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CORPORATE SOCIAL

PERFORMANCE:
(AREAS & MEASUREMENT)
Presented To-
Dr. Harpreet Kaur
Commerce
Department
Punjabi University,
Patiala
Presentation By-
Samiksha Chawla
Ph.D Course Work
Roll No.- 1605206
CONTENTS
Introduction
Definitions
Different Names for CSR
Responsibilities of Business Firm
Dimensions of CSR
Activities Part of CSR
Evolution in India
Need of CSR
CSR The Indian Scenario
Policy Framework for CSR in India
Companies Act, 2013
CSR and Legislation
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CSR PMbecome so important ? 2
Social Accounting
INTRODUCTION
Corporate + social + responsibility
Covers the relationship between corporation and society.
Also includes the effect of society on corporation as well.
So its a two-way relationship.

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DEFINITIONS
The continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of
the workforce and their families as well as of the local community and
society at large.
World Business Council for Sustainable Development defines
Corporate Social Responsibility (CSR)
Social Responsibility may be taken to mean intelligent and objective
concern for the welfare of the society.
- K.K. Andrew
H.S. Singhania classifies the nature of social responsibility of business
into two categories:
The manner in which a business carries out its own business activity, and
The welfare activity that it takes upon itself as an additional function

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DIFFERENT NAMES FOR
CSR
Corporate Responsibility
Corporate Accountability
Corporate Ethics
Corporate Citizenship or Stewardship
Responsible Entrepreneurship
Triple Bottom Line (People, Planet & Profit)
Corporate Sustainability

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RESPONSIBILITIES OF
BUSINESS FIRMS
Milton Friedmans Traditional View of Business Responsibility:-

A business person who acts responsibly by cutting the price of the


products, is spending shareholders money for a general social interest.
Even if he is having shareholders permission; even then by ignoring the
economic motive of the business, he may in long run, harm the very society
the firm is trying to help.
These results negatively affectperhaps fatallythe long-term efficiency
of a business.
Thus, Friedman w.r.t CSR stated that that there is one and only one social
responsibility of businessto use its resources and engage in activities
designed to increase its profits so long as it stays within the rules of the
game, which is to say, engages in open and free competition without
deception of fraud.

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Contd
Archie Carrolls Four Responsibilities of Business:-

Economic: to produce goods and services of value to society so that the firm may repay
its creditors and shareholders.
Legal: as defined by the government in laws that management is expected to obey. For
eg- Indian Public Sector Units are required to hire and promote people based on their
credentials rather than to discriminate on non-job related characteristics such as race,
gender or religion.
Ethical: organization management are to follow the generally held beliefs about
behavior in a society.
Discretionary: are the purely voluntary obligations a corporation assumes. Eg-
philanthropic contributions, training the hard-core unemployed and providing day-care
centres.
Discretionary
Carroll lists all these in order of priority.
Ethical

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economic Legal
DIMENSIONS OF CSR
(Summarizing Various Definitions)
E Economic Dimension (profitability)
Environmental Dimension (impact on natural
E environment)

S Social Dimension (relationship b/w business & society)

Stakeholder Dimension (not only shareholders but all


S stakeholders)
Voluntariness Dimension ( activities done but either
V disclosed or not )

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ACTIVITIES PART OF CSR
(Not An Exhaustive List)
Corporate Governance and Ethics,
Health & Safety (Quality Products),
Sustainable Development,
Conditions of Work (Safety of Employees),
Industrial Relations,
Community involvement, development & investment,
Corporate Philanthropy,
Customer Satisfaction & Principles of Fair Competition,
Anti-bribery & Anti-fraud activities,
Transparency, Corporate Performance Reporting, and
Supplier Relations for both domestic and international supply chain.

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EVOLUTION IN INDIA
India has a long tradition of paternalistic philanthropy. The process, though acclaimed recently, has been
followed since ancient times albeit informally. Philosophers such as Kautilya from India and pre-Christian
era philosophers in the West preached and promoted ethical principles while doing business.
The concept of helping the poor and disadvantaged was cited in several ancient literatures.
In the pre-industrialized period philanthropy, religion and charity were the key drivers of CSR.
The industrial families of the 19th century had a strong inclination toward charity and other social
considerations. However, the donations, either monetary or otherwise, were sporadic activities of charity or
philanthropy that were taken out of personal savings, which neither belonged to the shareholders nor did it
constitute an integral part of business. During this period, the industrial families also established temples,
schools, higher education institutions and other infrastructure of public use.
The term CSR itself came into common use in the early 1970s. The last decade of the twentieth century
witnessed a shift in focus from charity and traditional philanthropy toward more direct engagement of
business in mainstream development and concern for disadvantaged groups in the society
In India, there is a growing realization that business cannot succeed in isolation and social progress is
necessary for sustainable growth. An ideal CSR practice has both ethical and philosophical dimensions,
particularly in India where there exists a wide gap between sections of people in terms of income and
standards as well socio-economic status (Bajpai, 2001).
Currently, there is an increased focus and a changing policy environment to enable sustainable practices
and increased participation in the socially inclusive practices.

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NEED OF CSR
The current trend of globalization has made the firms realize that in order to compete effectively in
a competitive environment they need clearly defined business practices with a sound focus on the
public interest in the markets (Gray, 2001).
Firstly, the increase in competition among the multinational companies to gain first mover
advantage in various developing countries by establishing goodwill relationships with both the
state and the civil society is ample testimony to this transformation.
Secondly, in most of the emerging markets, the state has a duty of protecting the interests of
the general public and thus gives preference to companies which take care of the interests of all
the stakeholders.
Thirdly, emerging markets have been identified as a source of immense talent with the rising
levels of education. For eg, the expertise of India in churning out software professionals and
China in manufacturing has now become internationally renowned. In order to draw from this
vast talent pool coming up in developing countries, companies need to gain a foothold in these
markets by establishing sound business practices addressing social and cultural concerns of the
people. It has been observed that consumers consider switching to another company's products
and services, speak out against the company to family/friends, refuse to invest in that
company's stock, refuse to work at the company and boycott the company's products and
services in case of negative corporate citizenship behaviors (Edenkamp, 2002).

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Contd
Fourthly, firms all over the world are beginning to grasp the importance of intangible
assets, be it brand name or employee morale. Equity created in a companys reputation or
brand can easily be harmed or even lost particularly for companies whose brand equity
depends on company reputation. Reputation is built around intangibles such as trust,
reliability, quality, consistency, credibility, relationships and transparency, and tangibles
such as investment in people, diversity and the environment. Only firms that have gained
the goodwill of the general public and are ideal corporate citizens will be to develop these
intangible assets into strategic advantages. CSR can be an integral element of a firms
business and corporate-level differentiation strategies.
Fifthly, CSR is an important factor for employee motivation and in attracting and
retaining top quality employees as well. Innovation, creativity, intellectual capital and
learning are helped by a positive CSR strategy.
Sixthly, better risk management can be achieved by in-depth analysis of relations with
external stakeholders. Given the increase in cross-border business relationships and the
threat of cross-border litigation, boards have to consider the risk management standards of
business partners, and even suppliers. CSR also helps in compliance with regulation and
the avoidance of legal sanctions, while the building of relationships with host governments,
communities and other stakeholders can enhance a companys reputation and credibility
and be important with regard to its future investment decisions.
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CSR THE INDIAN

SCENARIO
Corporate Social Responsibility in India is finally a reality. Indian businesses realized
they have to look not only at the economic dimension of their company, but also at its
ecological and social impact the three pillars of CSR. However, to become a planned
strategy integral to business success, Indian companies have lot of catching up to do. CSR
is also linked to the broader issue of Corporate Governance. Needless to emphasize that
Indian companies have to take a closer look at CSR and link it to corporate governance, if
they really want to make a mark in all the three pillars of CSR.
According to a recent pilot survey by CII in Tamil Nadu, (Express Buzz) only 40% of
the companies practice CSR initiatives. The pilot survey, highlighted that a majority of the
companies did not take CSR seriously and those who did, did it only with a philanthropic
frame of mind. The pilot survey also revealed that more than 50% of the companies made
their employee welfare activities as part of their CSR initiative, not really contributing to
an outside community or its development. Sustainable CSR programs mean a cohesive
mix of economic, legal, ethical and philanthropic tenets. In today's changed business
scenario, there is an increased focus on giving back to society and creating a model which
works long term and is sustainable and it is imperative that the best practices for inclusive
growth are shared with the stakeholders.
Case Study ( Coca- Cola)
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POLICY FRAMEWORK FOR
CSR IN INDIA
In the developing world, governments and businesses understand that their
respective competitive positions and access to capital increasingly depend on
being able to respect the highest global standards. At one end of the spectrum,
CSR can be viewed simply as a collection of good citizenship activities being
engaged by various organizations. At the other end, it is a way of doing business
resulting in a significant impact on community and long-term sustainability.
In the last decade, CSR has rapidly evolved in India with some companies
focusing on strategic CSR initiatives to contribute towards nation building.
Gradually, the companies in India started focusing on need-based initiatives
aligned with the national priorities such as public health, education, livelihoods,
water conservation and natural resource management. Intensive national level
deliberations on the potential role and responsibility of the corporate sector in
contributing toward addressing social issues were witnessed in the last decade.

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Contd
In the last five decades, the Government of India has also enhanced its
focus on persuading companies to participate in addressing social and
developmental issues, not only as a part of their social responsibility but
also their business practices. Setting an example for the private sector,
guidelines regarding expenditure on CSR activities for Central Public
Sector Enterprises were issued by Department of Public Enterprises.
According to these Guidelines on Corporate Social Responsibility and
Sustainability for Central Public Sector Enterprises revised by the
Department of Public Enterprises (DPE), Ministry of Heavy Industries
and Public Enterprises every year, each CPSE shall with the approval of
its Board of Directors make a budgetary allocation for CSR and
Sustainability activities/projects for the year.

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These guidelines came into effect from 1 April 2013 and are a revised version
of the previous comprehensive Guidelines on Corporate Social Responsibility
for Central Public Sector Enterprises issued by The Department of Public
Enterprises (DPE), in April 2010. While the earlier guidelines focused mainly
on CSR activities for external stakeholders, the revised guidelines by the DPE
also take internal stakeholders, particularly employees, into account. The new
CSR Guidelines also include a dedicated section on sustainability reporting
and disclosure.
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Contd
The National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business Voluntary CSR guidelines create a common
standard for how companies can improve their CSR efforts, especially with
regard to sustainability. The adoption of a common set of standards creates an
expectation that companies will strive to meet the guidelines, and can create peer
and public pressure for companies failing to comply.
In this regard, the National Voluntary Guidelines (NVGs) on Social,
Environmental and Economic Responsibilities of Business, have been laid down
by the Ministry of Corporate Affairs in order to provide companies with
guidance in dealing with the expectations of inclusive growth and imperatives of
climate change, while working closely within the framework of national
aspirations and policies.
These are applicable to all businesses irrespective of size, sector or location. The
NVGs were designed with the intent of assisting enterprises to become
responsible entities whereby they formulate their financial/ business objectives
while considering the impact on various diverse stakeholders including society
and environment at large.
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COMPANIES ACT, 2013
Companies Bill, 2012 and CSR:-
With a view to provide a framework for companies (private and public)
to implement need-based CSR activities, the Government of India has
included CSR-related provisions in the Companies Bill, 2012.
The Clause 135 of the Companies Bill 2012 aims at motivating
companies to spend 2% of the Profits After Tax (PAT) on CSR.
Though spending 2% of the PAT is not mandatory but Clause 135 of
that proposed Companies Bill casts a duty on the board to specify
reasons for not spending the specified amount on CSR.

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Contd
The Clause 135 will be applicable to all companies that have either of the following:
Net worth of INR 500 crores or more
Turnover of INR 1000 crores or more
Net Profit of INR 5 crores or more
An average of last three financial years PAT will be considered for calculating the 2% for
CSR.
The Bill mandates companies to form a board-level CSR Committee comprising three
or more directors with at least one independent director. The composition of the CSR
Committee has to be disclosed in the annual board of directors report. The CSR
Committee will be responsible for formulating and recommending a CSR policy and
implementation plan. The Committee will also be responsible for regular monitoring of
CSR activities. Companys board will be responsible for approving and disclosing CSR
Policy in the annual Directors Report and on companys website. The Board will also be
responsible for ensuring implementation of CSR activities according to the Policy. The
annual Directors Report has to specify reasons in case the specific amount (2% of PAT)
has not been utilized adequately.

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CSR AND LEGISLATION
With globalization an increasing number of companies are already focusing voluntarily on
CSR issues, but it is clear, in the light of the poor corporate governance that resulted in both
the Enron and World Com debacles, that some further form of legislation is necessary. A
balance has to be made between no regulation and full regulation.

Advantages of legislation:

It would help to avoid the excessive exploitation of labour, bribery and corruption.
Companies would know what is expected of them, thereby promoting a level playing
field.
Many aspects of CSR behavior are good for business (such as reputation, human
resources, branding and making it easier to locate in new communities) and legislation
could help to improve profitability, growth and sustainability.
Some areas, such as downsizing, could help to redress the balance between companies
and their employees.

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Contd
Disadvantages of legislation:

Additional bureaucracy, with rising costs for observance.


Operation costs could rise above those required for continued
profitability and sustainability.
Critics say that the CSR of companies is simply to make a profit,
and legislation would increase the vocalization of these concerns.
Reporting criteria vary by company, sector and country, and they
are in constant evolution.

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WHY CSR BECOME SO
IMPORTANT ?
a)(Arguments
Public Requirements In Favor And Against)
b) Favourable for Business
c) Moral Justification
d) Socio-cultural Norms
e) Business can shoulder Responsibility
f) Responsibility must Correspond with Power
g) Public Image
h) Government Regulations
i) Indebted to Society WHY CSR ?

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Contd
a) Deviation from Main Objective
b) Increase in Prices
c) Excessive Concentration of Power
d) Lack of Social Skill
e) Lack of Accountability
f) Influence on Social Set-up
g) Opposition from Society
h) Complex Social Problems

WHY CSR ?

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SOCIAL ACCOUNTING
An approach of reporting a firms activities which stresses the
need for the identification of socially relevant behavior , the
determination of those to whom the company is accountable for
its social performance and the development of appropriate
measures and reporting techniques.
- D. Crowther

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Contd
Social accounting is rational assessment of and reporting on some
meaningful , definable domain of a business enterprises activities that
have social impact.
Social accounting is an expression of a companys social
responsibilities.
Also known as: social accounting ,corporate social reporting, corporate
social responsibility reporting, non- financial reporting.

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DIFFERENCE BETWEEN SOCIAL ACCOUNTING
AND FINANCIAL ACCOUNTING

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OBJECTIVES OF SOCIAL ACCOUNTING

K.V. Ramanathan has suggested the following:

a) Identify and measure the periodic net social contribution.


b) Determine whether the firms strategies and objectives are
consistent with social priorities.
c) Make available all the relevant information to all the social
constituents.

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SOCIAL AUDIT

Social audit is an examination of business enterprise focused


on the performance of its public interest non-profit activities .
Such activities have been held to include financial contributions
and personnel loans to public enterprises , creation of
scholarships, technical training programs ,membership on civic
committees and boards and participation in affairs devoted to the
public interest.
-Kohler( A dictionary for Accountants)

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Contd
It is a systematic study and evaluation of an organisations
social performance.
It implies a report on the social performance of business units.
It reflects on the social quality of life of an organisation.

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CONDUCT OF SOCIAL AUDIT

Internal
Auditors

Combinatio
n

External
Consultan
ts

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CONCLUSION
As discussed earlier, CSR is not a new concept in India. Ever since their
inception, corporates like the Tata Group, the Aditya Birla Group, and
Indian Oil Corporation, to name a few, have been involved in serving the
community. Through donations and charity events, many other
organizations have been doing their part for the society. The basic
objective of CSR in these days is to maximize the company's overall
impact on the society and stakeholders. CSR policies, practices and
programs are being comprehensively integrated by an increasing number of
companies throughout their business operations and processes. A growing
number of corporates feel that CSR is not just another form of indirect
expense but is important for protecting the goodwill and reputation,
defending attacks and increasing business competitiveness.

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REFERENCES
www.igidr.ac.in pdf publication
https://www.pwc.in pdfs publications
www.ijbmi.org papers Vol(1)1
www.ey.com Publication vwLUAssets
www.instituteforpr.org uploads Sawh...
www.environment.ucla.edu resources
unctad.org docs iteteb20076_en

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