Company Law Project
Title of the Project
"Corporate Social Responsibility- Indian Perspective"


Shoubhagya Ranjan Mahakud
MBA-07-09 Batch
Indian Institute of Planning and Management



The modern scenario is no longer based upon the ethics of past, the competitive revolution among the organizations has changed the perception of employees. The technology savvy producers have kept many welfare options infront of the employees, which have attracted employees to work and to adopt the culture. The options which got created by the employees or by the organizations set a benchmark infront of them to practice the similar for all other organizations. Government and different Government bodies discovered the reliable ways by keeping the welfare aspect as the motivation factor. In other terms if we say then, the concept of corporate social responsibility is not new to Indian companies. Corporate social Responsibility activities have their advantages. The benefits are in terms of building a positive image and encouraging social involvement of employees, which in turn develops a sense of loyalty for the organization. The companies have understood that the retention of market depends upon productivity, goodwill, quality of their product, which can be expected from the people associated to them. This whole project-"The first concern of a company is the happiness to people connected to it" explains clearly about the major concern related to people of the organization, future challenges, corporate insight and corporate involvement in a community. The related subtopics collected and analysed from various sources provides a clear concept about the organizational concern for their people. The sub topic corporate scrutiny brought out the major understanding for the people from the corporate aspect which can help to understand clearly about the importance in this competitive scenario.


Business is facing challenging times world-wide. Management of business has progressed rapidly in last 50 years. It has now thoroughly matured to higher levels of performance. The present age is a money-dominated age. Every one is running after money. Business enterprises are coming up with new strategies to earn more and more profits. Economists are bringing new philosophies to enhance prosperity. Today the efforts and energy of the world is being spent on increasing the organizational wealth. Increased competition and commercial pressure are combining with rising regulatory standards and consumer demand to create a whole new playing field for business. Traditional expectations of business are also changing. It is no longer enough to simply employ people, make a profit and pay taxes. The entities with maximum wealth are the most powerful in the present era and capable of safe guarding their economic interests leading to the gap between rich and poor widening. It is leading to a complex situation, where some people try to find out unfair means to quickly fill this gap. It gives rise to unrest in the human mind and quickly erodes the feeling of satisfaction and happiness. Quality expert Kaoru Ishikawa emphasizes on the role of company to keep its employees happy by stating, ''the first concern of a company is the happiness of the people connected to it. If the people do not feel happy, . . . that company does not deserve to exist'' (Ishikawa, 1985)1.

Companies no more consider human capital as commodity but as an asset. In the age of globalization, corporations and business enterprises are no longer confined to the traditional boundaries of the nation-state. One of the key characteristics of globalization is the spread of the market and the change in the mode of production. The centralized mode of production has given way to a highly decentralized mode of production spread across the world. In the last 20 years, multinational corporations have played a key role in defining markets and influencing the behavior of a large number of consumers. The rules of corporate governance have changed too. And there has been a range of reactions to this change. On the one hand globalization and liberalization have provided a great opportunity for corporations to be globally competitive by expanding their production-base and market share. On the other hand, the same situation poses a great challenge to the sustainability and viability of such mega-businesses, particularly in the context of the emerging discontent against multinational corporations in different parts of the world. Laborers, marginalized consumers, environmental activists and social activists have protested against the unprecedented predominance of multinational corporations. The ongoing revolution in communication technology and the effectiveness of knowledge-based economies has created a new model of business and corporate governance. A growing awareness about the need for ecological sustainability and the New Economy framework, with an unprecedented stress on communication and image merchandising, have paved the way for a new generation of business leaders concerned about the responses of the community and the sustainability of the environment. It is in this context that we need to understand the new trends in corporate social,the picture of human resource in front of the corporate leaders is clear that without human resource nothing is possible in this ever changing world and the nation.

The pursuit of economic growth does not necessarily lead automatically to social progress. In many cases it actually leads to a deteriorating physical environment, an unsafe workplace, needless exposure to toxic substances on the part of the workers and consumers, discrimination against certain groups in society, urban decay, and other social problems (Leonard and McAdam, 2003)2. Justice Kuldeep Singh, a judge of Supreme Court of India, while ordering the closure of more then 700 industrial units in Delhi which were actively harming ecological balance and had virtually converted river Yamuna into a sewer, observed that no one can allow economic progress and growth at the cost of ecological imbalance. As a result, corporate social responsibility (CSR) has become increasingly important in the modern era. Many Indian companies have understood the need of people and the way of utilizing the power for productive work, which turned organizations to think about their people and the people indirectly associated with the organization. The long term aspect from the organization shows a clear view towards the people management for existence in this competitive world. Society is the form of group of people which cannot be overlooked by the organizations because of their contribution towards the well being of the organization.

This view is governed by the common proposition that industry has economic contrast with society. This contrast is explicit in some areas, implicit in others and opens to negotiation, but it underpins all commercial activity. The need to look beyond the purely economic objectives of a business enterprise such as making profits, ensure adequate returns to the shareholders and making provision for future growth is becoming increasingly essential for achieving enduring success in business in real terms.

Today, business organizations increasingly concern themselves with a host public issue that are international in nature including trade legislation, regulations against corruption and growing concern about global issues based on industries.


The drive of improvement never ends. The best culture, system and plans do not remain so far long. Economic conditions, competitor's behavior, market dynamics, technological advances and the political environment demand change. The global  companies of tomorrow will have to actively work today to integrate social accountability issues into their key business processes in order to meet-and in some cases exceed-customer expectations. The 'neighbor -of –choice strategy' must become an integral part of a company's culture. Companies will know that they have succeeded in organizing corporate social responsibility activities when they automatically include corporate social responsibility considerations in their decisions. In fact, the international nature of the business environment means that these responsibilities exist in those areas where business operates or seeks to operate. This is a global responsibility which lies at the heart of the business contract. The economic function of the business and its wider responsibilities are integral features of  this contract. By crossing the boundary between business and the community , the community will become a key shareholder in business and business will be encouraged to give up the traditional mode of resource utilization and adopt a suitable mode for resource enrichment of the planet.


Clearly society expects many things from the corporate sector. Enterprise are being asked to move beyond the commercial sphere. Different stake holders place varying demands on organizations. Such demand varies over time and in different contexts. The primary expectation centers on wealth creation or profit function of the enterprise. But this not the only expectation. Beyond, this ,consumers continue to demand products that are safe, reliable and useful, services that are responsive to the changing needs, and advertising that is honest and informative. The public at large expects business to help project the physical environment and the health and safety of all those who are exposed to dangerous technologies or substances. Issue such as corporate power and corporate compliance, corporate activities and corporate disclosures of information will continue to concern an increasing number of people in the community.

Clearly, the emerging multipurpose corporations will demand multipurpose goals and synergistic policies that accomplish more than a single goal at time. This compels organizations to develop new measures of performance. Instead of focusing on the single bottom line of profits as in the past, organizations are expected to focus attention on multiple bottom lines-social, environmental, political and ethical- which are all interconnected.


The concept of corporate social responsibility (CSR) is not new to Indian companies. However, what is new is the way it has caught on with Indian corporate and the direct involvement of employees in implementation of these projects. Dedicated departments in most organizations are looking into much more than just funding or getting involved in one-time projects. CSR activities have their advantages. The benefits are in terms of building a positive image and encouraging social involvement of employees, which in turn develops a sense of loyalty for the organization. CSR activities help bond employees as a team, and with the organization, which in turn helps in creating a dedicated workforce that is proud of its employer.

When public sector enterprises were started, they located themselves in backward areas, set up townships for employees, followed socially desirable policies like job reservation, employing the physically disabled, purchase preference to small-scale industries, etc. Ignoring Drucker's advice, they pursued CSR to the detriment of profitability and many of them became sick wasting national resources and endangering employment. Does CSR need incentives? A knee-jerk reaction to this question would be: 'Socially responsible behavior needs no incentives at all as it is the basic duty of every citizen and corporate; in fact, socially irresponsible behavior deserves punishment.' The three levels: (A) compliance in letter of the law; (B) observing norms of common morality, like ethics and fair play, in its internal management and dealings; and (C) a social trusteeship mindset in deploying its resources3.Level A needs deterrents for default rather than incentives for adherence, being the basic obligation of any ordinary or corporate citizen in any civilized society. Level B refers to behavior that is not specifically obligatory under law but is expected in any just society. Level C is a non-obligatory, discretionary area and a company's involvement would depend on its values and social commitment. While level A may not deserve any positive incentive, it is certainly an area where unscrupulous companies would try and steal an unfair advantage over scrupulous ones and tilt the playing field in their favor. Complying with the law of the land is no doubt non-negotiable, but the way laws are framed and administered often sorely tempts companies to circumvent them in order to survive. Most serious instances of unethical or unlawful behavior of companies at this level occur during their interactions with public agencies and not with businesses or customers. The government, therefore, has the moral and economic responsibility first, to ensure that the laws governing business are framed realistically and reasonably, and enforced fairly and constructively; and second, to cleanse its own work environment of harassment and corruption. Thereafter, the government should come down heavily on companies violating the law. In a sense, this is an 'incentive' for healthy, honest industrial growth.

In a genuinely competitive environment, level B will, in the long run, regulate itself. Businesses and customers dealing with a company would evaluate its behavior and either continue to patronize it or 'vote with their feet'. Whereas levels A and B are independent of profitability, activity under level C arises only after the company ensures its own profitability, as otherwise CSR cannot be sustained. Level C is a rather vast area as it cannot be defined or listed out precisely. In practice, popular areas of action have been the services sector like education, health and housing, water resources, employment, poverty alleviation, etc. Level C does not, however, entirely rule out profit-making activities as long the activity serves an indisputable social purpose and does not involve any unjust activity or profiteering.

Tata Group ever since the days of Jamshetji Tata. Even while he was busy setting up textile ventures, he always thought of his workers' welfare and requirements of the country. From granting scholarships for further studies abroad in 1892 to supporting Gandhiji's campaign for racial equality in South Africa to giving the country its first science centre, hospital and atomic research centre to providing relief and rehabilitation to natural disaster affected places - they have done it all. Jamshed Irani, Director, Tata Sons Ltd, says, "The Tata credo is that 'give back to the people what you have earned from them'. So from the very inception, Jamshetji Tata and his family have been following this principle." Moreover 'he says that for any business to sustain in the long run they have to look beyond business. Ages ago when Corporate Social Responsibility was either the government, or charitable organizations headache, the Tatas aggressively worked for the upliftment of the community.  Tata initiated various labor welfare laws, like the establishment of Welfare Department was introduced in 1917 and enforced by law in 1948 or Maternity Benefit was introduced in 1928 and enforced by law in 1946.4 While today eyebrows are being raised about corporates doing social work, the Tata Group feels it is the need of the hour. Thus, where in the West companies are doubtful of spending the shareholders money and corporates are considering discontinuing Corporate Social Responsibility. Says Irani, "Which is fine for them, but not for a country like India. The governments of the western world have a strong social security net so corporates can concentrate on making profits and paying taxes regularly but in this regard India still lags behind. We are far away from reaching that phase of economic development where government is solely responsible for the basic needs of the public. We don't have a social security, adequate health and education services. So till then corporate houses should fill the gaps."  Further he explains that for any establishment to be successful public support is vital. One cannot be a spike of prosperity on the sea of poverty. In any society there is one section that makes huge profits and richer than the rest which leads to disparity. Over a period of time it has been witnessed that corporations die out if they do not support the masses.  Over the years, the Tata philosophy to 'Give back what you get' has been followed by all their enterprises across India. Be it relief measures, rural development, health care, education and art and culture, they have been very forthcoming. As result every year, the Tata Group's contribution to society has been phenomenal. In the fiscal year 2004 Tata Steel alone spent Rs 45 crore on social services.  Different Tata companies have been actively involved in various social work. Like Tata Consultancy Services runs an adult literacy programme, Titan has employed 169 disabled people in blue collar workforce at Hosur, Telco is fighting against Leprosy at Jamshedpur, Tata Chemicals runs a rural development programme at Okhamandal and Babrala, Tata Tea's education programme and Tata Relief Committee (TRC) which works to provide relief at disaster affected areas. The group's policy is to provide livelihood instead of giving money. "How long can you give rice and dal? What is required is the means to live. And that is what we do. During natural calamities there are two phases of assistance — relief measures and rehabilitation programme. After the Gujarat earthquake we built 200 schools in two years and we rendered help during the Orissa floods when people lost cattle 5. Tats's effort towards people is one of the great example for all the corporate players who have their insight for future for building their identity.

According to Associate Cement Company (ACC), they define Corporate Social Responsibility as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value. ACC has undertaken social volunteering practices almost from its inception, – long before the term corporate social responsibility was coined. The company's earliest initiatives in community development date back to the 1940's in a village on the outskirts of Mumbai while the first formal Village Welfare Scheme was launched in 1952. The community living around many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities. The range of Community & Rural Welfare activities in ACC begins with educational and medical facilities and goes on to cover vocational guidance and supporting employment-oriented and income-generation projects like agriculture, animal husbandry, cottage industries by developing local skills, using local raw materials and helping create marketing outlets. In close consultation with the Confederation of Indian Industry (CII), the management of ACC decided to step forward to participate in the national effort to eradicate the HIV/AIDS virus. ACC consider people as their real work force to keep them alive in the real competitive age. 

The trend is especially strong in IT companies with a young workforce that increasingly feels that they would like to contribute to the cause of creating a better society. Most of these companies are working on issues related to children and education. Voluntarism to them means taking technology to the grassroots levels and to bridge the digital divide. Whether it is TCS's Web-based solution for their adult literacy programme or Kale Consultants' (an airlines and banking verticals software maker) effort in creating a centralized data system on children for adoption.

With serious money and human resources involved, how does it benefit the organization? It is not uncommon to hear of rumors that in many cases no actual work was done and projects were shown on paper to gain tax exemptions. Most companies however strongly deny such allegations as funds are strictly dedicated to such projects and monitored by company boards. CSR is increasingly becoming a part of corporate governance. However, one of the biggest advantages of such activities is the development of internal branding among employees. In almost all organizations these activities have major employee involvement. In fact, all organizations feel that the success of such initiatives always depends on employee participation. Besides, it makes leaders out of employees and helps them realize the concept of teamwork. With a growing feeling that corporates should also contribute to social activities, globally, and with a desire to improve the immediate environment where they work, many companies are taking keen interest in such activities. In reality, most companies have special departments to document the best practices of corporate social responsibility and integrate them into the organizational fabric. They are investing huge amounts in creating special foundations for the implementation of these practices with a view to making a huge difference to the people around them. They are also drafting special policies to ensure better working conditions and promote the family welfare of their workforce. Companies argue that getting associated with people related activities with a cause might create an apparent impact but that does not generate any tangible profits. While it does help develop their brand and convey to the public that it is a socially conscientious company, it is a natural fallout and not a deliberate attempt. one of the biggest advantages of such activities is the development of internal branding among employees. "Employees feel a sense of pride when they are involved in such activities which in turn help in retaining them. Similarly, such activities also in a small way contribute towards image building," 


The involvement of corporate in a community generates trust in front of people which in a positive manner creates the identity in the nation. Corporate Community Involvement is about the impact your company has on the wider community. Companies can support the community through a number of activities that use both its staff and resources. People ,who are the part of the community always observe the community based activities done by the target industry of their locality. This could include making charitable donations, allowing staff to volunteer their skills to help community groups, or donating PCs and office equipment to organizations that need them.6

                               FIGURE-1-Types of Corporate Community Involvement


The following companies were listed as models by the survey Conducted by Centre for Social Markets. Of note, Infosys, Tata and Wipro were mentioned multiple times as models. The other companies were listed once each.7Refer appendix for detail company overview.8


    * Birla Group of companies
    * BSES (Bombay Suburban Electric Supply)
    * DSP Merril Lynch
    * Hindustan Lever
    * Infosys
    * ITC (Indian Tobacco Corporation)
    * Larsen & Toubro
    * MahindraBT
    * Mitsui
    * NTTF
    * PriceWaterhouseCoopers
    * Reliance
    * Tata
    * Tata Consultancy Services
    * TISCO (Tata Steel)
    * WBPDCL
    * Wipro


    * IBM
    * EDS
    * Goodyear
    * Conagra Inc. in USA.
    * Siemens training institute, Germany
    * R&S, Germany
    * Cisco Systems
    * Motorola
    * Microsoft

TABLE A and B9


60 years of independent India, but we still haven't experienced a real economic growth and development. The government plans take a long time to get implemented and the policies are highly skewed. If the corporate houses choose to intervene, perhaps, the day wont be far when, India can boast of a real economic boom. The world map of happiness survey 2006, gave India 180 points. The only one reason, where it lagged behind other countries, was its inability to provide its people with basic education, healthcare, and reduce poverty. Every country should embrace the remarkable concept of individuals and businesses forming a partnership to support social causes. A successful modern Indian company also needs to be well managed, with a corporate culture that promotes integrity. This message was conveyed by half of those respondents who answered this question. Respondents referred to practicing ethical business values, values based management, participative leadership, and conduct[ing] business with integrity and honor as important conditions for business success. Professional management was mentioned as a criterion by several respondents. It is important for [management to be] agile and informed [and to] recognize the bottleneck in infrastructure and find methods to solve them.  As one respondent summarizes, the role of a successful company is to contribute to national wealth, to generate employment opportunities, E-business and E-commerce, accountable employees, transparency of Managements policy, open communication, safe working environment, concern for society. In the context of India, such a partnership has enormous potential for strengthening society. The state broadly speaking was referred to by over a quarter of respondents as an obstacle to successful business. Problems included unclear, unpractical and poorly monitored regulations, poor infrastructure, a complicated tax system, and too much bureaucracy.  The main obstacles, we think, are lenient attitude of the Government in enforcing Quality control measures. Interestingly, however, the state is also criticized for too much interference.  Irresponsible & unpractical government regulations in sector that are best left to private hands, keeps the government to busy to understand the difficulties of an average small businessperson whose capabilities & spirit is being choked due to the lack of infrastructure. There were also references made to cleaning up the corporate governance structure and clamping down on corruption in India. Broad frameworks on corporate governance should be developed and followed. And, penalties for non-compliance should be strictly implemented. Benefit from corruption should be reduced. This is to be done by flattening the tax structure and reducing exclusive authority on Govt.agencies. In an era of increasing global competition, the need to create an image that shows that corporate are part of the community and care about it is growing. People as the part of community and a strong part of the workforce for the production in organizations plays important role and benefits acquired from them cannot be ignored as far as possible for growth.

1 Ishikawa, K. (1985), What is Total Quality Control?: The Japanese Way, Prentice-Hall, Englewood Cliffs, NJ, trans. by D.J. Lu, (2002).Kaoru Ishikawa (Ishikawa Kaoru ) (1915-1989) was a Japanese University professor and influential quality management innovator best known in North America for the Ishikawa or cause and effect diagram (also known as Fishbone Diagram) that are used in the analysis of industrial process. Ishikawa has emphasized include the seven Quality Control tools. As per his view and respecting the ideas that suggested by him-'' The first concern of a company is the happiness of the people connected to it".

Leonard, D., McAdam, R. (2003), "Corporate social responsibility", Quality Progress: ASQ Magazine, No. October, pp.27-32.

3 Business Daily from THE HINDU group of publications, Friday, Oct 12, 2007, ePaper

4 Forerunners in corporate social responsibility, The Indian Express  — March 16, 2005
5 Corporate Social Responsibility: Perceptions of Indian Business, Centre for Social Markets, July 2001, Research & Compilation: Kate Brown

6 Corporate Community Involvement is part of the broader area of Corporate Social Responsibility (CSR) and is often thought to be the most visible aspect of CSR. It looks at the social, economic and environmental impact your company's operations can have on society. The above diagram- FIGURE-1-Types of Corporate Community Involvement- shows the many ways in which a company can get involved in the community.

7 Collected from-Social responsibility, corporate style/ source-express computer online. The trend is especially strong in IT companies with a young workforce that increasingly feels that they would like to contribute to the cause of creating a better society. Most of these companies are working on issues related to children and education. Voluntarism to them means taking technology to the grassroots levels and to bridge the digital divide. Whether it is TCS's Web-based solution for their adult literacy programme or Kale Consultants' ( an airlines and banking verticals software maker) effort in creating a centralised data system on children for adoption.

8 This section presents Karmayog's view on Corporate Social Responsibility, & how Companies can undertake CSR programmes. The section contains: a)Details of the CSR activities of the 500 largest Indian Companies & other Indian Companies. b)Karmayog CSR rating of the largest 500 Indian Companies, & sector-wise analysis of the same. c) Recommendations, guidelines, reporting formats for Companies to adopt d)Opportunities available for NGOs under the CSR programmes of various Companies.

9 Teri Enhancing Business-Community Relations -India National Research Report

Shoubhagya Ranjan Mahakud
MBA-07-09 Batch
Indian Institute of Planning and Management

Source: E-mail August 28, 2008




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