Hi
Welcome to this blog!
In this blog I shall present a summary of what I teach you in the class every week.
Please use the comment section to ask me questions on the content of this blog. We shall have a two way communication on the subject matter.
We spent a few minutes on the syllabus and the plan of teaching; the syllabus is covered under four headings, viz., 1. Building Blocks of CSR/Sustainability, 2. Standards & Codes, 3. Engaging the Stakeholder and 4. Cases and Papers for discussion. The syllabus also provides you a list of books that will improve your understanding of the subject.
We shall aim to complete the course in about 18 classes of 90 minutes each. Classes will be conducted on Saturdays; and there will be two classes (09.30 - 11.00 and 11.00 - 12.30 hrs) every Saturday till the middle of April 2014 (say till 12 April 2014). We shall also have time for assignments and examinations within this time available to us.
With the Gazette publication of the Companies Act 2013, Corporate Social Responsibility (CSR) is no more a voluntary activity in India.
Section 135 of the Companies Act 2013 requires that:
a) companies which have net-worth of Rs.500 Crores and more
b) companies which have an annual sales turn-over of Rs. 1000 Crores and more and
c) companies which have a net profit of Rs.5 Crores in a financial year
have to establish a CSR Committee at the Board level,
a) to formulate a CSR Policy
b) to suggest CSR projects and programmes and
c) to monitor the progress of these projects and programmes
The CSR Committee should have at least one independent director.
The Board should ensure that:
a) at least 2% of the average of net-profit (i.e. profit before tax) of the last three financial years are spent on CSR activities of the current financial year and the
b) amount is spent on local areas or the areas surrounding the operations of the company
We just made a quick calculation for Reliance Industries; the new Companies Act requires the Reliance Industries Ltd., to spend about Rs.1220 crores in the financial year 2014-15, the year in which the Companies Act 2013 comes into effect. This is in contrast to Rs. 150 + crores spent by Reliance Industries in 2012-13.
Draft CSR Rules, 2013, requires that this money is spent on:
i) eradication of extreme hunger and poverty
ii) promotion of education
iii) promoting gender equality and empowering women
iv) reducing child mortality and improving maternal health
v) combating human immuno-deficiency virus, acquired immune deficiency syndrome, malaria and other diseases
vi) ensuring environmental sustainability
vii) employment enhancing vocational skills
viii) social business projects
ix) contribution to Prime Minister's National Relief Fund or any other Fund set up by the Central or State Governments for Socio-economic development and relief, and funds for the welfare of the Scheduled Castes and the Scheduled Tribes and Other Backward Classes, minorities and women and
x) such other matters as may be prescribed (by the Government)
The CSR Rules 2013 is still in the draft form; once it is published in the final form in the Gazette of India we will have more clarity on the specific requirements.
One of the positive aspects of the CSR Rules is its definition of CSR. The draft CSR Rules 2013 defines CSR as:
"the process by which an organization thinks about and evolves its relationship with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies"
In short CSR is a strategic business process to manage the relationship with stakeholders for the common good
Some of the stakeholders that we could immediately identify are: (i.e. this list is not complete)
a) shareholders
b) employees
c) customers
d) Government
e) Non-Governmental Organization
f) Suppliers
g) dealers and distributors
i) investors
j) lenders
k) competitors
l) neighbours / surrounding community
m) society at large
n) flora and fauna
o) cultural and historical monuments and buildings
p) future generations
A company (business organization) is expected to establish a positive (or better synergic) relationship with the above stakeholders through its strategic business processes, collectively called CSR processes; such synergic relationships are likely to help the company to sustain itself for a long period, i.e.they help the company to be sustainable.
(Those who are interested to know more about the thinking of the Government of India on CSR may study the National Voluntary Guidelines on social, environmental and economic responsibilities published by the Ministry of Corporate Affairs, Government of India, in 2011.
http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)
The meaning of CSR has changed over time. In the early part of the 20th Century till about 1970s, Corporate Social Responsibility meant the philanthropic activities of Corporates where they spent some amount of their earnings on social welfare activities. For example, Tatas helped to set up the Indian Institute of Science, Bangalore, in 1908. Similarly Tatas also have taken the responsibility for maintaining the township of Jamshedpur after the set up a steel plant there (now it costs them over Rs.500 Crores per year to maintain Jamshedpur).
In this blog I shall present a summary of what I teach you in the class every week.
Please use the comment section to ask me questions on the content of this blog. We shall have a two way communication on the subject matter.
We spent a few minutes on the syllabus and the plan of teaching; the syllabus is covered under four headings, viz., 1. Building Blocks of CSR/Sustainability, 2. Standards & Codes, 3. Engaging the Stakeholder and 4. Cases and Papers for discussion. The syllabus also provides you a list of books that will improve your understanding of the subject.
We shall aim to complete the course in about 18 classes of 90 minutes each. Classes will be conducted on Saturdays; and there will be two classes (09.30 - 11.00 and 11.00 - 12.30 hrs) every Saturday till the middle of April 2014 (say till 12 April 2014). We shall also have time for assignments and examinations within this time available to us.
With the Gazette publication of the Companies Act 2013, Corporate Social Responsibility (CSR) is no more a voluntary activity in India.
Section 135 of the Companies Act 2013 requires that:
a) companies which have net-worth of Rs.500 Crores and more
b) companies which have an annual sales turn-over of Rs. 1000 Crores and more and
c) companies which have a net profit of Rs.5 Crores in a financial year
have to establish a CSR Committee at the Board level,
a) to formulate a CSR Policy
b) to suggest CSR projects and programmes and
c) to monitor the progress of these projects and programmes
The CSR Committee should have at least one independent director.
The Board should ensure that:
a) at least 2% of the average of net-profit (i.e. profit before tax) of the last three financial years are spent on CSR activities of the current financial year and the
b) amount is spent on local areas or the areas surrounding the operations of the company
We just made a quick calculation for Reliance Industries; the new Companies Act requires the Reliance Industries Ltd., to spend about Rs.1220 crores in the financial year 2014-15, the year in which the Companies Act 2013 comes into effect. This is in contrast to Rs. 150 + crores spent by Reliance Industries in 2012-13.
Draft CSR Rules, 2013, requires that this money is spent on:
i) eradication of extreme hunger and poverty
ii) promotion of education
iii) promoting gender equality and empowering women
iv) reducing child mortality and improving maternal health
v) combating human immuno-deficiency virus, acquired immune deficiency syndrome, malaria and other diseases
vi) ensuring environmental sustainability
vii) employment enhancing vocational skills
viii) social business projects
ix) contribution to Prime Minister's National Relief Fund or any other Fund set up by the Central or State Governments for Socio-economic development and relief, and funds for the welfare of the Scheduled Castes and the Scheduled Tribes and Other Backward Classes, minorities and women and
x) such other matters as may be prescribed (by the Government)
The CSR Rules 2013 is still in the draft form; once it is published in the final form in the Gazette of India we will have more clarity on the specific requirements.
One of the positive aspects of the CSR Rules is its definition of CSR. The draft CSR Rules 2013 defines CSR as:
"the process by which an organization thinks about and evolves its relationship with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies"
In short CSR is a strategic business process to manage the relationship with stakeholders for the common good
Some of the stakeholders that we could immediately identify are: (i.e. this list is not complete)
a) shareholders
b) employees
c) customers
d) Government
e) Non-Governmental Organization
f) Suppliers
g) dealers and distributors
i) investors
j) lenders
k) competitors
l) neighbours / surrounding community
m) society at large
n) flora and fauna
o) cultural and historical monuments and buildings
p) future generations
A company (business organization) is expected to establish a positive (or better synergic) relationship with the above stakeholders through its strategic business processes, collectively called CSR processes; such synergic relationships are likely to help the company to sustain itself for a long period, i.e.they help the company to be sustainable.
(Those who are interested to know more about the thinking of the Government of India on CSR may study the National Voluntary Guidelines on social, environmental and economic responsibilities published by the Ministry of Corporate Affairs, Government of India, in 2011.
http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf)
The meaning of CSR has changed over time. In the early part of the 20th Century till about 1970s, Corporate Social Responsibility meant the philanthropic activities of Corporates where they spent some amount of their earnings on social welfare activities. For example, Tatas helped to set up the Indian Institute of Science, Bangalore, in 1908. Similarly Tatas also have taken the responsibility for maintaining the township of Jamshedpur after the set up a steel plant there (now it costs them over Rs.500 Crores per year to maintain Jamshedpur).
Over the period of time, at least in the last forty years, the meaning of CSR has changed. We discussed the famous quote of Prof. Milton Friedman: "There is only one responsibility of business, namely to use its resources and engage in activities designed to increase its profits" (Ref: New York Times Magazine, 13 September, 1970). We also discussed another famous quote from Prof. Peter Drucker: "Profit for a company is like oxygen for a person. If you don't have enough of it, you are out of the game. But if you think that you think that your life is about breathing, you are really missing something". We have come a long way from Milton Friedman's analysis of CSR; now we consider CSR is strategic to the existence of a company ! CSR is no more the philanthropic activities of the corporates alone, but the term encompasses various strategic business process that are aimed at building good relationship with all its stakeholders! The changing world order, to an extent, is responsible for this expansion of scope of CSR; the world is ageing, globalization has changed the way business is carried out now, a few countries are emerging as areas of new economic activities (BRICA), customers have been empowered and they have many choices, Climate Change and Sustainable Development issues affect all stakeholders; since all the stakeholders are part of the society in which the corporate operates, there is no distinction between Corporate Social Responsibility and Corporate Responsibility.
In simple terms, CSR may be defined as the "Management of the interface between the organization and its various stakeholders to achieve the objectives of the business"
We have identified some of these "interface elements" as follows:
In simple terms, CSR may be defined as the "Management of the interface between the organization and its various stakeholders to achieve the objectives of the business"
We have identified some of these "interface elements" as follows:
1.Resource Consumption and Eco-Efficiency/Resource Productivity
2. Wastes, emissions and discharges
3. Energy efficiency
4. EcoDesign or Design for Environment
5. Innovation in product and process design
6. Packaging design and logistics
7. Green Purchasing
8. Research & Development and Patents (intellectual rights)
9. Occupational Health & safety
10. Employee Compensation
11. Employee benefits
12. Labour Union
13. Inclusion and Diversity
14. Discrimination
15. Gender bias and harassment at the workplace
16. Insider trading
17. Bribery and corruption
18. Ethical working
19. Child and Forced Labour
20. Employee Productivity
21. Employee Morale and Loyalty
22. Fair and ethical behavior
23. Socially relevant business
24. Social Development programmes
25. Philanthropy / Strategic Philanthropy
26. Ecological footprints
27. Emergency and Emergency Response
28. Response to Complaints
29. Product Safety
30. Compliance with law
31. Brand Image
32. Exchange Rates
33. Interest Rates
34. Credit Rating
35. Stock Value
36. DJSI value
37. Profits and Dividends
38. Taxes
39. Niche Markets
40. New and Emerging Markets
41. Competition
42. Brand Image
In order to sustain for long a business organization needs to address all the above issues adequately at the same time.
In order to sustain for long a business organization needs to address all the above issues adequately at the same time.
A closer look at the various projects identified in the draft CSR Rules, 2013, shows that CSR embraces economic prosperity, environmental performance and social equity all at the same time. These elements are essentially those which form the “Sustainability” of business organization. "Sustainability" is also called the triple bottom-line approach, meaning an approach to enhance economic performance, environmental performance and social performance of a business organization all at the same time. Because of the convergence of concepts, all referring to strategies for the long term survival of the business organization, it is generally understood that CSR and Sustainability are synonymous.
“Sustainability“ is derived from “Sustainable Development”, a term used by Mrs. Brundtland in the UN Report “Our Common Future” (See Chapter 2: para 1 of http://www.un-documents.net/our-common-future.pdf). Sustainable Development has been defined by the Brundtland report as “the development that meets the needs of the present without compromising the ability of the future generations to meet their own needs”. In a way, Sustainable Development is about using the renewable resources, such as water, soil etc., within the carrying capacity of the ecosystem and to find alternatives for the non-renewable resources, such as coal, oil etc., before they become exhausted.
New approaches are essential for promoting Sustainability. As Einstein said "The World we have created today as a result of our thinking thus far has problems which cannot be solved by thinking the we thought when we created them". We need to essentially think differently than what we did when we created environmental, social and economic problems. Sustainability can not be achieved without innovative thinking, beyond "business as usual" thinking.
As an example I urged you to think about pollution differently. While almost all of us thought "business as usual", when I presented the view of Prof. Buckminster Fuller: "Pollution is resources positioned not at their maximally effective location" you could realize the potential of "thinking differently". We discussed about carbon dioxide at the exhaust of a motorcycle and the same carbon dioxide in a soda water bottle and the opportunity provided by the realization that after all carbon dioxide is a resource and if handled properly it not only provides environmental benefit but also economic benefit. We also discussed about "fly ash" which was till recently a waste generated in thermal power plants which posed major environmental problem of handling and storing; now fly ash is used as a raw material for cement manufacturing and is no more considered as an environmental nightmare !
New approaches are essential for promoting Sustainability. As Einstein said "The World we have created today as a result of our thinking thus far has problems which cannot be solved by thinking the we thought when we created them". We need to essentially think differently than what we did when we created environmental, social and economic problems. Sustainability can not be achieved without innovative thinking, beyond "business as usual" thinking.
As an example I urged you to think about pollution differently. While almost all of us thought "business as usual", when I presented the view of Prof. Buckminster Fuller: "Pollution is resources positioned not at their maximally effective location" you could realize the potential of "thinking differently". We discussed about carbon dioxide at the exhaust of a motorcycle and the same carbon dioxide in a soda water bottle and the opportunity provided by the realization that after all carbon dioxide is a resource and if handled properly it not only provides environmental benefit but also economic benefit. We also discussed about "fly ash" which was till recently a waste generated in thermal power plants which posed major environmental problem of handling and storing; now fly ash is used as a raw material for cement manufacturing and is no more considered as an environmental nightmare !
Your blog is quite interesting and I think everybody should get the awareness,which will ultimately 'uplift our nation'.
ReplyDeletehello sir!
ReplyDeleteCan u please post what is there for Tutorial 2
The following is an extract from Post 3:
ReplyDelete"we agreed that the next tutorial is about "Competitive Advantage of Corporate Philanthropy" based on this paper. For the second tutorial you may start preparing now; you have to prepare one A-4 sheet write-up on the topic. You may refer to the material available in the above referred paper or from any other source. You should be able to support or reject the hypothesis that Corporate Philanthropy can be advantageous to a company"
Please submit the assignment before the end of the month (March 2014)