CORPORATE SOCIAL RESPONSIBILITY AND

HUMAN RESOURCES

SUBMITTED TO
MS. PADMA PARIJA
FACULTY FOR CORPORATE-II

SUBMITTED BY
SHALKI TIWARI
SEMESTER-V, POLITICAL SCIENCE MAJOR (A)
ROLL NO.- 117

DATE OF SUBMISSION

9th April, 2013

HIDAYATULLAH NATIONAL LAW UNIVERSUTY

RAIPUR (C.G.)
 TABLE OF CONTENTS

ACKNOWLEDGEMENTS 3

OBJECTIVES 4

RESEARCH METHODOLOGY 4

INTRODUCTION 5

CSR: ITS LEGAL REGIMES 6

ROLE OF HUMAN RESOURCES IN PROMOTING CSR

9

CHALLENGES IN HR INVOLVEMENT WITH CSR

11

RECOMMENDATIONS 13

CONCLUSION 14

BIBLIOGRAPHY 15
 ACKNOWLEDGEMENT

The successful completion of any task would be, but incomplete, without the mention of people
who made it possible and whose constant guidance and encouragement crowned my effort with
success.

I would like to thank my course teacher Ms. Padma Parija for providing me the topic of my
interest.

Secondly, I would like to thank our Student Body for providing the best possible facilities of I.T
and Library in the university.

I would also like to extend my warm and sincere thanks to all my colleagues, who contributed in
numerable ways in the accomplishment of this project.

OBJECTIVES

 To understand the concept of Corporate Social Responsibility

 To scrutinize the role of Human Resources in promoting Corporate Social Responsibility.
 RESEARCH METHODOLOGY

The research was based on secondary sources of information comprising of books, newspapers as well as
Internet. The topic has been extensively researched upon so as to accomplish the goal of completion of
the current project report.

Sources of Data:

The following secondary sources of data have been used in the project-

1. Cases
2. Books
3. Websites

Method of Writing:

The method of writing followed in the course of this research paper is primarily analytical.

Mode of Citation:

The researchers have followed a uniform mode of citation throughout the course of this research
paper.
Introduction
“A good company delivers excellent product and services, and a great company does all that and
strives to make the world a better place”.

-WILLIAM FORD Jr., CHAIRMAN, FORD MOTOR CO.

“What comes from the people must go back to the people.”

-JAMSHEDJI TATA

Business houses, right from the inception of human race, have been regarded as constructive
partners in the communities in which they operate. Though they have been instrumental in
creating employment, wealth, products and services, yet the pressure on business to play a role in
social issues involving employees, stakeholders, society, environment, government etc. is
continuously increasing. The society is questioning the existence of business houses, especially
in the wake of the scandals and scams conducted by the business houses like UTI, Enron, and
WorldCom. In response to it, the organizations around the globe are forced to wake up to the
need for being committed towards Corporate Social Responsibility. Over the years this concept
of Corporate Social Responsibility (CSR) has gained unprecedented momentum in business and
public debate and has become a strategic issue crossing the departmental boundaries, and
affecting the way in which a company does business. It has become so important that many
organizations have rebranded their core values to include social responsibility. Almost all
corporate websites/ policies/reports talk about their endeavors for CSR which has become a way
of ensuring that the organization is fulfilling all the obligations towards society and thus is
eligible for the license to operate. It assures that the organization can grow on sustainable
basis.In India, the initiatives of Dabur India Limited, for example, which commenced ‘Sundesh’
in 1993, a non-profit organization, with an aim to promote research and welfare activities in rural
areas are appreciable. On the same track to fulfill its urge to do something for community, Bharat
Petroleum Corporation Limited has adopted 37 villages as their responsibility to develop in all
walks of life. It has made efforts to make them self-reliant, provided them fresh drinking water,
sanitation facilities, medical facilities, vocational training and literacy camps. 1 Around its
industrial facilities, Tata Group has created towns and cities like Jamshedpur, Mithapur, Babrala
for the benefit of its employees. Cadbury India, Glaxo and Richardson Hindustan are some of the
companies which are helping farmers to grow crops which in turn shall serve as raw materials for
them.

CSR: Its Legal Regimes

“A good company delivers excellent product and services, and a great company does all that and
strives to make the world a better place”.

-WILLIAM FORD Jr., CHAIRMAN, FORD MOTOR CO.

“What comes from the people must go back to the people.”

-JAMSHEDJI TATA

The World Business Council for Sustainable Development proposes a definition for CSR as:
‘The ethical behaviour of a company towards society & management acting responsibly in its
relationships with other stakeholders who have a legitimate interest in the business.’

Corporate social responsibility is founded on the notion that corporations are in relationship with
other interests in for instance economic, cultural, environmental and social systems because
business activities affect such interests in society.

The important legislations for regulating the entire corporate structure and for dealing
with various aspects of governance in companies are Companies Act, 1956 and Companies
(Amendment) Bill, 2009. These laws have been introduced and amended, from time to time, to
bring more transparency and accountability in the provisions of corporate governance. That is,
corporate laws have been simplified so that they are amenable to clear interpretation and provide
a framework that would facilitate faster economic growth.

1
http://www.karmayog.org/csr500companies
 Secondly, the Securities Contracts (Regulation) Act, 1956, Securities and Exchange
Board of India Act, 1992 and Depositories Act, 1996 have been introduced by Securities and
Exchange Board of India (SEBI), with a view to protect the interests of investors in the securities
markets as well as to maintain the standards of corporate governance in the country. Apart from
that, clause 49 of Listing Agreement (Agreement between the listed company and SEBI) lists
various disclosure requirements and other regulatory mechanisms to ensure protection of
investors.

As far as Companies act, 1956 is concerned it does not contain any provision regarding
corporate social responsibility till recently.As in Companies (Amendment) Bill 2009 21streport
by Ministry of Corporate Affairs contained special provision for corporate social responsibility
as it clearly specifies that “There was no mention in the earlier Companies Act about corporate
social responsibility. We are just mentioning that there will be a Corporate Social Responsibility
Policy in each and every company beyond a certain limit, which are profitable companies and
which are of certain size”2.
It was felt that the Bill may include provisions to mandate that every company having net
worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more or a net profit of Rs. 5
crore or more during a year shall be required to formulate a CSR policy to ensure that every year
at least 2% of its average net profits during the three immediately preceding financial years shall
be spent on CSR activities as may be approved and specified by the company. The directors shall
be required to make suitable disclosures in this regard in their report to members.

As per the Voluntary Guidelines 2009 laid by the Ministry of Corporate Affairs, Government
of India, the CSR Policy should normally cover following core elements:
1. Care for all Stakeholders:
The companies should respect the interests of, and be responsive towards all stakeholders,
including shareholders, employees, customers, suppliers, project affected people, society at large
etc. and create value for all of them. They should develop mechanism to actively engage with all
stakeholders, inform them of inherent risks and mitigate them where they occur.
2. Ethical functioning:

2
Their governance systems should be underpinned by Ethics, Transparency and Accountability.
They should not engage in business practices that are abusive, unfair, corrupt or anti-competitive.
3. Respect for Workers' Rights and Welfare:
Companies should provide a workplace environment that is safe, hygienic and humane and
which upholds the dignity of employees. They should provide all employees with access to
training and development of necessary skills for career advancement, on an equal and non-
discriminatory basis. They should uphold the freedom of association and the effective
recognition of the right to collectivebargaining of labour, have an effective grievance redressal
system, should not employ child or forced labour and provide and maintain equality of
opportunities without any discrimination on any grounds inrecruitment and during employment.
4. Respect for Human Rights:
Companies should respect human rights for all and avoid complicity with human rights abuses
by them or by third party.
5. Respect for Environment:
Companies should take measures to check and prevent pollution; recycle, manage and reduce
waste, should manage natural resources in a sustainable manner and ensure optimal use of
resources like land and water, should proactively respond to the challenges of climate change by
adopting cleaner production methods, promoting efficient use of energy and environment
friendly technologies.
6. Activities for Social and Inclusive Development:
Depending upon their core competency and business interest, companies should undertake
activities for economic and social development of communities and geographical areas,
particularly in the vicinity of their operations. These could include: education, skill building for
livelihood of people, health, cultural and social welfare etc., particularly targeting at
disadvantaged sections of society

Approach of Indian judiciary towards CSR

The Indian judiciary has been constantly pondering upon the fact that corporate should be
socially responsible towards the community in which it operates. The following citations are
witness to the above fact:
In National textile workers’ union vs. P.R. Ramkrishnan and Others 3the honorable Supreme
Court by majority observed that: The traditional view that the company is the property of the
shareholders is now an exploded myth. The ownership of the concern was identified with those
who brought in capital. That was the outcome of the property-minded capitalistic society in
which the concept of company originated. But this view can no longer be regarded as valid in the
light of the changing socio-economic concepts and values. Today social scientists and thinkers
regard a company as a living, vital and dynamic, social organism with firm and deep rooted
affiliations with the rest of the community in which it functions.It is true that the shareholders
bring capital, but capital is not enough. It is only one of the factors which contribute to the
production of national wealth. There is another equally, if not more, important factor of
production and that is labour. Then there are the financial institutions and depositors, who
provide the additional finance required for production and lastly, there are the consumers and the
rest of the members of the community who are vitally interested in the product manufactured in
the concern. Then how can it be said that capital, which is only one of the factors of production,
should be regarded as owner having an exclusive dominion over the concern, as if the concern
belongs to it? A company, according to the new socio-economic thinking, is a social institution
having duties and responsibilities towards the community in which it functions.

The Supreme Court pointed out as far back as 1950 in Chiranjeetlal v. Union of India 4: We
should bear in mind that a corporation, which is engaged in production of commodities vitally
essential to the community, has a social character of its own and it must not be regarded as the
concern primarily or only of those who invest their money in it.

In Saraswat co-operative bank vs. P.G. Koranne and ors. 5, the honorable Bombay high court
through Madon CJ stated that” states including India have assumed the role of welfare states and
as part of their welfare program have brought about socio- economic reforms by enacting
appropriate legislations. It is now well-recognized that a company or a corporation does not exist
purely for the sake of its shareholders or merely to earn profit for them. It is recognized and
accepted that it exists not only for the sake of its shareholders but also for the sake of its

3
1983 AIR SC 75
4
AIR 1951 SC 41
5
1983 AIR bom 317
employees to whom it provides livelihood and for the sake of the consumers for whom it
produces goods.

Role of Human Resources in Promoting

CSR
With the growing importance of CSR in companies, HR professionals play a key role in
initiating, developing and sustaining CSR activities in the organization. While some companies
have separate CSR executives who are responsible for coordinating and managing events, most
companies expect HR personnel and other employees to invest their time and participate in such
activities. In today’s corporate scenario employees typically work for more than 8-10 hours a day
and are expected to multitask in their sphere of work. Given this hectic pace of work it‘s a
challenge for any organization to sustain CSR initiatives. Therefore, HR professionals have an
indispensable role to play in the areas of creating strong organizational culture aligning with core
company values ,fostering relation ship that is sensitive to the community culture, engaging
every employee in active community activities, and assessing the environment in order to
identify threats to the community.

HR professionals need to co-ordinate the CSR activities and demonstrate company‘s

commitment to CSR. Effective CSR depends on being seen as important throughout an
organization. HR professional need to include CSR in an organizational culture to make a change
to actions and attitudes and ensure the support of the top team which is critical factor to success.
HR should communicate; implement ideas, policies, cultural and behavioural change across
organization. HR is also responsible for the key systems and processes underpinning effective
delivery.

The way a company treats its employees contributes directly to the company being seen as
willing to accept organizations wider responsibilities. Building credibility and trusting their
employer are being increasingly seen as important by employees when they choose who they
want to work for. HR manager should instill individual social responsibility in every employee in
the organization. He should make employees aware that every single person in the society has
responsibility to the society they belong irrespective of the job, class, caste or gender. HR should
make employees think that only when one fulfils or at least do the sincere attempts to do so, one
can lead a complacent life in the society. HR team can motivate the employees to contribute a
certain amount or few hours in a period of time to any organization worth. Even one can start
with helping the needy in their neighbourhood.

Human Resource Departments play a critical role in ensuring that the company adopts Corporate
Social Responsibility programs. Furthermore, HR can manage the CSR plan implementation and
monitor its adoption proactively, while documenting (and celebrating) its success throughout the
company. Human Resources technology can help with a Corporate Social Responsibility
program, including reducing the company‘s carbon footprint to benefit the planet. Start with
these areas:

 Implement and encourage green practices.

 Foster a culture of social responsibility.
 Celebrate successes.
 Share and communicate the value of corporate social responsibility to employees and the
community.

Challenges In HR Involvement With CSR

 HR has to understand how CSR strategy is aligned to business and HR practices.HR has
to get endorsement for the CSR strategy from inside and outside the organization and
communicate consistently.
 HR needs to ensure that their organization CSR can stand up to the inevitable scrutiny by
stake holders and that training and communication mean its embedded throughout the
culture of an organization
 HR needs to be an active business partner working with other functions like finance,
public relations, marketing etc.
 HR has to implement CSR as a strategic opportunity which should be market-led and It
should be restrained by bureaucracy. Because trust build through successful CSR is hard
to regain if lost.
  HR has to get the Top team on board and know how to sell benefits of CSR to different
stakeholders.
 HR has to develop CSR code based laws and regulations of the country and also ensure
that reporting systems are accountable and transparent.
 HR has to look for ways to leverage social responsibility initiatives internally.
Communicate the contributions company is making in the community and get employees
involved.
 The separation of employees during mergers, acquisitions, downsizing etc. should be
strategically aligned with the business strategy as well as Corporate Social responsibility.
Retraining, retention, redeployment of people can be worked out with aggressive
communication, information campaigns and outplacement services in place to assist the
transition of people from the organization.
 The Human Resource department should effectively measure and evaluate CSR
activities. The value added by CSR in the form of direct results, such as, economic
savings and indirect results like increase in employee satisfaction, less employee
turnover, measured by staff attitude surveys, shall indicate contribution to improved
business performance. There is also a need to conduct periodic review of the CSR
activities

Recommendations
 The HR department should take the responsibility to develop a formal policy on
sustainable practices involving employees.
 The orientation programme of newly recruited candidates should be designed in a manner
that corporate philosophy about CSR gets highlighted. The commitment of top
management towards CSR is very important which should be expressed in tangible terms
to reinforce the right kind of behaviour in the organization.
 The Training facilities may also be made available to instil the CSR culture among
employees. This becomes necessary to make employees learn and practice CSR
activities.
  Responsible Human Resource Management practices on equal opportunities, diversity
management, whistle blowing, redundancy, human rights, harassment shall give
credibility to the CSR initiatives of the organization. It is beyond doubt that protecting
human rights such as denial or prevention of legal or social rights of workers is a very
important issue under CSR.
 The separation of employees during mergers, acquisitions, downsizing etc. should be
strategically aligned with the business strategy as well as Corporate Social responsibility.
Retraining, retention, redeployment of people can be worked out with aggressive
communication, information campaigns and outplacement services in place to assist the
transition of people from the organization.
 The Human Resource department should effectively measure and evaluate CSR
activities. The value added by CSR in the form of direct results, such as, economic
savings and indirect results like increase in employee satisfaction, less employee
turnover, measured by staff attitude surveys, shall indicate contribution to improved
business performance. There is also a need to conduct periodic review of the CSR
activities.
 CSR activities are generally designed by top management. The HR role is only the
execution of those plans .It is known that HR role in every organization is vital, so HR
role cannot be isolated from any other in organization. So HR should take the job of CSR
activities. Through HR CSR can be given credibility and aligned with how business run.
 CSR can be integrated in to processes such as employer brand, recruitment, appraisal,
retention, motivation, rewards, internal communication diversity, coaching and training.
 CSR is a strategic opportunity which is market -led and is restrained by bureaucracy. It
needs dynamism, creativity, imagination and even oppurtunitism.
 Indian companies have to be sensitized to CSR in the right perspective in order to
facilitate and create an enabling environment for equitable partnership between civil
society and business.

Conclusion
It is a foregone conclusion that business enterprises have social obligations. Instead of single
objective enterprises are required to pay attention to multiple objectives like social,
environmental, information and ethical objectives all of which are integrated. Indian enterprises
must graduate from thinking in terms of just charity to the concept of respectability. More
particularly, HR activities must realize that neither office nor position gives immunity from
responsibility. It is important to link HR with external environment to chart out a better future for
the society. “C” no longer stands for Corporate and Cash, now it also includes Care and
Community development as socially responsible enterprises help in building a better tomorrow
for the underprivileged. Companies must earn respect and affection of the community through
good deeds and enlightened HR policies.

CSR activities undoubtedly enhance the reputation, respect and the brand image of the company
in the place they operate. This would inevitably improve their profitability, attract, and retain
talent, increase savings, institute diversity and establish their strong foothold in their sphere of
operation. In a larger sense, they ensure a better world for the generations to come. Moreover, an
individual can significantly grow and learn by participating and connecting with the society.
Individuals gain self- confidence and self-esteem by helping others. HR is a key organizational
leader and can take the lead or partner with other executives to work cross-functionally to
integrate CSR objectives into how business gets conducted. All will agree that effective HR
leadership on CSR integration requires Board, CEO and executive commitment to be successful.
The insights, knowledge and tremendous satisfaction one derives can be more enriching than
monetary awards. It is the HR Professionals who can instil, nourish and stress the importance of
CSR activities to the employees and management of the organization and make it a reality.
However, more and more organizations are committing to sustainability and to embedding CSR
into “all that we do”, so it is hoped the 10 steps provide some guidance as to how to go about
doing this. The firm of the future is expected to have undergone significant transformation such
that CSR no longer becomes managed as a separate deliverable, but is part of the experience of
being an employee in an organization that lives its values. For human resource professionals
embarking on CSR or deepening their CSR experience, this roadmap can help them understand
their role in sustainability and CSR and how they can foster an environment that embeds a CSR
ethic in “the way we do business around here”.
References