Corporate Social

UNIT 14 CORPORATE SOCIAL Responsibility and

Ethics
RESPONSIBILITY AND ETHICS

Objectives
When you have studied this unit, you will be able to:

• Understand the concepts of CSR and ethics.

• Explain the evolution of CSR legislation in India with its benefits and
drivers.
• Discuss the salient features of The Companies Act 2013 and CSR
guidelines under the act.
• Interpret CSR from different ethical viewpoints.

Structure

14.1 Introduction
14.2 Meaning and Evolution of CSR
14.3 Evolution of CSR Legislation in India
14.4 Benefits and Drivers of CSR
14.5 Ethics in the Context of CSR
14.6 Ethical Views or Theories
14.7 Case Study: Tata Motors Limited and CSR
14.8 Summary
14.9 Keywords
14.10 Self Assessment Exercises
14.11 References /Further Readings

14.1 INTRODUCTION
You may be aware that ethics denote the concepts of right and wrong
behaviour in general. In business or corporate terms, ethics is a form of
professional behaviour, existing organizational standards, principles, sets of
values and norms. In the context of corporate social responsibility (CSR), an
ethical business must act responsibly for the betterment of the social system
in which it operates even at the cost of profits or other goals of the business.
The CSR is an attempt to supplement the government’s efforts of equitably
delivering the benefits of growth and to engage the corporate sector in
inclusive and sustainable development.
Usually the corporate ethics and CSR originates from:

a. Individuals 281
Organisational b. Organizational statements, and
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c. Legal obligations.
At the individual and organizational levels, the CSR is not a novel concept
for Indian companies, as several of them have been practicing CSR
voluntarily in the form of Philanthropy. However, with the enactment of the
Companies Act, 2013 the mandate for CSR has been formally introduced to
the Indian companies as a legal obligation. Now the corporate sector has
accepted the CSR as one of the core functions of management and
implementing the CSR programmes across the Indian and multinational
companies - both in public and private sectors.

Keeping this in view, this unit will consider the meaning, evolution,
legislation, benefits and drivers of CSR, ethics and ethical views / theories
vis-a-vis CSR.

14.2 MEANING AND EVOLUTION OF CSR

Over the decades, the focus of the companies have shifted from single bottom
line approach of profitability to integration of financial, social and
environmental concerns in business operations of companies. This
transformation, either voluntarily or as a mandatory legal obligation, is the
essence of CSR evolution.
The CSR is a strategic business management concept generally understood as
being the way through which a company achieves a balance of economic,
environmental and social imperatives (Triple-Bottom-Line-Approach), while
at the same time addressing the expectations of shareholders (UNIDO).
Furthermore, the concept implies the need for businesses to go beyond the
law to protect the interest of all its stakeholders, such as the environment,
their employees, and the communities they operate within (University of
Texas, 2018).

Following are some definitions which reflect the evolution of CSR over the
decades:

• Obligations of businessmen to pursue those policies, to make those

decisions, or to follow those lines of action which are desirable in terms
of the objectives and values of our society – Horward R Bowen (1950s)
• Businessmen’s decisions and actions taken for reasons at least partially
beyond the firm’s direct economic or technical interest - Keith Davis
(1960s).
• The idea of social responsibilities supposes that the corporation has not
only economic and legal obligations but also certain responsibilities to
society
which extend beyond these obligations – Joseph W. McGuire (1960s).
• Three concentric circle definition of CSR - The inner circle includes the
clear-cut basic responsibilities for the efficient execution of the economic
282 function (products, jobs and economic growth). The intermediate circle
 Corporate Social
encompasses responsibility to exercise this economic function with a Responsibility and
sensitive awareness of changing social values and priorities Ethics
(environmental conservation; hiring and relations with employees; and
more rigorous expectations of customers for information, fair treatment,
and protection from injury). The outer circle outlines newly emerging
and still amorphous responsibilities that businesses should assume to
become more broadly involved in actively improving the social
environment (poverty and urban blight) – CED (1970s).
• The social responsibility of business encompasses the economic, legal,
ethical, and discretionary expectations that society has of organizations
at a given point in time – Caroll (1979).
• The CSR should not be seen as a set of outcomes but as a process that
corporations have an obligation to constituent groups in society other
than stockholders, and beyond that which is prescribed by law and union
contract - Thomas M Jones (1980s).
• An organization’s responsibility for the impacts of its decisions and
activities on society and the environment, through transparent and ethical
behaviour that: contributes to sustainable development, including health
and the welfare of society; takes into account the expectations of
stakeholders; is in compliance with applicable law and consistent with
international norms of behaviour; and is integrated throughout the
organization and implemented in its relations - ISO 26000 Standards on
Social Responsibilities of Organizations (2010).
Late 1980s and 1990s saw a quest to widen the concept and go beyond CSR
with wider acceptance of the concept of Corporate Social Performance,
Stakeholder theory, Business Ethics theory and Corporate Citizenship. The
2000 onwards has been the era of defining the CSR activities, and about
legally regulating CSR.

Thus, the concept of CSR has evolved beyond the economic component over
the years to encompass employees’ satisfaction, work safety, community,
environment, responsibility, responsiveness, social, ethical, voluntary and
legal obligation aspects. This evolution accepted the fact that CSR involves
cost which may not give any direct or measurable economic returns.

The CSR perspectives in selected countries is summarised in Box for your

comprehension.

CSR Perspectives in Selected Countries

USA: CSR is about taking personal responsibility for your actions and
the impact that you have on society. Companies and employees must
undergo a personal transformation, re-examine their roles, their
responsibilities and increase their level of accountability.
The Netherlands: CSR is about making a leadership commitment to core
values and recognizing local and cultural differences when implementing
global policies. It’s about companies endorsing the UN Convention on
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Organisational Human Rights and the ILO Rights at Work.
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Taiwan: CSR is the contribution to the development of natural and
human capital, in addition to just making a profit.
Thailand: CSR must be locally relevant and meaningful only if backed
up by action.
The Philippines: CSR is about business giving back to society.
Brazil: CSR is about commitment to strive for the best economic
development for the community, to respect workers and build their
capacities, to protect the environment and to help create frameworks
where ethical business can prosper.
Argentina: CSR is about a corporation’s ability to respond to social
challenges. It starts with developing good relations with neighbours.
Companies should make a strong commitment to education, worker
rights, capacity building, and job security. CSR is stimulating the
economic development of a community.
Ghana: CSR is about capacity building for sustainable livelihoods. It
respects cultural differences and finds the business opportunities in
building the skills of employees, the community and the government.
India: CSR urges businesses to embrace the “triple-bottom-line”
approach whereby its financial performance can be harmonized with the
expectations of society, the environment and the many stakeholders it
interfaces with in a sustainable manner.
Source: World Business Council for Sustainable Development (WBCSD),
2000); MCA, Government of India (2011).

14.3 EVOLUTION OF CSR LEGISLATION IN

INDIA
The major developments in the evolution of CSR from a voluntary practice to
regulatory mechanism are summarised in Box.

Evolution of CSR in India – Major Developments

• Long tradition of philanthropy and social activities.
• Issuance of CSR Voluntary Guidelines (2009).
o Ethical functioning
o Human rights
o Worker’s rights
o Environmental considerations
o Stakeholder welfare
• Guidelines on CSR for Central Public Sector Enterprises (2010).
• National Voluntary guidelines of Social, Environmental and Economic
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 Corporate Social
Responsibilities of Business (2011) Responsibility and
Ethics
o Nine principles of CSR based on the ‘apply or explain’ approach.
• Enactment of Section 135 of the Companies Act (2013) to make CSR
spending and disclosure mandatory.

National Voluntary Guidelines

The National Voluntary Guidelines (NVGs) on social, environmental and
economic responsibilities of business were laid down by the Ministry of
Corporate Affairs to help the corporate to formulate objectives keeping in
consideration their impact on stakeholders and environment (Box).

The Nine Principles of National Voluntary Guidelines

1. Businesses should conduct and govern themselves with ethics,
transparency, and accountability.
2. Businesses should provide goods and services that are safe and
contribute to sustainability throughout their life cycles.
3. Businesses should promote the wellbeing of all the employees.
4. Businesses should respect the interests of and be responsive towards
all stakeholders, especially those who are disadvantaged, vulnerable
and marginalized.
5. Businesses should respect and promote human rights.
6. Business should respect, protect, and make efforts to restore the
environment.
7. Businesses when engaged in influencing public and regulatory policy
should do so in a responsible manner.
8. Businesses should support inclusive growth and equitable
development.
9. Businesses should engage with and provide value to their customers
and consumers in a responsible manner.
(Source: Khandelwal, 2011)

The Companies Act 2013 and CSR (Source: www.mca.gov.in)

The Companies Act 2013 and CSR guidelines under the act are briefly
summarised below for your comprehension.

The Act: The inclusion of the CSR mandate under the Companies Act, 2013
is an attempt to supplement the government’s efforts of equitably delivering
the benefits of growth and to engage the Corporate World with the country’s
development agenda. The Companies in India are governed by Clause 135 of
the Companies Act 2013 for performing their CSR activities.

Section 135: Section 135 of the Companies Act 2013 lays down that:

• The companies with an annual turnover of 1,000 crore INR and more, or
a net worth of Rs. 500 crore and more, or a net profit of Rs. 5 crore and 285
Organisational more shall constitute a CSR Committee of the Board consisting of 3 or
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more directors of which one will be an independent director.
• The CSR Committee will be responsible to:
i. formulate and recommend to the Board, a CSR Policy which shall
indicate the activities to be undertaken by the company as specified in
Schedule VII;
ii. recommend the amount of expenditure to be incurred on the activities
referred above; and
iii. monitor the CSR policy of the company from time to time.
• The Board of every company shall
i. after taking into account the recommendations made by the CSR
Committee, approve the CSR Policy for the company and disclose
contents of such Policy in its report and place it on the company’s
website, if any, in such manner as may be prescribed; and
ii. ensure that the activities as are included in CSR Policy of the company
are undertaken by the company.
• It is also the duty of the Board to ensure that the company spends two
percent of the average net profits made by the company in the preceding
three financial years and while spending the CSR amount, giving
preference to local areas where it operates.
• If the company fails to spend the amount, the Board in its report shall
specify the reasons for not spending the same.
Though section 135 makes CSR spending and reporting mandatory, it gives
flexibility to the companies to choose the CSR activities from the list of
activities that the corporate can potentially undertake.
The CSR Rules, 2014 A set of rules framed under section 135 of the Act,
came into force on 1st April, 2014. It lays down rule for the following:

CSR Activities
• The CSR activities taken up by the companies will be as per the stated
CSR policy and activities taken up by the company under its normal
course of business will be excluded from CSR activities.
• A company can implement the CSR activities approved by the CSR
committee either on its own or through a non-profit foundation set up by
the company to facilitate this initiative or through an independently
registered non-profit organization that has a record of being into such
activities for at least three years or in collaboration with other
companies.
• The activities undertaken in India will only be considered under the CSR
activities.
• Spending on activities that benefit only the employees of the company,
also known as self-serving expenditure will not be considered as CSR
286 spending.
• The companies are free to spend on capacity building of their employees Corporate Social
Responsibility and
but the expenditure should not be more than 5 percent of the total CSR Ethics
expenditure in any particular year.
• Contribution to political parties will also not be considered as CSR
activity.
• The income generated from the CSR activities should be credited back to
the community or CSR corpus and this would be over and above the
mandatory 2% of profit.

CSR Committee

• The companies which are bound by the CSR clause are required to
constitute a CSR committee of the Board consisting of 3 or more
directors of which one will be an independent director.
• A private company with only two directors on its Board will have
only two directors in the CSR Committee and in case of foreign
company, the Committee will have at least two persons of which
one will be an authorized person residing in India and the other will
be nominated by the foreign company.

CSR Policy
• The CSR policy of a company will include:
o List of projects or programmes within the Schedule VII of the Act
which the company will undertake, along with the implementation
schedules and other modalities.
o Monitoring process of these programmes.
• The policy will also specify that the surplus generated from the CSR
programmes will not be a part of the business profit of the company.

CSR Expenditure
• All expenses including contribution to the corpus for programmes
relating to CSR activities approved by the board will be included as CSR
activities provided, they are in conformity with the activities which fall
within the purview of Schedule VII of the Act.
• The rules also provide a format for the board report on CSR which
includes reasons for spending of less than 2 % of the average net profits
of previous three years and a responsibility statement stating that the
company’s CSR policy, implementation and monitoring mechanism are
in accordance with the CSR objectives. The report is signed by the CEO,
MD, or Director of the company.

Display of CSR Activities on its Website

• The Board of Directors shall disclose the content of the CSR policy in its
report as well as on the company’s website as per the particulars
specified.

Schedule VII The Schedule VII of the Companies Act provides a list of 287
Organisational activities which can be included by companies in their CSR policies where
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the CSR spending can be done. These activities relate to:

1. Eradicating extreme hunger and poverty;

2. Promotion of education;
3. Promoting gender equality and empowering women;
4. Reducing child mortality and improving maternal health;
5. Combating human immuno deficiency virus, acquired immune
deficiency syndrome, malaria, and other diseases;
6. Ensuring environmental sustainability;
7. Employment enhancing vocational skills;
8. Social business projects;
9. Contribution to the Prime Minister’s National Relief Fund or any other
fund set up by the Central Government or the State Governments for
socio-economic development and relief and funds for the welfare of the
Scheduled Castes, the Scheduled Tribes, other backward classes,
minorities, and women; and
10. Such other matters as may be prescribed

14.4 BENEFITS AND DRIVERS OF CSR

Benefits of CSR
The CSR offers multiple benefits to firms, including long-term self-interest
(in the form of higher profit), enhanced public image, and greater stakeholder
interest (Davis, 1973). As per CII (2013), CSR is becoming increasingly
important for businesses due to the following benefits:
• Communities provide the license to operate: The CSR behaviour of
corporate is not just driven by their values but are also influenced by the
stakeholders like government, investors, customers and community.
Today’s corporate understands that the license to operate in any
particular area is not just given by the government but also by the
communities that get impacted by the activities of these companies. A
strong CSR programme provides the companies with the license to
operate and to maintain the trust of the local community.
• Attracting and retaining employees: The CSR interventions that help
the employees to participate give them a sense of belongingness to the
company. Good CSR initiatives can attract employees to the company
and give them the incentive to remain motivated and committed to the
company.
• Communities as suppliers: There are instances wherein as a part of
CSR activities, the communities have been incorporated into the supply
chain to enhance their livelihood. Such initiatives have helped in
increasing their incomes and ensuring the companies with a steady and
288 secure supply chain.
• Enhancing corporate reputation: When the companies position Corporate Social
Responsibility and
themselves as responsible corporate citizens, it creates good will and a Ethics
positive image, thereby helping them to enhance their brand image in the
market.

Drivers of CSR
According to the KPMG (2011) survey, the top ten drivers motivating the
corporations to engage in CSR are:

1. Economic considerations
2. Ethical considerations
3. Innovation and learning
4. Employee motivation
5. Risk management or risk reduction
6. Access to capital or increased shareholder value
7. Reputation or brand
8. Market position or share
9. Strengthened supplier relationships
10. Cost saving

Building a positive brand image, government regulations, alleviation of

environmental issues, survival and growth, employee satisfaction and
consumer awareness are other drivers of CSR for various companies.
It is now to the discussion on Ethics related to CSR that we will turn in the
next section.
Before we proceed, please complete activities 1 & 2.

Activity 1 (Visit and Discussion): Visit a nearby corporate company’s CSR

department and find out various CSR projects started by them. Compare them
with Schedule VII activities mentioned in the above section. Write your
observations on compliance.
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Activity 2 (Visit and Discussion): In continuation of the Activity 1, discuss

the benefits of CSR to the company. Compare their response with the benefits
discussed in the above section and write your observations.

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Organisational …………………………………………………………………………………
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14.5 ETHICS IN THE CONTEXT OF CSR

Ethics in the context of CSR can be defined as a set of moral reactions or
principles that serve as a guide for individual or organization’s actions /
activities related to CSR. Ethics is about reasoning and is important to
corporate companies as it allows them to make rational decisions about
appropriate CSR programmes. Ethics considers what is right and wrong
about the ways companies take-up CSR programmes. Unlike some of the
management functions you have read in earlier units, the ethical questions
cannot be solely realistic, but are based on moral priorities which can be
discussed and debated. If we undertake CSR programmes solely based on our
feelings (e.g. stating ‘I don’t like legal obligations in the way of implementing
CSR programmes’) these cannot be properly debated as it is merely an
expression of opinion. If however, we state that something is ‘morally right
or wrong’ we need to be able to support that with reasoned arguments that
justifies these views. Further, not only should these be reasoned but they
should be applicable consistently in different CSR contexts.
Below we will consider the different ethical theories or views, particularly in
their application to CSR. However, it is worth firstly briefly discussing the
following types of ethics that we may be exposed to in our day-to-day lives:

1. Personal ethics
2. Professional ethics
3. Organisational ethics

Personal Ethics
Individuals working in corporate sector will have their own personal views
on what is right or wrong. When we discuss different ethical theories below,
we are likely to be drawn to one or more of these more strongly than others.
We can see this within corporate sector, many employees might find
spending on CSR morally acceptable, whereas few others do not. Despite our
personal ethical views on CSR sometimes we need to abide by other ethical
codes, which may differ from our personal ethics.

Professional Ethics
Professional ethics are those accepted codes of practice held by a particular
group of people or professions. For example, doctors swear an oath on
joining their profession, which can be interpreted as the ethical or moral
principles by which the practice of their profession is governed across the
country. Unlike doctors, management professionals have no universal and
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enforceable code of conduct. However, individual companies may write and Corporate Social
Responsibility and
enforce managerial ethics / corporate codes / value statements. These are a set Ethics
of principles and rules dictated usually by upper management that define
what is right and what is wrong in an organization. It is the guideline that
helps direct a lower manager's decisions in the scope of CSR job when a
conflict of values is presented. These set out the ethical view of the
profession and should overtake any personal ethical viewpoints if they
conflict with these statements while taking up CSR activities.

Organisational Ethics
Some organisations or companies may also have ethical or moral principles.
Sometimes these might be referred to as organisational ‘values’ or social
responsibilities. For some companies, these can be very important if these are
part of what makes them unique or different to other companies offering
similar services. For example, Tata Motors’ CSR Mission states that “To be a
responsible corporate citizen by driving inclusive growth with social equity,
strengthening sustainable development and an active participant in nation
building process”. The CSR at Tata Motors is underpinned by ‘More from
Less for More’ ethical philosophy which implies striving to achieve greater
impacts, outcomes and outputs from CSR projects and programmes by
judicious investment and utilization of financial and human resources,
engaging in like-minded stakeholder partnerships for higher outreach
benefitting more lives. Tata Motors would expect their employees to support
organisational ethical views, regardless of their personal ethical perspectives
related to CSR.
Before we proceed, please complete activities 3 & 4.

Activity 3 (Discussion): Visit a nearby CSR department of a company or an

NGO handling CSR projects and discuss about conflicting personal,
professional and organizational ethics related to CSR work. How do they
handle those conflicts? Compare their responses to the discussion given in
the section above and write your observations:

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Organisational
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Activity 4 (Review): Browse the website of any corporate company having
an ethical business policy. Write your findings on the following:

(a) What is the company’s ethical policy?

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(b) Why do business ethics matter to the company?
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(c) Approach to improve business ethics (e.g. transparency, communication
etc)
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(d) Actions to improve business ethics (e.g. standards, social audit etc)
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(e) Any other observation:

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 Corporate Social
14.6 ETHICAL VIEWS OR THEORIES Responsibility and
Ethics
There are differing ethical views or theories distinguished by moral
philosophers which could apply to business organizations as well while
undertaking CSR activities. Some of these are contrasting positions, which
might lead to markedly different positions about what is acceptable and what
is not acceptable in business. The following three views / theories are widely
described positions when considering business and CSR.
1. Contractarian view
2. Utilitarianism / Consequentialism view
3. Deontology view

Contractarian View
The key principle of this view is: ‘Morality is based on agreement’

This view suggests that being moral is in your own self business interest and
agreements. By showing consideration for the CSR developmental activities,
we are really behaving in a way that is for our own business sake. Part of
these arguments suggest that only corporate companies are truly able to make
business contracts, and as poor communities cannot, then corporate
companies only need to treat poor communities effectively. This moral
position suggests that using social system resources for business benefit and
vice versa is acceptable. (Box).

CSR by Suguna Foods vis-a-vis Contractarian View

Suguna Foods is India’s largest poultry enterprise with Rs. 8700+ crore
turnover, which covers over 42,000 farmers from 8,000 + villages in 18
Indian States. Suguna’s pioneering efforts in contract poultry farming helped
create thousands of rural entrepreneurs who share the growth successfully.
"Poultry Integration" introduced and pioneered by Suguna in the country has
energized the livelihoods of farmers in rural India.
CSR Activities of Suguna
The following are the major CSR activities of Suguna group (Source: CSR
Suguna Foods 2020-21):

• Community & Infrastructural Support: Providing education and

training on scientific poultry production, poultry farming, poultry
breeder management, hatchery and incubation techniques, feed
manufacturing and disease control measures through Suguna Institute of
Poultry Management, an educational institution functioning under the
aegis of Suguna Foundation.
• Health Care & Sanitation: Contributing to various charitable causes
that touch the underprivileged in the villages nearby by providing eggs,
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Organisational milk to the Orphanages, Anganwadis and Primary schools at free of cost.
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Engaging with Government bodies/ Establishments / Gram panchayats to
make the neighboring communities healthier by organizing health camps,
providing the essential materials for protection during COVID- 19
pandemic.
• Environmental Sustainability: Making a positive difference to
Environment and contribute its share towards the social cause of
betterment of society including the area in which Company operates by
donating saplings and planting trees.
• The Contractarian ethical view might explain how an individual
person might be treated differently by Suguna Company, both legally
and in terms of accepted approaches. For the company an individual
could be:
• A farmer who supplies raw corn for poultry feed preparation
• A contract farmer who sign an agreement to rear poultry birds for a cost
• A consumer who buys Suguna chicken and egg products
• A CSR beneficiary of Suguna’s foundation (mostly related to poultry
production).
An individual person is same in all above situations, but the view of the
person’s value changes depending on which situation the person is from the
perspective of Suguna company. From Contractarian ethical view, the
majority of CSR activities of Suguna are related to poultry which is the
business focus of the Suguna. This suggests that being moral is in Suguna’s
own self business interest as well.

Utilitarianism / Consequentialism View

The key principle of this view is: ‘Morality is about maximising business and
community well-being’

John Stuart Mill’s contributed greatly to this view of ethics. He said that
“actions are right in proportion as they tend to promote happiness, wrong as
they tend to produce the reverse of happiness”. This theory belongs to a
general category called utilitarianism. At its core, this theory underscores the
importance of utility. Every action is based on a particular goal and
outcomes.

The aim of this view is to maximise the benefits to the community and to
always attempt to bring about the best possible consequences from our
business actions, taking into account all those affected by the decision.
Utilitarianism holds that the most ethical choice is the one that will produce
the greatest good for the greatest number. It is also the most common
approach to moral reasoning used in business because of the way in which it
accounts for costs and benefits. However, because we cannot predict the
future, it’s difficult to know with certainty whether the consequences of our
294 actions will be good or bad. This is one of the limitations of utilitarianism.
The Uniliver’s CSR programme is an example of how utilitarianism can be Corporate Social
Responsibility and
applied (Box). Ethics

CSR by Uniliver vis-a-vis Utilitarianism View

Companies are entities created to make profits and please shareholders. An
ethical dilemma ensues when the company is forced to make a decision to
give back to the community or satisfy the needs of the shareholders. The
investors or shareholders have only one thing in mind and that is to earn a
profit through the money that they invested. However, utilitarianism dictates
that the correct action is the one that can create the “greatest happiness
altogether”. Thus, the company must learn to give back to the community
and spend money in activities that does not generate a profit.
A good example is the CSR programme launched by Uniliver, a
multinational company which sells household products worldwide. A CSR
programme is deemed counterproductive because it requires the use of
corporate funds to finance something that has no direct bearing on the
profitability of the company. But Uniliver demonstrated that there is a way to
handle the conflict that exists between the business aspect of handling
corporations and the need to give back to the community. Uniliver was able
to prove that the application of utilitarianism can benefit the organization and
the community.
In the CSR programme Uniliver hired thousands of Indian women to sell
their products. This programme was initiated in a region that is so remote it is
not practical to send sales representatives in the area. It is a dramatic
demonstration of utilitarianism. In this example the agent has achieved the
greatest good because the agent was able to blend together CSR and the need
to increase revenue. Thus, there is a way to satisfy the requirements of
business ethics while at the same time maintaining a sound economic base. It
erases the fear that an ethical way of doing business can drive a company to
bankruptcy.
Analysis: The CSR programme of Uniliver is the best example of how
utilitarianism can be applied in a real-world setting. In the said programme,
Uniliver benefited from helping others. In a normal way of doing things,
helping people requires sacrifice on the part of the helper. In this case the
company risked very little to accomplish much. Consider for instance the
reaction of one of the beneficiaries who remarked that “she now commands
respect in the village and it is enough to stand on my own two feet”. Without
a doubt the earnings are miniscule but it is enough for women who are so
poor that they are dependent on their husbands for survival.
Utilitarianism has to be interpreted correctly because a mere overview of the
theory can provide a defective understanding of the said ethical theory. The
problem lies in the fact that John Stuart Mill used happiness as a measuring
stick to determine the appropriateness of a particular action. It has to be
clarified that the end goal is not just to attain happiness but to reach a state
where the majority are happy. At the same time the goal includes the need to
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Organisational achieve noble character.
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Uniliver’s CSR programme is a perfect example of how to apply
utilitarianism. It is an action that benefited not only the company but also
thousands of destitute women. It is not just the pursuit of happiness but the
creation of a noble character. The company representatives who went there to
initiate the project and the beneficiaries who now understand the meaning of
independence experienced a transformation in character. The corporate
leaders are happy that they can help curb poverty but the women are ecstatic
that they can have control over their destiny.
Conclusion: Utilitarianism is difficult to apply because it requires not only
the consideration of the majority but also the attainment of noble character. If
it is difficult to accomplish this goal on a personal basis, imagine the
difficulty if applied in a corporate setting. But the CSR programme of
Uniliver is a good starting point because it provides a blueprint that other
companies can emulate. Unilever was able to prove that helping others need
not be disadvantageous for the company and their shareholders. The said
CSR programme is a good example that doing the right thing can lead to
long-term growth and sustainability.
(Source: Studycorgi, 2020)

Deontology View
The key principle of this view is: “morality of an action should be based on
whether the action itself is right or wrong under a series of rules, rather than
based on the consequences of the action”.

Unlike consequentialism, deontological ethics are concerned with what

people do, not the consequences of their actions. The key principles are:

• Do the right thing because it is the right thing to do

• Avoid doing wrong things because they are wrong.

This philosophical position believes that you cannot justify an immoral action
by showing that it produced good consequences (whereas consequentialism
would argue there is no such thing as a moral or immoral action). Thus,
people have a duty to act according to the rights and wrongs of the act,
regardless of the consequences. This view is most famously associated with
the 18th Century philosopher Immanuel Kant. In comparison to
Consequentialists who would consider what things are good and then identify
the right actions to achieve that, Deontologists would first consider the right
actions and then proceed from there.

The India’s CSR policy is summarised from Utilitarian and Deontology View
Points in Box.

India’s CSR Policy vis-a-vis Utilitarian and Deontology View Points

India became the first country to introduce a mandatory CSR policy under the
296 Companies Act (GOI, 2013). Most companies engage in some form of CSR.
 Corporate Social
There are arguments not to make CSR mandatory (by few companies) and Responsibility and
counter arguments to make such activities mandatory (by social activists and Ethics
environment protectors).
The compulsory CSR is ethical from Utilitarian perspective as it benefits the
greater good with more resources, multiple actors in development and
integration of financial, social and environmental concerns in business
operations of companies – popularly known as Triple Bottom Line (TBL).
Deontology ethical view states that companies have duties/responsibilities to
specific stakeholders, and it is the motivations towards these stakeholders that
hold more considerable significance than the actual consequences. Likewise,
a government must consider their duties and responsibilities towards their
citizens before addressing legal declarations. Many deontologists argue that
one of the government’s primary responsibilities is to protect and enforce the
laws; nevertheless, whether the law is ethical or not is still a very
controversial debate. In summary, the Deontology perspective contended that
mandatory CSR is unethical because a government infringes on its citizens’
rights.
In conclusion, mandatory corporate social responsibility can be ethical and
unethical. It depends on an individual or government’s moral values as one
cannot claim that one ethical framework is more reliable than the other.
(Source: Jain, 2020)

Before we proceed, please complete activity 5.

Activity 5 (Review of Literature): Review the internet literature on the three

ethical views / theories. Compare them with the discussion given in the
above section and write the outcome in the following table:
Ethical Views / Key Position towards Position towards
Theories Principle Business CSR
Contractarian

Utilitarianism /
Consequentialism
Deontology

14.7 CASE STUDY: TATA MOTORS LIMITED

AND CSR
Tata Motors Limited (TML), a USD 44 billion organisation, is a leading
global automobile manufacturer of cars, utility vehicles, pick-ups, trucks and
buses. In this case study is presented under the following three parts for your
comprehension:

1. CSR policy of Tata Motors

297
Organisational 2. Reactive CSR Programme Strategy of TML During Covid 19
Processes
3. Understanding Gap in Development Scenario for CSR Intervention by
TML -Tribals Transform from Forest Gatherers to Entrepreneurs
1. Tata Motors Corporate Social Responsibility (CSR) Policy 2021-
2022
As an integral part of our commitment to Good Corporate Citizenship,
we at TATA Motors believe in actively assisting in the improvement of
the quality of life of the people in the communities, giving preference to
local areas around our business operations. We shall continue to
relentlessly strive in our endeavour of nation building, sustainable
development, accelerated inclusive growth and social equity.
The Tata group constitutes a global force not only for doing good
business, but being in the business of doing good for society. We shall
strategically integrate the shouldering of our Social Responsibility with
our pursuit of Business Excellence. Towards achieving long-term
stakeholder value creation, TATA Motors shall always continue to
respect the interests of and be responsive towards its key stakeholders -
the communities, especially those from socially and economically
backward groups, the underprivileged, marginalized and most vulnerable
groups; focused on inter alia the Scheduled Castes and Scheduled Tribes,
Persons with Disability, Women and the society at large.
In our CSR journey towards achieving human development and
excellence, we shall endeavor to deploy TATA Group CSR Programmes
and drive Affirmative Action (AA) agenda and other international
development goals like Sustainable Development Goals (SDGs), in line
with Schedule VII of The Companies Act, 2013 as recommended by the
CSR Committee of the Board and approved by the Board from time to
time.
In order to leverage the demographic dividend of our country,
Company’s CSR efforts shall focus on Health, Education, Employability
and Environment interventions for relevant target groups, ensuring
diversity and giving preference to needy and deserving communities
inhabiting urban and semi urban India. Company shall also develop a
CSR annual action plan covering details of the programme, manner of
execution, modality of utilization, monitoring and reporting mechanism,
and impact assessment, wherever applicable.
The corpus to be spent by TATA Motors on CSR shall include at least
2% of the average net profits of its India Operations for preceding three
financial years. Any surplus arising out of the CSR projects or programs
or activities shall not form part of business profits of the Company. CSR
Policy implementation shall be periodically reviewed and monitored by a
two tiered Governance Structure comprising of Tier I – Board and CSR
Committee of the Board, and Tier II - CSR Team comprising of
Corporate Office, Manufacturing Plants and Commercial Offices.
CSR at Tata Motors shall be underpinned by ‘More from Less for More’
298 philosophy which implies striving to achieve greater impacts, outcomes
 and outputs from our CSR projects and programmes by judicious Corporate Social
Responsibility and
investment and utilization of financial and human resources, engaging in Ethics
like-minded stakeholder partnerships for higher outreach benefitting
more lives. Company shall disburse milestones linked payment to the
CSR implementing partners.
We shall continue to nurture a vibrant culture of volunteering in our
aspiration to leverage our core competencies and managerial,
technological capabilities for CSR. We shall strive to bring innovation to
our CSR initiatives and optimize their effectiveness while seeking to
create a measurable impact of our CSR activities.
2. Reactive CSR Programme Strategy of TML During Covid 19
The Adversity and What TML did differently in 2020-21: Even as the
business sector in India, particularly the auto sector, was recovering from
the slowdown of previous years, the gravest adversity of our times, in the
form of pandemic, disrupted the very way we lived. It disrupted the
Education, Skilling, Health and Employment sectors all over the world.
Schools were shut, students were confined to their home and there was
no certainty of continuity in sight. Skilling institutes were closed,
threatening the vast potential of youth to go untapped, forcing ‘practical
training’ that involves “work with hands” and “learning by doing” to
take a backseat. The focus of the entire health sector shrunk to battling
Covid.
Adversity Rewires: The current year and Covid-19 brought
unprecedented and unforeseen challenges in all aspects of human life,
globally. In navigating the challenges the TML CSR team, its partners
and most importantly the community not only demonstrated resilience
but also unexpected creativity and spontaneity, relinquishing well-worn
paths to embrace a gratifying level of empowerment, which not only led
to projects staying well on track but also the dramatic scaling up of some
initiatives.
Aspirations Accelerate: Partnerships, sustainability, scalability and
technology have been the bedrock of TML’s CSR reactive programmes.
In the early days of the lockdown, it became evident that TML’s core
tenet of building sustainability into its programmes and emphasis on
greater community ownership had sufficiently prepared communities to
shoulder greater responsibility with handholding from the CSR team. A
reactive or rewired process of working allowed a range of initiatives to
take on new dimensions and scale.
Outcomes Soar: Rather than be constrained by the challenges of Covid,
the ability to leverage technology, harness resources and work with
partners propelled outcomes in multiple programmes and initiatives to
levels higher than anticipated during pre-Covid times.
3. Understanding Gap in Development Scenario for CSR Intervention
by TML -Tribals Transform from Forest Gatherers to
Entrepreneurs
It was a simple berry that helped tribals in the Bhimashankar sub-belt of 299
Organisational Maharashtra near Pune sustain themselves through the lockdown
Processes
imposed due to Covid-19. The berry, a non-timber forest produce,
though has great commercial value as an ingredient in Ayurvedic
medicines such as Triphala and in the leather tannery business. The
tribals who collected and sold the berries were at the brink of survival
during the lockdown. Tata Motors intervened to organise them into a
Farmers Producers organisation, comprising 26 Self Help Groups, to not
only sustain them through the lockdown but also take a first step towards
financial resilience.
Approach: This non-timber forest produce, the Hirda berry grows in
abundance in Bhimashankar, where 600 to 700 tonnes of berries is
produced every year. Yet, the tribals are not allowed to sell this produce
in bulk because of it being designated a common property resource.
During the non-farming season they labour to collect the berries to
sustain themselves, and then may be forced to make distress sales to feed
their families. This compulsion to sell Hirda at abysmally low prices
became even more acute during the lockdown. To prevent them from
descending into abject poverty and to protect their incomes, Tata Motors
encouraged them to create a formal social enterprise, collaborating with
Shashwat, a NGO, to help the tribal communities form a Farmers
Producer Organisation (FPO). The initiatives were based on Felt Needs
and the Support required.
This collective brought together 26 Self-Help Groups and 400 families
within it, which was registered with the purpose of engaging in
commercial transactions of Non Timber Forest Produce. The members of
the FPO have been trained and also assisted in establishing a revolving
fund for their working capital needs.
Impact: The FPO sold 25 tonnes of fruits worth Rs 50 lakhs from till
March 2021, yielding an assured income of Rs 5000/- per quarter to each
farmer and giving their families the ability to sustain themselves through
the lockdown. The FPO created by the farmers has earned a revenue of
Rs 4.4 lakhs in the FY 2020-21.
Based on its ‘More from Less for More’ approach, Tata Motors currently
manages 66 per cent of the sales and the beneficiaries are responsible for
34 per cent. Over the next three years or by 2023-24, TML will taper
down its contribution to a mere 7 per cent. In the same period, the project
will be scaled up to benefit 600 families by next year and will touch
1000 families by FY 2023-24.

14.8 SUMMARY
In this unit we discussed the concept and development of different facets of
CSR over the decades. We also discussed the evolution of CSR legislation in
India, national voluntary guidelines, how the CSR was made mandatory
under The Companies Act 2013, benefits and drivers of CSR. In the second
part of the unit we discussed the concept of ethics in the context of CSR vis-
a-vis personal, professional and organisational ethics. Later we discussed the
300 three major ethical views or theories viz., contractarian, utilitarianism /
consequentialism and deontology views. At the end we discussed the CSR Corporate Social
Responsibility and
case study of Tata Motors Limited. Ethics

14.9 KEYWORDS
Contractarianism: The view that ethical obligations come about from
mutual agreements or contracts between people.

CSR: The corporate social responsibility of business encompasses the

economic, legal, ethical, and discretionary expectations that society has of
organizations at a given point in time.

Deontology: The key principle of this view is “morality of an action should

be based on whether the action itself is right or wrong under a series of rules,
rather than based on the consequences of the action”.

National Voluntary Guidelines: The National Voluntary Guidelines on

social, environmental and economic responsibilities of business help the
corporate to formulate objectives keeping in consideration their impact on
stakeholders and environment.

Schedule VII: The Schedule VII of the Companies Act provides a list of
activities which can be included by companies in their CSR policies where
the CSR spending can be done.

The Companies Act 2013: The act mandated the CSR which is an attempt
to supplement the government’s efforts of equitably delivering the benefits of
growth and to engage the corporate world with the country’s development
agenda.
Triple Bottom Line: The triple-bottom-line (TBL) is a framework that
recommends that companies commit to focus on social and environmental
concerns along with profits. The TBL posits that instead of one bottom line,
there should be three: profit, people, and the planet.

Utilitarianism / Consequentialism: An ethical approach that advocates that

it is the outcomes of our actions that are important, rather than what we do. It
seeks to maximize the benefits to the greatest number, and to minimize the
costs. This weighs up the relative benefits and costs to all those affected by a
decision.

14.10 SELF ASSESSMENT QUESTIONS

1. What is meant by CSR? Interpret CSR from different ethical viewpoints.
2. Examine the evolution of CSR legislation in India with its benefits and
drivers.
3. Write the National Voluntary Guidelines on social, environmental and
economic responsibilities of business

301
Organisational 4. Discuss the salient features of The Companies Act 2013 and CSR
Processes
guidelines.
5. What do you understand by the terms single bottom line and triple
bottom line approaches of companies related to CSR?
6. Write any one definition of CSR.
7. Name the components of CSR that have evolved over the years.
8. Write the purpose of Clause 135 of the Companies Act 2013.
9. Write any five drivers motivating the corporations to engage in CSR.
10. What is meant by ethics?
11. Why understanding ethics is important in dealing with business?
12. Write briefly the meaning of the following:
a) Personal Ethics:
b) Professional Ethics:
c) Organisational Ethics:
13. Write the key ethical principle in the following views / theories:
a. Contractarian view
b. Utilitarian view
c. Deontology view
14. How the Contractarian view differ from the Utilitarian view?

14.11 REFERENCES/ FURTHER READINGS

Alexander, L., and Moore, M. (2016). Deontological Ethics. In E. N. Zalta
(Ed.), Stanford Encyclopedia of Philosophy. Stanford: Metaphysics Research
Lab, Stanford University.
Bhaduri, S. N. and Selarka, E. (2016). Corporate Governance and Corporate
Social Responsibility of Indian Companies. XV, 134p, Springer.
Brin, P. and Nehme, M.S. (2019). Corporate Social Responsibility: Analysis
of Theories and Models. EUREKA: Social and Humanities 5.
Carroll, A.B. (2008). A History of Corporate Social Responsibility: Concepts
and Practices. In Andrew Crane, Abigail McWilliams, Dirk Matten, Jeremy
Moon & Donald Siegel (eds.) The Oxford Handbook of Corporate Social
Responsibility. Oxford University Press,19-46.
Carroll, A.B. (1999). Corporate Social Responsibility: Evolution of a
Definitional
Construct. Business and Society. 38 (3) pp. 268 - 295.
CII (2013). Handbook of Corporate Social Responsibility in India. PWC Pvt.
Ltd.
GOI (2013). The Companies Act. Ministry of Corporate Affairs, Government
of India. https://www.mca.gov.in/Ministry/pdf/CompaniesAct2013.pdf
302
(Retrieved on 21st August 2021) Corporate Social
Responsibility and
Jain, H. (2020). Mandatory Corporate Social Responsibility: A Utilitarian Ethics

and Deontological Perspective. Open Journal of Business and Management,

8, 2278-2284.
https://doi.org/10.4236/ojbm.2020.85139 (Retrieved on 21st August 2021)
Pradhan, A. K. and Nibedita, B. (2019). The determinants of corporate social
responsibility: Evidence from Indian firms. Global Business Review, pp.1-14.
Study Corgi (2020). Utilitarianism and Corporate Social Responsibility.
https://studycorgi.com/utilitarianism-and-corporate-social-responsibility/
(Retrieved on 21st August 2021).
TML (2021). Annual CSR Report (2020-21), Tata Motars Limited.
https://www.tatamotors.com/wp-
content/uploads/2021/06/30063751/annualcsr-report-2020-21.pdf (Retrieved
on 21st August 2021)
University of Texas (2018). Corporate Social Responsibility. Ethics
Unwrapped.
https://ethicsunwrapped.utexas.edu/glossary/corporate-social-responsibility

303