Corporate Social Responsibility

Introduction:
Since 1991 we have seen the needs of business and social in general. It is the time
period in India where numerous companies then started knowing the importance of business
involvement in the community. This began to grow and recently Corporate Social
Responsibility became the important part of business process. Companies Act 2013 has
introduced many new provisions which changed the face of Indian Corporate Business.
Among those one such new provision is Corporate Social Responsibility. The concept of
Corporate Social Responsibility rests on the ideas of give and take. Companies take valuable
resources in the form of raw material, human resources etc. from the society. By achieving
the task of Corporate Social Responsibility activities the companies are giving something
back to the society. There are some criterias for companies who can do Corporate Social
Responsibility. Under Section 135 of Companies Act 2013 the threshold limit for Corporate
Social Responsibility to a company is a) Net worth of the company to be Rs.500 crores or
more, b) Turnover of the company to be Rs.1000 crores or more, c) Net profit of the company
to be Rs 5 Crores or more. India is a country where the Corporate Social Responsibility is
mandatory to spend. The board of committee will ensure that the company spends at least
spend 2% of the average net profits of the company made during every financial year.
Every Company Public, Private or even owned by a foreign company, above certain
size thresholds shall spend at least 2% of its average net profit on Corporate Social
Responsibility activities. If the company fails to spend such amount on Corporate Social
Responsibility activities the board shall specify the reasons for not spending the amount. The
company to constitute Corporate Social Responsibility committee should be 3 or more
directors at least one should be independent among them. Corporate Social Responsibility
committee will formulate and monitor CSR policy & recommend expenditure. Only projects
or activities that are undertaken in India only will be considered as CSR. Activities which
only benefit the employees in the company will not be considered as CSR. Contributions
directly or indirectly to political party will not be considered as CSR activity. Events such as
marathons, awards, charitable contribution, advertisement, sponsorships of tv programs etc.
will not be considered as a CSR activity. Expenditure on building Corporate Social

Responsibility capacities and training should not exceed 5% of total amount spent in one
financial year for CSR.
Stakeholder Engagement:
Stakeholders are the people or groups having the power to respond to negotiate with
and change the strategic decisions for future in the organizations. The stakeholders have the
capability to influence the organization. There is a lot of difference between communication
and engagement whereas communication is one-way information sharing and engagement is
a two-way communication, it provides information and seek input. Engagement is
conversational and interactive. Stakeholder engagement is the process which is being used by
the organizations to engage relevant stakeholders for a purpose to get the ultimate final
outcomes. The long term value of a company depends upon the knowledge, abilities and
commitment of its employees and also its relationships with investors, customers and other
stakeholders. Loyal Relationships are mainly dependent up on how a company is observed to
create value which will be beyond the normal transactions. If the stakeholders relationship is
maintained loyal then these relationships become one of the most important determinants of
commercial viability and success of business.
Why do we need Stakeholder Engagement?
We need Stakeholder Engagement for Social License. i.e you can have all the legal
and regulatory approvals you want. Unless you have the support of the society or social
license you cannot do anything. We will face many oppositions. But if we have social license
then the oppositions turn into support. Then comes trust. If you are from trusted organization
people will believe positive information when they hear you. Most of the people will believe
if they trust you. Only less percentage of people will believe in negative information. Then
comes economics. When traded companies do stakeholder engagement publicly their market
valuation increases.
Benefits of Stakeholder Engagement:
There are many benefits of stakeholder engagement. Some of them are when you have
good stakeholder engagement then a lot of money and time will be saved, conflicts will
reduce, effective decision making, share the responsibility, better outcomes and policy,
manage the issues, build credibility and trust.

There are Six stages of Stakeholder Engagement. They are mentioned as below

Set Engagement Objectives:

The objectives will have a lot of impact. While setting the objectives they should be careful.
The objectives should be made keeping the goals in point of view. These objectives gives the
final ultimate result.
Identify and Assess stakeholders:
It might help to set them against a backdrop of interest and influence. That helps determine
which groups and individuals require the most effort. Level of interest depends upon level of
influence.
Develop Engagement plan:
To develop engagement plan you have to design the strategy. Develop key messages. Plan
activities and align your engagement strategy with the goals of the project.
Implement Engagement plan:
After developing the engagement plan now implement engagement plan. The implementation
plan can be if they communicate, be inclusive, ensure clarity, engage early and often, honest
and transparency
Evaluate Results:
Evaluate the results and collect the feedback, ask specific questions.
Adjust and Correction:
If any changes require adjust them and correct. After making necessary correction and ensure
that you communicate back to stakeholders and continue to address the issues through the
project.

Why Stakeholder engagement is a success key to CSR

Since many years standard corporate practice has been provide and develop CSR &
sustainability programs with minimal engagement. For many companies CSR has become to

recognize as a growing area of strategic value creation. Almost all the companies report
having a CSR program. Many companies are achieving positive results. Today many
stakeholder engagement programs are tick-box approaches conciliate two elements. The first
element is listening and second element is promotion. An example of effective stakeholder
engagement and collaboration around ensuring transparency and accountability:
Sources of value creation:
Resilience: Tracking social political and environment issues.
Reputation: Monitoring and managing stakeholder expectations.
Alignment: Understanding stakeholder values and ensuring CSR program impact.
Strategy: Sourcing the wisdom of the crowd and co-creating solution.
Benefit/Opportunity of Engaging:
Resilience: *Issue Identification
*Preparation: Mitigation & adaption
*Co-creation and collaboration on solutions.
Reputation: *Reputation capital
*Trust and Reputation management
Alignment: *Optimize and validate program investment.
*Increased budget and Reinforcement of results.
Strategy: *Innovation & differentiation
*Capture market opportunities as they emerge.
*Co-Create and collaborate.
Cost/Risk of under-engaging:
Resilience: *Absence or loss of trust and stock market issues.
*Negative media & lack of preparation for crises.
Reputation: *Unmet expectations.

*Crisis & damage control

Alignment: *Ineffective impact /results.
*Demotivated team and Difficulty justifying budget.
Strategy: *Missed business opportunities & loss of market shares.
*Stagnant revenue growth.
Whats possible?
Resilience: The ability for both the business and its operating environment to resist impacts.
Renewable Reputation: A potentially limitless source of reputation capital.
Virtuous Value Creation: Alignment and stakeholder relevance increase measureable results,
investment and in turn social good.
Sustainable competitive Advantage: A generous source of ideas to improve business
outcomes.

NAME: V. Sai Gowthami

Roll No: 1225314107
MHRM