CSR and Sustainability – Governance, Risk Management, Compliances and Ethics Important Questions

Question 1.
Corporate Social Responsibility (CSR) is also called corporate citizenship or corporate responsibility. Discuss.
Answer:
CSR is a way firms integrate social, environmental and economic concerns into their values, culture, decision making, strategy and operations in a transparent and accountable manner and thereby establish better practices within the firm, create wealth and improve society. CSR is also called Corporate Citizenship or Corporate Responsibility of business.

According to Business for Social Responsibility (BSR) – “Corporate social responsibility is operating a business in a manner which meets or excels the ethical, legal, commercial and public expectations that a society has form the business.”

Business entity is expected to undertake those activities, which are essential for betterment of the society. Every aspect of business has a social dimension. Corporate Social Responsibility means open and transparent business practices that are based on ethical values and respect fop employees, communities and the environment. It is designed to deliver sustainable value to society at large as well as to shareholders.

Question 2.
Justify why ‘corporate sustainability’ and ‘corporate social responsibility’ have different background and different theoretical path although scholars and practitioners often interpret corporate sustainability and corporate social responsibility as being nearly synonymous.
OR
Narrate briefly the relationship between corporate sustainability and corporate social responsibility.
Answer:
Scholars and practitioners often interpret Corporate Sustainability and Corporate Social Responsibility as being nearly synonymous, pointing to similarities and the common domain. The two concepts have different backgrounds and different theoretical paths.

Corporate Sustainability can be considered as the attempt to adapt the concept of Sustainable Development to the corporate setting, matching the goal of value creation with environmental and social considerations. Corporate Sustainability includes an attempt to assimilate the environmental and social dimensions into business operations: processes, products and procedures.

In practical terms, the Corporate Sustainability Approach leads to a very concrete and pragmatic problem; how to measure performance based on the three dimensions outlined and how natural and social values can be incorporated into corporate accounting.

Corporate Social Responsibility approach lays emphasis; besides economic and legal responsibilities, companies are expected to satisfy other requirements, relevant to conformity to social norms and voluntary contributions to the community in which they operate. Another important Corporate Social Responsibility approach developed during the 1980s in the light of the growth of the stakeholder approach, firms have obligations to a broader group of stakeholders than the simple shareholders, where a stakeholder is any group or individual who can affect or is affected by the achievement of the firm’s objectives.

Question 3.
Attempt the following; Distinguish between corporate sustainability and corporate social responsibility.
Answer:
Following are the differences between corporate sustainability and corporate social responsibility:

Corporate Sustainability	Corporate Social Responsibility
Corporate sustainability indicates new philosophy as an alternative to the traditional growth and profit maximisation model under which sustainable development comprising environmental protection, social justice and equity and economic development are given more significant focus while recognizing simultaneously corporate growth and profitability.	As a corporate citizen every corporate is duty bound to its society wherein they operate and serve. Although there is no hard and fast rules, CSR activities need to be clubbed and integrated into the business model of the company.

Question 4.
Business cannot exist in isolation; it cannot be oblivious to Societal Development”. Elaborate this statement.
Answer:
It is rightly said that business cannot exist in isolation; business cannot be oblivious to societal development. The social responsibility of business can be integrated into the business purpose so as to build a positive synergy between the two.

Points explaining the synergy between the two are as follows:
1. CSR creates a favourable public image, which attracts customers. Reputation or brand equity of the products of a company formed and customers trust the products of such a company and are willing to pay a premium on its products.

2. It builds up a positive image encouraging a sense of loyalty towards the organization, helping in creating a dedicated workforce proud of its company.

3. Society gains through better neighbourhoods and employment opportunities, while the organization benefits from a better community, which is the main source of its workforce and the consumer of its products.

4. Public needs have changed leading to changed expectations from consumers. The industry/business owes its very existence to society and has to respond to the needs of the society.

5. The company’s social involvement discourages excessive regulation or intervention from the Government or statutory bodies, and hence gives greater freedom and flexibility in decision-making.

6. The internal activities of the organisation have an impact on the external environment, since the society is an inter-dependent system.

7. A business organisation has a great deal of power and money, entrusted upon it by the society and should be accompanied by an equal amount of responsibility. In other words, there should be a balance between the authority and responsibility.

8. The good public image secured by one organisation by their social responsiveness encourages other organizations in the neighborhood or in the professional group to adapt themselves to achieve their social responsiveness.

9. The atmosphere of social responsiveness encourages co-operative attitude between groups of companies. One company can advise or solve social problems that other organizations could not solve.

10. Companies can better address the grievances of its employees and create employment opportunities for the unemployed.

(Note: This list is inclusive and not exhaustive)

Question 5.
“Modem business organizations are giving higher attention on discharging their social responsibilities.” Elaborate and discuss the factors which | led to increasing attention being devoted to CSR by these organizations.
OR
“The term Corporate Social Responsibility refers to the concept of business being accountable for how it manages the impact of its processes on stake¬holders and takes responsibility for producing a positive effect on society”.
What are the factors influencing corporate social responsibility?
Answer:
It is true that modern organisations have become more social responsibility conscious in comparison to old or traditional organisation S and they are paying higher attention towards the discharge of their social X responsibility. One of the possible reasons is that these organisations has realised that it is in their own interest to discharge social responsibility.

Many factors influencing Corporate Social Responsibility (CSR), some of them are as under:
a. Globalization coupled with focus on cross-border trade, multinational enterprises and global supply chains is increasingly raising CSR con-cerns relating to Human Resource Management practices, environmental protection, and health and safety, among other things.

b. Governments and Inter-governmental bodies, such as the United Nations, the Organisation for Economic Co-operation and Development and the International Labour Organization have developed compacts, declarations, guidelines, principles and other instruments that outline social norms for acceptable conduct.

c. Advances in communication technology are making it easier to track corporate activities and disseminate information about them.

d. Consumers and investors are showing increased interest in supporting responsible business practices and are demanding more information on how companies are addressing risks and opportunities related to social and environmental issues.

e. Citizens in many countries are making it clear that corporations should meet standards of social and environmental care, no matter where they operate.

f. There is increasing awareness of the limits of government legislative and regulatory initiatives to effectively capture all the issues that corporate social responsibility addresses.

g. Businesses are recognizing that adopting an effective approach to CSR can reduce risk of business disruptions, open up new opportunities, and enhance brand and company reputation.

h. The legislative requirements prescribing mandatory spending on CSR.

Question 6.
The Triple Bottom Line is made up of social, economic and environ-mental aspects and indicated by the phrase ‘people, planet and profit’. Elucidate.
OR
Within the broader concept of corporate social responsibility (CSR) the concept of triple bottom line (TBL) is gaining recognition. Discuss the need to apply the concept of TBL.
OR
Discuss the following; Triple Bottom Line Approach of CSR.
Answer:
Triple Bottom Line is a phrase coined in 1994 by John Elkington. The concept of the Triple Bottom Line proposed that business goals are inseparable from the society and environment within which they operate. The Triple Bottom Line (TBL) is made up of “Social, Economic and Environmental” aspect and is indicated by the ‘People, Planet, Profit’ phrase.

‘People’ (Human Capital) pertains to fair and beneficial business practices towards labour and the community and region in which a corporation conducts its business.

People issues faced by the organisation includes : Health, safety, diversity, ethnicity etc.

‘Planet’ (Natural Capital) refers to sustainable environmental practices. Planet concerns include: Climate change, energy, water, bio-diversity and land use.

‘Profit’ is bottom line shared by all customers. It is the reflection of lasting economic impact the organisation has on its business activities and that too after meeting all costs that would protect society and environment.

Profit includes : Creating Employment, generating innovation, paying taxes, wealth creation
The need to apply the concept of TBL is caused due to –

Increased consumer sensitivity to corporate social behaviour.
Growing demands for transparency from shareholders/stakeholders.
Increased environmental regulation.
Legal costs of compliances and defaults.
Concerns over global warming.
Increased social awareness.
Awareness about and willingness for respecting human rights.
Media’s attention to social issues.

Question 7.
Discuss briefly the following; Corporate Citizenship.
OR
Corporate Citizenship is a commitment to improve community well being through voluntary practices. Comment
Answer:
‘Corporate Citizenship’ is a commitment to improve community well-being through voluntary business practices and contribution of corporate resources leading to sustainable growth. Corporate citizenship involves the social responsibility of businesses and the extent to which they meet legal, ethical and economic responsibilities, as established by shareholders. The term corporate citizenship implies the behaviour, which would maximize a company’s positive impact and minimize the negative impact on its social and physical environment.

Question 8.
“Social, environmental and economical issues are fundamental to corporate to sustain in long run”. In view of this statement, define Corporate Sustainability and describe key aspects, companies as a corporate citizen, should focus.
Answer:
The contribution of sustainable development to corporate sustainability is twofold:
1. First, it helps in setting out the areas that companies should focus on
i.e., environmental, social, and economic performance.

2. Secondly, it provides a common societal goal for corporations, governments, and civil society to work towards ecological, social, and economic sustainability.

However, sustainable development by itself does not provide the necessary arguments for why companies should care about these issues. Those arguments come from corporate social responsibility and stakeholder theory.

Corporate sustainability:
Corporate sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. Corporate sustainability describes business practices built around social and environmental considerations.

Corporate sustainability encompasses strategies and practices that aim to meet the needs of the stakeholders today while seeking to protect, support and enhance the human and natural resources that will be the need of the future.

As a good corporate citizen, the companies are required to focus on the following key aspects:

Absolute Value Creation for the Society.
Ethical Corporate Practices.
Worth of the Earth through Environmental Protection.
Equitable Business Practices.
Corporate Social Responsibility.
Innovate new technology/process/system to achieve eco-efficiency.
Creating Market for All.
Switching over from the Stakeholders Dialogue to holistic Partnership.
Compliance of Statutes.

Question 9.
What are the areas a company should focus upon so as to be good corporate citizen?
Answer:
As a good corporate citizen, companies are required to focus on the following key aspects:
1. Absolute Value Creation for the Society: Organisations should set its goal towards creation of absolute value to the society. Once it is ensured, a corporate never looks back and its sustainability in long run is built up.

2. Ethical Corporate Practices: In the short run, enterprise can gain through non-ethical practices. However those cannot be sustained in long run. Society denies accepting such products or services.

3. Worth of Earth through Environmental Protection: Resources which have economic and social value should be preserved for long-term use and be priced properly after considering environmental and social costs.

4. Equitable Business Practices: Corporates should not divulge themselves in unfair means and it should create can did business practices, ensure healthy competition and fair trade practices.

5. Corporate Social Responsibility: As a Corporate citizen, every corpo-rate is duty bound to its society wherein they operate and serve. CSR activities need to be clubbed and integrated into the business model of the Company. ,

6. Innovate new technology/process/system to achieve eco-efficiency: Innovation is the key to success. Risks and crisis can be eliminated through innovation.

7. Creating Market for All: Monopoly, unjustified subsidies, price not reflecting real economic, social environmental cost, etc. are hindrances to sustainability of a business. Simultaneously, a corporate is to build up its products and services in such a way so, as to cater all segments of customers/consumers. Customer confidence is essence to corporate success.

8. Switching over from Stakeholders Dialogue to holistic Partnership: A business enterprises can advance their activities very positively if it makes all of stakeholders partner in its progress. It not only builds confidence of various stakeholders, but also helps the management to steer the business under a very dynamic and flexible system.

9. Compliance of Statutes: Compliance of statutes, rules and regulations, standards set by various bodies ensure clinical check up of a corporate and it confers societal license to the corporate to run and operate in the society.

Question 10.
“Tata steel’s Vision strikes a balance between economic value as well as ecological and societal value”. Comment
Answer:
Yes, Tata Steel’s Vision strikes a balance between economic value as well as ecological and societal value. Its visions statements is ‘We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship.

In the initial years, Tata Steel’s CSR interventions were more as a ‘provider’ to society where the community was given support for its overall needs, both for sustenance and development. Gradually, the shift in approach led to Tata Steel being an ‘enabler’ focusing on building community capacity through training programmes; focusing on providing technical support rather than giving aid.

At present, CSR interventions of Tata Steel focus on ‘sustainable development’ to enhance the quality of life of people. It guides the Company in its race to excel in all areas of sustainability. J R D Tata the Chairman of the Tata Group believed :

“to create good working conditions, to pay the best wages to its employees and provide decent housing to its employees are not enough for the industry, the aim of an industry should be to discharge its overall social responsibilities to the community and the society at large, where industry is located.”

Guided by this mandate, Tata Steel has for decades uses its skills and ) resources, to the extent it can reasonably afford, to give back to the 2s community a fair share of the product of its efforts. It was the first to establish labour welfare practices, even before these were made statutory laws across the world.

The Company also instituted an eight-hour workday in 1912, free medical aid in 1915, a Welfare Department in 1917, leave with pay, Workers Provident Fund and Workmen’s Compensation in 1920 and Maternity Benefit for „ ladies in 1928.

The Company supports and propagates the principles of the United Nations Global Compact as a Founder Member, is a signatory to the Worldsteel Sustainability Charter and supports the Affirmative Action programme of the Confederation of Indian Industry.

Tata Steel’s approach to business has evolved from the concept that the wealth created must be continuously returned to society. The responsibility of combining the three elements of society – social, environmental, and economic – is of utmost importance to the way of life at Tata Steel. Today, Tata Steel’s CSR activities in India encompass the Company’s Steel Works, Iron ore mines and collieries, reaching out to the city of Jamshedpur, its peri-urban areas and over 800 villages in the states of Jharkhand, Odisha and Chhattisgarh.

Community involvement is a characteristic of all Tata Steel Group companies around the world. It can take the form of financial support, provision of materials and the involvement of time, skills and enthusiasm of employees. The Group contributes to a very wide range of social, cultural, educational, sporting, charitable and emergency assistance programmes.

Question 11.
Sustainability in an emerging mega trend and is a measure of good corporate governance. Explain.
Answer:
Sustainability is an emerging megatrend and is a measure of good corporate governance. Over the years, environmental issues have steadily encroached on businesses’ capacity to create value for customers, shareholders, and other stakeholders. Globalized workforces and supply | chains have created environmental pressures and attendant business liabilities.

The rise of new world powers has intensified competition for natural resources and added a geopolitical dimension to sustainability. Externalities such as carbon dioxide emissions and water use are fast becoming material meaning that investors consider them central to a firm’s performance and stakeholders expect companies to share information about them.

These forces are magnified by escalating public and government concern about climate change, industrial pollution, food safety, and natural § resource depletion, among other issues. Governments are interceding with unprecedented levels of new regulation. Consumers in many countries are jg seeking out sustainable products and services or leaning on companies to improve the sustainability of traditional ones.

Further fueling this megatrend, thousands of companies are placing strategic bets on innovation in energy efficiency, renewable power, resource productivity, and pollution control. Sustainability, in today’s competitive globalised world, is one of the most commonly discussed terms as a part of viability and credibility of the organisations.

Most executives know that how they respond to the challenge of sustainability will profoundly affect the competitiveness and perhaps even the survival of their organizations. The top management of an organisation can no longer afford to ignore sustainability as a central factor in their company’s long-term competitiveness.

Question 12.
Write short note on the following; Social Accountability International Standard.
Answer:
SA 8000 Standard is one of the world’s first auditable social certification standard. It is based on ILO, UN and national law conventions, and adopts a management system approach in order to ensure that companies that adopt this approach also comply with it. This standard ensures the protection of basic human rights of workers.

The nine basic elements of this standard include :

Child labour
Forced and compulsory labour
Health and safety
Freedom of association and the right to collective bargaining
Discrimination
Disciplinary practices
Working hours
Remuneration
Management systems.

According to SAAS, there are 695 facilities in India that have been accredited with this standard. Out of these, Aditya Birla Chemicals (India) Limited, Bhilai Steel Plant Steel Authority of India Limited, Birla tyres, Dr Reddy’s Laboratories Limited and Reliance Infrastructure Limited figure prominently in the list of certified facilities within India.

Question 13.
Describe briefly the following; Social accountability and the AA 1000.
Answer:
Institute of Social and Ethical Accountability – Account Ability’s AA 1000 series of standards is a series of standards which enable organisations to become accountable, responsible and sustainable.

It consists of:

AA1000 Accountability Principles (AP) standard
AA1000 Assurance Standard (AS)
AA1000 Stakeholder Engagement (SE) standard.

Since these standards have been formulated through a multi-stakeholder consultation process, they ensure that those impacted (that is, enterprises, governments and civil societies) stand to gain.

The Vodafone Group Pic has adopted the AA1000AP standard by focusing on three broad areas:

Inclusivity (stakeholder engagement to develop and implement a strategic approach to sustainability).
Materiality (assess the management effort required for each material issue and determine the content of sustainability reports).
Responsiveness (respond with solutions to material issues and challenges).

Social Accountability International (SAI) :
SA 8000 Standard is one of the world’s first auditable social certification standard. It is based on ILO, UN and national law conventions, and adopts a management system approach in order to ensure that companies that adopt this approach also comply with it. This standard ensures the protection of basic human rights of workers.

The nine basic elements of this standard include :

Child labour
Forced and compulsory labour
Health and safety
Freedom of association and the right to collective bargaining
Discrimination
Disciplinary practices
Working hours
Remuneration
Management systems.

Question 14.
Explain briefly the following; CSR standard – ISO-26000.
Answer:
ISO 26000 is an international standard which provides guidance on principles of social responsibility and on ways to integrate socially responsible behaviour into existing organizational strategies, systems, practices and processes. This is a not a certification and a guidance tool provided by the ISO which enables organisations to underst and the meaning and significance of social responsibility.

It is important to note that this is only a guiding tool. Hence, organisations which comply with these standards are self-certified. It covers six core areas of social responsibility, including:-

Human rights
Labour practices
Environment
Fair operating practices
Consumer issues
Community involvement and development

This ensures a holistic approach to the concept of social responsibility and sustainable development. It intends to assist organizations in contributing to sustainable development. It is intended to encourage them to go beyond legal compliance, recognizing that compliance with law is a fundamental duty of any organization and an essential part of their social responsibility.

It is intended to promote common understanding in the field of social responsibility, and to complement other instruments and initiatives for social responsibility, not to replace them. ISO 26000 is not a management system standard. It is not intended or appropriate for certification purposes or regulatory or contractual use.

Question 15.
Discuss in brief the following; Global Compact Self-Assessment Tool.
Answer:
The Global Compact Self-Assessment Tool is an easy-to-use guide designed for use by companies of all sizes and across sectors committed to upholding the social and environmental standards within their respective operations. The tool consists of 45 questions with a set of three to nine indicators for each question.

It consists of management section and for other sections, including human rights, labour, environment and anti-corruption and relate to the principles of the UN Global Compact. The tool is in line with the UN guiding principles on Business and Human Rights.

For a small company, this tool acts as a measure to the company’s performance in all areas of the UN Global Compact and how well these issues are managed. For a large organization, this tool helps to continuously improve existing policies and systems, engage subsidiaries, suppliers or other stakeholders and improves internal and external reporting.

Question 16.
What is the global compact? What are the objectives of this initiative?
Answer:
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of:

Human rights,
Labour
Environment
Anti-corruption

Objective of Global Compact: By incorporating the Global Compact principles into strategies, policies and procedures, and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet, but also setting the stage for long-term success.

Principles of UN Global Compact: The UN Global Compact has issued ten principles which are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption.

Communication on Progress (COP): Global Compact incorporates a transparency and accountability policy known as the Communication on Progress (COP). It is an annual disclosure to stakeholders on progress made in implementing the ten principles of the UN Global Compact in the areas of human rights, labour, environment and anti-corruption, and in supporting broader UN development goals. The COP is posted on the Global Compact website by business participants. Failure to issue a COP will change a participant’s status to non-communicating and can eventually lead to the expulsion of the participant.

Question 17.
“The UN Global Compact incorporates a transparency and accountability policy known as the communications on progress (COP).” Elaborate.
Answer:
The UN Global Compact incorporates a transparency and accountability policy known as the Communication on Progress (COP). Following are its key points:
1. The Communication on Progress (COP) is an annual disclosure to stakeholders on progress made in implementing the ten principles of the UN Global Compact in the areas of human rights, labour, environment and anti-corruption, and in supporting broader UN development goals.

2. The COP is posted on the Global Compact website by business participants. Failure to issue a COP changes a participant’s status to non-communicating and can eventually lead to the expulsion of the participant.

3. The COP helps drive continuous sustainability performance improvement within the company.

4. The COP provides investors with sustainability performance information of companies, thus allowing for a more effective integration of environmental, social and governance (ESG) considerations in their investments and resulting in a more effective allocation of capital.

5. The COP is an important demonstration of a company’s commitment to transparency and accountability and it serves as an effective tool for multi stakeholder dialogue.

Question 18.
Attempt the following; Explain briefly the role of business in sus-tainable development in the light of UN Global Compact initiative.
OR
Discuss the UN global compact a strategic police initiative in the areas of human rights labour environment and anti – corruption how can companies align with these principles?
OR
What do you know about UN Global Compact? Give brief introduction and mention Principles as pronounced by the Compact.
Answer:
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. By incorporating the Global Compact principles into strategies, policies and procedures, and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet, but also setting the stage for long-term success.

The UN Global Compact’s Ten Principles are derived from the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations Convention Against Corruption. These Principles are:

Human Rights

Principle 1 : Businesses should support and respect the protection of internationally proclaimed human rights.
Principle 2 : Make sure that they are not complicit in human rights abuses.

Labour

Principle 3 : Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.
Principle 4 : The elimination of all forms of forced and compulsory

Labour

Principle 5 : The effective abolition of child labour.
Principle 6 : The elimination of discrimination in respect of employment and occupation.

Environment

Principle 7 : Businesses should support a precautionary approach to environmental challenges.
Principle 8 : Undertake initiatives to promote greater environmental responsibility.
Principle 9 : Encourage the development and diffusion of environmentally | friendly technologies.

Anti-corruption

Principle 10 : Businesses should work against corruption in all its forms, including extortion and bribery.

Question 19.
Discuss the core principles of national voluntary guidelines on social environmental and economic responsibility of business.
OR
“Businesses should support inclusive growth and equitable development.” Mention core elements of this principle of National Voluntary Guidelines on Social, Environment and Economic Responsibilities of Business-2011.
Answer:
National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business were released by MCA in July, 2011. These guidelines have been formulated keeping in view the diverse sectors within which businesses operate, as well as the wide variety of business organizations that exist in India today – from the small and medium enterprises to large corporate organizations.

The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business framework has 36 parameters reflecting nine key principles related to responsible business practices. The Guidelines encompassing nine Principles and related Core Elements identify the I areas where responsible practices need to be adopted and the Reporting Framework provides a standard disclosure template which can be used by businesses to report on their performance in these areas.

Principles and the core elements:

Businesses should conduct and govern themselves with Ethics, Transparency and Accountability.
Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
Businesses should promote the well being of all employees.
Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized.
Businesses should respect and promote human rights.
Business should respect, protect, and make efforts to restore the environment.
Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.
Businesses should support inclusive growth and equitable development.
Businesses should engage with and provide value to their customers and consumers in a responsible manner.

Question 20.
Discuss in brief the following; Government Role in improving Sus-tainability.
Answer:
Government does play an important and even critical role in improving sustainability. In 2011, Ministry of Corporate Affairs (MCA), Govt, of India issued the first voluntary reporting framework for reporting on Business Responsibility in the form of ‘National Voluntary Guidelines (NVG) on Social, Environmental and Economic Responsibilities of Business’.

Governments are interceding with unprecedented levels of new regulations, like SEBI mandated Business Responsibility Reporting in India for top 500 listed companies besides the voluntary reporting for others, Integrated Reporting in South Africa and many other jurisdictions are placing similar requirement on companies to report about the sustainability aspects in addition to financial information.

Question 21.
Discuss in brief the following; Functions of CSR committee.
Answer:
Section 135 of the Companies Act, 2013 provides that companies specified in the said section shall constitute a Corporate Social Responsibility Committee (CSR Committee) of the Board.

In accordance with section 135 of the Companies Act, 2013, the Corporate Social Responsibility Committee shall:

Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company in areas or subject, specified in Schedule VII.
Recommend the amount of expenditure to be incurred on the activities referred to in clause (a).
Monitor the Corporate Social Responsibility Policy of the company from time to time.

Further, the CSR Committee should institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.

Question 22.
Milk world Ltd. started milk collection in the district it was situated with a collection of 511 Kgs. of milk from 180 farmers. The company set¬up a system of direct and efficient contact with farmers. Company veterinarians and agronomists supervise the milk routes and advise farmers on various issues including proper feed for the herds.

Milk storage facilities have been set-up close to the farmers, veterinary services are provided free and medicines provided at wholesale price. The company assists farmers in artificial insemination programmes for their cattle, and helps them in obtaining subsidy and loans.

By working very closely with the farmers of the district and its local ad-ministration, the company has helped to raise the quality and hygiene of the milk produced and improved the health and lifestyle of the farmers and other residents. Its contribution to the creation of prosperity on an ongoing and sustainable basis has not only transformed the district into a prosperous and vibrant milk district today, but also a thriving hub of industrial activity.

On the basis of facts given in above case, what are your observations I pertaining to performance of the company on corporate social responsibility?
Answer:
In the given case, Milk wood Ltd. has provided following services to the farmers, who are stakeholders of the company. These services are the fine examples of the corporate social responsibility activities undertaken by the company.

The Company veterinarians and agronomists supervise the milk routes.
The Company advises farmers on various issues including proper feed for the herds.
Milk storage facilities have been set up close to the farmers.
Free Veterinary services are provided.
Medicines provided at wholesale price.
The company assists farmers in artificial insemination programs for their cattle.
Providing subsidy and help in procuring loand.
The company has helped to raise the quality and hygiene of the milk produced and improved the health and life style of the farmers and other residents.

The company was working very closely with the farmers in the district and local administration. The company had undertaken above mentioned activities which were mutually beneficial to the company as well as farmers and local community of that district. The ongoing social responsibility activities of the company not only resulted into the transformation of the district into a prosperous and vibrant milk district but also helped making it a hub of industrial activities.

The case clearly shows that the company had deep faith in “Stakeholder Theory” of Corporate Governance and in discharging social responsibility towards its stakeholders. It is an example of mutual benefit concept of social responsibility as business cannot exist and operate in isolation.

Question 23.
Corporate sustainability encompasses strategies and practices that aim to meet the needs of stakeholders today which reaching to protect support and enhance the human and nature resources that will be needed in the future.
In the light of this statement discuss the key drivers which need to be garnered to ensure sustainability.
OR
Why sustainability is considered an imperative in the present age?
Answer:
Sustainability is interchangeably used for the term ‘sustainable development’. It can be defined as a ‘strategy’ by which businesses and communities approach growth, economic development, or even their daily activities in a manner that either preserves or improves their environment and/or quality of life. Sustainability is an emerging megatrend and is a measure of good corporate governance.

Need for Sustainability:
These forces are magnified by escalating public and governmental concern about climate change, industrial pollution, food safety, and natural resource depletion, among other issues. Consumers in many countries’ are seeking” out sustainable products and services or leaning on companies to improve the sustainability of traditional ones.

Thus, it can be concluded that the top management of an organisation can no longer afford to ignore sustainability as a central factor in their companies’ long-term competitiveness.

Question 24.
Sustainable development is a broad concept that balances the need for economic growth with environmental protection and social equity. Define sustainable development and its principles.
OR
Discuss fundamentals principles of sustainable development.
OR
What is sustainable development? Discuss principles of sustainable development agreed upon by the world community.
OR
Discuss the concept of sustainable development.
Answer:
Sustainable development is a broad concept that balances the need for economic growth with environmental protection and social equity. It is a process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations. Sustainable development is a broad concept and it combines economics, social justice, environmental science and management, business management, politics and law.

Sustainable Development indicates development that meets the needs of the present generation without compromising with the ability of the future generations to meet their needs. The principle behind it is to foster such development through technological and social activities which meets the needs of the current generations, but at the same time ensures that the needs of the future generation are not impaired.

The fundamental principles of sustainable development as agreed by the world community are as under:

Principle of Inter generational Equity: Need to preserve natural resources for the future generations.
Principle of Sustainable Use: Use of natural resources in a prudent manner without or with minimum tolerable impact on nature.
Principle of Equitable Use or Inter generational Equity: Use of natural resources by any state/country must take into account its impact on other states.
Principle of Integration: Environmental aspects and impacts of socioeconomic activities should be integrated so that prudent use of natural resources is ensured.

Question 25.
Mention any ten sustainability terminologies.
Answer:
There are various terminologies related to the sustainability. These are as follows:

Carbon foot prim
Carbon offsetting
Carbon neutral
Ecological footprint
Green washing
Greenhonse effect
Global warming
Ethical consumerism
Clean Development Mechanism (CDM)
Environmenlal performance index

Question 26.
Explain the following statement; Ecological footprint is a measure of human demand on the earth’s eco-systems.
Answer:
Ecological footprint is a measure of human demand on earth’s eco-systems. It compares human demand with planet earth’s ecological capacity to regenerate it. It represents the amount of biologically productive land and sea area needed to regenerate the resources a human population consumes and to absorb and render the corresponding waste harmless, given prevailing technology and resource management practices.

Question 27.
Discuss in brief the following; Carbon footprint vis-a-vis ecological footprint.
Answer:
Carbon footprint:
A carbon footprint is an estimate of how much carbon is produced to support your lifestyle. Essentially, it measures your impact on the gs climate based on how much carbon you produce. Factors that con- ® tribute to your carbon footprint include travel methods and general home energy usage. Carbon footprints can also be applied on a larger scale to companies, businesses and even countries. The word ‘carbon’ in the phrase ‘carbon footprint’ is often used as a short-cut to describe the main greenhouse gases – carbon dioxide, methane and nitrous oxide – in terms of carbon dioxide equivalents.

Ecological footprint:
Ecological footprint is a measure of human demand on earth’s eco-systems. It compares human demand with planet earth’s ecological capacity to regenerate it. It represents the amount of biologically productive land and sea area needed to regenerate the resources a human population consumes and to absorb and render the corresponding waste harmless, given prevailing technology and resource management practices.

Question 28.
Discuss the following; Carbon Offsetting.
Answer:
Carbon offsets are used to reduce the amount of carbon that an individual or institution emits into the atmosphere. Carbon offsets work in a financial system where, instead of reducing its own carbon use, a company can comply with emissions caps by purchasing an offset from an independent organization. The organization will then use that money to fund a project that would reduce carbon in the atmosphere. An individual can also engage himself with this system, and similarly pay to offset his or her own personal carbon usage, instead of or in addition to, taking direct measures such as driving less or recycling.

Question 29.
Distinguish between carbon footprint and carbon offsetting.
Answer:
Carbon footprint
A carbon footprint is an estimate of how much carbon is produced to support your lifestyle. Essentially, it measures your impact on the climate based on how much carbon you produce. Factors that con¬tribute to your carbon footprint include travel methods and general home energy usage. Carbon footprints can also be applied on a larger scale to companies, businesses and even countries. The word ‘carbon’ in the phrase ‘carbon footprint’ is often used as a short-cut to describe the main greenhouse gases – carbon dioxide, methane and nitrous oxide – in terms of carbon dioxide equivalents.

Carbon offsets:
Carbon offsets are used to reduce the amount of carbon that an indi¬vidual or institution emits into the atmosphere. Carbon offsets work in a financial system where, instead of reducing its own carbon use, a company can comply with emissions caps by purchasing an offset from an independent organization. The organization will then use that money to fund a project that would reduce carbon in the atmosphere. An individual can also engage himself with this system, and similarly pay to offset his or her own personal carbon usage, instead of or in addition to, taking direct measures such as driving less or recycling.

Question 30.
Write short notes on the following; Montreal Protocol on Substances that deplete the Ozone Layer.
Answer:
Montreal Protocol on Substances that Deplete the Ozone Layer:
The Montreal Protocol on Substances that Deplete the Ozone Layer (the Montreal Protocol) is an international agreement made in 1937. It was designed to stop the production and import of ozone depleting substances and reduce their concentration in the atmosphere to help protect the earth’s ozone layer.

It is a protocol of the Vienna Convention for the Protection of the Ozone Layer, an international treaty designed to protect the ozone layer by phasing out the production of numerous substances believed to be responsible for ozone depletion. The treaty was opened for signature on 16th September, 1987, and entered into force on 1 January 1989, followed by a first meeting in Helsinki, May 1989. Since then, it has undergone seven revisions, in 1990 (London), 1991 (Nairobi), 1992 (Copenhagen), 1993 (Bangkok), 1995 (Vienna), 1997 (Montreal), and 1999 (Beijing).

Due to its widespread adoption and implementation it has been hailed as an example of exceptional international cooperation. Since the Montreal Protocol came into effect, the atmospheric concentrations of the most important chlorofluorocarbons and related chlorinated hydrocarbons have either levelled off or decreased. It is believed that if the international agreement is adhered to the ozone layer is expected to be recovered by 2050.

Question 31.
Discuss in brief the following; Life Cycle Assessment.
Answer:
Life Cycle Assessment tracks the environmental impact of a product from the use of its raw materials to the end of its useful life. LCA is an important tool for developing an environment self-portrait and.for finding ways to minimize harm. A good LCA can shed light on ways to reduce the resources consumed and lower costs all along the value chain.

A LCA looks at this complete circle and measures environmental impact at every phase. It provides the foundation for understanding the issues a company must address and clues to help find Eco-Advantage.

Question 32.
Write short note on the following; Brundtland Commission.
Answer:
The Brundtland Commission, formally the World Commission on Environment and Development (WCED), known by the name of its Chairman Gro Harlem Brundtland, was convened by the United Nations in 1983.

The Commission was created to address growing concern “about the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development.”

In establishing the Commission, the UN General Assembly recognized that environmental problems were global in nature and determined that it was in the common interest of all nations to establish policies for sustainable development.

The Report of the Brundtland Commission, Our Common Future, published in 1987, deals with sustainable development and the change of policies needed for achieving that. The definition of this term in the report is quite well known and often cited:

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. ”

Question 33.
What is Paris Agreement? Discuss.
Answer:
The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

At the 21st Conference of the Parties in Paris, Parties to the United Nations Framework Convention on Climate Change (UNFCCC) reached a landmark agreement to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future.

Objective: The Paris Agreement brings all nations into a common cause to undertake take ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so.

On Earth Day, 22 April, 2016,175 world leaders signed the Paris Agreement at United Nations Headquarters in New York. This was by far the largest number of countries ever to sign an international agreement on a single day.

Question 34.
State and enumerate corporate sustainability assessment criteria under the Dow – Jones sustainability index?
OR
Attempt of the following; What is Dow-Jones sustainability index?
Answer:
The Dow Jones Sustainability Indices are the first global indices tracking the financial performance of the leading sustainability-driven companies worldwide, it was launched in 1999. The Dow Jones Sustainability World Index (DJSI World) comprises more than 300 companies that represent the top 10% of the leading sustainability companies out of the biggest 2500 companies in the Dow Jones World Index.

In addition to the composite DJSI World, there are six specialized subset indexes excluding alcohol, ex gambling, ex-tobacco, ex-armaments & firearms, ex-alcohol, tobacco, gambling, armaments & firearms indexes, and ex-alcohol, tobacco, gambling armaments & firearms, and adult entertainment.

Question 35.
Describe corporate sustainability assessment criteria under the Dow- Jones Sustainability Index.
Answer:
The Dow Jones Sustainability Indices launched in 1999 are the first global indices tracking the financial performance of the leading sustainability-driven companies worldwide. The Dow-Jones Sustainability World Index (DJSI World) comprises more than 300 Companies that represent the top 10% of the leading sustainability Companies out of the biggest 2,500 Companies in the Dow Jones World Index.

Dimension	Criteria	Weightage (%)
Economic	Codes of Conduct/Compliance/ Corruption & Bribery Corporate Governance Risk & Crisis Management Industry Specific Criteria	5.5 6.0 6.0 Depends on Industry
Environment	Environmental Performance (Eco-Efficiency) Environmental Reporting Industry Specific Criteria	7.0 3.0 Depends on Industry
Social	Corporate Citizenship/Philanthropy Labour Practice Indicators Human Capital Development Social Reporting Talent Attraction & Retention Industry Specific Criteria	3.5 5.0 5.5 3.0 5.5 Depends on Industry

Question 36.
What is ESG index? How does it work? [June 2014, 5 Marks]
OR
Discuss in brief the following; Environment, Social and Governance (ESG) Index.
Answer:
ESG describes the environmental, social and corporate governance issues that investors consider in the context of corporate behaviour, Integration of ESG refers to the active investment management processes that include an analysis of environmental, social and corporate governance risks and opportunities and sustainability aspects of the company performance evaluation.

The ESG index employs a unique and innovative methodology that quantifies a company’s ESG practices and translates them into scoring system which is then used to rank each company against its peers in the market.

Key Performance Indicators

Environment – Energy use and efficiency, Greenhouse gas emissions, water use, use of ecosystem
services – impact & dependence and y innovation in environment friendly products and services.
Social – Employees, poverty and community impact and supply chain x, management.
Governance – Codes of conduct and business principles, accountability, transparency and disclosure and implementation-quality and consistency.

Question 37.
Discuss the following; Standard and Poor’s ESG India index.
Answer:
Standard & Poor’s ESG India index provides investors with exposure to a liquid and tradable index of 50 of the best performing stocks in the Indian market as measured by environmental, social and governance parameters. The index employs a unique and innovative methodology that quantifies a company’s ESG practices and translates them into a scoring system which is then used to rank each company against their peers in the Indian market. Its quantitative scoring system offers investors complete transparency.

The creation of the index involves a two step process, the first of which uses a multi-layered approach to determine an ‘ESG’ score for each company, The second step determines the weighting of the index by score. Index constituents are derived from the top 500 Indian companies by total market capitalizations that are listed on National Stock Exchange of India Ltd. (NSE).

Question 38.
For the purpose of generating employment in Banaras, a leather industry is being started which consumes a large amount of water and discharges waste water containing putrescible organic and toxic inorganic materials into the river resulting in death of all aquatic life. Whether court I should allow the owners of the tanneries to continue as it is working in j public interest or direct them to stop working? Give reasons.
Answer:
The given case is similar to the case M.C. Mehta v. Union of India [AIR 1988 SC 1037] also known as the Kanpur Tanneries or Ganga Pollution case wherein the Supreme Court had held that:

“Where in public interest litigation owners of some of the tanneries discharging effluents from their factories in Ganga and not setting up a primary treatment plant in spite of being asked to do so for several years did not care, in spite of notice to them, even to enter appearances in the Supreme Court to express their willingness to take appropriate steps to establish the pre-treatment plants it was held that so far as they were concerned on order directing them to stop working their tanneries should be passed.

It was observed that the effluent discharged from a tannery is ten times noxious when compared with the domestic sewage water which flows into the river from any urban area on its bank. It was further observed that the financial capacity of the tanneries should be considered as irrelevant while requiring them to establish primary treatment plants.

Just like an industry which cannot pay minimum wages to it worker cannot be allowed to exist, a tannery which cannot set up a primary treatment plant cannot be permitted to continue to be in existence for the adverse effect on the public at large which is likely to ensure by the discharging of the trade effluents from the tannery to the river Ganga would be immense and it will outweigh any inconvenience that may be caused to the management and the labour employed by it on account of its closure”.

Hence, looking to the judgement given by the Apex Court in the given case, the owners of tanneries cannot be allowed to pollute the water by producing the hazardous material irrespective of the fact that this being the employment generation activity.

Question 39.
What is the measure of liability of an enterprise which is engaged in a hazardous or inherently dangerous industry, where by any chance an accident occurs, persons die or get injured? Answer with reference to the Oleum Gas leak case by narrating in brief the issues raised by the petitioner and important Judgements pronounced by the Apex court.
Answer:
The Oleum Gas Leak case came into limelight after it got originated in a writ petition filed in the Supreme Court by the environmentalist and lawyer M.C. Mehta, as a public interest litigation.

Facts:
On December 4, 1985 a major leakage of oleum gas took place from one of the units of Shriram, and this leakage affected a large number of people, both amongst the workmen and the public in general. This gas leak followed by another disaster i.e., within two days, another leakage took place as a result of escape of oleum gas from the joints of a pipe. The Delhi Administration issued two orders, on the behest of Public Health and Policy, to cease carrying on any further operation in the unit, and to remove such chemical and gases from there.

The Inspector of Factories and the Assistant Commissioner (Factories) issued separate orders on December 7th and 24th, 1985 to shut down % both the plants. Aggrieved, Shriram filed a writ petition challenging the < two prohibitory orders issued under the Factories Act of 1948, and sought X interim permission to reopen the caustic chlorine plant.

Held:
The Apex Court said that it is not possible to adopt a policy of not having any chemical or other hazardous industries merely because they pose hazard or risk to the community. If such a policy was adopted, it would mean the end of all progress and development. Such industries, even if hazardous, have to be set up since they are essential for the economic development and advancement of well-being of the people.

We can only hope to reduce the element of hazard or risk to the community by taking all necessary steps for locating such industries in a manner which would pose least risk or danger to the community by maximizing safety requirements.

Question 40.
Prepare a brief note on National Guidelines on Responsible Business Conduct (NGRBC).
Answer:
The Ministry of Corporate Affairs has revised the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGs) and has released the National Guidelines on Responsible Business Conduct (NGRBC) in March 2019. These guidelines urge businesses to actualise the principles in letter and spirit. The annexure 3 of the Guidelines details the reporting framework associated with the National Guidelines for Responsible Business Conduct.

It consists of three sections:

Section A : General Disclosures, covering operational, financial and ownership related information.
Section B : Management and Process Disclosures covering the structures, policies and processes to integrate the Guidelines.
Section C : Principle-wise Performance Indicators covering how well businesses are performing in pursuit of these Guidelines.

Businesses may use this reporting framework to voluntarily disclose their commitment to and performance against their economic, social and environmental impacts. A growing number of businesses are already doing this and are reporting several benefits, internal and external, as a result of their commitment to disclosure and reporting.

Question 41.
What is Risk-adjusted return on capital (RAROC) and how is it calculated?
Answer:
Risk-adjusted return on capital (RAROC) is a profitability metric that can be used to analyse return in relation to the level of risk taken on. It can be used to compare the performance of several investments with differing levels of risk exposure. RAROC was developed by Bankers Trust in the late 1970s and early 1980s in response to regulatory interest in the capital ratios of financial institutions and the implementation of capital adequacy regulations. RAROC is often used by banks to determine the amount of capital required to support the bank’s activities.

RAROC is defined as the ratio of risk adjusted return to economic capital. The economic capital is the amount of money which is needed to secure the survival in a worst-case scenario, it is a buffer against unexpected shocks in market values. Economic capital is a function of market risk, credit risk, and operational risk, and is often calculated by VaR (Value at Risk).

RAROC system allocates capital for two basic reasons:

Risk management
Performance evaluation

The formula used to calculate RAROC is:
RAROC = R – E – EL + (Income from Capital/Capital)
Where R = Revenue, E = Expenses, EL = Expected losses, Income from
Capital = Capital Charges X Risk free rate

CSR and Sustainability – Governance, Risk Management, Compliances and Ethics Important Questions

CSR and Sustainability – Governance, Risk Management, Compliances and Ethics Important Questions

Governance Risk Management Compliances and Ethics Notes