Karnataka 1st PUC Business Studies Question Bank Chapter 6 Social Responsibilities of Business and Business Ethics
One Mark Questions
Question 1.
Mention the major sources of pollution. (March-S-2019)
Answer:
The industry is a major generator of waste in terms of both its quantity and toxicity.
Question 2.
Mention any one type of pollution.
Answer:
Air pollution is one type of pollution.
Question 3.
How is land pollution caused? (March-N-2019)
Answer:
Excessive use of fertilizers, chemicals, and pesticides in cultivation are causes of land pollution.
Question 4.
State any one need for pollution control.
Answer:
Reduction of health hazards.
Question 5.
State any one step taken up by business enterprises for environment protection.
Answer:
Complying with the laws and regulations enacted by the government for the prevention of pollution.
Question 6.
Give an example of business ethics.
Answer:
Goods and services at reasonable prices.
Question 7.
Mention any one element of business ethics.
Answer:
Top management’s commitment is one element of business ethics.
Question 8.
Expand CSR.
Answer:
Corporate Social Responsibility.
Question 9.
State any one argument for social responsibility.
Answer:
Public Image is one of the arguments in favor of social responsibility.
Question 10.
State any one argument against social responsibility.
Answer:
Violation of profit maximization objective is one of against argument.
Question 11.
Mention any one area of social responsibility.
Answer:
Social Responsibility towards Owners.
Two Mark Questions
Question 1.
What is the social responsibility of business? (March-N-2019)
Answer:
Various activities which provide for the welfare of the society along with the earning of profit for the firm are termed as “Social Responsibility of Business”.
Question 2.
Mention any two responsibilities towards the workers.
Answer:
The responsibilities towards workers are:
(a) Job security should be provided with fair wages, bonuses, profit sharing, etc. Fair promotional practices have to be provided.
(b) Employees should be given equal rights to have their personality development.
Question 3.
Mention any two responsibilities towards the government.
Answer:
The social responsibilities towards government are:
(a) Rules and regulations regarding enactments and provision government of various laws should be strictly observed.
(b) The firm should see that the taxes and other dues to the government are regularly paid.
Question 4.
What do you mean by environment?
Answer:
The sum total of all surroundings of a living organism, including natural forces and other living things, provides conditions for development and growth as well as danger and damage.
Question 5.
Mention any two causes for environmental pollution.
Answer:
The causes of environmental pollution are:
(a) Due to a huge number of industrial plants.
(b) Deforestation.
Question 6.
State any two needs for pollution control.
Answer:
The need or importance of pollution control are:
(a) Reduced risk of liability.
(b) Reduction of health hazards.
Question 7.
State any two effects of pollution.
Answer:
The effects of pollution are:
(a) Environment degradation.
(b) Ozone layer depletion.
Question 8.
What ¡s business ethics? (March-N-2019)(March-S-2018)
Answer:
Business ethics is defined as a set of moral standards which society expects from businessmen.
Question 9.
State any two elements of business ethics.
Answer:
The elements of business ethics are:
(a) Publication of a code.
(b) Top management’s commitment.
Question 10.
State any two arguments against social responsibility. (March-S-2019)
Answer:
The arguments against social responsibilities are:
(a) Burden on consumers.
(b) Violation of profit maximization objective.
Question 11.
What is environmental pollution?
Answer:
Environmental pollution refers to the injection of harmful substances into the environment which causes a change in the physical, chemical, and biological characteristics of air, land, and water and can harm the life of humans and other species.
Question 12.
State the meaning of Corporate Social Responsibility as per the Companies Act of 2013.
Answer:
Corporate Social Responsibility Rules under Section 135 of the Companies Act, 2013, “Corporate Social Responsibility is the process by which an organization thinks about and evolves its relationships with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies. Thus CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good”.
Four Mark Questions
Question 1.
Explain briefly any four arguments for social responsibility.
Answer:
The arguments for social responsibilities are:
(a) Public image: The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of a business also depend upon the public image of its activities.
(b) Government regulation: To avoid government regulations businessmen should discharge their duties voluntarily.
(c) Survival and growth: Every business is a part of society. So for its survival and growth, support from society is very much essential. The business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsibility of every business to spend a part of its profit for the welfare of society.
(d) Employee satisfaction: Besides getting a good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education, and training. Employers should try to fulfill all the expectations of the employees because employee satisfaction is directly related to productivity.
Question 2.
Explain the arguments against social responsibility.
Answer:
The argument against social responsibility:
(a) Violation of profit maximization objective: According to this argument, business exists only for profit maximization. Therefore, any talk of social responsibility is against this objective. In fact, a business can best fulfill its social responsibility if it maximizes profits through increased efficiency and reduced costs.
(b) Burden on consumers: It is argued that social responsibilities like pollution control and environmental protection are very costly and often require huge financial investments. In such circumstances, businessmen are likely to simply shift this burden of social responsibility by charging higher prices from the consumers instead of bearing it themselves.
(c) Lack of social skills: All social problems cannot be solved the way business problems are solved. In fact, businessmen do not have the necessary understanding and training to solve social problems. Therefore, according to this argument, social problems should be solved by other specialized agencies.
(d) Lack of broad public support: Here the argument is that the public, in general, does not like business involvement or interference in social programs. Therefore, businesses cannot operate successfully because of a lack of public confidence and cooperation in solving social problems.
Question 3.
Explain briefly any four reasons responsible for increasing concern of business enterprises toward social responsibility.
Answer:
The following forces have been responsible for increasing concern of business enterprises towards social responsibility:
(a) Threat of public regulation: It is one important reason due to which business enterprise feels concerned with social responsibility. Democratically elected governments have to take care of every section of the societies thus regulating the businesses behaving in a socially irresponsible manner.
(b) Pressure of labor movement: Labour movement for ensuring fair gains for the working class throughout the world has become very powerful as labor has become far more educated and organized. This has forced business enterprises to pay due regard to the welfare of workers.
(c) Impact of consumerism: Development of education and mass media, and increasing competition in the market have made the consumer aware of his rights and power which has forced business enterprises to follow a customer-oriented approach.
(d) Development of social standard for business: New social standards consider the economic activity of business enterprises as legitimate but with the condition that they must also serve social needs. Business functioning is to be ultimately judged on the basis of social standards.
(e) Development of business education: Educated persons as consumers, investors, employ¬ees, or owners have become more sensitive towards social issues with the development of business education with its rich content of social responsibility.
(f) Relationship between social interest and business interest: Business enterprises have started realizing the fact that social interest and business interest are complementary to each other and that the long-term benefit of business lies in serving society well.
Question 4.
Explain the various area of social responsibility of business.
Answer:
A business enterprise is permitted by society to canyon industrial or commercial activities and earns profits from it. Therefore, a business enterprise is expected to do business and earn money in ways that fulfill the expectations of society.
Like every individual living in society, the business has certain obligations towards society in terms of respect for social values and norms of behavior. It is obligatory on part of the business enterprise not to do anything that is undesirable from society’s point of view. The manufacture and sale of adulterated goods, making deceptive advertisements, evading taxes, polluting the environment, and exploiting workers are some examples of socially undesirable practices which may increase the profit of enterprises but which have adverse social effects.
On the other hand, supplying good quality goods, creating healthy working conditions, honestly paying taxes, prevention of pollution, and resolving customer complaints are examples of socially desirable practices which improve the image of enterprises leading to higher profits in the long run.
The major areas of social responsibility of the business that explain that business is essentially a social institution and not merely a profit-making activity include the following:
(a) Responsibility towards the shareholders or owners: A business enterprise has the responsibility to provide a fair return to the shareholders or owners on their capital investment and to ensure the safety of such investment.
(b) Responsibility towards the workers: Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensures fair wage for their work.
(c) Responsibility towards the consumers: Supply of the right quality and quantity of goods and services to consumers at reasonable prices constitutes the responsibility of an enterprise toward its customers.
(d) Responsibility towards the government and community: An enterprise must respect the laws of the country and pay taxes regularly and honestly. It must behave as a good citizen and act according to the well-accepted values of the society and protect the natural environment.
Question 5.
Explain the social responsibility of business towards
(a) Shareholders
(b) Consumer (March-S-2018)(March-N-2018)
Answer:
Social responsibility of business towards shareholders:
(a) A fair rate of dividend should be regularly paid by the business enterprises to their owners.
(b) Management techniques should be effective and efficient so that the net present value of the business is maximized.
(c) Owners should be given the right to participate in the affairs of the enterprise.
(d) The tendency towards the growth of ‘Oligarchic management’ should be arrested.
(e) The owners should be given the full information regarding the working of the company. In other words, accurate and comprehensive reports have to be supplied.
(f) Financial information has to be disclosed and doubts have to be clarified.
(g) Chairman and directors of the company should be easily accessible to the owner.
Social responsibility of business towards consumer:
(a) Ensuring availability of products in the right quantity, at the right place, and at the right time.
(b) Maintaining the quality of the goods, increasing the quality to the maximum extent so as to compete with any international product.
(c) Charging reasonable prices to its products. ,
(d) Correct weights and measures have to be used.
(e) The company must provide after-sale service for maintenance of goods.
(f) The business firms should avoid restrictive trade practices and see that full justice is done to the amount that is spent by a consumer.
(g) Constant investigation and discovery of growing wants of consumers, giving importance to research and development of new products that satisfy their wants.
(h) Taking all such measures which promote consumer satisfaction, interest, and welfare.
Question 6.
Explain briefly the causes of pollution.
Answer:
Causes of Water Pollution:
(a) Drainage of human excreta into rivers, canals, etc.
(b) Improper sanitation and sewage system.
(c) Dumping of wastes and effluents by various industrial units into the rivers and canals.
(d) Drainage of toxic substances like chemicals and fertilizers used in cultivation, into streams and rivers.
Causes of Air Pollution:
(a) Emission of fumes from vehicles.
(b) Emission of smoke, dust, and chemicals from manufacturing plants.
(c) Emission of gases and dust arising from atomic plants.
(d) Emission of smoke from oil refineries, burning of trees and plants in forests, burning of coal, etc.
Causes of Land Pollution:
(a) Excessive use of fertilizers, chemicals, and pesticides in cultivation.
(b) Disposal of solid waste of industries, mines, and quarries.
(c) Disposal of solid waste from the construction of roads, buildings, etc.
(d) Effluents of some plants like paper, sugar, etc. which are not absorbed by the soil.
(e) Excessive use of plastic bags, which are non-biodegradable.
Causes of Noise Pollution: It is caused by modem machines and gadgets such as rail engines, loudspeakers, generators, airplanes, vehicles, machinery, telephones, televisions, etc.
Question 7.
Briefly explain different types of pollution. (March-S-2018)
Answer:
The different type of pollution are:
Air Pollution: Air pollution refers to the presence of any unwanted gases, dust particles, etc. in the air, that can cause damage to people as well as nature.
Causes of Air Pollution
(a) Emission of fumes from vehicles.
(b) Emission of smoke, dust, and chemicals from manufacturing plants.
(c) Emission of gases and dust arising from atomic plants.
(d) Emission of smoke from oil refineries, burning of trees and plants in forests, burning of coal, etc.
Effects of Air Pollution
(a) Presence of gases in the air, which are not required by human beings, animals, and birds, creates serious health problems. It can create diseases like asthma, cough, and cold, blindness, hearing loss, skin disease, etc.
(b) It reduces natural visibility and irritates the eyes and respiratory tract.
(c) Ozone layer gets depleted because of air pollution and thereby causes gene mutation, genetic defects, and skin cancer.
Water Pollution: Water pollution refers to the contamination of water due to the presence of unwanted and harmful substances thus, making the water unfit for use.
Causes of Water Pollution
(a) Drainage of human excreta into rivers, canals, etc.
(b) Improper sanitation and sewage system.
(c) Dumping of wastes and effluents by various industrial units into the rivers and canals.
(d) Drainage of toxic substances like chemicals and fertilizers used in cultivation, into streams and rivers.
Effects of Water Pollution
(a) It can create health hazards among human beings, animals, and birds. Diseases like typhoid, jaundice, cholera, gastroenteritis, etc. are common.
(b) It can endanger the lives of various aquatic species.
(c) It can lead to scarcity of drinking water as the water of rivers and canals, as well as underground water, get polluted.
Land Pollution: Land Pollution refers to the dumping of useless, unwanted as well as hazardous substances on the land that degrades the quality of soil we use.
Causes of Land Pollution:
(a) Excessive use of fertilizers, chemicals, and pesticides in cultivation.
(b) Disposal of solid waste of industries mines and quarries.
(c) Disposal of solid waste from the construction of roads, buildings, etc.
(d) Effluents of some plants like paper, sugar, etc. which are not absorbed by the soil.
(e) Excessive use of plastic bags, which are non-biodegradable.
Effects of Land Pollution:
(a) Reduces the quantum of cultivable land area.
(b) Causes health hazards as it contaminates the sources of food.
(c) Causes damage to the landscape.
(d) Leads to water and air pollution.
Noise Pollution: Noise simply means an unwanted sound that causes irritation. It is caused by modem machines and gadgets such as rail engines, loudspeakers, generators, airplanes, vehicles, machinery, telephones, televisions, etc. Noise pollution can cause loss of hearing, headache, irritation, high blood pressure, neurological or psychological disorders, etc.
Question 8.
Explain briefly any four steps that should be taken up by business enterprises for envi¬ronment protection.
Answer:
Some of the specific steps which can be taken by business enterprises to protect the environment from the dangers of pollution are as follows:
(a) Definite commitment by top management of the enterprise to create, maintain and develop work culture for environmental protection and pollution prevention.
(b) Complying with laws and regulations enacted by the government for the prevention of pollution.
(c) Participation in government programs relating to the management of hazardous substances, plantation of trees, and checking deforestation.
(d) Ensuring that commitment to environmental protection is shared throughout the enterprise by all divisions and employees.
(e) Arranging educational workshops and training materials to share technical information and experience with suppliers, dealers, and customers to get them actively involved in pollution control programs.
1st PUC Business Studies Social Responsibilities of Business and Business Ethics Textbook Questions and Answers
Multiple Choice One Mark Questions
Question 1.
Social Responsibility is
(a) Same as a legal responsibility
(b) Broader than legal responsibility
(c) Narrower than legal responsibility
(d) None of them
Answer:
(b) Broader than legal responsibility
Question 2.
If the business is to operate in a society that is full of diverse and complicated problems, it may have
(a) Little chance of success
(b) Great chance of success
(c) Little chance of failure
(d) No relation with success or failure
Answer:
(a) Little chance of success
Question 3.
Business people have the skills to solve
(a) All social problems
(b) Some social problems
(c) No social problems
(d) All economic problems
Answer:
(c) No social problems
Question 4.
That an enterprise must behave as a good citizen is an example of its responsibility towards
(a) Owners
(b) Workers
(c) Consumers
(d) Community
Answer:
(d) Community
Question 5.
Environmental protection can best be done by the efforts of
(a) Business people
(b) Government
(c) Scientists
(d) All the people
Answer:
(d) All the people
Question 6.
Carbon monoxide emitted by automobiles directly contributes to (March-N-2015) (March-J-2018)
(a) Water pollution
(b) Noise pollution
(c) Land pollution
(d) Air pollution
Answer:
(d) Air Pollution
Question 7.
Which of the following can explain the need for pollution control?
(a) Cost savings
(b) Reduced risk of liability
(c) Reduction of health hazards
(d) All of them
Answer:
(d) All of them
Question 8.
Which of the following is capable of doing maximum good to society?
(a) Business success
(b) Laws and regulations
(c) Ethics
(d) Professional Management
Answer:
(c) Ethics
Question 9.
Ethics is important for
(a) Top management
(b) Middle-level managers
(c) Non-managerial employees
(d) All of them
Answer:
(d) All of them
Question 10.
Which of the following alone can ensure effective ethics program in a business enterprise?
(a) Publication of a code
(b) Involvement of employees
(c) Establishment of compliance mechanism
(d) None of them
Answer:
(a) Publication of a code
Short Answer Questions
Question 1.
What do you understand by social responsibility of business? How is it different from legal responsibility?
Answer:
Various activities which provide for the welfare of the society along with the earning of profit for the firm are termed as “Social Responsibility of Business”.
Legal responsibility may be fulfilled by mere compliance with the law but social responsibility includes voluntary obligations towards society not covered by the law, along with the obligations laid down by law.
Question 2.
What do you mean by environment? What is environmental pollution?
Answer:
The sum total of all surroundings of a living organism, including natural forces and other living things, provides conditions for development and growth as well as danger and damage.
Question 3.
What is business ethics? Mention the basic elements of business ethics.
Answer:
Business ethics is defined as a set of moral standards which society expects from businessmen.
The elements of business ethics are:
(a) Publication of a code.
(b) Top management’s commitment.
Question 4.
Briefly explain
(a) Air Pollution,
(b) Water pollution
(c) Land pollution.
Answer:
Causes of Water Pollution
(a) Drainage of human excreta into rivers, canals, etc.
(b) Improper sanitation and sewage system.
(c) Dumping of wastes and effluents by various industrial units into the rivers and canals.
(d) Drainage of toxic substances like chemicals and fertilizers used in cultivation, into streams and rivers.
Causes of Air Pollution
(a) Emission of fumes from vehicles.
(b) Emission of smoke, dust, and chemicals from manufacturing plants.
(c) Emission of gases and dust arising from atomic plants.
(d) Emission of smoke from oil refineries, burning of trees and plants in forests, burning of coal, etc.
Causes of Land Pollution
(a) Excessive use of fertilizers, chemicals, and pesticides in cultivation.
(b) Disposal of solid waste of industries, mines, and quarries.
(c) Disposal of solid waste from the construction of roads, buildings, etc.
(d) Effluents of some plants like paper, sugar, etc. which are not absorbed by the soil.
(e) Excessive use of plastic bags, which are non-biodegradable.
Causes of Noise Pollution: It is caused by modem machines and gadgets such as rail engines, loudspeakers, generators, airplanes, vehicles, machinery, telephones, televisions, etc.
Question 5.
What are the major areas of social responsibility of business?
Answer:
(a) Responsibility towards the shareholders or owners: A business enterprise has the responsibility to provide a fair return to the shareholders or owners on their capital investment and to ensure the safety of such investment.
(b) Responsibility towards the workers: Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensures fair wage for their work.
(c) Responsibility towards the consumers: Supply of the right quality and quantity of goods and services to consumers at reasonable prices constitutes the responsibility of an enterprise toward its customers.
(d) Responsibility towards the government and community: An enterprise must respect the laws of the country and pay taxes regularly and honestly. It must behave as a good citizen and act according to the well-accepted values of the society and protect the natural environment.
Long Answer Questions
Question 1.
State any four arguments for social responsibility.
Answer:
The arguments for social responsibilities are:
(a) Public image: The activities of business towards the welfare of the society earn goodwill and reputation for the business. The earnings of a business also depend upon the public image of its activities.
(b) Government regulation: To avoid government regulations businessmen should discharge their duties voluntarily.
(c) Survival and growth: Every business is a part of society. So for its survival and growth, support from society is very much essential. The business utilizes the available resources like power, water, land, roads, etc. of the society. So it should be the responsibility of every business to spend a part of its profit for the welfare of society.
(d) Employee satisfaction: Besides getting a good salary and working in a healthy atmosphere, employees also expect other facilities like proper accommodation, transportation, education, and training. Employers should try to fulfill all the expectations of the employees because employee satisfaction is directly related to productivity.
Question 2.
Explain any four reasons responsible for increasing concern of business enterprises toward social responsibility.
Answer:
The following forces have been responsible for increasing concern of business enterprises towards social responsibility:
(a) Threat of public regulation: It is one important reason due to which business enterprise feels concerned with social responsibility. Democratically elected governments have to take care of every section of the societies thus regulating the businesses behaving in a socially irresponsible manner.
(b) Pressure of labor movement: Labour movement for ensuring fair gains for the working class throughout the world has become very powerful as labor has become far more educated and organized. This has forced business enterprises to pay due regard to the welfare of workers.
(c) Impact of consumerism: Development of education and mass media, and increasing competition in the market have made the consumer aware of his rights and power which has forced business enterprises to follow a customer-oriented approach.
(d) Development of social standard for business: New social standards consider the economic activity of business enterprises as legitimate but with the condition that they must also serve social needs. Business functioning is to be ultimately judged on the basis of social standards.
(e) Development of business education: Educated persons as consumers, investors, employ¬ees, or owners have become more sensitive towards social issues with the development of business education with its rich content of social responsibility.
(f) Relationship between social interest and business interest: Business enterprises have started realizing the fact that social interest and business interest are complementary to each other and that the long-term benefit of business lies in serving society well.
Question 3.
Business is .essentially a social institution and not merely a profit-making activity? Explain
Answer:
A business enterprise is permitted by society to canyon industrial or commercial activities and earns profits from it. Therefore, a business enterprise is expected to do business and earn money in ways that fulfill the expectations of society.
Like every individual living in society, the business has certain obligations towards society in terms of respect for social values and norms of behavior. It is obligatory on part of the business enterprise not to do anything that is undesirable from society’s point of view. The manufacture and sale of adulterated goods, making deceptive advertisements, evading taxes, polluting the environment, and exploiting workers are some examples of socially undesirable practices which may increase the profit of enterprises but which have adverse social effects.
On the other hand, supplying good quality goods, creating healthy working conditions, honestly paying taxes, prevention of pollution, and resolving customer complaints are examples of socially desirable practices which improve the image of enterprises leading to higher profits in the long run.
The major areas of social responsibility of the business that explain that business is essentially a social institution and not merely a profit-making activity include the following:
(a) Responsibility towards the shareholders or owners: A business enterprise has the responsibility to provide a fair return to the shareholders or owners on their capital investment and to ensure the safety of such investment.
(b) Responsibility towards the workers: Management of an enterprise is also responsible for providing opportunities to the workers for meaningful work and ensures fair wage for their work.
(c) Responsibility towards the consumers: Supply of the right quality and quantity of goods and services to consumers at reasonable prices constitutes the responsibility of an enterprise toward its customers.
(d) Responsibility towards the government and community: An enterprise must respect the laws of the country and pay taxes regularly and honestly. It must behave as a good citizen and act according to the well-accepted values of the society and protect the natural environment.
Question 4.
Why do enterprises need to adopt pollution control measures?
Answer:
Protection of the environment is a serious issue that confronts business managers and decision-makers. Business enterprises need to adopt pollution control measures due to the following reasons:
(a) Reduction of health hazards: There is increasing evidence that many diseases like cancer, heart attacks, and lung complications are caused by pollutants in the environment. Pollution control measures can not only check the seriousness of such diseases but can also be supportive of healthy life on earth.
(b) Reduced risk of liability: It is possible that an enterprise is held liable to pay compensation to people affected by the toxicity of gaseous, liquid, and solid wastes it has released into the environment. Therefore, it is a sound business policy to install pollution control devices in its premises to reduce the risk of liability.
(c) Cost savings: An effective pollution control program is also needed to save costs of operating business. Cost savings are particularly noticeable when improper production technology results in greater wastes which leads to higher cost of waste disposal and the cost of cleaning the plants.
(d) Improved public image: A firm that promotes the cause for the environment will be able to enjoy a good reputation and will be perceived as a socially responsible enterprise.
(e) Other social benefits: Pollution control results in many other benefits like clearer visibility, cleaner buildings, a better quality of life, and the availability of natural products in a purer form.
Question 5.
Explain any four steps that business enterprises should be taken to protect the environment.
Answer:
Five measure to control environmental pollution are:
(a) Definite commitment by top management of the enterprise to create, maintain and develop work culture for environmental protection and pollution prevention.
(b) Complying with laws and regulations enacted by the government for the prevention of pollution.
(c) Participation in government programs relating to the management of hazardous substances, plantation of trees, and checking deforestation.
(d) Ensuring that commitment to environmental protection is shared throughout the enterprise by all divisions and employees.
(e) Arranging educational workshops and training materials to share technical information and experience with suppliers, dealers, and customers to get them actively involved in pollution control programs.
Question 6.
Explain any four elements of business ethics.
Answer:
The various elements of business ethics are as under:
(a) Top management’s commitment: Top management has a crucial role in guiding the entire organization towards ethically upright behavior. To achieve results, the Chief Executive Officer and other higher-level managers need to be openly and strongly committed to ethical conduct.
(b) Publication of a code: Enterprises with effective ethics programs define the principles of conduct for the whole organization in the form of written documents which is referred to as the “code”. This involves areas such as fundamental honesty and adherence to laws; product safety and quality; health and safety in the workplace, etc.
(c) Establishment of compliance mechanisms: Company must ensure that actual decisions and actions comply with the firm’s ethical standards by establishing suitable mechanisms.
(d) Involving employees at all levels: Involvement of employees in ethics programs is a must as at different levels they are the ones who implement ethics policies to make the ethical business a reality.
(e) Measuring results: Although it is difficult to accurately measure the end results of ethics programs, the firms can certainly audit to monitor compliance with ethical standards. The top management team and other employees should then discuss the results for a further course of action.
Question 7.
Discuss the guidelines enumerated by Companies Act 2013 for Corporate Social Responsibility
Answer:
(a) Applicability: Section 135 of the Companies Act provides the threshold limit for applicability of the CSR to a Company, i.e. (a) net worth of the company to be Rs 500 crore or more; (b) turnover of the company to be Rs 1000 crore or more; (c) net profit of the company to be Rs 5 crore or more. Further, as per the CSR Rules, the provisions of CSR are not only applicable to Indian companies but also applicable to branch and project offices of a foreign company in India.
(b) CSR Committee and Policy: Every qualifying company requires spending of at least 2% of its average net profit for the immediately preceding 3 financial years on CSR activities. Further, the qualifying company will be required to constitute a committee (CSR Committee) of the Board of Directors (Board) consisting of 3 or more directors. The CSR Committee shall formulate and recommend to the Board, a policy which shall indicate the activities to be undertaken (CSR Policy); recommend the amount of expenditure to be incurred on the activities referred, and monitor the CSR Policy of the company. The Board shall take into account the recommendations made by the CSR Committee and approve the CSR Policy of the company.
(c) Activities under CSR: The activities that can be done by the company to achieve its CSR obligations include eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills, social business projects, 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 such other matters as may be prescribed.
(d) Local Area: Under the Companies Act, preference should be given to local areas and the areas where the company operates. The company may also choose to associate with 2 or more companies for fulfilling the CSR activities provided that they are able to report individually. The CSR Committee shall also prepare the CSR Policy in which it includes the projects and programs which is to be undertaken, prepares a list of projects and programs which a company plans to undertake during the implementation year, and also focus on integrating business models with social and environmental priorities and process in order to create shared value.