1. Business Ethics 1

2. TRUSTEESHIP MANAGEMENT Gandhian Philosophy of Wealth Management
Trusteeship, as applicable to the corporate world, refers to the act of holding and managing resources on behalf of the stakeholders of the firm.

3. TRUSTEESHIP MANAGEMENT Gandhian Philosophy of Wealth Management
Gandhian Philosophy of wealth management is based on the ‘Servodaya’ principles of Truth, Non-Violence and Trusteeship; wherein class harmony between labour and management reigns supreme.
According to Gandhiji, managers and proprietors of business firms are only the trustees of wealth of society.
The idea of trusteeship advocated by Gandhiji, is based on and has its origin in the Bhagaved Gita-in the principles of ‘aparigraha’ (non-possession) and ‘Sambhawa’ (equalism) which were ardently followed by Mahatma Gandhi.
Unlike the Utilitarian motto of ‘greatest good of the greatest number’ known as Teleology, Gandhiji’s motto was ‘greatest good of all’.

4. Gandhiji’s views on labour management relations
My ideal is that capital and labour should supplement and help each other. They should be a great family living in unity and harmony; capital not only looking to the material welfare of the labourers, but their moral welfare also-capitalists being trustees of the welfare of the labouring classes under them.

5. Gandhiji’s views on labour management relations
Gandhiji assigned a paternalist role to management in their dealings with labour
Gandhiji considered trade unions to be means of workmen’s material and moral development.
He declared that a strike is an inherent right of the working man for the purpose of securing justice, but they must be considered a crime immediately the capitalists accepts the principle of arbitration.
If conflict arises between labour and management, the weapon proposed by Gandhiji is Satyagraha

6. Gandhiji’s principle of Trusteeship
Trusteeship principle is foundation of philosophy of wealth management
Principles of Trusteeship
No recognition to right to individual property
Resources must be held and utilised for the benefit of society.
Management is the trustees of the stakeholders and must work towards optimising stakeholder value, not merely maximising shareholder value

7. Gandhiji’s principle of Trusteeship
In case of industrialist what they produce should be determine by social necessity with optimal utilization of scarce resources and not by personal whims
If workers are to work with harmony and collaboration with management then that make workers also co-trustee with the management
Though wealth legally belongs of owners of business, morally belongs to society and community

8. Politics without principles Education without character
Seven greatest Sins
Politics without principles
Education without character
Commerce without morality
Pleasure without conscience
Wealth without work
Science without humanity
Worship without sacrifice

9. Indian Corporate Leaders and Trusteeship
Infosys, particularly from its former CEO and current chief mentor, Narayana Murthy for creating this company along with a small group of people (better sharing of wealth in society), the involvement of employees in the company’s fortunes (through ESOPs) and his contentment with a mere 7% of company stock (he prefers it that way) reflect a deep-rooted commitment towards trusteeship.
House of the Tatas with their corporatised initiatives for socio-corporate benefits
“WIPRO Cares” Foundation, with a targeted corpus of Rs 100 crore for primary education;
Birla foundation with its focus on socio-economic improvement in the lives of the people touched by the corporation.

10. Social & Economic Responsibilities of Business

11. Reference books
Representations of Social Responsibility Vol.II edited by David Crowther/Renu Jatana
Corporate Social Responsibility: Ethical and Strategic Choice by Jayanta Bhattacharya
Corporate Social Responsibility: Concepts and Cases - The Indian Experience Edited by C. V. Baxi and Ajit Prasad
Essentials of Business Environment: K. Aswathappa

12. Meaning of CSR
By the term ‘Corporate Social Responsibility’ (CSR) what is generally understood is that business has an obligation to society that extends beyond its obligation to its shareholders or owners.

13. Ten Principles: The Global Compact
Human rights
1. Businesses should support and respect the protection of internationally proclaimed human rights; and
2. Make sure that they are not complicit in human rights abuses.
Labor standards
3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
4. The elimination of all forms of forced and compulsory labor;
5. The effective abolition of child labor; and
6. The elimination of discrimination in respect of employment and occupation.

14. Ten Principles: The Global Compact
Environment
7. Business should support a precautionary approach to environmental challenges;
8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
10. Business should work against all forms of corruption, including extortion and bribery.

15. The Global Compact
There are now some 90 Indian companies, which have signed up to the UN Global Compact.
More than 649 companies globally have signed the Global Compact (

16. Definition of CSR
CSR means operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that the society has of business”.
The World Business Council for Sustainable Development defines CSR as: “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”.

17. Key Elements in Definition of CSR
Corporations have responsibilities that go beyond the production of goods and services at a profit.
These responsibilities involve helping to solve important social problems. especially those they have helped create.
Corporations have a broader constituency than stockholders alone.
Corporations have impacts that go beyond simple marketplace transactions.
Corporations serve wider range of human values than can be captured by a sole focus on economic values.

18. Social Responsibilities of Business – Archie B Carroll
Economic
Responsibility
Legal
Responsibility
Ethical Responsibility
Discretionary
Responsibility

19. To whom Business Organizations are responsible?????
Primary Stakeholders
Secondary Stakeholders

20. Relations between a business firm and its primary stakeholders
Stockholders
Employees
(Unions)
Wholesalers
(Retailers)
Distribute
products
Sell
labor
Invest
capital
Creditors
Business firm
(Managers)
Buy
products
Lend
money
Customers
Suppliers
Sell
materials

21. Relations between a business firm and some of its other (secondary) stakeholders
General
Public
Central/State
and Local
Governments
Local
Communities
Positive,
negative
opinion
Jobs,
environment
Regulation,
taxes
Business
Support
Groups
Governments
Business Firm
(Managers)
Advice,
research
Friendly,
hostile
Image,
publicity
Media
Social
Activist
Groups
Social
demands

22. Social Responsibility Debate: Arguments in Against
In Friedman’s view business has only one social responsibility and that is to maximize the profits of its owners. His very famous statement says it all, “The business of business is business.”
Distorts allocation of Resources
Business lacks training in social issues, and lacks social skills necessary to carry out social programs.
Social policy is the jurisdiction of governments, not business
Increase in business Power

23. Social Responsibility Debate: Arguments in Favor
Corporations have too much power
In 1999 the United Nations reported that the world’s then three richest people-Bill Gates of Microsoft, the Sultan of Brunei and the Walton family of the Wall Mart retail chain were worth more than the combined GDP of the world’s 34 poorest nations.
“With great power and size comes great responsibility.”

24. How Does CSR benefit Business???
Reputation
Less Law Suits
Loyal Employees
& Customers
Less Media Harassment
Access to Capital Improves
Improves Productivity
Community Goodwill
Better Environment

25. DIFFERENCE GOOD COMPANY Excellent Products & Services GREAT COMPANY
Makes the world a better place

26. Developments of CSR in India
First Phase :Merchant charity – Dates back to Vedic period – Religious and social ethics
Relief in natural disasters
Dharam Shalas
Drinking water

27. Developments of CSR in India
Second Phase Trusteeship
Social responsibility was brought into community’s consciousness goes principally to business leaders like JRD Tata, Ramakrishna Bajaj, Arvind Mafatlal, Kasturbhai Lalbhai.
Vinoba Bhave on whom Gandhiji’s mantle had fallen wanted businessmen to interest themselves in humanitarian, educational and other beneficial social activities and consider business as a social mission while promoting the ‘trusteeship of wealth’ theory of Gandhiji whereby owners and workers were co-trustees of business for society.

28. Developments of CSR in India
Third Phase Declaration of social responsibility
Role of Jaiprakash Narayan –
Organized Conferences on responsibilities of business
Setting up of ‘Fair Trade Practices Association’ by Tata, Bajaj and others

29. Developments of CSR in India
Fourth Phase Managerial Trusteeship
1970s & later – realization that continued profitability depended on involvement towards development of society
Importance of ethical business practices and concern for the environment in which the business operates was also recognized.

30. Developments of CSR in India
Fifth Phase
Corporate citizenship
Realization that if social development is neglected, business cannot prosper.
Government alone cannot handle all social issues.

31. Traditional drivers for CSR
Values
Strategy
Public Pressure

32. Present Drivers for CSR
Corporate Social Performance
Stakeholder Management
Corporate Environment Management
Consumer Pressure
Risk Management and Sustainability
Business Ethics
Attracting employees
Personal Values

33. Significant Drivers of CSR

34. Social Audit
Gerald Vinten defines social audit as “a review to ensure that an organization gives due consideration to its social responsibilities to those both directly and indirectly affected by its decisions, and that a balance is achieved in its corporate planning between these aspects and more traditional business related objectives”

35. Area of Social Responsibility
Respecting Human Rights: not discriminating against caste, creed, gender, etc
Contributing to socio-economic development
Employee Welfare: which includes the right to organize, eliminating child labour, non-discrimination, living wage and social security, training, safety, health and wellbeing, lifelong learning, empowerment of employees, share ownership schemes etc.
Consumer Protection: includes right to information, impact of product on local market, etc
Respect for national sovereignty and local communities by multinationals.

36. Areas of Social Responsibility
Participating in academic research.
Share resources with under-privileged communities e.g., transportation and medical facilities with the community senior citizens, etc.
Community Investments e.g., companies can invest in sustainable development Programmes for the community.
Socially Responsible Investments e.g., Investors should to invest in companies who follow responsible business practices
Share expertise and knowledge with peers and learn from others experience.

37. Areas of Environmental Responsibility
Respect for the Environment
Environmental friendly technologies: investment in eco- friendly technologies.
Use, conserve and discharge: energy, material and water in an eco-friendly manner.
Adopt preventive and precautionary measures for environment pollution control. Educate employees and the community to take collective, preventive and precautionary measures to reduce environmental pollution.
Rectify environmental damage at source: Treat waste before disposing it.
Bio - diversity preservation
Promote and implement an environmental policy for sustainable energy and sustainable environment.

38. Areas of Business Responsibility
Compliance with Tax Laws and other regulations.
Corporate Governance: Transparent Financial Reporting; Auditing / Verification and Accountability; addressing customer redressals and grievances.
Invest in developing science and technology.
Foster ethical trade practices
Regulate supplier’s CSR practices and distributor’s CSR practices. e.g. stop working with suppliers and distributors who do not follow responsible business practices
Transparent financial reporting : Public financial reports in newspapers for public information.

39. Steps to implement CSR
Mainstreaming CSR vision in Articles of Association
Develop a written policy CSR and make it available in the public domain
Assessment of internal environment
Identification of drivers and barriers to change
Assessment of core competencies of the company
Building in the strategic business case
Assessment of external environment
Legal Context & Development Context
Identification & prioritization of the opportunities for corporate collaboration
Putting CSR policy in the public domain

40. Steps to implement CSR Translating CSR policy into action
Reporting, experience sharing and mutual learning
External reporting and certification

41. Why companies do not take up CSR???
Markets do not reward ethical companies
Lack of clear definition of CSR
Systematic denial of wrong doings
Location of CSR on the periphery of the corporate structure

42. Thank You