Key Points

Social responsibility of business refers to its obligation to take decisions and perform actions that are desirable in terms of the objectives and values of society, going beyond mere profit-making.

Legal responsibility is fulfilled by simply complying with the law. Social responsibility is a broader concept that includes voluntary actions and ethical obligations not covered by law.

Key arguments for social responsibility include ensuring long-term interest of the firm, avoiding government regulation, having the resources to solve social problems, and justification for existence and growth.

Major arguments against social responsibility are that it violates the profit maximization objective, places an unfair cost burden on consumers, and that businesses lack the social skills to handle social problems.

In reality, businesses are increasingly concerned with social responsibility due to factors like the threat of public regulation, pressure from labor movements, and rising consumer consciousness.

Social responsibilities are categorized as: Economic (be profitable), Legal (obey the law), Ethical (do what is right and fair), and Discretionary (be a good corporate citizen, e.g., philanthropy).

A business has responsibilities towards shareholders (fair return), workers (fair wages, good conditions), consumers (safe products, fair prices), and the government and community (pay taxes, protect environment).

Environmental protection is a key social responsibility, as industrial activity is a major cause of pollution. Businesses must take steps to minimize their adverse impact on the environment.

The main types of pollution caused by business activities are air pollution (emissions), water pollution (chemical dumping), land pollution (toxic waste disposal), and noise pollution (from factories and vehicles).

Businesses need to control pollution to reduce health hazards, avoid legal liability, achieve cost savings, improve their public image, and gain other social benefits like a cleaner environment.

Business ethics refers to the moral principles that should govern business activities. It is concerned with what is right and wrong in business conduct and goes beyond legal requirements.

Key elements to foster ethics in a business include top management commitment, publication of a written 'Code of Conduct', establishing compliance mechanisms, involving employees, and measuring results.

In India, CSR is governed by Clause 135 of the Companies Act, 2013. It applies to companies with a specified turnover, net worth, or net profit.

The Companies Act, 2013 encourages applicable companies to spend at least 2% of their average net profit of the previous three years on CSR activities specified in Schedule VII of the Act.