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SOLVED ASSIGNMENTS FOR JUNE & DEC TEE 2026
MCOM 2ND SEMESTER
TUTOR MARKED ASSIGNMENT
COURSE CODE : MCO-024
COURSE TITLE : Business Ethics and CSR
ASSIGNMENT CODE : MCO-024/TMA/2025-2026
1. The legal and ethical obligations of the firm are the same. Justify.
1. The Legal and Ethical Obligations of the Firm Are the Same – Justification
Introduction
Businesses operate in a complex environment where laws, regulations, and social expectations define acceptable behavior. Legal obligations are requirements that companies must follow under statutory or regulatory frameworks, while ethical obligations are standards of moral conduct that guide decision-making beyond legal compliance.
The statement “the legal and ethical obligations of the firm are the same” suggests that what is legally required is also ethically expected. While laws often codify ethical standards, there are overlaps as well as subtle differences. A closer examination reveals that legal compliance and ethical responsibility frequently reinforce each other, yet ethical obligations often extend beyond legal boundaries.
1. Overlap Between Legal and Ethical Obligations
1. Protection of Stakeholders
o Laws such as the Companies Act, 2013, Consumer Protection Act, and Labour Laws exist to safeguard stakeholders’ interests.
o Ethical principles such as fairness, honesty, and justice guide firms to act responsibly toward employees, consumers, and investors.
o Example: Paying minimum wages is legally required; treating employees with respect and fairness reflects ethical behavior.
2. Corporate Governance and Transparency
o Legal frameworks require disclosure of financial statements, corporate reporting, and adherence to accounting standards.
o Ethically, transparency and honesty in reporting build trust and credibility with shareholders and the public.
o Example: Compliance with SEBI’s listing regulations is a legal obligation, while voluntary CSR reporting aligns with ethical accountability.
3. Environmental Protection
o Laws such as the Environment Protection Act, 1986 mandate firms to reduce pollution and maintain ecological balance.
o Ethical obligations encourage companies to adopt sustainable practices beyond mere compliance, promoting environmental stewardship.
o Example: Tata Power adopting renewable energy initiatives exceeds legal requirements but meets ethical expectations.
2. Reinforcing Business Integrity and Reputation
· Legal compliance ensures minimum standards for operations, while ethical conduct strengthens corporate integrity and stakeholder trust.
· When firms align legal obligations with ethical expectations, they reduce the risk of litigation, penalties, and reputational damage.
· Example: Johnson & Johnson’s Tylenol recall in 1982 was both legally prudent and ethically responsible, prioritizing consumer safety over profits.
3. Ethical Obligations Often Extend Beyond Legal Requirements
· While laws establish a baseline, ethical responsibilities often go beyond what is legally mandated:
o CSR initiatives, environmental sustainability projects, and fair trade practices are often voluntary but ethically expected.
o Example: A company may follow all pollution control laws (legal obligation) but also aim for carbon neutrality (ethical obligation).
· This shows that legal and ethical obligations are not identical, but ethics often reinforces and extends legal duties.
4. Why Legal and Ethical Obligations Are Considered Similar in Principle
· Both aim to ensure responsible business conduct, protect stakeholders, and maintain societal trust.
· Laws are often codified ethical standards, reflecting society’s consensus on right and wrong.
· Non-compliance with law is both a legal violation and ethical lapse, while ethical negligence can sometimes result in legal action if it harms others.
Conclusion
The legal and ethical obligations of a firm overlap significantly because laws are designed to enforce basic moral standards in business operations. Both aim to ensure fairness, accountability, and protection of stakeholders.
However, ethical obligations often go beyond mere compliance, requiring firms to act responsibly even when the law does not mandate it. Firms that integrate legal and ethical responsibilities into their core strategies gain trust, sustainability, and competitive advantage.
In essence, legal obligations define the minimum standard, while ethical obligations define the ideal standard, but together they form the foundation for responsible and sustainable business practices.
2. Is ethical theory of any use in the real world of managerial decision making? Discuss by citing some examples from current business practices.
Introduction
Ethical theory refers to the systematic study of moral principles that guide human behavior, helping individuals distinguish right from wrong. In the context of management, ethical theories provide a framework for making decisions that are not only legally compliant but also morally responsible. With increasing scrutiny from stakeholders, regulators, and society, ethical decision-making has become critical for business sustainability.
The question arises: Are these ethical theories merely philosophical concepts, or do they have practical utility in real-world managerial decisions? The answer is a definitive yes, as ethical frameworks directly influence corporate behavior, stakeholder trust, and long-term profitability.
1. Ethical Theories Relevant to Managerial Decision-Making
1. Utilitarianism (Consequentialism):
o Decisions are judged by the outcome or consequences, aiming for the greatest good for the greatest number.
o Example: A company reducing emissions by switching to renewable energy benefits the environment, employees, and society, even if it requires initial financial investment.
2. Deontological Ethics (Duty-Based):
o Focuses on following rules, duties, and moral principles, irrespective of outcomes.
o Example: A bank adhering strictly to anti-money laundering laws, even if it leads to temporary business loss, demonstrates commitment to ethical duty.
3. Virtue Ethics:
o Emphasizes character and integrity of decision-makers rather than just rules or outcomes.
o Example: A CEO promoting transparency and honesty in financial reporting instills trust among investors and employees.
4. Justice and Fairness Theory:
o Decisions should be equitable and fair, ensuring no stakeholder is unjustly harmed.
o Example: Fair labor practices and equitable wage distribution in manufacturing units demonstrate adherence to justice principles.
2. Application in Current Business Practices
1. Corporate Governance:
o Companies like Infosys and Tata Group emphasize ethical frameworks in board decisions, risk management, and compliance, guided by principles of transparency, fairness, and accountability.
2. Environmental Responsibility:
o Patagonia and Tesla prioritize environmental sustainability by adopting green technologies, reflecting utilitarian ethics that maximize social good.
3. Fair Trade and Labor Ethics:
o Firms like Nestlé and Unilever follow labor laws, ensure fair wages, and avoid exploitative practices, aligning with deontological and justice ethics.
4. Consumer Protection and Transparency:
o Apple and Microsoft disclose data privacy policies and product safety measures, demonstrating duty and virtue ethics in protecting consumers.
5. Crisis Management:
o During product recalls or financial irregularities, companies guided by ethical principles prioritize stakeholder welfare over immediate profits, e.g., Johnson & Johnson’s Tylenol recall in 1982, still cited as a benchmark in ethical decision-making.
3. Benefits of Applying Ethical Theory in Management
· Enhanced Reputation: Ethical decisions build trust with customers, employees, and investors.
· Long-Term Sustainability: Aligning business strategies with ethical principles ensures longevity and reduces risk.
· Compliance and Risk Mitigation: Ethical frameworks guide adherence to laws and regulations, avoiding legal penalties.
· Employee Morale and Loyalty: Ethical culture fosters a motivated, committed workforce.
· Social Responsibility: Supports CSR initiatives and alignment with global frameworks like SDGs.
4. Challenges
· Conflicts may arise between profit maximization and ethical principles.
· Ethical decision-making requires judgment and discretion, which may vary across cultures and contexts.
· Balancing short-term pressures with long-term ethical considerations can be difficult in competitive markets.
Conclusion
Ethical theory is highly relevant in managerial decision-making. It provides a structured approach to resolving dilemmas, balancing stakeholder interests, and ensuring responsible business practices. Real-world examples from companies like Tata Group, Patagonia, Johnson & Johnson, and Nestlé demonstrate that ethical decision-making enhances reputation, ensures compliance, and drives sustainable growth.
In today’s business environment, ethical theory is not just a philosophical ideal but a practical necessity that guides managers to make decisions that are legally sound, socially responsible, and economically viable.
3. Draw out a clear distinction between shareholder centric CSR and stakeholder centric CSR.
Corporate Social Responsibility (CSR) can be approached from different perspectives depending on whose interests the company prioritizes. The two main approaches are shareholder-centric CSR and stakeholder-centric CSR. While both aim to contribute to society, they differ in their focus, objectives, and execution.
1. Definition
Shareholder-Centric CSR:
- This approach views CSR primarily as a means to enhance shareholder wealth.
- Social initiatives are undertaken only if they contribute to profitability or shareholder value in the long term.
- CSR is considered instrumental rather than an ethical obligation.
Stakeholder-Centric CSR:
- This approach recognizes all stakeholders—including employees, customers, suppliers, communities, and the environment—as important.
- CSR initiatives aim to balance the interests of multiple stakeholders, rather than prioritizing shareholders alone.
- CSR is considered both an ethical responsibility and a strategic tool for sustainable business growth.
2. Key Focus
Basis | Shareholder-Centric CSR | Stakeholder-Centric CSR |
Primary Goal | Maximize shareholder wealth | Promote welfare of all stakeholders |
Decision Basis | Economic returns and profitability | Social, environmental, and ethical considerations |
CSR Motivation | Instrumental (profit-driven) | Ethical and strategic (responsibility-driven) |
Scope of Activities | Limited to initiatives that improve brand image or revenue | Broad, including environment, community development, employee welfare, and social causes |
Time Horizon | Short- to medium-term (profit-focused) | Long-term (sustainable development-focused) |
3. Examples
- Shareholder-Centric CSR:
- Sponsoring a sports event that enhances brand visibility and drives sales.
- Investing in energy-efficient machinery to reduce costs and increase profits while appearing environmentally responsible.
- Stakeholder-Centric CSR:
- Setting up free schools, healthcare programs, or sanitation initiatives for communities.
- Employee skill development programs that benefit society and enhance workforce capabilities.
- Environmental conservation projects that prioritize ecological sustainability over immediate financial returns.
4. Underlying Philosophy
- Shareholder-Centric Approach:
- Rooted in Friedman’s doctrine (1970): The primary responsibility of a business is to maximize profits for its owners, and CSR is justified only when it contributes to this goal.
- CSR is seen as a tool for competitive advantage, marketing, or risk management.
- Stakeholder-Centric Approach:
- Rooted in Stakeholder Theory (Freeman, 1984): A firm’s responsibility extends beyond shareholders to all stakeholders affected by its operations.
- CSR is intrinsic to ethical business conduct, sustainability, and long-term societal impact.
5. Advantages and Disadvantages
Approach | Advantages | Disadvantages |
Shareholder-Centric | Increases short-term profitability; clear ROI on CSR activities | May ignore social and environmental needs; less ethical perception |
Stakeholder-Centric | Enhances brand reputation; long-term sustainability; builds trust with communities | Requires more resources and careful planning; ROI may not be immediate |
Conclusion
- Shareholder-Centric CSR focuses on profit and shareholder value, where CSR is a means to an end.
- Stakeholder-Centric CSR focuses on ethical responsibility, social welfare, and sustainability, balancing the needs of multiple stakeholders.
- In today’s business environment, stakeholder-centric CSR is increasingly preferred because it ensures long-term business sustainability, ethical credibility, and alignment with global initiatives like the SDGs.
4. a) Discuss the importance and relevance of Sustainable Development Goals (SDGs).
Introduction
The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030. Comprising 17 goals and 169 targets, the SDGs address critical social, economic, and environmental challenges globally. They are a continuation and expansion of the Millennium Development Goals (MDGs), reflecting lessons learned and addressing gaps.
The SDGs are significant because they provide a holistic framework for sustainable development, integrating economic growth, social inclusion, and environmental sustainability.
1. Eradicating Poverty and Hunger
· SDG 1 (No Poverty) and SDG 2 (Zero Hunger) aim to eliminate extreme poverty and ensure access to adequate nutrition and food security.
· Importance: Poverty and hunger are root causes of social instability, poor health, and limited access to education.
· Relevance: Developing countries, including India, face persistent poverty, making these goals critical for national development and human welfare.
2. Promoting Health and Well-Being
· SDG 3 (Good Health and Well-being) emphasizes universal access to quality healthcare, reduction of maternal and child mortality, and combating epidemics.
· Importance: Health is foundational for human capital development; a healthy population is more productive and contributes to economic growth.
· Relevance: Countries with high disease burden or limited healthcare infrastructure benefit from focused interventions guided by this goal.
3. Ensuring Quality Education
· SDG 4 (Quality Education) promotes inclusive and equitable education and lifelong learning opportunities for all.
· Importance: Education empowers individuals, reduces inequalities, and fosters innovation and economic development.
· Relevance: Literacy, skill development, and vocational training are essential for achieving national development and bridging socio-economic gaps.
4. Gender Equality and Social Inclusion
· SDG 5 (Gender Equality) addresses discrimination against women and girls, promoting empowerment and equal opportunities.
· Importance: Gender equality enhances social justice, economic productivity, and societal well-being.
· Relevance: Societies with gender disparities need SDG-driven initiatives to ensure equitable participation in all spheres.
5. Environmental Sustainability
· Goals such as SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 13 (Climate Action), SDG 14 (Life Below Water), and SDG 15 (Life on Land) emphasize conservation and responsible use of natural resources.
· Importance: Environmental sustainability ensures long-term survival and quality of life for current and future generations.
· Relevance: Climate change, water scarcity, pollution, and biodiversity loss require immediate action through SDG-aligned policies.
6. Economic Growth and Sustainable Development
· SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure) focus on inclusive economic growth, industrial development, and innovation.
· Importance: Sustainable economic development reduces inequalities, creates employment, and strengthens national economies.
· Relevance: Emerging economies need SDG-aligned growth strategies to balance industrialization and sustainability.
7. Global Partnership and Governance
· SDG 16 (Peace, Justice, and Strong Institutions) and SDG 17 (Partnerships for the Goals) emphasize good governance, rule of law, and global cooperation.
· Importance: Development is achievable only with transparency, accountability, and collaboration.
· Relevance: Effective governance, partnerships, and global support accelerate the implementation of SDGs at national and local levels.
b) Explain how SDGs and CSR are connected to each other.
(b) Connection Between SDGs and CSR
Introduction
The Sustainable Development Goals (SDGs) are a set of 17 global goals adopted by the United Nations in 2015 to address critical social, economic, and environmental challenges by 2030. These goals include ending poverty, ensuring quality education, promoting gender equality, providing clean water, and taking action against climate change.
Corporate Social Responsibility (CSR), as mandated under the Companies Act, 2013 in India, requires companies to allocate a portion of their profits for social welfare activities. CSR activities often focus on areas such as education, health, environmental sustainability, and skill development.
Thus, there is a natural alignment between CSR and SDGs, as both aim to create social, economic, and environmental impact.
1. Alignment of Objectives
· SDGs provide a global roadmap for sustainable development, while CSR represents corporate-level action toward these goals.
· Companies can design CSR initiatives that directly contribute to one or more SDGs.
· Example: A CSR program promoting renewable energy or tree plantation contributes to SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
2. CSR as a Means to Achieve SDGs
· CSR enables companies to translate broad global goals into actionable local initiatives.
· By investing in community welfare, education, health, and environment, companies help communities achieve SDG targets.
· Example: Skill development programs for youth align with SDG 4 (Quality Education) and SDG 8 (Decent Work and Economic Growth).
3. Reporting and Accountability
· The connection between CSR and SDGs encourages structured reporting of social impact.
· Companies can track how their CSR expenditure contributes to specific SDG indicators, improving transparency and accountability.
· Example: A company supporting clean water projects can report how many villages or people gained access, mapping it to SDG 6 (Clean Water and Sanitation).
4. Strategic CSR and SDGs
· Forward-looking companies adopt strategic CSR where projects are designed for long-term impact and sustainability.
· SDGs provide a framework for prioritizing CSR activities to address the most pressing societal challenges.
· Example: Pharmaceutical companies may focus on health initiatives (SDG 3) as part of their CSR strategy, ensuring measurable social impact.
5. Enhancing Corporate Reputation and Stakeholder Trust
· CSR initiatives aligned with SDGs demonstrate a company’s commitment to sustainable development.
· This enhances reputation, stakeholder trust, and brand value, which is particularly important in competitive markets.
· Example: Businesses investing in renewable energy or gender equality initiatives (SDGs 5 & 7) are viewed as responsible and ethical by consumers and investors.
6. Creating Shared Value
· CSR aligned with SDGs allows companies to create shared value, benefiting both society and business.
· By addressing societal needs through sustainable projects, companies ensure long-term economic and social benefits.
· Example: Clean energy CSR initiatives reduce environmental harm (societal benefit) and may reduce energy costs for the company (business benefit).
7. Global and Local Impact
· SDGs provide a global perspective, while CSR focuses on local implementation.
· Companies can contribute to global development goals while addressing local social challenges, bridging macro-level objectives with micro-level action.
· Example: Providing sanitation facilities in rural areas helps meet SDG 6 locally, contributing to the global goal of safe water access.
5. a) What are the methods of implementing CSR activities as per the Companies (CSR Policy) Amendment Rules?
5(a) Methods of Implementing CSR Activities as per Companies (CSR Policy) Amendment Rules, 2021
The Companies Act, 2013, along with the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, provides clear guidelines on how companies can implement CSR activities. The focus is on ensuring that CSR spending is effective, transparent, and aligned with the approved CSR objectives.
1. Through the Company Itself
- Companies can directly implement CSR programs using their own resources and personnel.
- This method involves planning, executing, and monitoring CSR projects without intermediaries.
- It is suitable for companies with adequate administrative capability, expertise, and manpower.
Example: A company sets up and manages a school or a health clinic in rural areas using its employees and management team.
2. Through a Registered Trust, Society, or Section 8 Company
- CSR activities can be undertaken by indirect implementation through registered entities.
- These entities must be:
- Registered under Indian law (Trusts under Indian Trusts Act, Societies under Societies Registration Act, or Companies under Section 8 of the Companies Act).
- Established by the company, its holding/subsidiary/associate, or jointly with other companies.
- This allows efficient execution of CSR projects through organizations with expertise in social development.
Example: Funding a local NGO to run skill development programs for youth in rural areas.
3. Collaborating with Other Companies
- Companies are allowed to collaborate or pool CSR resources with other companies.
- This enables shared expertise, reduced costs, and greater social impact.
- Each company is responsible for ensuring that their contribution is in line with the CSR policy and is monitored effectively.
Example: Multiple companies in the same industry jointly funding a clean water initiative in villages.
4. Implementation through Government or Public Authorities
- Companies can partner with central or state government programs or initiatives by public sector undertakings (PSUs).
- CSR funds can be used to support approved schemes of government or community development programs.
- Companies must ensure that the activities align with their CSR objectives and maintain proper reporting.
Example: Supporting government-led initiatives like Swachh Bharat Abhiyan or the National Digital Literacy Mission.
5. Direct Contribution to Public Charitable Institutions (Conditional)
- Companies may contribute directly to public charitable institutions provided:
- These institutions fall under Schedule VII of the Companies Act, which lists eligible CSR activities.
- Contributions are properly documented and monitored for effectiveness.
Example: Donations to institutions providing healthcare, education, or environmental conservation projects.
Key Points from the Amendment Rules, 2021
- CSR activities must align with Schedule VII of the Companies Act.
- Companies can implement projects directly, through registered entities, jointly with other companies, or through government programs.
- CSR spending cannot be made to benefit only the company’s employees or political/religious activities.
- Companies must monitor, document, and report CSR projects annually to the Board and in the Annual Report.
- Companies can choose multiple modes of implementation depending on the type of project and available expertise.
Conclusion
The Amendment Rules 2021 provide flexibility and clarity in implementing CSR activities. Companies can adopt direct implementation, work through registered trusts or societies, collaborate with other companies, or partner with government initiatives, ensuring CSR efforts are efficient, impactful, and compliant with law. The choice of method depends on the company’s capacity, resources, and strategic social objectives.
b) Which activities do not qualify as eligible CSR activity?
Under the Companies Act, 2013 (India), Corporate Social Responsibility (CSR) activities are defined broadly, but certain activities are explicitly excluded and do not qualify as eligible CSR activities under Section 135 and the CSR Rules. These exclusions are meant to ensure that CSR funds are used for genuine social welfare rather than activities benefiting only the company or its employees.
Here’s a detailed explanation:
Activities Not Eligible for CSR
- Activities Benefiting Only the Company or Its Employees
- CSR funds cannot be spent on direct business interests or perks for employees.
- Examples: Salary payments, bonuses, or employee welfare programs not linked to community development.
- Exception: Programs that benefit the community but include employees (like skill development) may qualify.
- Activities for Political or Religious Purposes
- CSR funds cannot be used for political contributions, political party support, or election campaigns.
- Activities promoting a specific religion or religious conversion are not eligible.
- Activities Already Mandated by Law
- Any spending that the company is legally obligated to do under other laws cannot count as CSR.
- Example: Compliance with environmental regulations, labor welfare obligations, or statutory levies.
- Capital Expenditure for Business Assets
- CSR funds cannot be used to acquire business assets like factories, machinery, or infrastructure used for commercial purposes.
- Exception: Building infrastructure solely for community welfare (schools, hospitals) is allowed.
- Personal Benefits or Hospitality
- CSR funds cannot be used for gifts, sponsorships for entertainment, travel, or personal benefits.
- Example: Sponsoring a corporate retreat or luxury travel for employees does not qualify.
- Activities Outside India
- CSR spending must be for projects within India (except for spending through Indian entities for projects outside India as permitted under certain rules).
- Purely Commercial or Promotional Activities
- Marketing campaigns disguised as CSR, brand promotion, or publicity exercises do not qualify.
- Example: Using CSR funds to promote the company’s products or services.
- Political or Legal Campaigns
- Funding litigation costs, legal battles, or lobbying efforts using CSR funds is strictly prohibited.
Summary Table: Non-Eligible CSR Activities
Category | Examples |
Employee welfare not linked to community | Salaries, bonuses, staff parties |
Political or religious contributions | Party donations, religious conversion campaigns |
Statutory obligations | Environmental compliance, legal requirements |
Commercial capital expenditure | Factories, business vehicles, office buildings |
Personal benefits | Luxury travel, gifts, private entertainment |
Purely promotional activities | Marketing campaigns, brand advertisements |
Activities outside India (unless specifically allowed) | Overseas commercial ventures |
Conclusion:
CSR is intended to promote social development, environmental sustainability, and community welfare. Companies must ensure that funds are used genuinely for public good rather than corporate gain, political interests, or religious purposes. Misuse of CSR funds for ineligible activities can lead to penalties and legal scrutiny under the Companies Act, 2013.
