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CHAPTER 20

Business is a socio-economic activity and it draws its inputs from the society; hence its objective should be the welfare of the society. It should owe a responsibility towards solving many of the social problems.

The concept of ‘Social Accounting’ has gained importance as a result of high-level industrialization which has brought prosperity as well as many problems to the society.

It has necessitated the corporate sector, with huge amounts of funds at their disposal, to invest substantial amounts in social activities so as to nullify the adverse effects of industrialization.

Social accounting is concerned with analysing and evaluating organizational impact on society and its environment. It measures the social costs and benefits of various organizational activities.

Social accounting is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large.

It is also known as social accounting and auditing, social accountability, social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or accounting.

Social accounting is an Information system in which the societal losses and benefits of an organization are identified accurately and measures those losses and benefits aptly and reporting those in such a manner so that the sustainability of the organization is judged by the society.

(i) Social accounting is an expression of a company’s social responsibilities.

(ii) Social accounting is related to the use of social resources.

(iii) Social accounting emphasizes on relationship between firm and society.

(iv) Social accounting determines desirability of the firm in society.

(v) Social accounting is application of accounting on social sciences.

The concept of social accounting gained prominence and momentum as a result of high level of industrialization that had necessitated the corporate to invest substantial amount in the social activities.

Main objectives of social accounting are to help society by providing different facilities by enterprise and to record them like:

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1. Effective utilization of natural resources:

Main objectives of making social accounting are to determine whether company is properly utilising their natural resources or not.

To identify and measure the periodic net social contribution of an individual firm consisting of cost and benefits internalised to the firm and externalities affecting social system.

2. Help to employees:

Company can help employees by providing the facility of education to children of employees, providing transport free of cost and also providing good working environment conditions.

3. Help the society:

To help determine whether individual firms’ strategies and practices which directly affect the relative resource and power status of individuals, social segments, generations consistent with widely shared social priorities one hand and individual aspirations on the other.

Because companies' factories spread the pollution in natural society which is very harmful for society.

So, enterprise can help to society by planting the trees, establishing new parks near factory area and also opening new hospitals.

4. Help to customers:

If company provides goods to customers at lower rate and with high quality also benefits the society.

To provide optimal information to all the constituents of the society to enable them to make decisions regarding allocation of the social resource where optimally implies cost/benefit effective reporting strategy which also optimally balances potential information conflicts among the various constituents of a firms.

The important benefits of social accounting are as follows:

A firm fulfils its social obligations and informs its members, the government and the general public to enable everybody to form correct opinion.
It counters the adverse publicity or criticism levelled by hostile media and voluntary social organisations.

It assists management in formulating appropriate policies and programmes.

Through social accounting the firm proves that it is not socially unethical in view of moral cultures and environmental degradation.
It acts as an evidence of social commitment.
It improves employee motivation.
Social accounting is necessary from the view point of public interest groups, social organisations investors and government.
It improves the image of the firm.

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The Sachan Committee in its report in 1978 recognised the need for social disclosures.

The concept was relatively new for India and is yet to gain momentum.

Tata Iron Steel was the first in India which conducted social accounting with the sole aim to examine and report to what extent company has been able to fulfil its objectives regarding its social and local community.

Corporate Social responsibility (CSR) is continuing commitment by businesses to integrate social and environmental concerns in their business operations.

Changes in the global environment increasingly challenge business around the world to look beyond financial performance, and to integrate social and environmental concerns into their strategic management.

Prior to Companies Act 2013, CSR in India has traditionally been seen as a philanthropic activity.

And in keeping with the Indian tradition, it was believed that every company has a moral responsibility to play an active role in discharging the social obligations, subject to the financial health of the company.

In the early 90’s Mahatma Gandhi introduced the concept of trusteeship helping socio-economic growth.

CSR was influenced by family values, traditions, culture and religion.

On 29th August 2013, The Companies Act 2013 replaced the Companies Act of 1956.

The New Act has introduced far-reaching changes that affect company formation, administration, and governance, and incorporates an additional section i.e. Section 135 – clause on Corporate Social Responsibility obligations (“CSR”) for companies listed in India.

The clause covers the essential prerequisites pertaining to the execution, fund allotment and reporting for successful project implementation.

India became the first country to legislate the need to undertake CSR activities and mandatorily report CSR initiatives under the new Companies Act 2013.

This is the beginning of a new era for CSR in India.

Entities Covered by the CSR Obligations –

The Section 135 is applicable to companies which have:

an annual turnover of Rs.1,000 crore or more
or a net worth of Rs.500 crore or more
or a net profit of Rs.5 crore or more.

Companies meeting the above criteria are required to constitute a CSR Committee.

The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.

The companies falling under

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the prescribed criteria are required to spend a minimum 2% of its average net profit for its preceding three financial years amount on CSR activities and report on the activities detailed in Schedule VII, or prepare to explain why they didn’t.

Activities where this money is to be spent by companies is as follows: (as per Schedule VII)

• Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swachh Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water;

• promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects;

• promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;

• ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;

• protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;

• measures for the benefit of armed forces veterans, war widows and their dependents;

• training to promote rural sports, nationally recognized sports, Paralympic sports and Olympic sports;

• contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Govt. for socio economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women;

• contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Govt.

• rural development projects

• slum area development.

YouTube Link for Lecture:

Channel Name:

Lateef’s Commerce Academy

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Giving back to Society

The page is a full-page CSR infographic.

Introductory text

Giving back to Society

“As a responsible corporate citizen, IndianOil undertakes a number of social welfare and community development programmes. With pan India presence, IndianOil undertakes CSR activities across the country, from Leh in J&K in the North, to the North Eastern States, to the aspirational / backward districts / naxal affected areas, to Gujarat in the West and Tamil Nadu/Kerala in the south.”

CSR expenditure (₹ Crore)

The chart shows:

Year	CSR expenditure (₹ Crore)
2011–12	83
2012–13	79
2013–14	82
2014–15	114
2015–16	157
2016–17	214
2017–18	331
2018–19	491

Beneficiaries

“During 2018-19, more than 1.15 crore beneficiaries were positively impacted through over 950 initiatives undertaken by IndianOil in various geographies across India.”

CSR Thrust Areas

The visual identifies four CSR thrust areas:

Safe drinking water and protection of water resources

Health care and sanitation

Education and employment-enhancing

Empowerment of women and socially/economically

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IndianOil Foundation

IndianOil has created a non-profit trust, the IndianOil Foundation (IOF), in collaboration with the Archaeological Survey of India (ASI) and the National Culture Fund (NCF) of the Ministry of Culture, Government of India to protect India’s heritage monuments.

The foundation is exclusively funded by IndianOil.

The major objective of the foundation is to protect, preserve and promote the glorious past of the country.

IndianOil Aarogyam

Under IndianOil Aarogyam, the flagship CSR programme, Mobile Medical Units (MMUs) have been operating in catchment areas of 5 Refinery Units i.e. Mathura, Barauni, Bongaigaon & Paradip.

The MMUs cover more than 420 villages in the catchment areas of 5 Refinery Units.

In 2018-19, patient footfall in the target geographies was about 90,000.

IndianOil Sports Scholarships

At present, 250 scholarships in 20 games have been awarded to upcoming junior players from 13 to 16 years of age.

During 2018-19, 103 sportspersons benefitted from the scheme.

IndianOil at the forefront of National Missions

Swachh Bharat

In support of the Mission, IndianOil undertook more than 30,000 ‘Swachhta’ events such as awareness campaigns, cleanliness drives etc in 2018-19.

The company is at the forefront of Government of India’s SATAT scheme for procurement and sale of Compressed Biogas (CBG) produced from organic waste.

Digital India

IndianOil has identified 80 initiatives across 10 themes to bridge the technological gap, including drone based pipeline monitoring, virtual reality based e-learning, block-chain inspired supply chain tool, etc.

A Digital Centre of Excellence is being developed to enable technology transformation.

Pradhan Mantri Ujjwala Yojana / LPG

Over the last 5 years, IndianOil has spearheaded mega schemes like PaHaL LPG subsidy scheme, GiveItUp Campaign and Pradhan Mantri Ujjwala Yojana (PMUY), which have made clean energy accessible across socio-economic divides.

In 2018-19, IndianOil provided LPG connections to 1.68 crore BPL families under PMUY.

Startup India

IndianOil has set up a Start-Up Fund drive innovation and competitive advantage.

The Company is currently supporting 11 start-up ventures for innovative solutions in energy space including digital improvement in surveillance, automation, efficiency improvement, process improvement, customer retention, among others.

Make in India

IndianOil gives procurement preference to indigenous manufacturers and Micro, Small & Medium Enterprises (MSME).

In 2018-19, 29.07% of items procured (excluding crude, petroleum products & natural gas), were from indigenous MSME vendors.

IndianOil also actively uses the Government’s e-procurement portal, GeM.

Skill India

IndianOil’s skill development centres provide trainings to unemployed / under-privileged youth of India in areas of Medical Technician, General Housekeeping, Unarmed Security Guard, Computer data assistant, etc.

The Company’s Kaushal Vikas (Skill Development) initiative benefitted 15,000 unemployed youth in 2018-19.

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Visual content included

Pages 89 and 90 are image-based CSR presentation pages, so the extracted text does not contain their internal text. I have therefore transcribed the visible infographic content directly from the page images.

Page 89 contains:

“Giving back to Society”
CSR expenditure chart for 2011–12 through 2018–19
2018–19 beneficiary figure of more than 1.15 crore
over 950 initiatives
Four CSR thrust areas.

Page 90 contains:

IndianOil Foundation
IndianOil Aarogyam
IndianOil Sports Scholarships
“IndianOil at the forefront of National Missions”
Swachh Bharat
Digital India
Pradhan Mantri Ujjwala Yojana / LPG
Startup India
Make in India
Skill India.