Abstract

In India, the Companies Bill, 2013, mandated that firms spend 2% of their average net profits on corporate social responsibility (CSR) activities. This led to an increase in social activities by firms that were more socially relevant and effective. Thermax claimed to be one of the few companies that undertook CSR activities that were well beyond its functional imperatives. It avoided spending on common CSR causes such as the environment and alternative energy but looked into areas like education and skill-building. Going beyond the mandated 2%, Thermax spent about 3% of its net profit on CSR activities. Among its various activities, it set up a model school to provide free education to underprivileged children to train them in non-formal education, mentor adolescents for personality development and career counselling, etc. It developed workplace safety policies and practices at its manufacturing locations and offices. Employees were encouraged to report unsafe conditions and incidents. It had a Leadership Development Program that focused on developing leaders through various programs. Thermax supported human rights and labor rights as prescribed by the law and all its vendors were required to follow the labor laws applicable in the country of operation. The suppliers of Thermax were carefully selected and were required not to enter into any undisclosed agreement that hampered healthy competition. They were encouraged to innovate.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The why, what, and how of CSR
• The role of different stakeholders in the process of CSR
• The concept of CSR and its practice
• The arguments in favor of a company to practice CSR
• The different stakeholders that can be addressed

Keywords

Business Ethics, Corporate social responsibility, CSR Pyramid, Mandatory CSR, Philanthropy, Economic, Environmental, Social