Corporate Social Responsibility - Historical Development - Assignment Example

Corporate Social Responsibility Table of Contents 1.0Historical Development 2 1.1 Phase 1 (1960 – 1990) - Pre CSR phase 2 1.2 Phase 2 (1990 – 2000) – CSR Initiation Phase 2 1.3 Phase 3 (2000 ongoing) – Early CSR Mainstreaming 2 1.3.1.1 CSR practices in the Eighteenth Century 3 1.3.2 The Trends of Each Phase 3 2.0 Interpretation of CSR 4 2.1 Views of the Social Responsibility 4 5 2.2 Corporate Citizenship Concepts 6 3.0 Disclosure of CSR 7 4.1 Political Theories 10 4.1.1 Corporate Constitutionalism 11 4.2 Integrative Theories 11 4.2.1 Issue Management 12 4.2.2 Stakeholders Management 12 6.0 Challenges and Issues in Social and Environmental Accountability and Reporting 15 6.1 Stakeholders Dictation 15 6.2 Issues of Social Accounts Cf. Discursive Disclosure 15 6.3 Environmental Issue Related to CSR 16 6.4 Social Issue 18 7.0 Evidences of Corporate Governance and Ethics Embedment 19 7.1 Toshiba’s Corporate Governance 19 7.2 McDonald’s Corporate Governance 20 8.0 CSR in Action 22 9.0 Conclusion 24 References 25 1.0 Historical Development The development and the history of the CSR (Corporate Social Responsibility) existed since the inception of trade and the business. It was during the year 1700 BC in ancient Mesopotamia when King Hammurabi introduced a code where the builders, the farmers and the inn-keepers were put to death if their negligence led to the demise or major inconvenience to the local people. With the growth of industrialisation, there have been changes in the impact of the business on the environment and the society (Brass, 2010). There are three phases in the development of the CSR each having different characteristics. 1.1 Phase 1 (1960 – 1990) - Pre CSR phase 1.2 Phase 2 (1990 – 2000) – CSR Initiation Phase 1.3 Phase 3 (2000 ongoing) – Early CSR Mainstreaming In order to understand the above relevant phases, three sections can be made namely the early roots, the trends of each phase and the key milestones in the three phases. 1.3.1 The Early CSR Roots- Corporate Social Responsibility has neither been a new concept nor a radical one. However, the objective of the corporate houses to serve the society beyond the maximization of the profit has been a historical phenomenon (Dr. Katsoulakos & Et. Al., 2004). 1.3.1.1 CSR practices in the Eighteenth Century The actual business practices in the eighteenth century by the successful companies lead to the early roots of the Corporate Social Responsibility. Various countries consisting of various companies have adopted the CSR approach in the business management since centuries. The main aim of the current CSR movement is to make the corporate responsibilities a common practice for most of the companies in order to create an impact that would make a difference to the sustainability of the world and the quality of the life of the present and the future generations (Dr. Katsoulakos & Et. Al., 2004). 1.3.2 The Trends of Each Phase Phase 1– CSR Initiation Phase (1960-1990) The word CSR used in the year 1960s was started by the Goyder’s Responsible Company. Environmental issues gained much importance during this phase that triggered various national environment protection agencies and the UNEP. In the early 80’s, the main problems were poverty, social inequality, population pressure that were recognized as the critical characteristics for the proper functioning of the eco-system. However, in the late 1980’s the principle of sustainability development was established. It was in this particular year that the reporting system was established (Dr. Katsoulakos & Et. Al., 2004). Phase 2- CSR Momentum Building Phase 1990 – 2000 In the 1990s, there has been rise of the CSR to unparalleled importance in the political and the economic dialogue and momentum building. During the year 1990, there was a continuous development of the concept of sustainability gaining popularity. The second group of the CSR reporting was started by the Body Shop (Dr. Katsoulakos & Et. Al., 2004). Phase 3- Mainstreaming Initiation phase 2000 onwards In the last few years, CSR is at the maturity stage as it is expected. The main principles have been recognised. The focus has been on the implementation developments that are likely to occur from the linkage of the CSR with the main strategy and the framework of the management (Dr. Katsoulakos & Et. Al., 2004). 2.0 Interpretation of CSR As observed in the Scribd, CSR is the commitment of the business for the contribution to the sustainable economic development who works with the families, the employees, the local communities and the societies with the aim that the quality of life is improved (Scribd, n.d.). 2.1 Views of the Social Responsibility There are two views, one is the classical view and other is the socioeconomic position. By the term classical view it is understood that the managements’ social responsibility is to increase the profits only. Whereas, the socio economic position tries to explain that the responsibility of the management is beyond the profit maximisation and includes protection and improvement of the welfare of the society (Scribd, n.d.). There are various areas of the corporate social responsibility; they are environment, investors, customers, general social welfare, employees (Scribd, n.d.). As stated in Slideshare, CSR can be defined as how the company’s action makes an impact on the society (Slideshare, 2008). 2.2 Corporate Citizenship Concepts Corporate social responsiveness- it mainly emphasizes upon the activity and the action. Corporate social performance – It provides more weightage on the results and the outcome (Slideshare, 2008). According to Talbot (2006), CSR has been the most used term that seeks to increase the function of the corporation which is beyond the economic framework and includes both environmental and social aspects of the community. There are people who believe that earning money make them socially responsible as they provide jobs and economic values to the community. They also consider that if they keep shareholders happy then they will be regarded as the successful enterprise. Yet, if the accountability shifts beyond the shareholders to employees, competitors, suppliers, then it poses various challenges not only to the values of the corporation but also at the role of the board of directors in overseeing the shift in the accountability. As opined by the author, CSR is not much about ‘giving back’ but it is all about ‘making things right'. CSR is all about the corporate sustainability that tries to operate in such a way that helps to sustain the health, relevance and viability of all those who have a stake (Talbot, 2006). According to Werther & Chandler (2010), CSR is composed of three words namely corporate, social and responsibility. The term CSR depicts the relation between the corporation and the societies with which the corporations interact (Werther & Chandler, 2010). According to Werther & Chandler (2010), corporate social responsibility follows a certain hierarchy which can be shown in the figure below. FIG: Corporate Social Responsibility Hierarchy (Werther & Chandler, 2010). According to Heath & Ni (2008), many people prefer to use the term “corporate” responsibility with the aim to avoid the assumption that it is confined to the “social” concerns. Others use the term as “social” responsibilities in order to shun the fact that the social responsibility only relates to the topic concerning to businesses that keep profit over the social principle. The person who prefers “social” than “Corporate” recognises that the non-profits and the government organisations must adhere to the responsibility standards (Heath & Ni, 2008). 3.0 Disclosure of CSR The academic researchers have been focusing upon the CSR disclosures since mid 1970s. The disclosure may have been important for the researchers as there has been increasing recognition among the business communities regarding the importance that the stakeholders attach to the environmentally and socially responsible behaviour of the corporate. Many researchers have defined the term corporate disclosures in different ways. According to Deegan and Rankin, disclosures can be understood as the revelation that relates to the interaction of the physical and the social environment with the organisation including the disclosures that link to the community involvement, the human resources, the natural environment, the energy and the product safety (Ahmad & Et. Al., 2003). By implementation of CSD (Corporate Social Disclosure), public can get information about the companies’ activities that relates to the community. For instance, the companies may provide information regarding their commitments to improve the waste management, to reduce the dangerous impact from the environment to show their agreement with the Environmental Quality Regulation, to make efforts to protect the employees of the organisation and many other social issues that affect the general public. The CSD helps to strengthen the relation with the stakeholders as it leads to corporate transparency. It also promotes greater confidence and faith among the stakeholders (Bhandari & Et. Al., n.d.). The main benefits of disclosing the information is that it may lead to reduction of the transaction cost like brokerage fees, monitoring cost, bonding cost. There are many other benefits of disclosure which may arise in the form of increased share liquidity and the lower cost of capital. Moreover, it has been the general belief that higher the level of disclosure the more transparent the company would be (Bhandari & Et. Al., n.d.). There are various types of disclosure like voluntary social disclosure and solicited disclosure. The voluntary social disclosures reveal the information to the general public about the companies’ activities related to the community. The social information is voluntarily disclosed by most of the corporations. The disclosures are relied upon by the public as the representation of the companies’ output, goal and activities and are basically not readily observable. They are the disclosures that are textually mediated. The format of such kind of the disclosures is basically unregulated and may rise in the annual reports in the form of management discussions. The example of voluntary disclosure can be disclosure of the earnings and sales forecast, changes in the senior management, corporate governance, and the environmental and the social policies of the companies (Bhandari & Et. Al., n.d.). Solicited disclosures on the other hand are less complex for the organisations. It is to be noted that the traditional voluntary disclosures take place by the management, but in case of the solicited disclosures the impetus is provided on the direct request by the stakeholders (Bhandari & Et. Al., n.d.). It is to be remembered that there are various ways of communicating the information to the public about its environmental and social activities. The main vehicle has been the annual reports. In addition to these, the companies also use other means to reveal their CSR activities like through internet home pages as a part of the accountability- discharge activity in order to reach the identified stakeholders. Internet disclosure has been increasing and more and more companies are trying to use the internet in order to communicate the corporate information to the public. It has been evident that internet reporting has a wider reach, and has the advantage of being cheap (Idowu & Filho, 2009). According to Yakovleva (2005), the leading media through which the social and the environmental disclosure can be made is via stand-alone environmental reports and the corporate websites. Stand-alone reports have said to be evolved since the beginning of the 1990s to environmental and community reports and most recently to sustainability reports. The corporate websites are gaining more familiarity as it is becoming the most useful resources through which information about the companies social and the environmental strategies can be found out (Yakovleva, 2005). The practice of the disclosure of the sustainability report of the stakeholders has gained a wide acceptance and has been conducted by various companies across the industrial sectors. It has been noted that the disclosure of such kind of reports are attracting scrutiny from government, business, investment communities and civil society (Sobh, 2010). 4.0 Theories of CSR The CSR field demonstrates not only the background of the theories but it also tries to present the creation of the approaches that tend to be very complex and controversial in nature. There are four theories relating to CSR that will be discussed in detail. The four theories are Ethical theories, Integrative theories, Political theories and Instrumental theories (Garria & Mele, 2004). 4.1 Political Theories The various theories and the approaches of the CSR mainly throw light on the connection and the interaction between the business and the society. It also focuses upon the supremacy and position of the business and its responsibility towards the business. The CSR debate consists of both the political analysis and the political consideration. Among various other approaches, two theories can be highlighted namely the Corporate Citizenship and the Corporate Constitutionalism (Garria & Mele, 2004). 4.1.1 Corporate Constitutionalism During the year 1960, David explored the role and impact that the power businesses have over the society. According to him business being the social institution should exercise the power in a responsible manner. Moreover, the equation of the social power responsibility needs to be understood from the functions performed by the business and the managers (Garria & Mele, 2004). 4.1.2 Corporate Citizenship It was in 80s, that the corporate citizenship was introduced in the business and the society relationship especially by the practitioners. It is gaining more and more popularity in the recent days. The term corporate citizenship denotes the sense of belongingness in the communities (Garria & Mele, 2004). It becomes utmost difficult to understand the differences and similarities between the corporate social responsibilities and the corporate citizenship. The meaning of the term corporate citizenship depends upon the type of community it is referring to. 4.2 Integrative Theories This theory focuses on the belief that how the integration takes place between the business and the demand of the society. It also argues upon the fact that there is reliance upon the society for its survival and for the growth and continuity by the business. The assumptions of this group centres upon the response, detection and scanning of the social demands in order to achieve greater acceptance, and prestige and social legitimacy (Garria & Mele, 2004). 4.2.1 Issue Management In this theory it is very important to consider the gaps between what the organisation expects its performance to be and the actual performance of the organisation. The gaps can be identified in the zone called “zone of discretion” where some unclear signals are received by the companies from the environment. Therefore, the gaps need to be perceived and response should be chosen in order to close the gap (Garria & Mele, 2004). 4.2.2 Stakeholders Management This approach is oriented towards the stakeholders’ or the people who are affected by the corporate practices and the policies. They are not oriented upon the generic responsiveness, the public responsibility principle, or the specific issues. The integration of the various groups within the firm takes place when they have stake in the firm to make managerial decisions (Garria & Mele, 2004). 5.0 CSR Model The model can be generated taking into consideration the various theories like social issues management theory where the significant issues related to the ethical concerns with regards to the firm are selected and analysed. After that the influence of religion in the social and the moral life can be taken into consideration. Thirdly, the sustainability approach is also very important as it tries to integrate the social issues with the environmental and the economic issues (Secchi, 2007). The model generated will be for the large business especially the MNC’s. The basic elements of the CSR model as depicted in the above diagram are Transparency, Corporate Citizenship, Policies, Ethical, Disclosure and Shareholders Engagement. Whenever any CSR is to be created it is required to focus on these six elements. However, before taking any action it is important to identify the problem. The main problem underlying the MNC’s is that they have a common CSR report despite operating in various nations of the world. The report tends to demonstrate the CSR activities of those countries where they have been outperforming excluding the nations where they haven’t contributed anything towards the society. Therefore, focusing on these problems the model needs to be developed where the problems can be highlighted. The companies need to make CSR strategies keeping in mind the ethics and the codes of conducts of the particular nation. The MNC’s also needs to follow certain standards of the acceptable behaviour as part of the ethics. The basic aim must be to serve the community apart from generating profits. The companies need to generate certain CSR strategies where it will include how it will respond to the competition. Responding to the competition has also been the most important form of the CSR. The mandated actions must be taken. The CSR needs to consider the requirement of the government; it must take into account the rules and regulations of the particular country when preparing the CSR. Companies may also take into account the voluntary actions by giving charities. Besides all this the companies needs to maximise the stakeholder’s wealth in order to survive. The reporting system must be very accurate and transparent to the stakeholders. MNC’s must prepare different reports for different branches in order to make the stakeholders understand their contribution towards each nation. Corporate Social Reporting needs to be published on a regular interval showing the social performance of the MNC’s. The social goals should be aligned with the structure, the culture and the processes of the companies. The engagement of the internal and the external stakeholders are very important as it adds value to the long term strategy of the CSR. Engagement and communication of the stakeholders will keep all the areas connected together. The external stakeholders are the local communities; the NGO’s who needs to be communicated about the CSR activities of the organisation. The corporate citizenship needs to be considered when developing the CSR model. The MNC’s needs to identify the social as well as environmental issues in which it is operating which will help it to create a sense of belongingness. The above CSR model If followed by the MNC’s will be very beneficial for the companies as they will be able to conduct their CSR related conduct in an organised manner. 6.0 Challenges and Issues in Social and Environmental Accountability and Reporting There are many challenges and issues pertaining to the social and environmental accountability and reporting. 6.1 Stakeholders Dictation If the companies spread messages about the corporate ethical and the social responsible initiatives then it is likely to evoke a positive and a strong reaction among the stakeholders. There are many potential business benefits of disclosing the CSR. CSR being associated with the positive corporate virtues and reflecting on the status of the organisation with respect to its perceived societal obligation, the corporate CSR messages have also confirmed to attract the critical attention. According to some researchers, it has also been suggested that the more the companies expose their facts and figures relating to their contribution towards the society, there will be more possibilities for the companies to attract the attention of the critical stakeholders. Moreover, it has also been noted that if the companies focus too much upon communicating the CSR association, then the consumers may think that the company might be trying to hide something. The expectation of the stakeholders with regards to the CSR has been a moving target and this must be paid due consideration on a frequent basis which is the biggest challenge for the corporate houses (Morsing & Schultz, 2006). 6.2 Issues of Social Accounts Cf. Discursive Disclosure There are many issues related to the social accounts disclosure. Reputation has been defined as a strategic asset that produces tangible benefits, for instance, it brings premium prices for the product, improved loyalty from the employees and lower cost of capital and labour. It has been noted by the various researchers that the reputation takes long time to be created and cannot be bought or damaged easily. Maintaining the good reputation may be the decision taken by the companies as it helps them to withstand the future reputation shock. Risk may arise from the perception of the social and environmental performance of the organisation. When the disclosure is made to the stakeholders regarding its CSR by the companies, then it may lead to reputational risk. Managing such risk is the biggest challenge for the corporate. It has been found that the corporate manage and control the reputational risk through CSR reports. 6.3 Environmental Issue Related to CSR It is to be noted that the environment is entirety the human surroundings; therefore the term human environment is derived from the physical environment. The modification of the human environment has been the physical environment. Since man operates on this earth and uses the resources of the environment, he is responsible for the environmental degradation. It can also be a consequence of the man’s hazards. The organisation takes input from the environment, processes them and returns them in the form of output. However, the main task of the organisation should be to produce the products and services with the aim that they can satisfy their customers. They also need to produce actions that will help to protect the environment. There are arguments for and against the organisations’ participation in the social responsibilities. A major argument for the CSR is that if a better social environment is created then it will benefit both the business and the society. The society is benefited with the creation of the better employment opportunities and economic conditions. Moreover, the businesses are benefited from a better community, as it is the source of the human and natural resources. The argument against the CSR is that the basic objective of the business is the maximization of the profits that is achieved by focusing upon the economic activities. Moreover, their involvement in the social activities may reduce the economic efficiency of the business (Okafor & Et. Al., 2008). One of the main challenges of the companies is the usage of the production factors or the raw material in a way that eco-efficiency can be achieved. The eco-efficiency cannot be attained in a short span of time. It requires considerable effort and long term commitment from the organisation. Companies need to understand the adverse affect of the carbon footprints upon the eco-system. It should also comprehend the increasing harm done by the hydrocarbons in the environment. Besides, the best challenge for the companies is to reduce the amount of wastage coming from the environment (NMIMS, 2010). Environmental Issue Related To Solid Waste: The group of people working with the McDonalds realised that its waste management strategy needs to be implemented in a tight-loose manner. They realised that if the content of the recycled paper was increased in packaging then the strength of the paper was getting deteriorated. From this it is understood that the company has been effective enough at its CSR activities. The use of recycled paper denotes proper management of the solid waste. But the issue related to this is that the recycled paper that is used for the packaging may contain harmful bacteria. Therefore it is important for the company to see that it uses recycled packaging only for non food products (UMICH, 1995). 6.4 Social Issue Addressing the adverse impacts of human rights is the corporate social responsibility of the organisation. The responsibility is applicable throughout the business activity of the companies, as well as through its relation with the third parties like business partners, host governments and the suppliers. It is also applicable for all the enterprise, regardless of the size and the ownership structure. It has been recognized by the U.N. Special Representative that exactly what the human rights due diligence may look like will depend upon the factors such as size of the business enterprise, context of the business operation and the harshness of its human rights risk. Even if the principles provide helpful guidelines, it is to be remembered that the companies need to tailor their principle according to their organisational structure and the risk profile. The principle makes it very clear that the companies may have to face pressure in order to conduct the assessment of the human right risk and the impacts as long as they operate in the market. They may even face a tough time in order to engage themselves with the stakeholders in this process. Another difficulty may arise in the process of the integration of the human rights concerned with the management systems throughout the course of their business activities. In addition, issue may arise in the form of evaluation and the addressing of the human rights risk as posed by the partners of the business. They may even face difficulties in the development of the effective operational level grievance mechanism (Lehr, 2010). Social Issue related to Toshiba: To encourage the development of the organisation that is imbued with the respect for the human rights, the company educates its employees on human rights. It implements its human rights policies throughout the supply chain (Toshiba, 2010). 7.0 Evidences of Corporate Governance and Ethics Embedment According to the definition provided in Investopedia Corporate Governance can be stated as the relationship between the various stakeholders of the companies. It includes the shareholders, the management of the company, the directors. According to it, the companies who practice ethical behaviour have excellent corporate governance (Investopedia, 2010). The corporate social responsibility is the part of the Corporate Governance. The evidence of the two companies namely Toshiba and McDonald’s will be studied in detail. Latter, the CSR activities conducted by the two companies will be described. 7.1 Toshiba’s Corporate Governance The corporate governance policy of the Toshiba aspires to improve the efficiency as well as the transparency of the management alone with the maximization of the corporate values from the perspective of the shareholders. There are 14 members in the board of directors; seven of them are the non-executive directors with four outside directors, one chairman, and two full time Audit Committee members. In Toshiba, prior explanation is given to the outside directors on the matters to be resolved during the board meeting. Office has been created by the company in order to help the Audit Committee execute its duty successfully. It is the duty of the Toshiba Group Standards of Conduct to prescribe the values and the codes of the conduct for all the members in the organisation. It has also determined the policies on the internal control system. In order to enhance the Group-wide internal control system, the groups in the company were requested to adopt the policies of the internal control system. JCG Index Survey that was held by the Japanese Corporate Governance Research Institute, ranked Toshiba in the 8th position (Toshiba, 2010). Fig: Toshiba Corporate Governance (Toshiba Tec, 2010). 7.2 McDonald’s Corporate Governance There are around hundreds of millions of people around the globe who trust McDonald’s. It is not so easy. It takes years of efforts and commitments to gain the trust of the people. McDonald’s has earned trust by serving safe food, respecting their customers, employees and also focusing upon the Cleanliness, Quality, Value and Service. The Board of Directors of the company has been responsible and entrusted with effective functioning of the organisation in a fair, ethical and honest manner. It has been observed by the board that good corporate governance is important for fulfilling the obligations made by the shareholders. In order to promote continuous improvement it reviews its corporate governance on an annual basis (McDonald’s, 2010). The company has been trying to gain public trust. It believes in the fact that the good governance is more than the collection of the regulations and the laws. For the uncontested Directors election, the company has the majority of the voting standards. In addition, the directors of the companies need to abide by the specific Code of Conduct for all the Board of Directors. Along with the matters that are addressed by each member of Board of Directors, Board oversight is contributed by the six standing committee. There are cross-functional and issue-specific governing bodies that are responsible for monitoring and the management of the day-to-day issue in the organisation. The various governing bodies are Worldwide Corporate Relation Council, Corporate Social Responsibility Department, Quality Systems Board, Sustainable Supply Steering Committee and Global Environmental Council. This can be made clear with the help of the diagram given below (McDonald’s, 2010). (McDonald’s, 2010). Weaknesses in Reporting On Risk and Financial Transactions: The committee has to discuss with the independent auditors regarding the scope, plans and the budget for the audit. It must also include the adequacy of the staffing and various other factors that affects the efficiency of the audit. The committee needs to discuss with the independent and the internal auditors regarding the various risk exposure. 8.0 CSR in Action It has been found that McDonald’s Corporation is one of the most admired companies in terms of social responsibility. It was during the year 2001 when the company was ranked as number five in reputation for the CSR in the Wall Street Journal. It was in the year 2002 the first Social Responsibility Report was issued by the McDonald’s. The promotional messages of the McDonald’s had promised for participation of all the people in the restaurant; a donation would be made to the children’s charity that would be based upon the sales of the specific item. Moreover, special events were conducted on November 20th, around the globe with the launch of the New York Times Square McDonald’s Restaurant where performances were given by the athletes and the famous celebrities at “World Children’s Day”. According to the AAP the diseases like polio, chicken pox, measles and hepatitis would be prevented if the vaccines are taken on a regular basis as they are a threat to the children. Therefore, it is very important to immunize the children on proper time. An attempt was made from the side of the Ronald McDonald House Charities teaming up with the AAP and the Hwealth care providers around US on “Immunise for the Healthy Lives” in order to help children and families (Kotler & Lee, 2008). It was on the occasion September 11 terror attack anniversary that McDonald’s provided means for the volunteers and the professionals at the disaster site. The company has been quite effective at conducting its CSR responsibilities which become evident from the fact that McDonald’s changed its packaging and had made it recycled-content packaging and reduced its packaging material (My Efficient Planet, 2010). Another company that has realised its responsibilities for the society and the environment has been Toshiba. The corporate philosophy of the company focuses on the respect towards the people, contribution of the people towards the society and the creation of the value. In the CSR management, the company tries to emphasize on the word integrity and tries to fulfil the responsibilities towards a wide group of stakeholders. It attempts to provide its customers secure and safe products and services that offer great value. It tries to enhance the satisfaction level of the customers and also focuses upon the management of the customer information. It is held responsible towards it suppliers by selecting them in the fair manner and engaging themselves in a fair trading practices. Its responsibilities towards the employees are to conduct fair assessment and treatment and to optimize human resources, promoting their growth in the organisation. It ensures that the information is disclosed within the allocated time. It respects different customs and cultures and tries to provide full support to the neighbouring communities if any disasters take place. It complies with the laws and regulations of the government and pays taxes on a regular basis. It has also been involved in reducing waste discharges and release of the chemicals (Toshiba, 2010). 9.0 Conclusion The origin of the CSR has not been too old or too new. It has evolved from the time when the companies started thinking of serving the society apart from the maximisation of the profit. CSR is the relation of the corporation with the society. It has been found from the above study that there are four theories of the CSR namely the Ethical theories, Integrative theories, Political theories and the Instrument theories. The companies need to disclose their social performance on a regular basis to the stakeholders in order to increase the transparency. Therefore, they take the help of internet or the annual reports to disclose their CSR activities. A model has been generated that will help the MNCs to operate their CSR activities in a proper manner. There are various challenges that the companies need to face on a regular basis. 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