Corporate Social Responsibility: A Case Study of Reliance Industries Limited

This report is a case study of Reliance Industries Limited (RIL) and its corporate social responsibility (CSR) practices. It covers RIL's economic, environmental, and social performance, governance practices, stakeholders, and impact on economic performance. The report suggests that RIL is performing well in CSR, but there is still scope for improvement.

Corporate Social Responsibility
2/4/2019

CORPORATE SOCIAL RESPONSIBILTY 1
Contents
Company: An interview...................................................................................................................2
Economic and Environmental Performance................................................................................4
Social and Economic Performance..............................................................................................6
Governance and Economic Performance.....................................................................................7
Conclusion...................................................................................................................................9
References......................................................................................................................................10

CORPORATE SOCIAL RESPONSIBILTY 2
Company: An interview
Reliance Industries Limited is selected as a company for the preparation of this report.
(hereinafter mentioned as "Reliance/RIL/company). The company is incorporated in India and
currently having it is a registered office in Mumbai, Maharashtra, (Brennan, 2010). The company
have many business verticals that include telecommunication, energy, textiles, retail,
petrochemicals, and natural resources. RIL has marked its place in one of the gainful companies
of India as the same achieved $100 billion market capitalization in 2007 (Iyengar, 2018).
Ambani family is the promoter group of Reliance, which holds most of the shares out of total 3.1
billion shares. Nearly 46.32 percent shares of the company are registered in the name of the
promoters group and pubic holds the remaining 56.38 percent shares (Rungasamy, 2019).
Listing:- Bombay Stock Exchange Limited (BSE) (Josh, 2015) and National Stock
Exchange of India Limited (NSE) are the major stock exchanges of the countries that have
securities of RIL listed. Further, Reliance also issued and allotted the Global Depository Receipts
(GDRs) and the same are listed on the Luxembourg Stock Exchange (Luxse).
Stakeholders:- Company has identified few stakeholders in the annual report published
for the financial year 2017-18. The identified stakeholders are mentioned below:-
 Employees and workers: - Including all the employed personals of the company.
 Shareholders and Investors:- People who have securities of Reliance or invested money
in the company in any other form
 Suppliers:- People who provide material and other support for the production or
preparation of the final product

CORPORATE SOCIAL RESPONSIBILTY 3
 Customers: Persons who buy the final products (including goods as well as services)
provided by Reliance
 Trade Unions:- Association of workers in trade
 Government and other Regulatory Authorities:- Government of India, State
governments, Stock exchanges, Government departments, and another regulatory
department
 Local Communities- Individuals or organizations that are part of the local environment
Non Profit organizations (NGOs): - The authorities which work for the social causes such
as for the welfare of the woman, children, and other groups of society.
Reliance is actively considering the interest of all the stakeholders by adopting various
practices. The objective behind this is to prevent any potential disputes with one or more
stakeholders. In the sector of Corporate Social Responsibility, Reliance is doing well since years
and implemented many models. If to talk about the environment, the company is doing sourcing
of resources in a sustainable manner. The level of involvement of the company incorporate social
activities can be assumed by the fact that the same spent an amount of 771 Crore Rupees on
subjective activities (Ril.com, 2019a). After reviewing the bifurcation of this spent amount, this
is to mention that the company is spending money on various sectors such as disaster response
and management, education, arts and culture, sports, rural transformation, and many others.
Kitchen garden model is one of the major initiatives taken by the company with the objective to
improve the level of dietary outcomes in rural areas. Further, RIL is also contributing to the
mission of village social transformation. In such a manner, this can be stated that the company is
continuously focusing on the development of local as well as the national environment and is
performing many corporate social activities expecting positive results.

CORPORATE SOCIAL RESPONSIBILTY 4
Economic and Environmental Performance
Every organization is depended on the environment for natural resources, as the same is
required in the process of production. In such a manner, it becomes the responsibility of the
organization to protect the environment. In addition to every other stakeholder, an organization
has an equal liability towards the environment. This responsibility can be better understood by
looking after the definition of environmental responsibility. The definition says that it is the
responsibility of every business to work in a manner that provides protection to the environment
(Dictionary.cambridge.org, 2019). In general, the protection of the environment is not required
under a commercial law but the same is part of corporate social responsibility. Study of the
environmental performance of the company is necessary as the same is closely connected to the
economic performance of the business. (Edwards, 2014). This is the reason that every
organization needs to adopt environmental friendly approaches. Making the discussion more
specific, this is to inform that RIL is using many natural resources in its working. The company
is active in the sector of energy and petroleum and therefore including the extraction of natural
gas, many other activities are there which affect the environment in a negative manner. However,
in addition to using natural resources, reliance also does the activities that reduce the negative
impact.
In order to improve energy efficiency, the company is taking the necessary steps. The further
company also have an environmental policy, according to the same environmental protection
comes under the category of the primary objectives of the company (Ril.com, 2019b). In recent
years, RIL has taken many steps for the environmental protection, which includes the installation
of water conservation plant in Sendhwa. Further, reliance also started and joined some campaign

CORPORATE SOCIAL RESPONSIBILTY 5
out of which Swachhta hi seva campaign is the most significant project (Disha Experts, 2018).
As the name implies the campaign is focused on the cleanliness in the society.
In conjunction with above, reliance is using safe and clean energy. As mentioned above
that the environmental performance of a company affect economic performance, the same proves
true for RIL. In the last few years the company's financial performances became better and one
of the important reason behind the same is the positive environmental performance of the
company. The concern of customers regarding environmental safety is increasing day by day.
They want the products, which are naturally developed, and no harm has happened to the
environment in the development of the same. Further, shareholders also want to take a minimum
risk and therefore invest in the companies, which have a positive public image. Not in just the
retail sectors but in almost every sector, reliance is reducing the use of plastic that is attracting
customers.
Reliance is complying with the provisions of all the environmental laws and chance of
notices and penalties are very few. Hence, Reliance is one of the first choices of investors and
shareholders. The company does not face the issue of lack of capital and is not required to pay
the fines and penalties for the breach of laws. It strengthens the financial performance of the
company. RIL is doing well and earning profits. Because of environmental friendly culture,
goodwill of the company enhanced that make an indirectly impact on the financial/economic
performance of the same.
While discussing the relation of the environment and economic performance of the company, the
other side of the coin is also required to be check. It means the steps taken by the company to
make the environmental performance better also do have certain negative impacts on the

CORPORATE SOCIAL RESPONSIBILTY 6
economic performance. RIL has selected the five major areas of environmental protection and
the same are mentioned below:-
 Clean water
 Clean Air
 Preservation of Flora
 Prevention of soil contamination and
 diligent use of scarce resources
In order to achieve the above-mentioned targets, the company has made some changes in
the present working structure. These changes attracted additional cost to the company.
Nevertheless, in a conclusive way, this is to say that in long term, this change working structure
is expected to bring the positive impact on the economic performance and hence the
environmental and economic performance of RIL is connected with each other.
Social and Economic Performance
Not only the environmental but also the social performance of the company has an impact
on the economic performance of the company. Social performance mean is activities taken by
the company regarding its stakeholders such as labor, employees, and other social groups of
stakeholders (Kurtz & Boone, 2008). Every company has different social performance, as the
same is not mentioned in any law. This is the reason that some of the companies have positive
social performance whereas some have the negative one. In order to get the commercial benefits,
a company is required to be socially responsible. It means Company is required to be aware of
the issues related to business such as environmental protection, product safety and so on and to
resolve them. In the past, RIL has done many of the acts for the welfare of the society. It majorly

CORPORATE SOCIAL RESPONSIBILTY 7
includes the development of concrete road in Uttar Pradesh. These social steps affected the
economic condition of the company in a negative manner at first instance. However, in the
coming future, the same is expected to bring good results to the goodwill and overall value of the
company. In the presented era, every stakeholder is smart and the same wants to be a part of the
organization, which is socially responsible. RIL is donating money to the NGOs for years. Such
steps are significant and for sure affect the economic performance of the company, which is
negative in short, term, and positive in long term. After the study of the annual report of the
company, this is clear that the amount spent on social performance has not an isolated presence
but the same effect the economic performance in both positive and negative mode.
Governance and Economic Performance
Alike the social as well as the environmental performance of the company, a company's
governance performance also put an impact on the financial performance of the same. (Tiwari,
2010). The governance performance of the company referees to the manner and approach of
working by which a company is controlled and regulated. When it comes to an organization,
governance is a broad term, which includes and considers the interest of all the stakeholders.
Most of the economists think and believe that positive and good governance is an effective
measure of quality management and bring the affirmative impact on the financial
condition/performance of the business. If to talk about reliance, this is to mention that the same
has taken many of the steps towards good governance and these practices affected the economic
performance of the same in recent years. The company has its own ethical standards and the
same is complying with these standards continuously in order to ensure the accountability,
integrity, independence, and integrity. In addition to the ethical standards, the company has

CORPORATE SOCIAL RESPONSIBILTY 8
developed much codes of conduct related to different stakeholders. For instance, to protect the
interest of suppliers, reliance has developed a supplier code of conduct. In addition to this, to
prevent one of the major unfair practices that is insider trading, reliance developed Prohibition of
insider trading code. Further, RIL has policies on other subjects such as the preservation of
documents, determining material subsidiaries, whistleblowing, whistle blower protection and
many more.
The good governance practices adopted by the company are developing the goodwill and
market value of the same. Out of 13 directors of the company, 7 are independent one (Khan &
Jain, 2017). These directors work in the best interest of the stakeholders and company. As a good
governance practice, the company is developing such practices, which are able to increase the
skills of employees. Nevertheless, employees are not the only focus of the company and the
same is acting for the interest for all the stakeholders. Corporate Governance policy is an
important document of RIL, which let all stakeholders, know about the vision and practices of
the company. The activities mentioned under this policy are an indication that the company is
really doing well for the governance. In addition, this is to mention that Reliance has a
stakeholder relationship committee. As the name implies, the committee is responsible to check
that whether the company is doing well and maintaining good governance by submitting the
quarterly disclosures to stock exchanges or not (Indiainfoline.com, 2019). Such practice
enhances the trust of shareholders. Further, in recent years, the company has not paid any
significant penalties as the same always ensure the existence of good governance. In respect to
the customers and suppliers too, reliance is performing good corporate governance practices.
Because of this reason, the company has affirmative business relations, which are good for the
economic performance of the company. In a similar manner, good governance practices increase

CORPORATE SOCIAL RESPONSIBILTY 9
the morale of the employees (Argenti, 2015). RIL has a high employee retention rate as most of
the employees are satisfied with the approach that the organization adopts regarding them. In
conjunction to this, there are very less cases of strike off in RIL, which further saves the cost. At
last risk management is also a part of corporate governance procedure of the company and give
the economic benefits to the company.
Conclusion
In the above-mentioned discussion, the focus has been made on the social, governance
and environmental performance of the company and this is to conclude that the same is
performing well in the field of corporate governance. However, there is still scope for
betterment. By the updation in current policy and practice structure, the company can become
more sustainable in the coming future. For instance, the company can improve the waste
management process and can adopt this practice for every sector. Employee involvement in the
governance process is another option using which company can ensure better governance
structure in the organization. The reasoning behind the same is that employees are an important
part of every organization and understand the problems in actual. By taking ideas from them the
company can initiate new practices. In such a manner employee seems to be an important
opinion and advise providers. The company is advised to develop more focus towards re-cycling
of its products. Further, as mentioned above that the company is active in various sectors hence
the same should make a plan about the use of waste material of one sector in the different sector
as raw material if possible. This idea will reduce the cost of overall organization and would set a
positive sustainable image of the company in the coming future.

CORPORATE SOCIAL RESPONSIBILTY 10
References
Argenti, P., A. (2015). Corporate Responsibility. USA: SAGE Publications.
Brennan, L. (2010). The Emergence of Southern Multinationals: Their Impact on Europe. UK:
Springer.
Dictionary.cambridge.org, (2019). Environmental Responsibility. Retrieved From:
https://dictionary.cambridge.org/dictionary/english/environmental-responsibility
Disha Experts. (2018). Quarterly Current Affairs Vol 3 - July to September 2018 for Competitive
Exams. India: Disha Publications.
Edwards, D. (2014). The Link Between Company Environmental and Financial Performance
(Routledge Revivals). Oxon: Routledge.
Indiainfoline.com. (2019). Reliance Industries Ltd Directors Report. Retrieved From:
https://www.indiainfoline.com/company/reliance-industries-ltd/directors-report/476
Iyengar, R. (2018). India's top tech company is worth $100 billion. Retrieved From:
https://money.cnn.com/2018/04/23/technology/tcs-india-100-billion-market-cap/
Josh, J. (2015). Reliance Industries signed revised Listing Agreements with BSE and NSE.
Retrieved From: https://www.jagranjosh.com/current-affairs/reliance-industries-signed-
revised-listing-agreements-with-bse-and-nse-1446029912-1
Kangovou.com. (2017). The Importance Of Eco-Friendly Products. Retrieved From:
https://www.kangovou.com/the-importance-of-eco-friendly-products/

CORPORATE SOCIAL RESPONSIBILTY 11
Khan, M Y & Jain, P K (2017). Management Accounting: 7/e. India:McGraw-Hill Education.
Kurtz, D., L. & Boone, L., E. (2008). Contemporary Business. USA: Cengage Learning.
Ril.com. (2019a). Reliance: Changing Lives and Empowering India through Collaboration and
Digital Technology. Retrieved From: http://www.ril.com/ar2017-18/report-on-csr.html
Ril.com. (2019b). People, planet, prosperity. Retrieved From:
http://www.ril.com/sustainability/healthsafety.aspx
Rungasamy, S. (2019). Reliance Industries vs Tata Group: Who is the Biggest? Retrieved From:
https://pixr8.com/analysis/reliance-industries-vs-tata-group-who-is-the-biggest/
Tiwari, A. K. (2010). Corporate governance and economic growth. Economics Bulletin, 30(4),
2825-2841.