CSR Expenditure & Business Ethics: Analysis for Holmes Institute

This essay provides an in-depth analysis of Corporate Social Responsibility (CSR) expenditure, particularly within the manufacturing and service industries. It examines the background of CSR, its legal implications focusing on water management resources, and key ethical issues such as corporate governance, citizenship, and leadership. The essay delves into the ethical decision-making processes involved in CSR, aligning opinions with moral philosophies. It uses real-world examples and references to support its arguments, offering a comprehensive perspective on the role and impact of CSR expenditure in modern business, with specific reference to Holmes Institute course HC2121.

Corporate Social Responsibility Expenditure 0
Title: Corporate Social Responsibility Expenditure
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Corporate Social Responsibility Expenditure 1
Introduction
Corporate Social Responsibility is a form of competitive edge provided to the enterprises
and/or manufacturing companies which merge environmental and social variables with business
functionalities. The corporate social responsibility practice is undertaken at manufacturing and
service units to manage the brand image. This is done at the local community’s level.
The Background-CSR Expenditure Analysis of Manufacturing and Service
Industries
Corporate Social Responsibility is practiced through manufacturing and service industries
in a developing world. There are private manufacturing and service industries which are set up as
the result of CSR activities. The term CSR has been derived by the Merrick Dodd. This activity
has been made compulsory for the manufacturing and service organizations which have a
turnover of Rs.1000 Crores or more (Trong Tuan, 2012). The concept behind corporate social
responsibility is voluntary charitable actions which are undertaken beyond the legal
requirements. There are a number of firms those are involved with CSR activities. For instance-
Infosys and Tata are two companies which have set up environmental preservation schemes. The
manufacturing companies are making expenditure for a clean environment. Corporate social
responsibility must act as the strategic plan for the enterprise, but shall not be considered the
charity (Onkila, 2013).
The corporate social responsibilities are set up to meet with the legal obligation as
decided by the Governmental bodies. The manufacturing companies are implementing growth
models which can sustain the business continuity and renewable energy resources (Harjoto,
2017).

Corporate Social Responsibility Expenditure 2
The legal Implication-Water Management Resources
One of the major challenges faced by the manufacturing and service industry is water
management resources. The companies need to bind with legal implications to overcome the
different causes. Water is one of the most essential components of life and it is a top-rated entity
which is facing risk globally (Setó-Pamies, 2013). There are a number of companies which are
undertaking environmental management systems as a legal responsibility. The corporate sectors
need to undertake the corporate social responsibility of providing water in the rural areas. The
rural areas are facing prominent challenges of hunger and high mortality. Year wide budget
needs to be allocated by the private sector in ensuring the supply water in rural areas. The prime
areas of concern are irrigation facilities, farming, mining and other manufacturing activities. The
variables which are identified in CSR expenditure of manufacturing and services industry
include-pollution control expenditure and community welfare (Michaels and Gruning, 2018).
The companies are required to spend two percent of annual revenue generated in the past three
years on social corporate responsibility. The stakeholder responsiveness are a significant concern
to align the objectives of community and employers. The corporate social responsibility
identified by the companies must reduce the risk and cost associated with the implementation
water irrigation projects in the rural areas. The revamping of financial performance of a given
rural area depends on the labor market, investors and supply pressure.
Key Ethical Issues
The key ethical issues are enumerated below-
1. Corporate Governance-Corporate governance is a set of rules and systems that involves
balancing the interests of management and society at large. In the present article on CSR

Corporate Social Responsibility Expenditure 3
expenditure analysis made by manufacturing and services industry focuses on the
attainment of water management projects in rural areas. This is a CSR activity which
requires streamlining the objectives of government and service industry (Hinson and
Ndhlovu, 2011).
2. Corporate Social Responsibility-This is a self-regulating model which helps the
manufacturing and service enterprises to be socially accountable towards its stakeholders
and community. In the present context, companies need to spend 2 percent of total annual
revenue on corporate social responsibility special projects like water management
resources (Huang and Zhao, 2016)
3. Corporate Citizenship-Corporate citizenship is an identification of a business entity
which has certain social, environmental and cultural responsibilities towards the public.
The business enterprises need a license to operate economically and financially. The
manufacturing and services industry needs to specialize in corporate social responsibility
and sustainability (Ott, 2017). The companies can engage in brand recognition and
organizational growth. The principle of business states that a business must have
physical infrastructure by which corporate social responsibility functions are aligned with
the financial performance of the company.
4. Leadership-The leadership style involves providing direction, implementation of actions
and motivation of people. This is achieved through the personality, philosophy and leader
experience. The entrepreneurs need to come forward and take leadership in the
management of water management projects in rural areas. The leadership skills are
defined how effectively a company engages in the management of a given rural area and
generating employment. The project schemes launched must be within the jurisdiction of

Corporate Social Responsibility Expenditure 4
companies Act, 2013. The manufacturing companies must contribute towards reducing
the negative impacts and enhance the profitability and financial competitiveness of the
industry (Tilt, 2016).
The Opinion
The concept of corporate social responsibility has been evolved from many years. The
streamlining of philanthropic activities with accountability objectives is the prime concern of
manufacturing businesses. The corporate law has listed few decisions like –water resource
management, environmental and pollution control, eradication of poverty in rural areas. The
business projects must implement central funds and other schemes which are formulated for the
poor. Corporate social responsibility is an ethical relationship that ensures transparency within
the enterprise. The preservation of cultural and environmental resources is mandatory for the
manufacturing companies. This can be illustrated through example- Shell is a Dutch company,
which operates in Nigeria. The company is in the business of oil and gas. The company has
undertaken mandatory corporate social responsibility and listed out a wide number of activities
(Nguyen, Bensemann and Kelly, 2018).
The law is very significant from the beginning and companies need to create physical and
human capital for investment and employment prospects. The bureaucratic inefficiency is one of
the major causes behind scheme leakages and non-deliver y of goods and services to the
concerned business enterprise. The manufacturing industries must undertake environmental
sustainability and bring down emissions of greenhouse gases and other hazardous materials. The
CSR activity within an enterprise must be in correlation with domestic and international norms.

Corporate Social Responsibility Expenditure 5
The government needs to pass the acts which can disclose the corporate social responsibility
activities and expenditure. This is one of the measures by which companies can compile the
environmental reporting system. Corporate firms need not criticize the CSR expenditure stated in
the companies Act. Firms need to focus on strategically differentiating the products from the
competitors and involved with community development. The companies need to reduce the risk
and engage in increasing the stability and returns. Corporate social responsibility and profit have
a positive correlation and probability of expenditure is higher on CSR.
Ethical Decision Making Process
Ethical decision process refers to choosing the set of alternatives in a procedure which are
consistent with the moral principles. The elimination of necessary unethical options and selecting
the best alternative. The ethical decision making process with respect to corporate social
responsibility is as follows-
1. Statement of Problem
2. Checking facts
3. Identification of significant factors
4. Developing the list of alternatives
5. Testing the alternatives
6. Selecting a choice
7. Review
The manufacturing and service companies need to engage in ethical decision making
where in the problems with respect to the scarcity of natural resources can be resolved.
Seven Moral Philosophies

Corporate Social Responsibility Expenditure 6
1. Goodness-The intrinsic concept of Goodness involves a promise and commitment
towards society through which a difference can be made in people’s life.
2. Monism-Monism refers to one thing which is considered good and Pluralism refers
to more than two things. In the above context, the sustainability practices must be
good enough to resolve environmental concerns (Abukari and Abdul-Hamid, 2018).
3. Hedonism-Hedonism can be defined as the acceptable or right behavior which
maximizes the outcome. In the above context, hedonism refers to a company must not
go beyond the requirements of law while protecting the environmental concerns.
4. Pluralist-A pluralist will take the opposite position and think nothing is good in this
world. The evaluation of corporate social responsibility with context of political
parties and set of recommendations required for the assessment of CSR in
manufacturing companies.
5. Instrumentalist-Instrumentalist reject the idea of the ends are inseparable from the
means. The rise of vast approaches during the past decade has been instrumental in
corporate performance and measuring the financial results of the companies.
6. Teleology-Teleology has been derived from the Greek word- Purpose or end. This is
concerned with moral philosophies which are considered acceptable or right and can
produce desired results like career path, knowledge or pleasure. The moral
obligations or actions which are required to be fulfilled by the CSR companies.
7. Teology- Teology refers to the actions which are undertaken by an individual which
are right and acceptable for the self-interest. This is a new concept and must be
understood from the religious point of which and can benefit the corporate
governance and people understanding of CSR. The manufacturing companies need to

Corporate Social Responsibility Expenditure 7
engage in practices those are acceptable by the society and not particularly for the
self-interest. The legal dimension assesses moral responsibility and collective actions
of a corporate entity (Herbas Torrico, Frank and Arandia Tavera, 2018).
Conclusion
The Corporate social responsibility activities undertaken by manufacturing and service
companies involve an industry level analysis. The cost of production must be minimized to
undertake social protection. The CSR expenditure must be taken for the welfare of common
public and generate goodwill.

Corporate Social Responsibility Expenditure 8
References
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Harjoto, M. (2017). Corporate social responsibility and corporate fraud. Social Responsibility
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Herbas Torrico, B., Frank, B. and Arandia Tavera, C. (2018). Corporate social responsibility in
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Hinson, R. and Ndhlovu, T. (2011). Conceptualising corporate social responsibility (CSR) and
corporate social investment (CSI): the South African context. Social Responsibility Journal, 7(3),
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Huang, H. and Zhao, Z. (2016). The influence of political connection on corporate social
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Nguyen, M., Bensemann, J. and Kelly, S. (2018). Corporate social responsibility (CSR) in
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Corporate Social Responsibility Expenditure 9
Onkila, T. (2013). Pride or Embarrassment? Employees’ Emotions and Corporate Social
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236.
Ott, S. (2017). Corporate Social Responsibility and the Impact of Executive Compensation on
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Tilt, C. (2016). Corporate social responsibility research: the importance of context. International
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