Corporate social responsibility.doc 03

8/7/2019 Corporate social responsibility.doc 03

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TITLE: CSR and Trusteeship

management

Submitted By:

Snigdha Chadha 09012

Neelima Choudhary 09065

Sunita Mishra 09024


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Corporate Social Responsibility

Introduction

Your business doesn't exist in isolation nor is it simply a way of making money. Your

employees depend on your business. Customers, suppliers and the local community are all

affected by your business and what you do. Your products, and the way you make them, also

have an impact on the environment.

Corporate social responsibility (CSR) is about understanding your business' impact on the

wider world and considering how you can use this impact in a positive way. CSR can also be

good for your bottom line.

It means taking a responsible attitude, going beyond the minimum legal requirements and

following straightforward principles that apply whatever the size of your business.

This guide explains how you can exploit the benefits that CSR can bring to your bottom line.

Corporate social responsibility and your business

Corporate social responsibility (CSR) can cut across almost everything you do and everyone

you deal with. You need to think about:

The suppliers you choose and the way you deal with them. For example, trading with

suppliers who pollute the environment could be as irresponsible as doing so yourself. See

the page in this guide on how to deal responsibly with customers and suppliers.

How you treat your employees. For the responsible business, this means doing more

than simply complying with legal requirements. See the page in this guide on how to

benefit from corporate social responsibility.

How your business affects your local community and whether you should be actively

involved. See the page in this guide on how to work with the local community.

How what you do affects the environment and what you can do to use resources more

efficiently and reduce pollution and waste. See the page in this guide on how to

understand the environmental impact of your business.
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This doesn't mean that you can't run a profitable business. In fact, CSR can help you improve

your business performance. By looking ahead, you're ready to cope with new laws and

restrictions. You avoid costs such as wasted energy or paying unnecessary waste fees.

Perhaps most importantly, you can keep winning business from increasingly demanding

customers.

The business benefits of corporate social responsibility

Corporate social responsibility (CSR) isn't just about doing the right thing. It means behaving

responsibly, and also dealing with suppliers who do the same. It also offers direct business

benefits. See the page in this guide on how tobenefit from corporate social responsibility.

Building a reputation as a responsible business sets you apart. Companies often favour

suppliers who demonstrate responsible policies, as this can have a positive impact on how

they are perceived by customers.

Some customers don't just prefer to deal with responsible companies, but insist on it. The Co-

operative Group, for instance, place a strong emphasis on its corporate social responsibilityand publishes detailed 'warts and all' reports on its performance on a wide range of criteria -

from animal welfare to salt levels in its pizzas.

Reducing resource use, waste and emissions doesn't just help the environment - it saves you

money too. It's not difficult to cut utility bills and waste disposal costs and you can bring

immediate cash benefits. For more information read our guides on how to save money by

reducing wasteand use your resources more efficiently .

There are other benefits too:

A good reputation makes it easier to recruit employees.

Employees may stay longer, reducing the costs and disruption of recruitment and

retraining.

Employees are better motivated and more productive.

CSR helps ensure you comply with regulatory requirements.

Activities such as involvement with the local community are ideal opportunities to

generate positive press coverage.
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Good relationships with local authorities make doing business easier. See the page in

this guide on how to work with the local community.

Understanding the wider impact of your business can help you develop new products

and services.

CSR can make you more competitive and reduces the risk of sudden damage to your

reputation (and sales). Investors recognise this and are more willing to finance you.

Understand the environmental impact of your business

Your business affects many different people - employees, customers, suppliers and the local

community. It also has a wider impact on the environment.

Even the simplest energy efficiency measures, like switching off lights and equipment when

they aren't needed, makes a real difference. Reducing the use of water also directly cuts your

costs. For more information, read about managing your resources on the Small Business

Journey website - Opens in a new window or read our guides on how to save money by using

energy more efficiently and use water efficiently - the basics.

Minimising waste can also make a big difference. Simple steps like reducing the amount ofpaper you waste can immediately cut costs. You can save even more by thinking about waste

implications when you design new products and production processes. For more information,

read our guides on sustainable design and how to save money by reducing waste.

Caring about the environment can increase revenue too. Many customers prefer to buy from

responsible companies.

There are all sorts of ways in which you can reduce the environmental impact of your

business. For example:

creating recyclable products

sourcing responsibly (eg using recycled materials and sustainable timber)

minimising packaging

buying locally to save fuel costs

creating an efficient (and fuel-efficient) distribution network

working with suppliers and distributors who take steps to minimise their

environmental impact
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Deal responsibly with customers and suppliers

By working with your customers and suppliers in a responsible way your business can reap

substantial rewards.

Customers

Some actions you can take when dealing with customers are:

Make sure brochures are written in plain English, telling the truth without hiding

anything in the 'small print'.

Be open and honest about your products and services. Tell customers what they want

to know, including what steps you take to be socially responsible.

If something goes wrong, you should acknowledge the problem and deal with it.

In return, you can expect customers to reward you with their loyalty. Listening to your

consumers can also help you improve the products and services you offer them.

Suppliers

Choosing your suppliers carefully can be an important part of your approach to corporate

social responsibility (CSR). For example, you might try to use local suppliers as much as

possible. This helps you support your community and also reduces the energy wasted and

carbon emissions from deliveries.

When selecting suppliers you should also examine their employment, health and safety and

environmental practices. Customers are increasingly concerned about the wider impact of

supply chains, for example on local work forces and environments. Your reputation can be

damaged by being associated with businesses that abuse the rights of their own workers or

their local environment. See our guide on ethical trading.

Larger organisations often audit their suppliers to ensure that they follow responsible working

practices. You could do something similar - simply asking them about their attitudes to CSR

might be revealing.
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Work with the local community

Working with your local community brings a wide range of benefits. For many businesses,

local customers are an important source of sales. By improving your reputation, you may find

it easier to recruit employees. A good relationship with local authorities can also make your

life easier. For example, some local authorities prefer to award contracts to businesses with a

record of community involvement.

There are many ways to get involved. Some businesses choose to support a local charity, or

sponsor a local event. It makes commercial sense to get involved in an activity related to your

product. This lets you use your expertise as well as showing the human face of your business.

For example, some restaurants provide food to local homeless groups, while builders may

give free labour and materials to community projects.

Look for opportunities that will directly benefit you - for example, by generating publicity, or

improving the neighbourhood around your premises.

Many businesses involve their employees in working with the local community. For example,

you might support charities chosen by employees. Some businesses encourage employees to

volunteer for community activities and also give them paid time off for this. As well as

improving your community relations, this can help motivate employees and can help develop

their interpersonal and team participation skills.

You could also give your employees the option of making regular charitable donations which

are deduced 'at source' from their pay.

Business in the Community (BITC) has developed the CommunityMark standard to help

businesses get the most of out community involvement.

Community Justice projects

The government's community justice initiative helps businesses work with local agencies to

improve the quality of life in their local area. This can benefit your business in a number of

ways. For example, if your business is suffering because of damage to your property or the

surrounding area, the community justice team can work with you to address this.


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Your business could take a pro-active approach to dealing with local crime by supporting

recent offenders or your local community justice team. You could:

offer offenders work experience or training as part of a sentence or on a voluntary

basis

provide financial or practical resources to the local community justice team

get involved with local regeneration projects

support staff who volunteer in the criminal justice system, eg as mentors, special

constables, youth offender panel members, or in victim and witness support .

Measure the effectiveness of your corporate social responsibility

Corporate social responsibility (CSR) can help you cut costs and boost sales. However, there

are other significant benefits which businesses sometime forget about, as they are slightly

harder to measure.

Benefits such as improved reputation, stronger customer loyalty and motivated employees

should not be overlooked, and can in fact be measured. For example, improved motivation

could lead to reduced absenteeism and reduced staff turnover. Similarly, customer loyalty

could increase levels of repeat purchasing.

Identifying and measuring indicators of success

You can benchmark your business against others. See our guide on how to measure

performance and set targets.

Some of the UK's largest companies publish CSR reports online. You can read a

guide on CSR reporting on the Business in the Community (BITC) website - Opens in a

new window.

You can use key performance indicators (KPIs) to measure your environmental

performance. Download a guide on environmental KPIs from the Department for

Environment, Food and Rural Affairs (Defra) website (PDF, 354K) - Opens in a new

window.

The Community Mark standard lets you measure community involvement.
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Benefit from corporate social responsibility

Make the most of your corporate social responsibility (CSR) activities by publicising

them. Ensure that customers, suppliers and the local community know what you are

doing. CSR lends itself to good news stories..

Publicity like this can be a key part of using CSR to win contracts. People want to buy

from businesses they respect. CSR can be particularly effective for targeting ethical

companies, the public sector and not-for-profit organisations.

At the same time, you should see CSR as part of a continuing process of building

long-term value. Everything you do should help improve your reputation and

encourage customers and other stakeholders to stay involved with you. A business

that buys recycled paper - but exploits its customers and ignores the community - has

missed the point.

You could consider working towards a management standard which you can then use

to publicise your ethical, environmental or social responsibility. For example, many

businesses shave already achieved the environmental management standard ISO

14001.

A new voluntary standard is being introduced later in 2010 to help businesses manage

their corporate social responsibility.

Effective CSR like this helps you continue to differentiate yourself. Even with dozens

of competitors, a real commitment to CSR lets you stand out. As an example, John

Lewis department stores are well known as a business owned by its employees. Its

commitment to CSR feeds through into customer service, sales and profits. As well as

affecting the way you behave, CSR can lead to new products and services that reflect

your values and those of your stakeholders. Over time, it can all add up to a powerful

brand - and a winning business.


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CONTEMPORARY SOCIAL ISSUES

Corporations deal with a wide variety of social issues and problems, some directly related to

their operations, some not. It would not be possible to adequately describe all of the social

issues faced by business. This section will briefly discuss three contemporary issues that are

of major concern: the environment, global issues, and technology issues. There are many

others.

ENVIRONMENTAL ISSUES

Corporations have long been criticized for their negative effect on the natural environment in

terms of wasting natural resources and contributing to environmental problems such as

pollution and global warming. The use of fossil fuels is thought to contribute to global

warming, and there is both governmental and societal pressure on corporations to adhere to

stricter environmental standards and to voluntarily change production processes in order to do

less harm to the environment. Other issues related to the natural environment include waste

disposal, deforestation, acid rain, and land degradation. It is likely that corporate

responsibilities in this area will increase in the coming years.

GLOBAL ISSUES

Corporations increasingly operate in a global environment. The globalization of business

appears to be an irreversible trend, but there are many opponents to it. Critics suggest that

globalization leads to the exploitation of developing nations and workers, destruction of the

environment, and increased human rights abuses. They also argue that globalization primarily

benefits the wealthy and widens the gap between the rich and the poor. Proponents of

globalization argue that open markets lead to increased standards of living for everyone,

higher wages for workers worldwide, and economic development in impoverished nations.

Many large corporations are multinational in scope and will continue to face legal, social, and

ethical issues brought on by the increasing globalization of business.

Whether one is an opponent or proponent of globalization, however, does not change the fact

that corporations operating globally face daunting social issues. Perhaps the most pressing


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issue is that of labor standards in different countries around the world. Many corporations

have been stung by revelations that their plants around the world were "sweatshops" and/or

employed very young children. This problem is complex because societal standards and

expectations regarding working conditions and the employment of children vary significantly

around the world. Corporations must decide which is the responsible option: adopting the

standards of the countries in which they are operating or imposing a common standard world-

wide. A related issue is that of safety conditions in plants around the world.

Another issue in global business is the issue of marketing goods and services in the

international marketplace. Some U.S. companies, for example, have marketed products in

other countries after the products were banned in the United States.

TECHNOLOGY ISSUES

Another contemporary social issue relates to technology and its effect on society. For

example, the Internet has opened up many new avenues for marketing goods and services, but

has also opened up the possibility of abuse by corporations. Issues of privacy and the security

of confidential information must be addressed. Biotechnology companies face questions

related to the use of embryonic stem cells, genetic engineering, and cloning. All of theseissues have far-reaching societal and ethical implications. As our technological capabilities

continue to advance, it is likely that the responsibilities of corporations in this area will

increase dramatically.

Corporate social responsibility is a complex topic. There is no question that the legal, ethical,

and discretionary expectations placed on businesses are greater than ever before. Few

companies totally disregard social issues and problems. Most purport to pursue not only the

goal of increased revenues and profits, but also the goal of community and societal

betterment.

Research suggests that those corporations that develop a reputation as being socially

responsive and ethical enjoy higher levels of performance. However, the ultimate motivation

for corporations to practice social responsibility should not be a financial motivation, but a

moral and ethical one.


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Here's how a corporate social responsibility initiative benefitted my

business

The Venus Company is an award-winning beach shop and cafe operator with several

outlets based in Cornwall and Devon. Established in 1995 by Michael Smith, the firm

has strong environmental and ethical principles, and sells food that has been sourced

using local suppliers. Here Michael explains how developing corporate social

responsibility (CSR) policies have helped the business.

What I did

Help the environment and support our local community

"Our mission is to be the greenest beach shop and cafe operator in the UK, and our

attitude to almost every business decision flows from this. For us, CSR covers a

number of elements. We support local producers, having spent more than 300,000 on

local food and drink from the immediate area around our cafes, and use local

businesses for other goods and services. Over 80 per cent of our food and drink comes

from Devon and Cornwall.

"We also work hard to minimise our impact on the environment, from using solar

panels to recycling, carrying out regular litter collection and buying non-toxic

cleaning products. We've also focused on things like packaging to make sure it's as

biodegradable as possible.

"One scheme we're really proud of is the Venus Beach Wildlife Fund, which raises

money to educate local schoolchildren about their environment, and we also go into

schools to do talks. Any business can engage in the local education system, and it's

very rewarding."

Build a customer base and attract staff

"Building a positive image of a company that gives back to the community hasundoubtedly created a number of business benefits. Over the past couple of years, we


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have been able to open two of our beach cafes year-round, rather than just through the

summer months, as we have built up a loyal, local customer base and trade isn't

simply seasonal.

"Recruitment is another area in which the business has benefited. Many of our staff

are young, and they are really keen to work with a company that has a responsible and

ethical approach, so attracting people to come and work for us has become easier."

Generate PR

"Developing our CSR policies has also boosted our profile. We've won quite a few

awards, which have been good for us in PR terms, and we've also been able to use the

award logos on our website and van. These have become part of our visual identity

that people hopefully recognise. Entering awards can be a time commitment, but they

can also be a fantastic way to audit and benchmark your business against others."

What I'd do differently

Raise awareness about environmental protection earlier

"I'd have got involved with the education side of things earlier. I think we've achieved

a lot when it comes to teaching local kids how they can look after the environment,but if we'd started ten years ago, we'd be much further down the line by now."

Arguments For and Against CSR

FOR AGAINST

The rise of the modern corporation created

and continues to create many social

problems. Therefore, the corporate world

should assume responsibility for addressing

these problems.

Taking on social and moral issues is not

economically feasible. Corporations should focus

on earning a profit for their shareholders and leave

social issues to others.

In the long run, it is in corporations' best

interest to assume social

Assuming social responsibilities places those

corporations doing so at a competitive


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FOR AGAINST

responsibilities. It will increase the chances

that they will have a future and reduce the

chances of increased governmental

regulation.

disadvantage relative to those who do not.

Large corporations have huge reserves of

human and financial capital. They should

devote at least some of their

resources to addressing social issues.

Those who are most capable should address social

issues. Those in the corporate world are not

equipped to deal with social problems.


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Trusteeship management

Trustee is a legal term for a holder of property on behalf of a beneficiary. A trust can be set

up either to benefit particular persons, or for any charitable purposes (but not generally for

non-charitable purposes): typical examples are a will trust for the testator's children and

family, apension trust (to confer benefits on employees and their families), and a charitable

trust. In all cases, the trustee may be a person or company, whether or not they are a

prospective beneficiary.

Trusteeship management of assets

Nowadays it is a vital issue not only to save but also multiply the previously earned capital.

The most simple way to accumulate funds is the bank deposit. However the bank rate is

lower or at the best case can be compared with the current inflation.

By investing money on the stock market one may receive the earning yield considerably

outstripping the inflation, however individual control over the securities portfolio requires

professional knowledge which far not everyone can command and considerableconsumption of time.

It is appropriate to avail of such services as individual trusteeship management of the

investment company OEMK-Invest. This line of activity has been mastered by the

Company since 1999.

Trusteeship management is preferred by those who are lack of sufficient experience for

taking decisions on control over the portfolio independently.

Both natural persons and legal entities, residents and non-residents can become Clients of

our Company.

The main priority of the Companys work is to minimize risks of the trusteeship

management promoter by investing money.

Having submitted assets to trusteeship management you trust the Company to make

operations of purchase/sale of securities in your interests. All deals decisions are taken by
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the trusteeship manager, but the main direction of his actions is set by the trusteeship

management promoter, making the investment declaration. Here the trusteeship

management promoter can stipulate the securities list and securities shares in the portfolio

managed by the trusteeship manager, and also can specify other requirements.

All deposited funds of the trusteeship management promoter is kept on the separate

account of the trusteeship manager separately from the Companys internal funds, and used

only in conformity with the investment declaration.

Paper investment is an uneasy task, demanding special knowledge and professionalism.

The Client who has solved to work on the stock market independently, should devote

almost all time to it, after all the investment efficiency depends on timeliness of decision-

making and correctness of situation estimation. Trusting funds management to our

Company, the Client frees himself to solve other problems, besides he receives

professional control over assets, regular reports on investment situation, investment

confidentiality.

The Company adheres to an individual approach to each Client, discussing investment

strategy in details, developing the very approach that fully suits to the Clients

representations about admissible risks.

Today this line of the companys activity is developing dynamically. As of the end of 2006

more than 1000 trusteeship management agreements have been concluded.

Need to be mentioned following benefits of the trusteeship management:

Potentiality of high income receipts;

Opportunity to choose investment strategies which satisfy Clients requirements at thebest;

Opportunity to choose simultaneously number of investment strategies and validity

periods;

Comprehensive reporting of all actions carried out by the trusteeship manager;

Depositing and withdrawal of funds at any time in course of the trusteeship management.


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As of the end of 2006 volume of funds invested in the trusteeship management increased

12,7 times and amounted to RUR 6 781 million which has been an all-time high since

1999. For comparison in 1999 it was submitted RUR 36 million to trusteeship management

provided by the Company.

Volume of funds submitted to trusteeship management

Specialists in the trusteeship management using their working experience make operations

on investment of Clients funds in the most perspective securities both on the leading

exchange floors and on the over-the-counter market with consideration of Clients

individual requirements to reliability, earning yield and liquidity of investments. The main

objective of Clients funds management is their saving and incrementing.

Net earning yield from funds in trusteeship management in 2006 was in the range of 12-20

% for natural persons and 8-13 % for legal entities depending on the chosen investment

strategy minus commission charges and taxes.

Revenue earned in process of Clients funds management in form of dividends, interests

and realized profit are invested into market instruments.

Owing to their high liquidity the return of funds is always possible. In managing the

property we provide absolute transparency and give regular reports to Clients regarding

performed operations.


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Trusteeship Management Service

Enterprise Annuity Plan Design

Enterprise Annuity Plan is the source, foundation and premise of enterprise annuity

operation. It is of key importance to design an enterprise annuity program that is tailored

to the characteristics of an enterprise, although to design such a plan requires high

professionalism. In this regard, ICBC is able to meet the various demands of different

enterprises, and provide all-round support in terms of the design, internal and external

audit and record for enterprise annuity plan and operation management. Therefore, ICBC

helps enterprises to successfully finish the record of enterprise annuity plan, and lay a

solid basis for forging enterprise annuity plan in the next stage.

Choosing Annuity Management Institution

To choose which institution of enterprise annuity management is directly relevant to

whether the annuity fund can achieve the estimated management objectives on the

premise of securing asset safety. One of the trustee's most important responsibilities is to

assist clients of enterprise annuity in choosing account manager, investment manager and

custodian. ICBC abides by the principles of being "open, fair, just, prudent" and relies on

its scientific manager evaluation system of enterprise annuity to choose the most suitable

institutes of enterprise annuity management service for different enterprises via its

professional Evaluation Committee. Meanwhile, ICBC can also provide enterprises with

comprehensive services such as consulting and follow-up evaluation of the enterprise

annuity management institution, and the change of institution of the beneficiary's interest

upon clients' requirement.

Annuity Management Contract Report

The enterprise annuity record number of the administrative department stands for the

formal establishment of enterprise annuity plan. The trustee should take the responsibility

of making the record of annuity management contract. ICBC possesses rich experience in

enterprise annuity services, and is familiar with the process and requirement of different

types of enterprise annuity management contracts. Therefore, it can secure the timeliness


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of enterprise annuity management contract record through reasonable arrangement of

work plan. Meanwhile, ICBC can also offer multiple composite services during the

process of management contract record, including memorandum consultation of

organization management institution.

Strategic Asset Allocation

The objective of enterprise fund operation management is to realize the preservation and

increase of the property value of annuity fund. Investment management is the incentive

of the operation of enterprise annuity fund, while to make investment policies and to

strategically allocate assets is the starting point and the most important step of investment

management. ICBC is able to make asset allocation strategy based on clients' customized

need. Through designing different investment combinations for annuity fund, ICBC

enables clients to choose the most suitable investment product of annuity fund, so as to

realize enterprises management goal of preserving and increasing the property value of

their annuity fund.

Supervision of Annuity Operation

During the implementation stage of enterprise annuity fund operation, the trustee's

supervision of the account manager, custodian, investment manager and service agencies

is an important guarantee for the fund's secure operation and the preservation and

increase of property value. ICBC has established complete supervision management

system of enterprise annuity, thus being able to supervise and evaluate the performance

of different managers, provide evaluation reports and urge the managers to continuously

improve their capability of enterprise annuity fund management, so as to ensure the

qualification, safety, and efficiency of enterprise annuity fund management.

Processing Daily Entrusted Affairs

The management of enterprise annuity operation involves in multiple management roles

and steps. ICBC fully plays the role of the core of the entire operation process as well as

the hub of information transmission as a trustee: ensure the operation safety and


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effectiveness, coordinate the various roles, timely track the multiple steps, etc. In this

way, ICBC guarantees the smooth operation and safety of enterprise annuity fund,

realizes the preservation and increase of the property value of enterprise annuity fund,

and ultimately, secures the interest of the beneficiaries of enterprise annuity fund.

Revelation of Annuity Management Information

Based on the principles of being "adequate, effective, timely and open", ICBC sets up the

system of reporting to clients, beneficiaries, and supervising bodies as well as the system

of accounting information revelation. We also take charge of the responsibilities of

inquiry acceptance, periodical reports, and the timely report of major events.

Annuity Management Consulting Services

During the process of the establishment and daily operation management of the annuity

system, ICBC provides enterprises with comprehensive consulting services, which

include, but not are not limited to, relevant policies and regulations, annuity plan design,

operation management model design, evaluation and option of management institution,

investment strategy recommendation, as well as all kinds of information.

Case Study

At PNBISL, we deliver expert Trusteeship Services to our clients through a team of

dedicated, trained experienced professional who continually strive to cater to changing

market needs, ensuring that we deliver the best. The knowledge and expertise of the

professionals along with their ethical integrity approach inspires confidence of our clients

expediting the process of execution of assignments. The impetus is on developing excellent

rapport with corporates or investors by providing quality services with shortest possible

turnaround time.

PNBISL is a SEBI registered Debenture Trustee Company provide services with regard to

Trusteeship business as:

Debenture/ Bond Trustee

Security Trustee

Share Trustee


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Debenture Trustee

PNBISL provides Trusteeship Services for debenture/bond issuances, and other activities setup in trust format and thereby representing the interest of the debenture holders/bond holders.

PNBISL ensures the protection of interest of holders of debentures (including the creation of

securities within the stipulated time) and redressal of the grievances of holders of debentures

effectively and may take such other steps as we may be required for the same. We advise the

Debenture / Bond Issuers (Public/Private company, Govt / Semi Government bodies) on

obtention of rating, appointment of arrangers, guidance on structured payment mechanism,

clarification on legal / statutory matters in issue of debentures / bonds, documentationprocess, preparation of all kinds of related documents, creation of charge, registration and

compliance of legal and statutory requirements in this aspect.

Security Trustee

At PNBISL, we offer Security Trustee services that ensure the creation of security and its

management over time. At PNBISL, we create and hold security on behalf of various

lenders. We also facilitate dealings between borrowers and lenders, functioning as advisors

and efficient coordinators. As Security Trustee, PNBISL fulfils a range of activities related to

corporate, custodial and back office functions. We accept Security Trusteeship assignment

for the loans / advances granted by any Bank / Financial Institution to any corporate body as

under Security Trusteeship.

Share Trustee

The banks are barred under Section 31 of Banking Regulation Act (BR Act)to hold shares of

any company beyond 30% of their own capital of the company. In the present day scenario,

the banks and FIs invariably seek pledge of the promoters shareholding in the company. In

fact, in restructured accounts, the shares pledged all 51 % of the total paid up capital of the

company or 100% of the promoters holding in the same, whichever is less. Thus, in effect

more than 30% shares are sought to be pledged. However, in light of section 31 of BR Act, it

is not permitted, there is always a delay or non- compliance of the same.


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PNBISL provides a readymade solution to the issue by providing Share Pledge Trusteeship

services at nominal fee. The whole exercise of share pledge can be effected and security

created in a matter of 1-2 weeks. The Systems and procedures for the Share Pledge

Trusteeship have been perfected and customized to meet the requirements of customers. A

team of dedicated professionals has been developed to undertake these assignments. We

provide all services related to corporate, custodial and back office functions, including:

Drafting/Vetting necessary documentation.

Creation of Share Pledge and necessary compliance of reporting to regulatory bodies.

Providing clearances on behalf of the Lenders for future borrowings.

Acting on Lenders written directions. Enforcing security in the event of default.

Leadership as Trusteeship

By Raj Sisodia

Trust is an essential human attribute and virtue. When we are born, we are completely

helpless and at the mercy of others. We instinctively trust that someone will look after us,

nurture us, protect us. Being trusting and being trustworthy are central tenets of what it means

to be a human being.

Yet, there is a huge trust deficit in our society today. There is a crisis of trust in government,

in religious institutions, in our educational system, in the health-care system and in the

financial system. There is deep distrust within the public at large towards the corporate world

in general and towards most companies and their leaders. Within companies, there is a greatdeal of mutual distrust among employees, and among employees and customers, suppliers

and leaders.

Why should all of this matter? Trust is an essential element in building social capital, which

Francis Fukuyama defined as the shared norms or values that promote social cooperation,

instantiated in actual social relationships. Unlike other forms of capital, social capital is not

depleted by being used; in fact, it is depleted if not used. Social capital is vital for the

development of society as a whole as well as for organizations. A high trust organization is
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characterized by greater engagement and effectiveness on the part of its members. It exhibits

greater synergy across the workforce, so that people collectively achieve far more than they

could as individuals. An organizational environment that is lacking in trust leads to a

defensive, suspicious, insular and fearful mindset. This depletes organizational energy and

makes people incapable of true creativity. It imposes a burden of higher monitoring and legal

costs. It makes companies sluggish, unresponsive and uncaring towards market needs. It sows

the seeds of the eventual destruction of the organization.

If trust is so important, why have we allowed ourselves to be beset by such a crisis of mistrust

in most of our major societal institutions?

To me, the answer is quite clear. Every societal institution was conceived of and exists toserve a higher purpose in the world beyond its own well-being and that of its members. When

these entities lose sight of their reason for beingtheir higher purposeand become focused

on their own short-term self-interest, an epidemic of mistrust ensues. We see this everywhere.

Governments at every level are run by politicians hungry for ever greater power, instead of

trying to serve the many needs of the electorate. The educational system is driven, it seems,

more by inertia and the desire for job security for teachers than to meet the real learning

needs of students. The health-care system exists to maximize the profits of its variouscomponent industries, not to maximize the health of the public. The financial system exists to

profit heavily from short-term arbitrage opportunities (capitalizing on information

asymmetries) rather than to facilitate efficient investments of various kinds in the sectors that

need it most.

To reverse this epidemic of mistrust, the leaders and members of these organizations need to

rediscover anew the organizations higher purpose, and then align their own self-interest with

that higher purpose. In other words, individuals should only pursue their self-interest via their

pursuit of the organization's higher purpose, not to make serving their self-interest their

primary purpose.

So how, exactly, can companies build trust? What they cannot do is buy it. A major

corporation recently hired a leading consulting firm to help them design a $500 million

campaign to build trust. While it is laudable that the company thinks trust is so important that

it is willing to invest so much money in the initiative, its approach is fundamentallymisguided and myopic. As is often the case, the company is looking for a quick fix to a


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problem whose roots go very deep and are heavily interconnected. Trust is something that

can only be earned slowly, based on actions and not just words.

Building trust within an organization has to start at the very top. I believe it is impossible to

create a high-trust organization without a conscious leader. Such leaders are other-centered

and lead through motivating-and-mentoring rather than through command-and-control. They

are missionary leaders, with a deep commitment towards the company's higher purpose, and

not mercenary leaders looking for a big payday or militaristic leaders accustomed to giving

orders and having others follow unquestioningly. One such leader is John Mackey, the co-

founder and CEO of Whole Foods Market and a fellow MIX Maverick. John stopped taking a

salary in 2007 and directed that all his stock options go directly to the Whole Foods

Foundation, telling his 50,000+ team members in a letter that he had more than enough to

live on comfortably and that the reason he came to work in the morning had nothing to do

with his paycheck and everything to do with Whole Foods higher purpose: to educate

customers about healthy eating, and to improve the health of the food system and the planet

as a whole. He signed the letter, "Much love, John." Not surprisingly, Whole Foods is an

exemplary high-trust company that has delivered great value of all kinds to all its

stakeholders for 25 years.

Conscious leaders operate with a heartfelt sense of trusteeship. They think of the impact of

their actions on generations yet unborn, and not just on next quarter's bottom line. They feel a

deep sense of responsibility towards the resources they have been entrusted with, considering

it a sacred duty to leave them healthier and stronger than they found them. They shine most

brightly in the dark, during times of crisis, when their resolute, steadfast, principles-based

approach stands out in stark contrast to the expedient, panicky and self-serving actions of

many of their counterparts. High trust companies such as Whole Foods, Southwest Airlines,

Container Store, REI and Joie de Vivre Hospitality have all demonstrated the power of

conscious, caring leadership during times of crisis in the industry and in the economy as a

whole. For example, they have avoided layoffs if at all possible, shared the sacrifice,

protected their weakest stakeholders (part-time employees), and harnessed the collective

creativity of all of their employees to come up with innovative ideas for cost savings and

other improvements.


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Building trust requires constant, authentic communication. Communication is not just about

words; it is also based on actions. Every action communicates something to employees. Too

many companies exhibit a blatant mismatch between what they say and what they do, which

breeds deep cynicism among employees over time. Like the barnacles that attach themselves

to a ship's underside over time, this cynicism is very difficult for companies to remove.

There is a neat logic to trust: in order to cultivate high levels of trust in an organization, its

leaders must start by trusting their people to use their own judgment and follow their own

instincts rather than controlling them with directives and rules. Research has shown that

supervisors become less trusting of those employees they supervise most closely. The

employees who are being closely supervised feel that they are not trusted. Over time, this

becomes a self-fulfilling prophecy. Employees can rise to higher levels of performance when

they are trusted, and they can exhibit shockingly poor performance when they are mistrusted.

In order to get trust, you have to give it freely.

One powerful way to build a solid foundation of trust in an organization is to make the

decision making process as transparent and participatory as possible. Human beings have a

very strong need to be respected and heard. It turns out that having a fair and transparent

process for making decisions can be more important than the ultimate outcome. Employeeshave been found to be more satisfied when they feel there is a fair process leading even to an

unfavorable outcome for them personally, rather than the reverse. There are powerful

opportunities to bake in mutual trust at every level. For example, many companies have

stopped the practice of constantly monitoring and spying on their employees online

activities. While they felt that they had a legitimate interest in preventing employees from

wasting time or engaging in potentially illegal activities, they found that being spied upon

made their employees hostile and disengagedand simply trusting their people to do the

right thing yielded powerful results.

Building trust is a slow and difficult process. On the other hand, destroying trust can be done

quickly and with great ease. It doesn't take much: blatantly self-serving actions of senior

leaders, overtly short-term thinking, seeing other employees get away with unacceptable

behavior, inconsistency and unfairness in treating employees (playing favorites), and

distorting or withholding essential information.


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Trust is a holistic concept. It is imperative that companies think about trust in a systemic way.

It is impossible to have trust with customers (which many companies seek) without having

high levels of trust internally. Trust either pervades all stakeholders or none at all.

High trust businesses are built on love and caring, not fear and anxiety. They are

characterized by high levels of teamwork, synergy and cooperation. They are energetic,

optimistic, can-do organizations that can overcome seemingly insurmountable odds. Trust

within the company radiates out to all stakeholders, including customers, investors, partners,

communities, government and society as a whole. The company's overall reputation is

enhanced, giving it a halo that allows it to attract ever better employees, customers, suppliers

and investors starting a virtuous cycle that builds over time to create a truly great company

that generates tremendous value and well-being for society as a whole.

There is an almost spiritual aspect to high trust companies. They see humans as sources, not

resources. Human beings are capable of generating extraordinary amounts of creative energy

something that the vast majority of companies never get to see because they simply don't

inspire people at that level. High trust organizations see all humans as one spiritas

interconnected and interdependent. Trust is simply a given in organizations that see the world

in this wayto operate without it would be like your arm not trusting your leg.

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