Corporate Social Responsibility

“A company’s sense of obligation towards the society and environment (both ecological and social) in which it operates”, is how CSR is described.  Companies show their citizenship by (1) eliminating waste and emissions, (2) contributing to educational and social services, and (3) generating sufficient returns on the resources they employ.”

Indian Scenario: Evolution

• CSR developed over a period of time when industrial families such as Tata, Birla, Godrej, and others had an interest in such activities in the 19th century. These behemoth corporations engaged in a range of CSR practises without regard to legal requirements, using it as a means of fostering goodwill, prestige, and brand building.
• Later, during the period of independence, Mahatma Gandhi persuaded various industrialists to follow socio-economic development practises, as a result of which, various corporations established training centres and educational institutions such as schools and colleges.
• CSR was eventually given a boost in India with the implementation of labour and environmental protection legislation, and Public Sector Undertakings were asked to take on CSR initiatives. This is how this practice grew and matured into a long-term corporate plan.
• In April 2014, India became the first country in the world to make corporate social responsibility (CSR) mandatory, according to an amendment to the Companies Act, 2013. Businesses should invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR enforcement.
• Profit-making enterprises with profits of Rs.5 crore or more in the previous three years were required by the new Enterprises Act of 2013 to spend at least 2% of their average income on CSR efforts.

Arguments in Favour for CSR:

• To quote Chanakya “The meritorious should give away in charity all that they have in excess of their needs. By charity only Karna, Bali and King Vikramaditya survive even today”.
• Not only government policy, but also businesses should be responsible in addressing social problems.
• They have an obligation to give back to society.
• Industries have contributed to polluting the environment, thus should also clean it.
• Companies will benefit from it: corporations increase long-term profits by operating with a CSR perspective. Consumers are loyal and ready to spend more on retailers that support charity.

Critique of the CSR:

• CSR is merely a gimmick or an excuse to escape governments’ position as watchdogs over powerful multinational corporations.
• Companies engage in CSR projects to divert attention away from ethical issues raised by their core operations.
• Misdirection: CSR is often used by businesses to divert public attention away from other, more negative business practices. McDonald’s Corporation, for example, marketed its partnership with Ronald McDonald House as CSR, despite the fact that its meals have been accused of encouraging unhealthy eating habits.

• Controversial industries: Tobacco, alcohol, and munitions companies, all produce goods that harm their customers and/or the environment. Companies in this industry can participate in the same philanthropic activities as companies in other industries. This duality makes evaluating certain companies in terms of CSR more difficult.

The Companies Act, 2013, was one of the world’s largest attempts in adopting CSR as a required provision by placing legislative requirement on Companies to engage in CSR projects toward social welfare activities. It was enacted by the Ministry of Corporate Affairs, Government of India. The country will be pushed by this CSR initiative to accomplish sustainable development goals and reshape India through public-private partnerships.