CORPORATE SOCIAL RESPONSIBILITY: CONCEPTION TO REVOLUTION

DR. SAVITAAssistant Professor in Commerce Dev Samaj College for WomenFerozepur City (PB)-152002Email: dhawansavita@hotmail.comMobile No. : 9914123332

DR. VISHAL KUMARAssistant Professor in Commerce

Dev Samaj College for WomenFerozepur City (PB)-152002

Email: vkfzr@hotmail.comMobile No. : 9914023332

___________________________________________________________________________________________ABSTRACTCorporate social responsibility (CSR) can be defined as the "economic, legal, ethical, and

discretionary expectations that society has of organizations at a given point in time". The concept

of corporate social responsibility means that organizations have moral, ethical, and philanthropic

responsibilities in addition to their responsibilities to earn a fair return for investors and comply

with the law. A traditional view of the corporation suggests that its primary, if not sole,

responsibility is to its owners, or stockholders. However, CSR requires organizations to adopt a

broader view of its responsibilities that includes not only stockholders, but many other

constituencies as well, including employees, suppliers, customers, the local community, local,

state, and federal governments, environmental groups, and other special interest groups.

Collectively, the various groups affected by the actions of an organization are called

"stakeholders."

Keywords: CSR, Corporate Social Responsibility, Societal Marketing

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“William Ford Jr., the chairman of Ford Motors company said: “A good company delivers

excellent products and services, and a great company does all that and strives to make the

world a better place.”

A business doesn’t exist in isolation simply as a way of making money. Customers, suppliers and

the local community are all a affected by a business. Products, and the way you make them, have

an impact on the environment. Corporate Social Responsibility (CSR) takes all this into account

and helps the business to create and maintain effective relationships with your stakeholders. It

isn’t about being ‘right on’, or mounting an expensive publicity exercise. It means taking a

responsible attitude, going beyond the minimum legal requirements and following

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straightforward principles that apply, whatever the size of the business. CSR is a function of

operating a business that meets or exceeds the legal, ethical, commercial and public expectation

that society has of business .Corporate social responsibility (CSR) is the obligations on the part

of corporate and business houses to take such actions that protect and improve the welfare of the

society as a whole and also safeguard their own interest of profit. There has been a revolutionary

change in the attitude of the corporate sector towards the community they are operating in. CSR

emphasis the responsibility of companies towards stakeholders consisting of consumers,

employees, owners, government, suppliers, competitors and society at large as against their

earlier focus on profit maximization alone.

Social responsibility of big business houses encompasses the sector like health, education,

employment, Income and quality of life. It should be binding on the corporate sector to work on

the above aspects, which are thought to be primary social indicators. Better quality of living

standards is directly related to improve buying capacity of masses. Corporate social

responsibility is closely linked with the principles of ‘Sustainable development’ and proposing

that enterprises should be obliged to make decisions based not only on the financial/economic

factors but also on the social and environmental consequences of their activity. Corporate Social

Responsibility thus helps to define the contribution of a company beyond economic value and

creating employment, and weighs this contribution against the damage done by the company

through its products and processes. Corporate Social Responsibility encompasses two aspects:

1. The steps taken by a company to neutralize, minimize or offset the harmful effects caused by

its processes and product-usage.

2. The further steps a company takes using its resources, core competence, skills, location and

funds for the benefit of people and the environment.

The role of business houses in the development of social structure of the country and society has

undergone a sea change. The corporate sector in India very often blames the government for poor

governance and lack of far sightedness. But do the corporate sectors perform its duty to

contribute to the overall growth of the country? Does it have the right to blame the governance?

Does it contribute to nation building? Though India is one of the fastest growing economies,

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socio-economic problems like poverty, illiteracy, lack of healthcare etc. are still ubiquitous and

the government has limited resources to tackle these challenges. This scenario has opened up

several areas for businesses to contribute towards social development. India being a mixed

economy provides sufficient head room for both public and private sector. Today the Indian

economy is represented by both public and private sector engaging in healthy competition to

promote the rapid development of country.

Table1: Direction of CSR Initiatives – Public Vs Private Sector

Sr.

No.

Item Public Sector Private Sector

1 Rural development √ √

2 Health care √ √

3 Education √ √

4 Microfinance - √

5 Child welfare - √

6 Disaster management - √

7 Community development √ √

8 Women empowerment √ √

9 Environment protection - √

10 Infrastructure development - √

Sources: Compiled from Karmyog CSR rating 2008

Table 2: Relative Importance of CSR Initiatives – Public Vs Private Sector

Sr.

No.

Item Public Sector Private Sector

1 Rural development 14% 69%

2 Health care 14% 44%

3 Education 43% 65%

4 Microfinance - 8%

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5 Child welfare - 17%

6 Disaster management - 19%

7 Community development 14% 18%

8 Women empowerment 14% 17%

9 Environment protection - 31%

10 Infrastructure development - 6%

Sources: Compiled from Karmyog CSR rating 2008

Among ten different CSR initiatives, health care, education and community development are

commonly pursued by companies across different sectors as against these, microfinance and

child welfare and women empowerment have not received sufficient attention by the Indian

companies. There exist inter-sectoral differences with regard to the relative importance of

various CSR activities practiced in Indian companies. Education and health care generally

received top priorities at the inter-sectoral level. The least priority area includes infrastructure

development and microfinance. The beneficiary analysis revealed that the employees and society

at large are the least focused area among the corporate across different sectors of the industry

most of the beneficiary belong to the people in the immediate vicinity. Since CSR in not

mandatory, companies should be motivated by the government to set aside the part of their funds

for socially responsible products. Tax incentives, recognition etc. may be considered as

motivators in this regard.

CSR is not a new concept in India. Corporate houses like the Tata Group, the Aditya Birla

Group, and Indian Oil Corporation, Mahindra and Mahindra to name a few, have been involved

in serving the community ever since their inception. Many other organizations have been doing

their part for the society through donations and charity events. Today, CSR in India has gone

beyond merely charity and donations, and is approached in a more organized fashion. It has

become an integral part of the corporate strategy. Companies have CSR teams that devise

specific policies, strategies and goals for their CSR programs and set aside budgets to support

them. These programs, in many cases, are based on a clearly defined social philosophy or are

closely aligned with the companies’ business expertise. Employees become the backbone of

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these initiatives and volunteer their time and contribute their skills, to implement them. CSR

Programs could range from overall development of a community to supporting specific causes

like education, environment, healthcare etc. The review of the leading companies revealed the

key issues in India which companies are aware of the need to tackle: a huge and growing

population; mass urbanization and a move away from a traditional agricultural based economy;

and massive poverty alongside increasing and booming wealth, with the specter of HIV/AIDS

alongside diseases of the world’s neediest people. And alongside these was how best to balance

the needs and wants of a growing economy with the scale of the aforementioned issues.

For example, organizations like Bharat Petroleum Corporation Limited, Maruti Suzuki India

Limited, and Hindustan Unilever Limited, adopt villages where they focus on holistic

development. They provide better medical and sanitation facilities, build schools and houses, and

help the villagers become self-reliant by teaching them vocational and business skills. On the

other hand GlaxoSmithKline Pharmaceuticals’ CSR programs primarily focus on health and

healthy living. They work in tribal villages where they provide medical check-up and treatment,

health camps and health awareness programs. They also provide money, medicines and

equipment to non-profit organizations that work towards improving health and education in

under-served communities. A leading company Mahindra and Mahindra ltd. Has been set up a

specific objective to promote Medical relief to the poor and needy sections of the society. The

Mahindra group on the occasions of its 60th anniversary undertook the sponsorship of 6000

Nanhi Kali, making M&M the single largest corporate donor for the Nanhi Kali programme.

This was when the Nanhi Kali programmed showed great potential to develop successfully as a

model for Corporate NGO civil society partnership. Many CSR initiatives are executed by

corporate in partnership with Non-governmental organizations (NGOs) who are well versed in

working with the local communities and are experts in tackling specific social problems. For

example, SAP India in partnership with Hope Foundation, an NGO that works for the betterment

of the poor and the needy throughout India, has been working on short and long-term rebuilding

initiatives for the tsunami victims. Together, they also started The SAP Labs Center of HOPE in

Bangalore, a home for street children, where they provide food, clothing, shelter, medical care

and education.

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CSR has come a long way in India. From responsive activities to sustainable initiatives,

corporate have clearly exhibited their ability to make a significant difference in the society and

improve the overall quality of life. In the current social situation in India, it is difficult for one

single entity to bring about change, as the scale is enormous. Corporate have the expertise,

strategic thinking, manpower and money to facilitate extensive social change. Effective

partnerships between corporate, NGOs and the government will place India’s social development

on a faster track.

Observations from the India based NGO regarding CSR Rating of India's 500 largest

companies:

1. Most companies are not doing any CSR

2. Many companies are only making token gestures towards CSR in tangential ways such as

donations to charitable trusts or NGOs, sponsorship of events, etc.

3. Most companies believe that charity and philanthropy equals to CSR; very few

companies are using their core competence to benefit the community.

4. Most companies use CSR as a marketing tool to further spread the word about their

business. For instance, donation of a token amount to some cause on purchase of a

particular product. The fact that companies are hiring advertising agencies for their CSR

further highlights this.

5. Only 6 Indian companies (from this study) publish a Corporate Sustainability Report to

measure and assess the impact of their business on the environment

6. Very few companies openly state the processes followed by them, the damage caused by

these processes, and the steps taken to minimize this damage.

7. Very few companies state how much they spend on CSR. There is no mention of the

amount spent in any of their balance sheets or annual reports. Most companies just list

and describe their CSR activities and seem to be spending minimal amounts on CSR.

8. Very few companies are engaged in CSR activities in the local communities where they

are based.

9. Very few companies have a clearly defined CSR philosophy. Most implement their CSR

in an ad-hoc manner, unconnected with their business process.

10. Most companies spread their CSR funds thinly across many activities, thus somewhere

losing the purpose of undertaking that activity.

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11. Most companies appear reluctant to themselves fulfill their CSR unless it is mandatory by

law.

In India, most of the corporate do not have a clear policy on social responsibility. Generally

speaking, most companies seem either unaware or don’t care about CSR. While developed

countries like England have separate ministries to look after the issue of corporate social

responsibility, in India, the government does not have a clear policy on the issue. However, all

companies can be considered to be an upward learning curve with respect to CSR and it is

expected that the situation will improve. Enlightened businesses worldwide, small and large have

begun to realize that responsible practices enhance profitability & ensure long-term survival. For

those, which disrespect the environment or living beings, we, as responsible citizens, need to

individually and collectively, reward or penalize them through our voices and our wallets.

A survey was conducted by ORG-MARG for TERI-Europe in several cities of India in 2001.

The basic purpose of the survey was to capture perceptions and expectations (related to corporate

responsibility) of the following three sets of stakeholders such as general public, workers

(skilled, semiskilled and un-skilled) and corporate executives (head of corporate relation, labor

relations, welfare dept. and manufacturing dept. in MNCs, large and medium sized Indian

companies). The poll gathered that people believe that companies should be actively engaged in

social matters. A majority of the general public feels that companies should be held fully

responsible for roles over which they have direct control. These include providing good products

and cheaper prices, ensuring that operations are environment friendly, treating employees fairly

without any discrimination based on gender, race or religion and applying labor standards

globally. More than 60% of the general public felt that the companies should also be held

responsible for bridging the gap between the rich and the poor, reducing human rights abuses,

solving social problems and increasing economic stability.

Conclusion:

To conclude, the business of twenty first century will have no choice but to implement CSR. The

law needs to be formulated to help in reinforcing CSR practices and the corporate houses should

be answerable to the government. The corporate social responsibility (CSR) should not be

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merely a statement of intent. It should be made compulsory for the corporate operating in India.

Appointment of an independent social accounting committee to measure, monitor, evaluate and

report the impact of CSR in annual report should be mandatory. A certain percentage of profit

should be earmarked for social development that should reflect in the annual balance sheet of the

company. The corporate had increasingly begun to ponder over whether there is more to business

than just financial numbers, leading to the emergence of concept of the "triple bottom line

impact". Here a company basically tries to balance three critical aspects i.e., economic returns,

social benefits and environmental sustainability.

Rockefeller says, “Think of giving not as a duty but as a privilege.”

References:

1. The importance of corporate social responsibility a white paper from the economist

Intelligence unit sponsored by oracle.

2. CSR ASOCIO policy paper June 2004

3. Management Forum: CSR published by Asian Productivity Org.

4. CSR Asia weekly Vol.5 week39

5. Importance of corporate social responsibility in a Downturn “working knowledge:

Hardware business social August 3, 2009.

6. Prabandhak: Indian Journal of Marketing

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