A Study of Corporate Social Responsibility In India

Dr. Madhuri Datalkar

Associate Professor,

L.A.D.College for Women, Nagpur.

madhuri.s.datalkar@gmail.com

Cell : 9422866823

Introduction :

India`s new Companies Act 2013 has introduced new provisions which change the face of Indian corporate business. One of such new provisions is Corporate Social Responsibility (CSR). The concept of CSR rests on the ideology of give and take. Companies take resources in the form of raw materials, human resources etc from the society. By performing the task of CSR activities, the companies are giving something back to the society.

The companies who fulfill the criteria as mentioned In rules  to comply with the provisions relevant to Corporate Social Responsibility. As mentioned by United Nations Industrial Development Organization (UNIDO), CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives, while at the same time addressing the expectations of shareholders and stakeholders.

Keywords:

Corporate Social Responsibility,

 Objectives :

1. To understand the concept of CSR.
2. To find out the status of CSR in India.
3. To study the policies governing CSR in India.
4. To study the challenges faced by CSR in India.

Research Methodology:

The research paper is an attempt of exploratory research, based on the secondary data

sourced from journals, magazines, articles and media reports.

Looking into requirements of the objectives of the study the research design employed for the study is of descriptive type. Keeping in view of the set objectives, this research design was adopted to have greater accuracy and in depth analysis of the research study.

Literature Review :

• The paper published in Proceedings of 21st International Business Research Conference ,(10 – 11 June, 2013, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-25-2) stated that, the importance of CSR emerged significantly in the last decade. Over the time, CSR expanded to include both economic and social interests. Along with this it also broadened to cover economic as well as social interests.

Companies have become more transparent in accounting and display public reporting due to pressures from various stakeholders. It is possible for companies to behave in the desired ethical and responsible manner towards consumers, employees, communities, stakeholders and environment. They have started incorporating their CSR initiative in their annual reports. CSR is an entry point for understanding a number of firm-related and societal issues and responding to them in a firms business strategy.

However, there is a universal and prominent view on protecting the environment and stakeholders  interests. Emerging economies like India have also witnessed a number of firms actively engaged in CSR activities, and the Ministry of Corporate Affairs has come up with voluntary guidelines for firms to follow. Companies in India have quite been proactive in taking up CSR initiatives and integrating them in their business processes.

• The paper  Published by  Nitin Kumar in Abhinav Publication’s Abhinav International Monthly Refereed Journal of Research in Management & Technology (Volume 3, Issue 5 (May, 2014) Online ISSN-2320-0073 ) stated that CSR clearly impacts our corporations, society, and educational organizations. Despite its complexities, the numerous sustainability initiatives point toward continued, positive impact. CSR policy should function as a built-in, self-regulating mechanism whereby businesses would monitor and ensure their adherence to law, ethical standards and international norms. In the recent years corporate business houses have substantially involved towards societal responsibilities. Companies have started to realise the importance of CSR and initiating the steps towards it.

Corporate Social Responsibility :

The term “Corporate Social Responsibility (CSR)” can be referred as corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare. The term generally applies to companies efforts that go beyond what may be required by regulators or environmental protection groups.

There is no single, commonly accepted definition of “Corporate Social Responsibility” (CSR). There are different perceptions of the concept among the private sector, governments and civil society organizations.

Corporate Social Responsibility (CSR) is a concept whereby companies integrate social, environmental and health concerns in their business strategy (policy) and operations and in their interactions with stakeholders on a voluntary basis. The social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.1 (Carroll, 1979)

European Union (EU): It describes CSR as “the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly, and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large2.”

while proposing the Corporate Social Responsibility Rules under Section 135 of the Companies Act, 2013, the Chairman of the CSR Committee mentioned the Guiding Principle as follows: “CSR is the process by which an organization thinks about and evolves its relationships with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies. Thus CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good. Socially responsible companies do not limit themselves to using resources to engage in activities that increase only their profits. They use CSR to integrate economic, environmental and social objectives with the company’s operations and growth3

Corporate Social Responsibility (CSR) in India

In developing economies like India, CSR is seen as part of corporate philanthropy in which corporations augment the social development to support the initiatives of the government. However with time, the scenario of CSR has changed from being philanthropic to being socially responsible to multi stake holders. The period of 1960s and 1970s saw an emergence of CSR activities being inbuilt in corporate philanthropy. (Mohan, 2001).

India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia’s Asian Sustainability Ranking (ASR), released in October 2009. ‘Sustainability in Asia ESG reporting uncovered’ (September 2010) is based on four parameters viz. General, Environment, Social and Governance. In its study based on 56 companies in India, it observed that India is ranked second in country ranking in Asia and is ranked one ranking in general category

. It is observed that reporting is strongly followed by companies as well as they seek international development standards. It could be attributed to the Indian government compelling the public sector companies to provide for community investment and other environmental, social and governance liabilities.

A key finding of the survey conducted in June 2008, aimed at understanding of the role of corporations in CSR, carried out by TNS India ( a research organization) and the Times Foundation, revealed that over 90 per cent of all major Indian organizations surveyed were involved in CSR activities. Besides the public sector, it was the private sector companies that played dominant role in CSR activities. A study on the CSR activities of 300 corporate houses, conducted by an industry body in June 2009, revealed that Corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them.

 The study also revealed that about 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment as well as rural development.

The CSR study of 2015 finds that many companies have scaled up operations in CSR and are looking at it as a priority. Mahindra and Mahindra leads the pack. Compared to the previous study it has jumped two ranks. There are four Tata group companies in the top 10 list. GAIL replaces SAIL in the public sector honours; while Bharat Petroleum joins the top ten list. Interestingly no foreign players make it to the top 10 list. Interestingly, Jubiliant Lifesciences, a healthcare company has entered the top ten list.

Year 2013 vs 2014 Rankings

Government  Policies  of   CSR 

There are many big entities who have been actively engaged in the CSR activities but unfortunately the number is relatively less. In order to encourage more entities to participate in the process of development of the society via- CSR, the Government of India has actually implemented the concept of CSR in the new Companies Act 2013, On 27th February, 2014, the Government of India has notified the rules for CSR spending u/s 135 of the New Companies Act 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 effective from 1st April 2014. Turning the CSR from voluntary activities to the mandated responsibilities,

CSR Activities  as prescribed under Schedule VII of CA, 2013

1. Objective to efface the daily life segments including poverty, malnutrition and hunger while enhancing the standard of living and promoting the facets of better health care sanitation.
2. Initiative to promote the different segments of education including special education and programs to enhance the vocation skills for all ages like children, women, elderly and conducting other livelihood enhancement projects.
3. Aim to bring the uniformity in respect of different sections of the society to promote gender equality and other facilities for senior citizens and developing hostels for women and orphans and taking initiative for empowering women and lowering inequalities faced by socially and economically backward groups.
4. Elevate the segment of flora and fauna to bring the ecological balance and environmental sustainability in respect of animal welfare, conservation of natural resources and  forestry while maintaining the quality of air, water and soil.
5. Enhancement of Craftsmanship while protecting art and culture and measures to restore    sites of historical importance and national heritage and promoting the works of art and setting up of public libraries.
6. Steps to bring worthy to the part of war windows, armed force veterans and their departments.
7. Sports programs and training sessions to enhance the level of rural sports, nationally recognized sports, Paraolympic sports and Olympics sports.
8. Favoring to Prime Minister’s National Relief Fund and contribution to other fund set up by the central government to promote socio-economic development and welfare of the schedule castes and Schedule Tribes and for supporting backward classes, minorities and women.
9. To uplift the technology of incubator that’s comes under academic institutions and which are approved by the Central Government.
10. Introducing varied projects for Rural Development.

Challenges of CSR :

Many companies think that corporate social responsibility is a peripheral issue for their business and customer satisfaction more important for them. They imagine that customer satisfaction is now only about price and service, but they fail to point out on important changes that are taking place worldwide that could blow the business out of the water. The change is named as social response Corporate Social Responsibility which is an opportunity for the business.

It is important for CSR strategies to become central to business strategy and part of the long-term planning process. Stakeholders are questioning more on CSR initiatives of the companies today. They are challenging the companies’ decisions-making in this direction. It has become imperative to incorporate stakeholders’ views.

In India the CSR managers face number of challenges in managing CSR activities. The biggest problem is of lack of budget allocations followed by lack of support from employees and lack of knowledge as well. Lack of professionalism is another problem faced by this sector. Absence of training and undeveloped staff are additional problems for reduced CSR initiatives.

General Public also do not take enough interest in participating and contributing to CSR activities of companies as they have little or no knowledge about it.

The increasing demand for more transparency and accountability on the part of the companies and d more the open and honest disclosure, the stronger and trusting relationships can be built with the stakeholders and consumers.

Small companies do not take adequate interest in CSR activities and those which undertake them fail to disclose it to the society. In the process they loose out on people and their trust in them.

Media can come up with strong support for informing the people at large about the CSR initiatives taken up by the companies. It can sensitize population and also make them aware of the benefits of CSR to them. However, media is not doing enough in this regard.

The failure of the government to come up with statutory guidelines to give a definite direction to companies taking up CSR activities, in terms of size of business and profile of CSR activities also results into few companies practicing CSR concept adequately.

Suggestions :

Companies can set a network of activities to be taken up in a consortium to tackle major environmental issues. It would also provide an opportunity to learn from each other. Everyone in the organisation needs to recognise their own role in promoting CSR. Companies should provide wider professional development activities.

Training, conferences and seminars could be organised by companies to disseminate and generate new knowledge and information in this sector. A strong budgetary support would definitely help to grow this sector and research related to respective industry would enhance their organisation’s contribution fu isclosure of information through formal and improved reporting is also inevitable for the co Training, conferences and seminars could be organised by companies to disseminate and generate new knowledge and information in this sector. A strong budgetary support would definitely help to grow this sector and research related to respective industry would enhance their organisation’s contribution further. Government regulations which are supporting in this direction could attract more response from organisations. All this would also lead to benchmark CSR activities.

Companies need to involve their stakeholders in order to build meaningful and long term partnerships which would lead to creating a strong image and brand identity. It is also suggested to review existing policies in order to develop more meaningful visions for the companies and broaden their contributions to reach to local communities.

Conclusions :

Corporate sustainability is an evolving process and not an end. The Companies bill is a good initiative on the part of the government however what would be included in ‘spending’ on CSR is unclear and is left for the companies to decide. Across the globe, the concept of CSR has been accepted as an element for success and survival of business along with fulfilling social objectives. However, the challenge for the companies is to determine a strong and innovative CSR strategy which should deliver high performance in ethical, environmental and social areas and meet all the stakeholders’ objectives

 References :

Banerjee , P. K. (2003), “Corporate Governance & Business Ethics in the 21st Century”, ICFAI Journal of Corporate Governance, Vol III No 2.

Brown K (2001), “Corporate Social Responsibility: Perceptions of Indian Business”, in Mehra M (Ed.), Ret EU Green Paper (2001)

Krishnan, S. (2001). “Corporate social responsibility: How and why in India”, Retrieved from http://www.coolavenues.com/know/ m/corporate_citizenship.php3 (Accessed February 10th 2011)

Mohan, A. (2001), “Corporate Citizenship: Perspectives from India” , Journal of Corporate Citizenship, Spring, pp 107-117.

Read-Brown Alex, Bardy Florent, Lewis Rebecca, (2010), “Sustainability in Asia ESG reporting uncovered”,

 Retrieved from http://www.asiansr.com/Sustainability_in_Asia___ESG_Reporting_Uncovered.pdf (Accessed February 10th 2011)

http://articles.economictimes.indiatimes.com/2014-02-28/news/47774403_1_csr-rules-csr-policy-csr-activities

http://www.mondaq.com/india/x/366528/Corporate+Governance/Corporate+Social+Responsibility+Indian+Companies+Act+2013

http://www.mca.gov.in/SearchableActs/Section135.htm