Corporate social responsibility - A Growing conviction in India


By

Ms. Akanksha Singh
MBA
Lecturer
NGF College of Engineering & Technology
Palwal
 


Abstract:

When India is making a transformational progress the world is looking at us as one of fastest emerging economies of world. We assume that our society is also progressing at the same rate as the economy is growing or there is a gap between economic vs social progress of the country. If society is progressing at the same pace as the economy is growing then it is a very healthy sign but if there is a mismatch between the two then it would be very grave situation since it may widen the gap between the different strata of society. When most societies are wrestling with an acceleration and intensification of social change, there is a revolution of rising expectations. But how this change will happen. There are various measures to bring about such changes in the form of war, revolution or planned way. But in India we believe in democracy, rationality and progress. But question arises whether the initiatives taken by government for social upliftment is sufficient or private players should also contribute or government, corporate and citizen's together act for this change. This paper is an attempt to answer such critical questions. An attempt would be made to find economic vs. social progress and will try to suggest how Corporate Social Responsibility can contribute. Paper would also try to highlight the existing examples of owning social responsibilities by corporate and how they have benefited through it.

Keywords: Business, Corporate Social Responsibility, Economic Progress, Social Progres.

CSR- An Introduction

"Corporate derive a lot of benefits from society ... it is their responsibility to give back some of that to society."

Business depends on the society for the needed inputs like money, men and material. Business also depends on the society for the market. Thus business depends on the society for existence, sustenance and encouragement. Dependence of business on society is so complete that as long as the latter wants the former, business has reasons to exist.

A business enterprise in modern times is not only regarded as an economic institution but also as a social institution. It is expected to behave as a good neighbour which should take part in the betterment of the community and fulfilling its responsibility as a responsible citizen in a democracy. Business is therefore responsible not only for economic results but also for making social contribution. When the very existence of a business organisation depends on society it should not ignore its responsibility towards the society.

An overview:

Giving a universal definition of corporate social responsibility is bit difficult as there is no common definition as such. However, there are few common threads that connect all the perspectives of CSR with each other; the dedication to serve the society being most important of them.

* Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.

* CSR involves addressing the legal, ethical, commercial and other expectations that the society has for business, and making decisions that fairly balance the claims of all key stakeholders. Effective CSR aims at "achieving commercial success in ways that honour ethical values and respect people, communities, and the natural environment." Simply put it means "what you do, how you do it, and when and what you say." Several terms have been used interchangeably with CSR. They include -- business ethics, corporate citizenship, corporate accountability, sustainability and corporate responsibility

* Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at the large.

Thus, the meaning of CSR is twofold. On one hand, it exhibits the ethical behaviour that an organization exhibits towards its internal and external stakeholders (customers as well as employees). On the other hand, it denotes the responsibility of an organization towards the environment and society in which it operates.

CSR is also referred to as:

* 'corporate' or 'business responsibility'
* 'corporate' or 'business citizenship'
* 'community relations'
* 'social responsibility'.

The rationale for CSR has been articulated in a number of ways. In essence it is about
building sustainable businesses, which need healthy economies, markets and communities.

The key drivers for CSR are:

* Enlightened self-interest - creating a synergy of ethics, a cohesive society and a
sustainable global economy where markets, labour and communities are able to
function well together.

* Social investment - contributing to physical infrastructure and social capital is
increasingly seen as a necessary part of doing business.

* Transparency and trust - business has low ratings of trust in public perception.
There is increasing expectation that companies will be more open, more accountable
and be prepared to report publicly on their performance in social and environmental
arenas

* Increased public expectations of business - globally companies are expected to
do more than merely provide jobs and contribute to the economy through taxes and
employment."

CSR can be well understood under the three waves, which are as follows:

a. Community engagement
b. Socially responsible production process
c. Socially responsible employee relations

It could be clearly analyzed under the "3 waves of CSR" that the corporate world need to shell out a part of their profit initially to tap the long run economies of scale ( LREoS), be it internal or external. Beyond good intentions some of the benefits that the corporate world reaps are:

* Powerfully aligning the firms operations and social environmental "Foot print" with managements values,
* Understanding and transforming public perception of the company and industry,
* Attracting investment in the firm, sector and overall economy,
* Increased market share and new market penetration,
* Mobilizing and energizing the company's own human capital,
* Reducing risk

In developing countries like INDIA, business can succeed only if industries maintain good relationships with all their stakeholders. These relationships can be strengthened, if organizations fulfill their obligations towards the stakeholder.

CSR;- ITS RESPONSIBILITIES & OBLIGATIONS
Types of Social Responsibility in Business Organisations:


a) Internal Social Responsibilities: Shareholders and Employees.
b) External Social Responsibilities: Customers, Government, Suppliers, Community and the Environment.
c) Social objectives refer to a company's objectives and its responsibilities towards its employees, shareholders, and the public at large.
d) Economic objectives refers to optimization of available resources for maximization of profits and to survive in the competition prevailing in the industry. Sun is named as one of the World's Most Ethical Companies. It leads the industry in offering a portfolio of eco responsible products and services that deliver powerful, sustainable, energy-efficient computing solutions that don't compromise on capacity and security. Eco Responsibility Initiative focus on includes efforts to shrink carbon emissions, develop an alternative-energy strategy, and otherwise reduces the environmental impact of its operations.

WHY CSR?:-

CSR results in the following benefit for the business in an organization.

1. Company benefits:
* Improved financial performance;
* Lower operating costs;
* Enhanced brand image and reputation;
* Increased sales and customer loyalty;
* Greater productivity and quality;
* More ability to attract and retain employees;
* Reduced regulatory oversight;
* Access to capital;
* Workforce diversity;
* Product safety and decreased liability.

2. Benefits to the community and the general public:
* Charitable contributions;
* Employee volunteer programmes;
* Corporate involvement in community education, employment and homelessness programmes;
* Product safety and quality.

3. Environmental benefits:
* Greater material recyclability;
* Better product durability and functionality;
* Greater use of renewable resources;
* Integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards, and eco-labelling.

CSR:- India's position.

The Indian business sector presents a mixed picture as far as social responsibility is concerned J.R.D. Tata, who has been instrumental in conducting the first audit in India and perhaps in the world, is of the opinion that while on the side of production , of growth, of efficiency . Even much before the issue became a global concern, India was aware of corporate social responsibility (CSR), due to the efforts of organisations such as the Tata Group. (Around 66 per cent of Tata Sons, the holding group of the Tata Group, is today owned by a trust). Corporate companies like ITC have made farmer development a vital part of its business strategy, and made major efforts to improve the livelihood standards of rural communities. Unilever is using micro enterprises to strategically augment the penetration of consumer products in rural markets. IT companies like TCS and Wipro have developed software to help teachers and children in schools across India to further the cause of education. In June 2008, a survey was carried out by TNS India (a research organization) and the Times Foundation with the aim of providing an understanding of the role of corporations in CSR. It is gratifying to that a number of leading companies in India have shown recognition of the social responsibility of the corporate sector. The business community has been instrumental in setting up hundreds of institutions of public service like schools, colleges, management institutes, dispensaries, hospitals, technological institutes, research institutes , libraries, dharamshalas, cultural institutions, institutes for the dumb, deaf & blind, museums & places of religious worship. Some of the leading enterprises have extended welfare measures like health & medical facilities to people of the surrounding villages. Some enterprises have taken pollution abatement measures. Many businessmen have risen up to the occasion to help the victims of droughts, floods, earthquakes & other natural calamities.Hindustan Construction Company (HCC)plays an active role in CSR initiatives in the fields of Health, Education, Disaster Management, and Environment. Disaster Resource Network DRN is a worldwide initiative, promoted by the World Economic Forum (WEF). JCB India adopted a Government school, in the vicinity of the company premises as its social responsibility. The K. C. Mahindra Education Trust was established in 1953 by late Mr. K. C. Mahindra with an objective to promote education. The Trust has provided more than Rs. 7.5 Crore in the form of grants, scholarships and loans. It promotes education mainly by the way of scholarships. The Nanhi Kali project has over 3,300 children under it. Alambana (support) is the corporate social responsibility arm of Satyam Computer Services Limited, formed to support and strengthen the vulnerable and underprivileged sections in urban India.

Indian companies have made little progress in reporting development projects. And only 48 companies have so far given their commitment to support the United Nations Global Compact, a charter for improving the global business environment through standards, such as labour rights and fighting corruption.

Companies, too, continue to rely on different models to earmark its social expenditure, making it difficult to measure the overall impact. For instance, the Steel Authority of India Ltd (SAIL), the country's largest steel company, spent Rs100 crore on CSR last year; this was 2% of its profit after tax, exclusive of dividend tax, according to SAIL spokesperson N.K. Singhal. Yet others, such as Tata Steel Ltd, which runs a 850-bed hospital and rural projects in 800 villages around Jamshedpur, spends an average of Rs150 crore as part of its annual revenue expenditure. What eventually makes up for CSR of a company ultimately depends on leadership; as part of company decision, about 66% of Tata Sons, the holding group of the Tata group, is today owned by a trust.

Conclusion

It can be concluded that in today's informative world where information are readily available to general public CSR has been an important part of any organization to be successful. Organization in present world cannot be successful without taking into account the social responsibility. CSR has been a vital component for any organization to have perpetual success and to create brand . CSR cannot be an additional extra - it must run into the core of every business' ethics, and its treatment of employees and customers.

Thus, CSR is becoming a fast-developing and increasingly competitive field. The case for demonstrating corporate responsibility is getting stronger as expectations among key opinion formers, customers and the public are increasing. Being a good corporate citizen is increasingly crucial for commercial success and the key lies in matching public expectations and priorities, and in communicating involvement and achievements widely and effectively.

References:

1) Corporate Social Responsibility in India - An Empirical Research
By Bernadette Dsilva.
2) Corporate Social Responsibility is no longer just an addition, it is a key differentiator."
3) CSR could prove to be a valuable asset in an age of M&As, as it helps firms spread their brand name - Maitreyee Handique.
4) http://matthewalberto.com/2011/07/corporate-social-responsibility-in-india/
5) http://tutor2u.net/business/strategy/corporate-social-responsibility-introduction.html
6) http://www.alliancemagazine.org/node/1259
7) http://www.csr-weltweit.de/en/laenderprofile/profil/indien/index.nc.html
8) http://www.indianmba.com/Faculty_Column/FC1307/FC1307a/fc1307a.html
9) http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol2No1/article9.pdf
10) http://www.simplycsr.co.uk/what-is-sustainable-business.html
11) http://www.youthkiawaaz.com/2011/04/corporate-social-responsibility-in-india/
Prasad Chandra, CMD, BASF, South Africa.
12) Review Corporate Social Responsibility Practices in India in Times of India
 


Ms. Akanksha Singh
MBA
Lecturer
NGF College of Engineering & Technology
Palwal
 

Source: E-mail February 28, 2013

          

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