“Corporate Social Responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it…. Because it is good for our business”- Niall Fitzgerald, Former CEO, Unilever
In simple words, Corporate Social Responsibility (CSR) may be defined as “the ethical behavior of a company towards the society.” Section 135 of the Companies Act 2013 requires companies to constitute a corporate social responsibility committee of the Board consisting of three or more directors with at-least one independent director. The companies specified for this purpose are those having net worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit of rupees five crore or more. The composition of the committee formed under section 135 needs to be disclosed in the Boards’ report. Clause (o) of Section 134(3) requires disclosure of company’s policy and initiatives taken during the year. The Companies (Social Responsibility Policy) Rules, 2104 states, that Board’s report shall include an annual report on CSR containing particular in the Annexure to the rules.
Over the year CSR has become an efficacious marketing strategy, a way for a company to ameliorate its positive image. CSR creates short term employment opportunities for the company by
Undertaking various projects. It improves operational efficiency of the company and is accompanied by increase in productivity. It gives a feeling of contentedness and meaning to the lives of all those associated.
CSR originated in the 1930s and 1940s. It became concretized in 1953 with the publication of “Social Responsibility of the Businessman”, by Howard Bowen, the Father of CSR. The meaning of CSR extended during the 1960s with Keith Davis definition of CSR as “…businessmen’s decision and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.”
Ethical ( Gandhian )Model (1930s-1950s) – Business were motivated to manage their business entity as a trust held in the interest of the community.
Statist( Nehruvian ) Model (1950s-1990s) – Important features of this model was that state ownership and legal requirements decided the corporate responsibilities.
Liberal (Friedman) Model (1970s –1990s) – As per this model encapsulated by Milton Friedman, CSR is confined to its economic bottom line. It implies that it is sufficient business to obey the law and generate wealth, which through taxation and private charitable choices can be directed to social ends.
Stakeholder(Freeman) model (1990s- Present) – The model came into existence as a consequence of the realization that
With growing economic profits, businesses also have certain societal roles to fulfill.
Gandhi, Nehru, Friedman and Freeman respectively were chairpersons of these four models. In the ethical model locus is on “voluntary commitment by companies to public welfare”, in the Statist model, “state ownership and legal requirements determine corporate responsibilities”, in the liberal model “corporate responsibility are limited to private owners”, and in the stakeholder model, “companies respond to the need of stakeholder – customers, employees, communities, etc.” While these four approaches were followed in India by different companies, in Asia many companies followed the combination of any two approaches or all the four models. In India few MNCs started following CSR before it was made compulsory, the companies followed the Gandhian model for this:
“Padhega India Badhega India”
FMCG major Procter & Gamble (P&G) in partnership with Child Relief and You ( CRY) and Sony Entertainment Television launched ‘Shiksha’, the motto “padhega India, Badhega India”, a program to educate under privileged children.
G.D. Birla, the founding father promoted the concept of holding wealth as a trust for stakeholder. The Birla Group runs as many 18 hospitals in India and has touched lives of more than 5000 physically challenged individuals.
Reliance industries limited has made great progress in the field of health care. Its various initiatives include the Dhirubhai Ambani Hospital, Lodhivali which renders quality medical services to the rural population and prompt services to highways accidents victims. Trauma patients are provided free life saving treatments.
In the same manner many programs are run by different companies for environment protection, for agricultural and rural development, women’s Empowerment and etc.
It can be done in five ways the ways are as follows:
The total CSR spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross Rs 50,000 crore by March 2019, said a report. The CSR compliance is also likely to improve and fall in the range of 97 to 98 percent by financial year 2019- 20, according to a research done by development sector platforms CSRBOX and NGOBOX.
“Mandatory CSR has gradually formalized the corporate philanthropy with emphasis on impacts on the ground. With an average Rs 12,000 crore funding annually, there is a lot that can be done in education, healthcare and rural developments areas. CSR can make valuable contribution to society. Organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspect of their operations. However, to make CSR a success it should be treated like any other aspect of business and not merely an act of philanthropy.
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