The emergence of big corporate and their drive for the optimization of individual profits has not only divided the world between the rich and poor but have also led to an imbalance between development and environmental sustainability. The Government of India has with the passage of time adopted liberalisation, privatisation and globalisation leading the shift of the Public sector to Private one. With the shift in the paradigm, the new concept of Corporate Social Responsibility [CSR] where a corporate sector shall perform such welfare function towards society which is necessary for maintaining the social interest of the society came in vogue.
Mahatma Gandhi once opined, business entrepreneurs are trustees and not the owners of the social wealth and they have to spend a part of it for social causes. To further explain the role of the business entrepreneurs as trustees he quoted, enjoy the wealth, take the minimum which you need, leave the rest to the welfare of community.” It cannot be considered as charity.
In 1953, Howard Bowen published his book, “Social Responsibilities of the Businessman”, and is largely credited with coining the phrase ‘corporate social responsibility’ and is perhaps the Father of modern CSR.
In the words of ‘Carroll’ and ‘Buchholtz’, the corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on the organisations by the society at a given point of time.
According to Browin H.R., social responsibility is defined as, “the obligation of a businessman to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of objectives and values of the society. Business entity is expected to commence those activities, which are crucial for advancement of the society. Every characteristic of business has a social element. Corporate Social Responsibility means open and transparent business practices that are based on ethical values and respect for employees, communities and the environment. Business cannot exist in isolation; business cannot be oblivious to societal development.
Essentially, Corporate Social Responsibility is an inter-disciplinary subject in nature and encompasses in its fold:
With its anthro- root, philanthropy means literally “love of mankind”. Thus, philanthropy is giving money for a purpose or cause benefiting people who you don’t personally know. However, Corporate Social Responsibility on the other hand is about how a Company aligns their values to social causes by including and collaborating with their investors, suppliers, employees, regulators and the society as a whole.
The company owes the society to undertake CSR activities owing to the interdependence between the both. The essence of the contract between society and business lies in the basic principle that companies shall not pursue their immediate profit objectives at the expenditure of the long-term interests of the society.
In the words of Sir Adrian Cadbury (2002), “The broadest way of defining social responsibility is to say that the continued existence of companies is based on an implied agreement between business and society. In effect, companies are licensed by society to provide the goods and services which society needs. The freedom of operation of companies is, therefore, dependent on their delivering whatever balance of economic and social benefits society currently expects of them. The problem for companies is that the balance of needs and benefits is continually changing and there is no generally accepted way of measuring those changes
With the emerging importance of corporate social responsibility, the concept of Triple Bottom Line (TBL) is gaining significance and becoming prevalent amongst corporates.
Coined in 1997 by John Ellington, the concept of TBL is based on the premise that business entities have more to do than make just profits for the owners of the capital, only bottom line people understand. “People, Planet and Profit” is used to succinctly describe the triple bottom lines. “People” (Human Capital) pertains to fair and beneficial business practices toward labour and the community and region in which a corporation conducts its business. “Planet” (Natural Capital) refers to sustainable environmental practices. It is the lasting economic impact the organization has on its economic.
Before the enactment of the Companies Act, 2013, various other laws in India addressed the basic responsibilities of corporate towards its employers and environment through labour laws such as Factories Act, 1948, ESI Act, 1948, Employees Compensation Act, 1923, Contract Labour (Regulation and Abolition) Act, 1970, Equal Remuneration Act, 1976, The Minimum Wages Act, 1948, Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, environment protection laws such as The Water (Prevention and Control of Pollution) Act, 1974, The Air (Prevention and Control of Pollution) Act, 1981 and the Environment Protection Act, 1986 .
As per section 135 of the Companies Act 2013, the CSR provision will be applicable companies which fulfils any of the following criteria during any of the three preceding financial years:
The CSR revolves around the following core elements:
It is not a new phenomenon that the individuals as well as corporations bear the solemn responsibility towards the environment. The Stockholm Conference stated man’s ‘solemn responsibility ‘is to protect and improve environment. The draft principles on Human Rights and environment states that, ‘All persons have the duty to protect and preserve the environment’. None of these instruments however forms legally binding onuses for individuals as such.
Only upon happening of accident of Bhopal gas leak disaster with such magnitude, the environmentalist, Government and public in general started devising new ways and means to prevent occurrence of such tragedies in the future. The event that became an eye opener led to bring transformation in the perception of people towards the environment and became an object of international concern.
The Bhopal gas leak accident, one of the worst industrial disasters in the human history, occurred before the Supreme Court evolved the rule of absolute liability. It is impossible for the court to make quick decisions relating to compensation to the victims of the accidents like those of Bhopal gas leak. The interests affected are various; the intensity of damage and suffering varies from one victim to another.
In M. C. Mehta v Union of India, the Supreme Court formulated the doctrine of absolute liability for the harm caused by the hazardous and inherently dangerous industry by interpreting the scope of the power under article 32 to issue directions and orders, ‘ whichever may be appropriate’ in ‘appropriate proceedings’. According to the court this power could be utilised for forging new remedies, and fashioning new strategies.
In the recent order of the National Green Tribunal regarding fire in Bellandur Lake in Bangalore. National Green Tribunal issued Suo Moto issued Notice to the following:
PIL No.218 of 2013 “Navi Mumbai Environment Preservation Society and Anr vs. Ministry of Environment & Ors”, (Order dated 29th April, 2014 and Order dated 20th June, 2014)
NMEPS was concerned with the wanton destruction of mangroves, wetlands and natural habitats of birds, including migratory birds in Navi Mumbai. Debris continued to be dumped, mangroves burnt and illegal reclamation/construction in CRZ zones including within 50 meters of mangroves. Despite the MCZMA order of 16/01/13 and Konkan Commissioner’s order of 19/10/2012, debris continued to be dumped on the lake with water channels blocked. Since no action was being taken despite representations to various authorities, NMEPS decided to file a PIL in Bombay High Court. It was served on the seven respondents on 2nd December, 2012. The petitioners are NMEPS and Mr. VK Punshi. The respondents are Ministry of Environment, Govt. of Maharashtra.
A company’s interactions and interdependencies with society are many and complex. Businesses have an impact on societies, and vice versa, so there is a need to recognize the mutual responsibilities that this entails. Friedman’s saying “the business of business is business” has outlived its utility in the current scenario. Social responsibility and being a good corporate citizen are the buzz words today. Besides the constitutional and legislative duty it is an also an ethical duty of the individuals as well as corporations to protect and preserve the environment.
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