Be Mains Ready

Introduction

• "Corporate Social Responsibility (CSR)" can be referred to as the 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.
• It is a concept that holds an enterprise accountable for its impact on all relevant stakeholders by continuing its commitments to behave fairly, transparently and therefore sustainably.
• India became the first country to statutorily provide for CSR through its Companies Act 2013 by inserting clauses on compliance, enforcement, conformity, disclosure and auditing.
• The provisions explicitly state that companies with a revenue of Rs.1,000 crore and more or those with a profit of Rs.5 crore and more or a net worth of Rs.500 crore or more are required to spend a minimum of 2% of their net profits over the preceding three years on any field ranging from rural development, women empowerment, promotion of arts, relief and infrastructure building.

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Significance of CSR in India

• Engages Corporates in the Development process:
  
  • The responsibility of a corporation to contribute to local development differs fundamentally with the nature and scope of activities of a welfare state.
  • Involving corporate sector is an effective way to provide services, especially in India where massive development work is required to reach acceptable living standards.
• Helps build brand of a company: CSR also serves as an additional force to expand work and rebuild brand, image and goodwill of a company.
• Empowers the communities: ensuring accountability from the corporates for their consumption of resources shared by the communities.
• Can help achieve sustainable development goals: CSR aligns private enterprises to the goal of sustainable global development by providing them with a more comprehensive set of working objectives than just profit alone.
• Moral Responsibility: Corporate sector is dependent on wider society for its business. Business managers have a moral responsibility to protect the interests of society and look after the welfare of their different stakeholders apart from providing goods and services.
• Attracts better human resources: CSR is seen to be a great way to attract good talent and to retain them. Social initiatives are a good way to satisfy the emotional and social needs of employees by helping them contribute towards the good of society.
• Meeting consumer expectations: Consumers have become more aware of their rights and are also more demanding. They protest against corporate adopting unethical practices and support and reward socially responsible corporate e.g. corporate ensuring no child labour or adopting green policies are appreciated.
• Efficient allocation of available resources: Large organization have the human talent and financial resources to solve societal problems, hence they should be socially responsive. They are also more efficient and ensure a business and result oriented approach towards social projects.

Way Forward

• With increased integration of world capital and improvement in communications, ethics has become all the more integral to corporate behaviour.
• The should be thrust on local area development, as industries are located in India on the basis of the research of raw market availability, transportation costs and, crucially, the co-operative attitude of the local government.
  
  • Intimate knowledge of the needs of the locality would even be beneficial. Hence, localisation of CSR should be emphasised upon.
• To undertake long-term projects there needs to be certainty in the CSR budget, fluctuating performance implies fluctuating CSR allocations. This can jeopardize a CSR initiative initiated earlier. Pooling resources among companies can address this issue.