What is Corporate Social Responsibility (CSR)?

About the author: Saloni Aggarwal from Vivekananda Institute of Professional Studies (VIPS), Guru Gobind Singh Indraprastha University (GGSIPU).

Meaning:

Any activity carried out by corporate for the well-being and for the betterment of society, the environment, and the nation as a whole.

Corporate social responsibility towards different interest groups:

1. Towards shareholder: shareholders are the owners or investors of the company. A company must ensure that they get a fair return on its investments.
2. Towards employees and workers: apart from providing good working conditions and salaries to the employees of the corporation the company must respect the democratic rights of the employees/workers so the company should allow them to form unions which can negotiate with the management regarding employees’/workers’ problems. Fair salary/wages should be given to the employees/workers. Some companies in order to save cost avoid giving proper gadgets or safety equipment to the workers so the social responsibility of a company is to ensure that such practices do not take place and proper safety gadgets should be provided to the workers where it is necessary.
3. Towards consumers: corporate should provide the right quality and quantity of goods and services to its consumers without any unfair practices. The goods and services should not be of substandard nature.
4. Towards government and environment: A company should abide by the rules and regulations and policies formed by the government and should be followed on a strict basis. A company should make sure that it does not harm the environment by not overdrawing or wasting environmental resources.
5. Towards community: communities will include creditors and suppliers. A company should make sure that it is paying its statutory dues on a timely basis. While dealing with the debtors, creditors or other various parties to the business, a company should have a good image and goodwill and should not practice unfair trade practices.

CSR in today’s environment

Global warming, depletion of natural resources the extinction of various animals and plant species, increase in global population and migration, amongst others, are some of the environmental and social issues we faced today. How can we address these issues while ensuring food, education and health for all? How can we ensure that economic development and technological progress benefit the greatest number of people? Faced with these challenges, a more sustainable development approach becomes necessary. This requires the commitment to the environment of all: international organisations, governments, associations, companies, citizens everyone is concerned. To address these challenges what can a company do? The overall goal is to combine economic, Social and environmental preservation. Based on its corporate social responsibility, a company can make sure that its economic growth is benefiting everyone: its suppliers, employees, customers, the local population, in short, all its stakeholders while minimising its impact on the planet. Depending on the sector of the activity, the specific issues and challenges differ from company to company. Taking an example of a pharmaceutical company - it can act responsibly in many ways, for example, offering as many people as possible safe and quality medicines, taking into account the needs of patients by supporting them throughout their healthcare, and for all companies, being responsible also means taking care of its employees and ensuring their safety at work, it also means being complaint with the application of the various laws and regulations as well as defining ethical business practices, it also means reducing the environmental impacts of its production sites and choosing fewer pollution modes of transport. Corporate social responsibility is now recognised as a real performance driver, particularly as it encourages innovation, reduces cost and brings employees together around a meaningful project, within our daily activities, both individually and collectively.

In India, the government has made certain norms in terms of CSR. In section 135 companies act 2013 - according to this section, companies are required to allocate a certain percentage of their profit for CSR activities. This certain percentage for CSR activities is mandatory for some companies which are as follows;- the company has a net worth of Rs 500 crores, company having a turnover of Rs 1000 crores, a company having net profit of Rs 5 crores, therefore, any company falling in the given categories were required to give 2% of the average net profit which they have earned for the past three years to activities related to a social cause. Few corporate houses have implemented various corporate social responsibility

1. Mahindra and Mahindra - This is the company which produces vehicles and is famous for its tractors. They started the programme ’NANHI KALI’ focusing on girl child education, the company also started Mahindra pride school which provides industrial training to the lower-income group, people, and the company also have a lifeline express which is a healthcare service for remote areas.
2. Indian Tobacco Co. (ITC) - The company created e-choupals programme, which aims to comment on the rural farmers through the internet for procuring agricultural products, covering 40,000 villages and over four million farmers.

Conclusion

In 2015-16 it witnessed a 28% growth in CSR spending in comparison to the previous year. With the introduction of the CSR activities, the companies that have the capability have started following various creative ways to ensure the growth and the development of the villages.
Therefore, the ambition of a responsible company is to contribute to an economically efficient, socially equitable and environmentally sustainable development while ensuring its profitability and economic growth.

Disclaimer: The author undertakes that the work submitted is an original creation of the author. The author has not previously submitted the article for the purpose of publication. Any similarity with previously published content is not intentional. The author shall be personally liable for any infringement of intellectual property of any person, organization, government or institution.