A View on Cor­po­rate So­cial Re­spon­si­bil­i­ties in In­dia

Economic Challenger - - CONTENTS - - Dr. K. Kr­ishna Ku­mar & K. Radha


The term "cor­po­rate so­cial re­spon­si­bil­ity" came into com­mon use in late 1960s and early 1970s, af­ter many multi­na­tional cor­po­ra­tions were formed. CSR is ti­tled to aid an or­ga­ni­za­tion's mis­sion as well as a guide to what the com­pany stands for and will up­hold to its con­sumers. Cor­po­rate so­cial re­spon­si­bil­ity is also called cor­po­rate con­science, cor­po­rate cit­i­zen­ship, so­cial per­for­mance, or sus­tain­able re­spon­si­ble busi­ness. Cor­po­rate So­cial Re­spon­si­bil­ity ( CSR) is be­com­ing an in­creas­ingly im­por­tant ac­tiv­ity to busi­nesses na­tion­ally and in­ter­na­tion­ally. As glob­al­iza­tion ac­cel­er­ates and large cor­po­ra­tions serve as global providers, th­ese cor­po­ra­tions have pro­gres­sively rec­og­nized the ben­e­fits of pro­vid­ing CSR pro­grams in their var­i­ous lo­ca­tions. CSR ac­tiv­i­ties are now be­ing un­der­taken through­out the globe. A more com­mon ap­proach of CSR is phi­lan­thropy. This in­cludes mon­e­tary do­na­tions and aid given to lo­cal or­ga­ni­za­tions and im­pov­er­ished com­mu­ni­ties in de­vel­op­ing coun­tries. Some or­ga­ni­za­tions do not like this ap­proach as it does not help build on the skills of the lo­cal peo­ple, whereas com­mu­nity based devel­op­ment gen­er­ally leads to more sus­tain­able devel­op­ment. A busi­ness needs a healthy, ed­u­cated work­force, sus­tain­able re­sources and adept government to com­pete ef­fec­tively. For so­ci­ety to thrive, prof­itable and com­pet­i­tive busi­nesses must be devel­oped and sup­ported to cre­ate in­come, wealth, tax rev­enues, and op­por­tu­ni­ties for phi­lan­thropy. An at­tempt has been made in this pa­per to an­a­lyze a view on Cor­po­rate So­cial Re­spon­si­bil­i­ties in In­dia.


The con­cept of cor­po­rate so­cial re­spon­si­bil­ity of large in­dus­trial groups has oc­cu­pied a prom­i­nent place in the greater na­tional dis­course on eco­nomic is­sues since the in­de­pen­dence era in In­dia. Gandhi de­scribed large busi­nesses as 'trusts' of the 'wealth of the peo­ple' and thus em­pha­sized on the larger so­cial pur­pose that in­dus­trial wealth should serve in in­de­pen­dent In­dia. In the early days of the postin­de­pen­dence pe­riod, the In­dian state un­der the heavy in­flu­ence of Nehru­vian so­cial­ism en­cour­aged pri­vate in­dus­tries to play an ac­tive role in the eco­nomic and so­cial devel­op­ment of the back­ward sec­tions of the so­ci­ety, while at the same time setup a mam­moth pub­lic sec­tor for serv­ing larger so­ci­etal in­ter­ests. As Nehru's gen­tle so­cial­ism gave way to the more rad­i­cal poli­cies of na­tion­al­iza­tion and ex­ten­sive state reg­u­la­tion of the Indira Gandhi era, in­dus­trial groups des­per­ate to avoid the dra­co­nian state poli­cies and reg­u­la­tions in eco­nomic af­fairs re­sorted to large scale cor­po­rate wel­fare pro­grams to demon­strate that pri­vate wealth also played an im­por­tant role in poverty al­le­vi­a­tion and the so­cio-eco­nomic devel­op­ment of the na­tion and was not anti-peo­ple. An im­pend­ing cri­sis in In­dian econ­omy led the Ra­jiv Gandhi and Narashima Rao gov­ern­ments to dis­man­tle the 'li­cense raj' and in­tro­duce much-needed eco­nomic re­forms in the coun­try, which marked the be­gin­ning of the eco­nomic lib­er­al­iza­tion and the free mar­ket econ­omy in In­dia. In this sce­nario, there is an in­creased fo­cus on the so­cial role of th­ese pri­vate en­ter­prises by both the pro­po­nents and op­po­nents of lib­er­al­iza­tion in In­dia.


The vol­un­tary com­pli­ance of so­cial and eco­log­i­cal re­spon­si­bil­ity of com­pa­nies is called CSR. Cor­po­rate so­cial re­spon­si­bil­ity is ba­si­cally a con­cept whereby com­pa­nies de­cide vol­un­tar­ily to con­trib­ute to a bet­ter so­ci­ety and a cleaner

en­vi­ron­ment. Cor­po­rate so­cial re­spon­si­bil­ity is rep­re­sented by the con­tri­bu­tions un­der­taken by com­pa­nies to so­ci­ety through its busi­ness ac­tiv­i­ties and its so­cial in­vest­ment. This is also to con­nect the con­cept of sus­tain­able devel­op­ment to the com­pany's level. Over the last few years an in­creas­ing num­ber of com­pa­nies world­wide started pro­mot­ing their Cor­po­rate So­cial Re­spon­si­bil­ity strate­gies be­cause the cus­tomers, the pub­lic and the in­vestors ex­pect them to act in a sus­tain­able as well as re­spon­si­ble man­ner. In most cases CSR is a re­sult of a va­ri­ety of so­cial, en­vi­ron­men­tal and eco­nomic pres­sures. The term Cor­po­rate So­cial Re­spon­si­bil­ity is im­pre­cise and its ap­pli­ca­tion dif­fers in many ways. CSR can­not only re­fer to the com­pli­ance of hu­man right stan­dards, la­bor and so­cial se­cu­rity ar­range­ments, but also to the fight against cli­mate change, sus­tain­able man­age­ment of nat­u­ral re­sources and con­sumer pro­tec­tion.


How a com­pany per­ceives its so­ci­etal re­spon­si­bil­ity de­pends on var­i­ous fac­tors such as the mar­kets in which it op­er­ates, its busi­ness line and its size. Com­pa­nies un­der­stand that a strong CSR pro­gram is an es­sen­tial el­e­ment in achiev­ing good busi­ness prac­tices and ef­fec­tive lead­er­ship.

Eco­nomic, So­cial and En­vi­ron­men­tal sec­tor

Com­pa­nies have ex­plored that their im­pact on the eco­nomic, so­cial and en­vi­ron­men­tal sec­tor di­rectly af­fects their re­la­tion­ships with in­vestors, em­ploy­ees and cus­tomers. Whilst so far CSR was mainly pro­moted by a num­ber of large or multi­na­tional com­pa­nies, it is now also be­com­ing im­por­tant to small na­tional com­pa­nies.

Prime Goal of a Com­pany

As com­pa­nies march for­ward in the con­text of glob­al­iza­tion, they be­come in­creas­ingly aware that Cor­po­rate So­cial Re­spon­si­bil­ity can be of di­rect eco­nomic value. Although the prime goal of a com­pany is to gen­er­ate prof­its, com­pa­nies can at the same time con­trib­ute to so­cial and en­vi­ron­men­tal ob­jec­tives by in­te­grat­ing CSR as a strate­gic in­vest­ment in to their busi­ness strat­egy.

An In­trin­sic Part of Busi­ness Plans

In In­dia there is a small num­ber of com­pa­nies which prac­tice CSR. This en­gage­ment of the In­dian econ­omy con­cen­trates mainly on a few old fam­ily owned com­pa­nies, and cor­po­rate giants such as the Tata and Birla group com­pa­nies which have led the way in mak­ing cor­po­rate so­cial re­spon­si­bil­ity of an in­trin­sic part in their busi­ness plans. Th­ese com­pa­nies have been deeply in­volved with so­cial devel­op­ment ini­tia­tives in the com­mu­ni­ties sur­round­ing their fa­cil­i­ties. So, the cor­po­rate so­cial re­spon­si­bil­i­ties play a vi­tal role in In­dian com­pa­nies.


A CSR pro­gramme can be an aid to re­cruit­ment and re­ten­tion par­tic­u­larly within the com­pet­i­tive grad­u­ate stu­dents’ mar­ket. Po­ten­tial re­cruits of­ten ask about a firm's CSR pol­icy dur­ing an in­ter­view, and hav­ing a com­pre­hen­sive pol­icy can give an ad­van­tage. CSR can also help im­prove the per­cep­tion of a com­pany among its staff, par­tic­u­larly when staff can be­come in­volved through pay­roll giv­ing, fundrais­ing ac­tiv­i­ties or com­mu­nity vol­un­teer­ing.

Risk man­age­ment

Man­ag­ing risk is a cen­tral part of many cor­po­rate strate­gies. Rep­u­ta­tions that take decades to build up can be ru­ined in hours through in­ci­dents such as cor­rup­tion scan­dals or en­vi­ron­men­tal ac­ci­dents. Th­ese can also draw un­wanted at­ten­tion from reg­u­la­tors, courts, gov­ern­ments and me­dia. Build­ing a gen­uine cul­ture of ' do­ing the right thing' within a cor­po­ra­tion can off­set th­ese risks.

Brand dif­fer­en­ti­a­tion

In crowded mar­ket­places, com­pa­nies strive for a unique sell­ing propo­si­tion that can sep­a­rate them from the com­pe­ti­tion in the minds of con­sumers. CSR can play a role in build­ing cus­tomer loy­alty based on dis­tinc­tive eth­i­cal val­ues. Sev­eral ma­jor brands, such as the co­op­er­a­tives group, the body shop and Amer­i­can ap­parel are built on eth­i­cal val­ues.

Li­cense to op­er­ate

Cor­po­ra­tions are keen to avoid in­ter­fer­ence in their busi­ness through tax­a­tion or reg­u­la­tions. By tak­ing sub­stan­tive vol­un­tary steps, they can per­suade gov­ern­ments and the pub­lic at large that they are tak­ing is­sues such as health and safety, di­ver­sity, or the en­vi­ron­ment se­ri­ously as good cor­po­rate ci­ti­zens with re­spect to labour stan­dards and im­pacts on the en­vi­ron­ment.


Some peo­ple think that a cor­po­ra­tion's ba­sic pur­pose is to max­i­mize re­turns to its share­hold­ers, and that since it is for the peo­ple to have so­cial re­spon­si­bil­i­ties, cor­po­ra­tions are only re­spon­si­ble to their share­hold­ers and not to so­ci­ety as a whole. Although they ac­cept that cor­po­ra­tions should obey the laws of the coun­tries within which they work, they as­sert that cor­po­ra­tions have no other obli­ga­tion to so­ci­ety. Mo­tives

Some cor­po­ra­tions start CSR pro­grams for the com­mer­cial ben­e­fit they en­joy through rais­ing their rep­u­ta­tion with the pub­lic or with government. They sug­gest that cor­po­ra­tions which ex­ist solely to max­i­mize prof­its are un­able to ad­vance the in­ter­ests of so­ci­ety as a whole.

Eth­i­cal con­sumerism

The rise in pop­u­lar­ity of eth­i­cal con­sumerism over the last two decades can be linked to the rise of CSR. As global pop­u­la­tion in­creases, so does the pres­sure on lim­ited nat­u­ral re­sources re­quired to meet ris­ing con­sumer de­mand. In­dus­tri­al­iza­tion, in many de­vel­op­ing coun­tries, is boom­ing as a re­sult of both tech­nol­ogy and glob­al­iza­tion.

Glob­al­iza­tion and mar­ket forces

As cor­po­ra­tions pur­sue growth through glob­al­iza­tion, they have en­coun­tered new chal­lenges that im­pose lim­its to their growth and po­ten­tial prof­its. Government reg­u­la­tions, tar­iffs, en­vi­ron­men­tal re­stric­tions and vary­ing stan­dards of what con­sti­tutes "la­bor ex­ploita­tion" are prob­lems that can cost or­ga­ni­za­tions mil­lions of dol­lars. CSR method­olo­gies as a strate­gic tac­tic to gain pub­lic sup­port for cor­po­rate pres­ence in global mar­kets, helps them sus­tain a com­pet­i­tive ad­van­tage by us­ing their so­cial con­tri­bu­tions.

So­cial aware­ness and ed­u­ca­tion

The role among cor­po­rate stake­hold­ers is to work col­lec­tively to pres­surise cor­po­ra­tions to keep chang­ing. Share­hold­ers and in­vestors them­selves, through so­cially re­spon­si­ble in­vest­ing are ex­ert­ing pres­sure on cor­po­ra­tions to be­have re­spon­si­bly. Non-gov­ern­men­tal or­ga­ni­za­tions are also tak­ing an in­creas­ing role, lev­er­ag­ing the power of the me­dia and the In­ter­net to in­crease their scru­tiny and col­lec­tive ac­tivism around cor­po­rate be­hav­ior.

Ethics train­ing

The rise of ethics train­ing in­side cor­po­ra­tions, some of it re­quired by government reg­u­la­tions, is an­other driver cred­ited with chang­ing the be­hav­ior and cul­ture of cor­po­ra­tions. The aim of such train­ing is to help em­ploy­ees make eth­i­cal de­ci­sions when the an­swers are un­clear. Hence the need for learn­ing nor­ma­tive val­ues and rules in hu­man be­hav­ior. Or­ga­ni­za­tions also see sec­ondary ben­e­fit in in­creas­ing em­ployee loy­alty and pride in the or­ga­ni­za­tion.

Laws and reg­u­la­tions

An­other driver of CSR is the role of in­de­pen­dent me­di­a­tors, par­tic­u­larly the government, in en­sur­ing that cor­po­ra­tions are pre­vented from harm­ing the broader so­cial well, in­clud­ing peo­ple and the en­vi­ron­ment. Gov­ern­ments should set the agenda for so­cial re­spon­si­bil­ity by way of laws and reg­u­la­tions that will al­low a busi­ness to con­duct them­selves re­spon­si­bly.


In our nar­ra­tive so far, we have fo­cused on the pri­vate sec­tor and its greater so­ci­etal obli­ga­tions. In­dia, also, has a large pub­lic sec­tor with sev­eral huge cor­po­ra­tions. There are government com­pa­nies op­er­at­ing in var­i­ous

sec­tors like pe­tro­leum, heavy in­dus­tries, avi­a­tion, min­ing, steel, equip­ment man­u­fac­tur­ing and ship­ping. The In­dian pub­lic sec­tor has had a long tra­di­tion of cor­po­rate so­cial re­spon­si­bil­ity and the ini­tia­tives of cor­po­ra­tions like the Oil and Nat­u­ral Gas Com­mis­sion (ONGC), Steel Author­ity of In­dia Ltd (SAIL) and Gas Author­ity of In­dia Ltd. (GAIL) have played a crit­i­cal role in the devel­op­ment of sev­eral back­ward re­gions of the coun­try. In­dian Air­lines and Bharat Heavy Elec­tron­ics have been widely ac­claimed for their dis­as­ter man­age­ment ef­forts. The era of lib­er­al­iza­tion has led to the pri­va­ti­za­tion of sev­eral pub­lic sec­tor units and oth­ers be­ing forced to make switch from be­ing mo­nop­o­lies to be­ing free mar­ket play­ers with in­tense pri­vate com­pe­ti­tion. Th­ese dy­namic pro­cesses have raised sev­eral key ques­tions re­lat­ing to the cor­po­rate so­cial re­spon­si­bil­ity of the pub­lic sec­tor. Mean­while the op­po­nents of pri­va­ti­za­tion have used the 'cor­po­rate so­cial re­spon­si­bil­ity' ar­gu­ment for their cause, they ar­gue that con­sid­er­ing the vi­tal im­por­tance of the so­cial role played by the pub­lic sec­tor in In­dia, there should not be any pri­va­ti­za­tion of th­ese vi­tal in­dus­tries. Busi­ness or­ga­ni­za­tions across the world are re­al­iz­ing the ben­e­fits of adopt­ing so­cially re­spon­si­ble be­hav­ior. This idea still needs to be un­der­stood and im­ple­mented in a bet­ter man­ner by the busi­ness sec­tor in In­dia.


In­dia is be­com­ing one of the fastest grow­ing economies in the world. With a soar­ing growth rate, In­dia is invit­ing more and more in­ter­na­tional in­vestors to its mar­kets. But is this rise in eco­nomic growth solely based on suc­cess­ful busi­ness op­er­a­tions. As far as the up­lift­ment of com­mu­ni­ties, gen­er­a­tion of em­ploy­ment op­por­tu­ni­ties and en­sur­ing eco­nomic growth is con­cerned, the government alone can­not at­tain success. The con­cept of CSR is not new to In­dia as large com­pa­nies like BIR­LAs and TATAs have been in­te­grat­ing good work in their busi­ness op­er­a­tions for decades. Even though the con­cept is not new to the coun­try, its im­ple­men­ta­tion has been a ma­jor con­cern for years. If ex­perts are to be be­lieved, cor­po­rate so­cial re­spon­si­bil­ity is still in the nascent stages in In­dia. In short, CSR is mis­un­der­stood for char­ity by a large num­ber of In­dian com­pa­nies. It is merely con­sid­ered a pol­icy that should be im­ple­mented in busi­ness op­er­a­tions rather than giv­ing im­por­tance to so­cial good. The key to CSR success is es­tab­lish­ing the well­be­ing of all stake­hold­ers in the pro­gramme. While CSR strat­egy and pro­gramme plan­ning is vi­tal, im­ple­men­ta­tion still needs con­tin­u­ous mon­i­tor­ing, im­prove­ment and vig­i­lance on the im­pacts on its ben­e­fi­cia­ries.


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