Is Cor­po­rate So­cial Re­spon­si­bil­ity (CSR) the Need of Cor­po­rate Suc­cess?

- Dr. S.D. Vashistha, - Ra­jesh & Geeta Rani

Economic Challenger - - NEWS -

Dr. S.D. Vashishtha*, Ra­jesh Kumar** and Geeta Rani**

* Dean & Pro­fes­sor, Fac­ulty of Com­merce, M. D. Univer­sity, Ro­htak (124001) M: 09896780050, e-mail-: vashishthasd@ya­hoo.com ** Re­search Scholar, Deptt. of Com­merce, M.D. Univer­sity, Ro­htak (124001) M: 09992323431, e-mail-: bal­hara24@gmail.com and geeta.kadyan@gmail.com

Busi­nesses en­ti­ties re­ceive the fac­tors of pro­duc­tion and nat­u­ral re­sources from so­ci­ety and in turn the busi­ness en­ter­prises pro­vide the so­ci­ety em­ploy­ment, con­sum­able goods with qual­ity, and cre­ate in­fra­struc­ture. In this way, so­ci­ety sac­ri­fices and loses its dif­fer­ent re­sources in the form of in­puts for busi­ness en­ter­prises. Thus, so­ci­ety ex­pects the de­vel­op­ment, as a whole, in terms of hu­man re­source, qual­ity prod­ucts and em­ploy­ment, That is why, the prime re­quire­ment for the stake­hold­ers is to fol­low a right sense of so­cial re­spon­si­bil­ity and per­for­mance. This as­pect has been an­no­tated by many ex­perts and au­thors in the right man­ner. Dr. Man­mo­han Singh (the Prime Min­is­ter of In­dia) has spo­ken in fa­vor of the cor­po­rate so­cial re­spon­si­bil­ity many times that, “Cor­po­rate So­cial Re­spon­si­bil­ity must not be de­fined by tax plan­ning strate­gies alone. Rather, it should be de­fined within the frame­work of a cor­po­rate phi­los­o­phy which is needed by the com­mu­nity and dif­fer­ent re­gions in which cor­po­rate en­ti­ties op­er­ate. This is a part for cul­tural her­itage. Ma­hatma Gandhi called it trus­tee­ship…… I in­vite cor­po­rate In­dia to be a part­ner in mak­ing ours a more hu­mane and just so­ci­ety…….. We need a new part­ner­ship for inclusive Growth based on what I de­scribe as a Ten Point So­cial Char­ter……. first, we need to have healthy re­spect for your work­ers and in­vest in there wel­fare…..”.

COR­PO­RATE SO­CIAL RE­SPON­SI­BIL­ITY-A CON­CEP­TUAL FRAME­WORK

As a pro­logue, the CSR in the back drop of its mean­ing and char­ac­ter­is­tics can be said that this as­pect may be a suc­cess­ful way of re­solv­ing the con­flicts among var­i­ous stake­hold­ers by re­solv­ing so­cial prob­lems and con­tribut­ing to eco­nomic de­vel­op­ment by im­prov­ing the qual­ity of life of the work­force as well as lo­cal com­mu­nity (World Busi­ness Coun­cil for Sus­tain­able De­vel­op­ment, 1998) . It is also a pow­er­ful, com­pet­i­tive and strate­gic tool for cor­po­rate houses to get suc­cess in busi­ness as well as com­mu­nity de­vel­op­ment (Miall Fitzger­land, 2003; Sailaja, 2008; Green, 2011). To­tal CSR may be a group of re­spon­si­bil­i­ties to­wards var­i­ous ac­tiv­i­ties like-eco­nomic, le­gal, eth­i­cal and phil­an­thropic ac­tiv­i­ties (Car­roll, Archie B, 1991).

RE­SPON­SI­BIL­I­TIES OF BUSI­NESS: A NEW PAR­A­DIGM

Dawkins (2004), em­pha­sized that CSR must be dis­closed in the an­nual re­port and com­mu­ni­cated to all the re­lated par­ties. It will im­prove the sup­port and ap­pre­ci­a­tion of the com­mu­nity. The ar­eas in the CSR ac­tiv­i­ties for sus­tain­able de­vel­op­ment of so­ci­ety have been sug­gested by

Simeon Scott:

Pro­mot­ing democ­racy and cit­i­zen­ship, Re­duc­ing poverty and in­equal­ity be­tween rich and poor,

Em­ploy­ees right and wrong con­di­tions, Eth­i­cal be­hav­ior, Tak­ing ini­tia­tives to­wards en­vi­ron­men­tal pro­tec­tion, Do­na­tion for nat­u­ral calami­ties, En­hance pro­duc­tiv­ity, cus­tomer ser­vice, staff re­ten­tion and re­cruit­ment.

Mrs. Anu Aga (Chair­per­son, CII National Com­mit­tee on Women Em­pow­er­ment) sug­gested the fol­low­ing ar­eas of CSR in a new par­a­digm: Felt need and re­quire­ments of the so­ci­ety in more vis­i­ble form in healthy, pri­mary ed­u­ca­tion, child de­vel­op­ment, women em­pow­er­ment and vo­ca­tional train­ing, Mit­i­gat­ing neg­a­tive im­pact on so­ci­ety as waste man­age­ment, emis­sion con­trol, wa­ter clear­ance, etc. by busi­ness, Ex­ten­sion of busi­ness com­pe­ten­cies, Serv­ing un­der­priv­i­leged peo­ple by pro­vid­ing them food, prod­ucts, ser­vices, shel­ter etc., Set up al­liance with govern­ment and NGO's for the up­lift­ment of the poor.

Hence, it is es­sen­tial for the busi­ness en­ter­prizes to be aware of the so­cial prob­lems and CSR ac­tiv­i­ties for mit­i­gat­ing the prob­lems.

THE IN­DIAN SCE­NARIO

In the present global sys­tem, CSR has a wide scope be­cause of its con­tri­bu­tion in var­i­ous so­cial ar­eas of the coun­try as a whole. Presently, the Com­pa­nies Bill 2011 man­dates the spend of money by cer­tain cor­po­rate houses (which have net worth of Rs. 500 crores or turnover of Rs. 1,000 crores) to­wards meet­ing their so­cial re­spon­si­bil­ity. Such com­pa­nies have to con­sti­tute a com­mit­tee of board on 'cor­po­rate

so­cial re­spon­si­bil­ity' con­sist­ing of 3 di­rec­tors and out of th­ese three di­rec­tors, one has to be an in­de­pen­dent di­rec­tor and min­i­mum 2% of aver­age prof­its of last three years has to be spent ev­ery year to meet their so­cial re­spon­si­bil­i­ties. Time-to-time, the Min­istry of Cor­po­rate Af­fairs has is­sued vol­un­tary guide­lines on CSR (2009, 2011). The National Vol­un­tary Guide­lines (2011) is­sued by Min­istry of Cor­po­rate Af­fairs have nine ba­sic prin­ci­ples, th­ese are:

1) Busi­nesses should con­duct and gov­ern them­selves with Ethics, Trans­parency and Ac­count­abil­ity,

2) Busi­nesses should pro­vide goods and ser­vices that are safe and con­trib­ute to sus­tain­abil­ity through­out their life cy­cle,

3) Busi­nesses should pro­mote the well-be­ing of all em­ploy­ees,

4) Busi­nesses should re­spect the in­ter­ests of, and be re­spon­sive to­wards all stake­hold­ers, es­pe­cially those who are dis­ad­van­taged, vul­ner­a­ble and marginal­ized,

5) Busi­nesses should re­spect and pro­mote hu­man rights,

6) Busi­nesses should re­spect, pro­tect, and make ef­forts to restore the en­vi­ron­ment,

7) Busi­nesses when en­gaged in in­flu­enc­ing pub­lic and reg­u­la­tory pol­icy, should do so in a re­spon­si­ble man­ner,

8) Busi­nesses should sup­port inclusive growth and eq­ui­table de­vel­op­ment, and

9) Busi­nesses should en­gage with and pro­vide value to their cus­tomers and con­sumers in re­spon­si­ble man­ner.

Cen­tral Board of Di­rect Taxes (CBDT) in In­dia also mo­ti­vates the cor­po­rate sec­tor to ful­fill its CSR by giv­ing some re­lax­ations and de­duc­tions in tax li­a­bil­i­ties un­der the In­come Tax Act, 1961.

Th­ese are:

1) De­duc­tion of ex­pen­di­ture on sci­en­tific re­search u/s 35, 35(1)(i), 35(1)(ii), 35(1)(iii), 35(1)(iv), 35(1)(v),

2) Ad­mis­si­bil­ity of ex­pen­di­ture on el­i­gi­ble pro­ject or scheme (So­cial-wel­fare) u/s 35AC

3) Pay­ment to ru­ral de­vel­op­ment fund u/s 35CCA

4) In­sur­ance pre­mium for the health of em­ploy­ees u/s 36(ib)

5) Ex­pen­di­ture on fam­ily plan­ning u/s 41(4A)

6) De­duc­tion in re­spect of do­na­tions to cer­tain funds, char­i­ta­ble in­sti­tu­tions, etc. u/s 80G

7) De­duc­tion in re­spect of cer­tain do­na­tions for sci­en­tific re­search or ru­ral de­vel­op­ment u/s 80GGA

CSR AND SOME LEAD­ING COR­PO­RATE OR­GA­NI­ZA­TIONS IN IN­DIA

Ac­tu­ally, many lead­ing cor­po­rate or­ga­ni­za­tions have been con­tin­u­ously pay­ing at­ten­tion on CSR dur­ing more than 20 yester years. How­ever, this sec­tor dares to make its sin­cere ef­forts to dis­charge its re­spon­si­bil­ity to­wards so­ci­ety. In­dian cor­po­rate sec­tor is try­ing to dis­charge CSR in the man­ner of good cit­i­zen­ship, ed­u­ca­tion, char­ity/do­na­tion, hu­man & in­fra­struc­ture de­vel­op­ment, health and so on. Here, we take ex­am­ples of some of the cor­po­rate en­ter­prises con­tribut­ing to de­vel­op­ment of so­cial as­pect other than their busi­nesses. Th­ese groups in the fol­low­ing para­graph are only a few ex­am­ples.

TATA GROUP:

The com­pany's ac­tiv­i­ties to dis­charge the re­spon­si­bil­ity to­wards so­cial setup were started with the es­tab­lish­ment of J N TATA En­dow­ment Scheme in 1982 to pro­vide higher ed­u­ca­tion for de­serv­ing In­di­ans. Tata steel ru­ral de­vel­op­ment so­ci­ety was es­tab­lished for ru­ral de­vel­op­ment in 1979 which helps com­mu­ni­ties for im­prov­ing their qual­ity of life by or­ga­niz­ing sev­eral pro­grams re­lated to health, ed­u­ca­tion, agri­cul­ture, fam­ily plan­ning, ru­ral in­dus­try and hand­i­crafts. To up­lift the life stan­dard of peo­ple, the first school known as KMPM was opened by Tata group. Be­sides all th­ese, Tata also con­tin­ues its strong sup­port for the so­ci­ety of phys­i­cal dis­abled, spread­ing the green world, in­fra­struc­ture de­vel­op­ment like in Kot­pali, Odisha, women em­pow­er­ment by Tejaswini a pro­gramme for de­vel­op­ment of health, sports etc.

Be­cause of all th­ese ef­forts made by Tata Group, the com­pany has been awarded var­i­ously for ex­cel­lence.

STATE BANK OF IN­DIA (SBI)

Cor­po­rate So­cial Re­spon­si­bil­ity has been a part of the State Bank of In­dia since 1973 un­der the name of com­mu­nity ser­vice bank­ing cov­er­ing var­i­ous so­cial, en­vi­ron­men­tal and wel­fare ac­tiv­i­ties. Dur­ing the fi­nan­cial year 201011, bank has im­ple­mented sev­eral wel­fare and so­cial ac­tiv­i­ties. Th­ese are: Do­na­tion of Rs. 2 crores were made for vic­tims of nat­u­ral calami­ties, 2547 projects have been as­sisted for cov­er­ing the area of, ed­u­ca­tion, health, hand­i­capped en­vi­ron­ment other un­der­priv­i­leged mem­ber of so­ci­ety, Strate­gic train­ing unit were op­er­a­tional­ized on 5 th April, 2010, Rs. 50 lakhs in IIT Kan­pur with par­tic­u­lar em­pha­sis to­wards in­no­va­tion in the field of so­lar en­ergy, and etc.

Other phil­an­thropic ac­tiv­i­ties like Girl Child adop­tion, Right to In­for­ma­tion Act. also are im­ple­mented by the or­ga­ni­za­tion.

CSR IN BUSI­NESS OR­GA­NI­ZA­TIONS-THE NEED

The def­i­ni­tion of CSR used within the or­ga­ni­za­tion can vary and will of­ten in­clude char­i­ta­ble ef­forts or pub­lic vol­un­teer­ing. CSR may be based on hu­man re­sources, busi­ness de­vel­op­ment or pub­lic re­la­tions depart­ment of an or­ga­ni­za­tion. So, the need, scale and na­ture of CSR for an or­ga­ni­za­tion can vary de­pend­ing upon the na­ture of or­ga­ni­za­tion. To dis­close the CSR, many ex­perts in this area have worked and pre­sented dif­fer­ent prac­tices of record­ing and pre­sent­ing the CSR phe­nom­e­non (Lee J.

Seidler, 1973; Ralph W. Estes, 1976).

In­dian Com­pa­nies Act, 1956 also re­quires a re­port on share­holder u/s 227 and a com­mit­tee un­der the chair­man­ship of Jus­tice Ra­jin­der Sachar was ap­pointed by the govern­ment of In­dia to give re­port on some nec­es­sary changes for the struc­ture of the Act. Here, we sug­gest a ' SO­CIAL BEN­E­FIT AND COST PRO­FORMA' to record and present the or­ga­ni­za­tion's con­tri­bu­tion to dis­charge its CSR to­wards a so­ci­ety.

In this way, cor­po­rate so­cial re­spon­si­bil­ity may be clas­si­fied into two broad cat­e­gories like, 'in­ter­nal CSR' and 'ex­ter­nal CSR' . The in­ter­nal CSR in­cludes the so­cial re­spon­si­bil­ity to­wards em­ploy­ees of the cor­po­rate or­ga­ni­za­tion and ex­ter­nal CSR in­cludes the so­cial re­spon­si­bil­ity to­wards out­side so­ci­ety of the busi­ness. The ex­cess of so­cial ben­e­fits over the costs to the so­cial set up dur­ing an ac­count­ing pe­riod por­trays that cor­po­rate or­ga­ni­za­tion has so­cial ben­e­fits and vice-versa.

SOME IM­POR­TANT SUG­GES­TIONS

This was an at­tempt to un­der­stand the need of CSR in cor­po­rate sec­tor. Here, au­thors sug­gest some im­por­tant points which may be used to mo­ti­vate the cor­po­rate sec­tor to dis­charge its re­spon­si­bil­ity. Th­ese are: Dif­fer­ent size of cor­po­rate units should ear­mark the dif­fer­ent pro­por­tions of their rev­enues or net prof­its. Af­ter the limit of that pro­por­tion, if any en­tity spends more than the ear­marked pro­por­tion it should be given more in­cen­tives by en­act­ing new pro­vi­sions in In­come Tax Act. as well as com­pa­nies Act., Some ad­di­tional re­lax­ations, de­duc­tions and re­bates un­der the Tax Act should be pro­vided to those en­ti­ties which spend to de­velop the un­de­vel­oped/ back­ward re­gions, and, A Code of Con­duct re­lat­ing to ethics and moral­ity i n dis­charg­ing of so­cial re­spon­si­bil­ity should be main­tained by the cor­po­rate en­ti­ties.

REF­ER­ENCES

Ca­rooll, Archie, B. (1991), “The Pyra­mid of Cor­po­rate So­cial Re­spon­si­bil­ity: To­wards the Moral Man­age­ment of Or­ga­ni­za­tional Stake­hold­ers”, Busi­ness Hori­zons, Ju­lyAu­gust 1991, re­trieved from http://www.cbe.wwu.edu/dunn/rprnts.pyrami dofcsr.pdf Joyner, B., and Pyane, D. (2002), “Eval­u­a­tion and Im­ple­men­ta­tion: A Study of Val­ues, Busi­ness Ethics and cor­po­rate So­cial Re­spon­si­bil­ity”, Jour­nal of Busi­ness Ethics , Vol. 41 , No. 4, pp. 297-311. Dawkins, J (2004), “Cor­po­rate Re­spon­si­bil­ity: The Com­mu­ni­ca­tion Chal­lenges”, The Jour­nal of Com­mu­ni­ca­tion Man­age­ment, Vol. 9, No. 2, pp. 108-119. Simeon, Scott (2007), “Cor­po­rate So­cial Re­spon­si­bil­ity and Fet­ter of Prof­itabil­ity”, So­cial Re­spon­si­bil­ity Jour­nal , Vol. 3, Is­sue 4, pp. 31-39. Kin­jal, Shah (2008), “An In­dian Per­spec­tive of Cor­po­rate So­cial Re­spon­si­bil­ity”, HRM Re­view Mag­a­zine re­trived from http//www. iup ind ia. in /108/HRM_An_In­di­an_per­spec­tive_14.html Sailaja (2008), “Emerg­ing Model of Cor­po­rate So­cial Re­spon­si­bil­ity” HRMRe­view Mag­a­zine re­trieved from http//www.iupin­dia.in/108/HRM _Emerg­ing_­mod­els_10.html Busaya, Vi­rakul, Kalya­nee, Koomee (2009), “CSR Ac­tiv­i­ties in Award Win­ning Thai Com­pa­nies”, So­cial Re­spon­si­bil­ity Jour­nal, Vol. 5, Is­sue 2, pp. 178-199. Lal, Jawa­har (2009), “Cor­po­rate Fi­nan­cial Re­port­ing” , New Delhi, Tax­mana Pub­li­ca­tion, 3 Ed Cor­po­rate So­cial Re­spon­si­bil­ity Guide­lines2009 re­trieved from http://www.mca.gov.in/ Min­istry/latestnews/CSR_Vol­un­tary_Guidelin es­_24dec2009.pdf Wil­li­ium, B, and Chan­dler, D. (2011), “Strate­gic Cor­po­rate So­cial Re­spon­si­bil­ity: Stake­hold­ers in a Global En­vi­ron­ment ”, New

nd York, Sage Pub­li­ca­tions, Inc, 2 Ed, pp. 4856. Green, Todd and Peloza, John (2011), “How does CSR Cre­ate value for Cus­tomer?” Jour­nal of Con­sumer Mar­ket­ing, Vol. 28, Is­sue 1 pp. 48-56 Saleh, Mus­tarudin, Norhayah, Zul­kali and et. al. (2011), “Look­ing for Ev­i­dence of the Re­la­tion­ship be­tween CSR and CPF in the Emerg­ing Mar­kets”, Asia Pa­cific Jour­nal of Busi­ness , Vol. 3, No. 2, pp. 165-190.

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