Is Corporate Social Responsibility (CSR) the Need of Corporate Success?
- Dr. S.D. Vashistha, - Rajesh & Geeta Rani
Dr. S.D. Vashishtha*, Rajesh Kumar** and Geeta Rani**
* Dean & Professor, Faculty of Commerce, M. D. University, Rohtak (124001) M: 09896780050, e-mail-: firstname.lastname@example.org ** Research Scholar, Deptt. of Commerce, M.D. University, Rohtak (124001) M: 09992323431, e-mail-: email@example.com and firstname.lastname@example.org
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
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.
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.
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.
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