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Introduction
The emerging concept of CSR goes beyond charity and requires the company
to act beyond its legal obligations and to integrate social, environmental and
ethical concerns into company’s business process. What is generally
understood by CSR is that the business has a responsibility – towards its
stakeholders and society at large – that extends beyond its legal and
enforceable obligations. The triple bottom line (people, planet, profit) approach
to CSR emphasizes a company’s commitment to operating in an
economically, socially and environmentally sustainable manner. The emerging
concept of CSR advocates moving away from a ‘shareholder alone’ focus to a
‘multi-stakeholder’ focus. This would include investors, employees, business
partners, customers, regulators, supply chain, local communities, the
environment and society at large. The key components of CSR would
therefore include the following:
Corporate Governance:
Within the ambit of corporate governance, major issues are the accountability,
transparency and conduct in conformity with the laws which enable the
company to realize its corporate objectives, protect shareholder rights, meet
legal requirements and create transparency for all stakeholders.
Business Ethics:
relates to value-based and ethical business practices.
Supply Chain:
The business process of the company is not just limited to the operations
internal to the company but to the entire supply chain involved in goods and
services.
Customers:
With increased awareness and means of communication, customer
satisfaction and loyalty would depend on how the company has produced the
goods and services, considering the social, environmental, supply-chain and
other such aspects.
Environment:
Merely meeting legal requirements in itself does not comprise CSR but it
requires company to engage in such a way that goes beyond mandatory
requirements and delivers environmental benefits.
Community:
A major stakeholder to the business is the community in which the company
operates. The involvement of a company with the community would depend
upon its direct interaction with the community and assessment of issues/risks
faced by those living in the company surrounding areas.
History of CSR in India :-
India has a long rich history of close business involvement in social causes for
national development. In India, CSR is known from ancient time as social duty
or charity, which through different ages is changing its nature in broader
aspect, now generally known as CSR. From the origin of business, which
leads towards excess wealth, social and environmental issues have deep
roots in the history of business. India has had a long tradition of
corporate philanthropy and industrial welfare has been put to practice since
late 1800s. Historically, the philanthropy of business people in India has
resembled western philanthropy in being rooted in religious belief. Business
practices in the 1900s that could be termed socially responsible took different
forms: philanthropic donations to charity, service to the community, enhancing
employee welfare and promoting religious conduct. Corporations may give
funds to charitable or educational institutions and may argue for them as great
humanitarian deeds, when in fact they are simply trying to buy community
good will. The ideology of CSR in the 1950s was primarily based on an
assumption of the obligation of business to society.
After Independence, JRD Tata who always laid a great deal of emphasis to go
beyond conducting themselves as honest citizens pointed out that there were
many ways in which industrial and business enterprises can contribute to
public welfare beyond the scope of their normal activities. He advised that
apart from the obvious one of donating funds to good causes which has been
their normal practice for years; they could have used their own financial,
managerial and human resourced to provide task forces for undertaking direct
relief and reconstruction measures. Slowly, it began to be accepted, at least in
theory that business had to share a part of the social overhead costs of.
Traditionally, it had discharged its responsibility to society through
benefactions for education, medical facilities, and scientific research among
other objects. The important change at that time was that industry accepted
social responsibility as part of the management of the enterprise itself. The
community development and social welfare program of the premier Tata
Company, Tata Iron and Steel Company was started the concepts of "Social
Responsibility." (Gupta, 2007)
The term corporate social performance was first coined by Sethi (1975),
expanded by Carroll (1979), and then refined by Wartick and Cochran (1985).
In Sethi's 1975 three-level model, the concept of corporate social performance
was discussed, and distinctions made between various corporate behaviors.
Sethi's three tiers were 'social obligation (a response to legal and market
constraints); social responsibility (congruent with societal norms); and social
responsiveness (adaptive, anticipatory and preventive) (Cochran, 2007).
The last decade of the twentieth century witnessed a swing away from charity
and traditional philanthropy towards more direct engagement of business in
mainstream development and concern for disadvantaged groups in the
society. This has been driven both internally by corporate will and externally
by increased governmental and public expectations (Mohan, 2001). This was
evident from a sample survey conducted in 1984 reporting that of the amount
companies spent on social development, the largest sum 47 percent was
spent through company programs, 39 percent was given to outside
organizations as aid and 14 percent was spent through company trusts
(Working Document of EU India CSR, 2001). In India as in the rest of the
world there is a growing realization that business cannot succeed in a society
which fails. An ideal CSR has both ethical and philosophical dimensions,
particularly in India where there exists a wide gap between sections of people
in terms of income and standards as well as socio-economic status (Bajpai,
2001).
Corporate social responsibility (CSR) is on the rise all over the world, and
India is no exception. The history of corporate paternalism has played an
important part in shaping community expectations and CSR practices in India.
Civil society, consumers and other actors have increased the pressure on
companies to adhere to social and environmental standards, and this new
“civil regulatory” environment has had impacts on business in India. This
paper considers corporate environmental and social behaviour in India, both in
the past and the present, in an attempt to better understand the actual impact
of CSR.
The paper is divided into five broad sections with the first section setting forth
the issues in context. Section 2 covers the historical aspects of the business
and society interface in India from the middle of the nineteenth century up to
the present, and it determines the actors and the factors that have influenced
the corporate responsibility discourse. Section 3 then presents the state of
contemporary CSR in India, by detailing perceptions of the issue, and the
initiatives undertaken by selected companies, industries, industry
associations, non-governmental organizations (NGOs) and trade unions. It
includes a discussion on certain codes of conduct related to labour and
environmental issues. Section 4 discusses the drivers of corporate social and
environmental responsibility in India, using a case study of the garment sector.
Voluntary initiatives are examined in light of the macro changes unfolding in
the Indian economy and society since the early 1990s, particularly by
examining the characteristics of the labour market and the impact of labour,
environmental and other regulations on business and society. This section
also documents corporate management and governance practices. The last
section contains a brief discussion on issues beyond voluntarism and judicial
activism.
Philanthropy has been important in India since the middle of the nineteenth
century, largely due to a strong heritage of community influence and
paternalism among traders-turned-entrepreneurs. At the same time, the larger
economic governance framework that was put in place by the state also
influenced corporate practices toward labour and society from time to time.
The Indian government’s socialistic policy agenda, which aimed at a more
equitable distribution of resources, restricted the concentration of wealth to the
hands of a few industrialists through strategies of import substitution, foreign
exchange control, reservations for and protection of small-scale enterprises,
industrial licence, and quota systems for raw material and production. This
influenced business practices of the times. However, business was often
reluctant to abide by such principles. As a result, interest in corporate
philanthropy decreased, leading to an increase in corporate malpractice, and
manoeuvring for survival and profits. All this was facilitated by incidents of
corruption in state and national government bureaucracies. However, certain
self-enlightened businessmen practiced and advocated ethical and
responsible business behaviour, and issues of the social responsibility of
business and stakeholder engagement were debated in India as early as the
1960s. In fact, there is evidence available of businesses going far beyond
compliance and setting best-practice standards in labour relations and
community development even before India’s independence in 1947. Some
such best practices later became the basis for drafting related legislation after
independence.
Despite the existence of trade unions, the trade union movement was not very
effective in advocating for the rights of workers beyond issues related to
wages and could not, therefore, contribute much to the larger corporate
responsibility debate. To some extent, this shortcoming was offset by the
emergence of other civil society actors in the form of NGOs and community-
based organizations from the 1970s. However, NGO activism in the early
phase was limited by government policies to the role of service delivery
agents; it was only in the 1990s, when this role broadened, that NGOs started
to have greater effect. However, they tended to influence state policies rather
than confronting business head-on. Consumer boycotts, popular in the
Western economies, have also been rare in the Indian context.
Since the mid-1990s, CSR has been practised and debated by businesses,
industry associations, NGOs and the government. However, there is still
progress to be made. CSR is not institutionalized as a part of business
practice; instead it is more of a “social good” left to the discretion of chief
executive officers or top management. The agenda does not yet engage with
CSR in terms of workers’ rights. Employee care is often left to employer
benevolence. And while environmental care and total quality management
have been driven by international competition as well as by legislation in India,
compliance and enforcement are slack.
What then is the right way to look at CSR as an investment - particularly given
that it frequently involves intangible and less quantifiable domains. The bottom
line is that a prudent business may tend to regard CSR in the same way it
treats most investment decisions. It would be inclined to use the same
systematic approach to assess the anticipated benefits and related revenues
relative to the costs that it employs for investment proposals. A rigorous and
systematic approach to CSR investment is likely to yield the most positive
results for both the business and society as it is likely to demonstrate the most
efficient allocation of resources from the perspective of both the firm and
society.
Policy:
Business Principles, Defining your Purpose, Innovation, Know the law,
Managing risks, Measuring success, Sharing good practice
What are the theories and business principles which drive successful
businesses?
Here you can dip into information on the law and its implications for your
business. There is also information about how to measure the intangibles e.g.
how can you measure increased customer loyalty? Plus you'll find useful
signposts and pointers as to where you can find more information on each
topic.
Practice:
Better payment, Developing skills, Diversity, Equality, Health and safety,
Managing resources, Marketing with a cause, Minimising waste, Volunteering
If you want to save money through managing waste more effectively how do
you go about it? What about health & safety? In a recent survey* 60% of small
and medium sized business owners said that they had been asked about their
practices in this area by a large corporate customer. Make sure you're one
step ahead of the game and start by reading the guide to health and safety
contained within this section.
Stakeholders:
Employees, Customers, Suppliers, Communities
But ACC has undertaken social volunteering practices almost from its
inception, – long before the term corporate social responsibility was coined.
The company’s earliest initiatives in community development date back to the
1940's in a village on the outskirts of Mumbai while the first formal Village
Welfare Scheme was launched in 1952. The community living around many of
our factories comprises the weakest sections of rural and tribal India with no
access to basic amenities.
“The Company shall continue to have among its objectives the promotion and
growth of the national economy through increased productivity, effective
utilization of material and manpower resources and continued application of
modern scientific and managerial techniques, in keeping with the national
aspiration; and the Company shall continue to be mindful of its social and
moral responsibilities to consumers, employees, shareholders, society and the
local community.
Education
Education is imparted not only to children of ACC employees but also more
importantly to children from rural areas who do not have access to any
medium of information or education. ACC schools maintain high standards
and are open to other children of the vicinity. Often these schools are the most
preferred centers of learning in the district and adjoining areas. Wherever
possible, ACC provides funds and infrastructure to help set up local schools,
colleges and centers for learning and education.
Healthcare
ACC takes pride in providing various forms of medical assistance to the
families of our employees and also to all those living in surrounding villages.
Each factory has a medical center with full-fledged doctors and the latest of
basic equipment. Mobile medical services are provided in the vicinity and
regular medical camps are held to eradicate diseases, offer medical help,
treatment and preventive care.
ACC has come out to provide support to state and national health initiatives
such as the eradication of malaria, dengue fever and the dreaded HIV.
Business
Company Type Focus Area Linkage
Methodology
Company Adopted Impact