UNIT – III CORPORATE SOCIAL RESPONSIBILITY

UNIT – III

CORPORATE SOCIAL RESPONSIBILITY

EVOLUTION OF CSR IN INDIA

The idea of CSR first came up in 1953 when it became an academic topic in HR Bowen’s “Social

Responsibilities of the Business”. Since then, there has been continuous debate on the concept and

its implementation. Although the idea has been around for more than half a century, there is still

no clear consensus over its definition.

CSR is oftentimes also described as the corporate “triple bottom line”- the totality of corporation’s

financial, social, and environmental performance in conducting its business.

Today, more companies are realizing that in order to stay productive, competitive, and relevant in

a rapidly changing business world, they have to become socially responsible.

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The Four Phases of CSR Development in India

The history of CSR in India has its four phases which run parallel to India's historical development

and has resulted in different approaches towards CSR.

THE FIRST PHASE (1850 – 1914) (CSR DRIVEN BY CHARITY AND PHILANTHROPY):

In the first phase charity and philanthropy were the main drivers of CSR. Culture, religion,

family values and tradition and industrialization had an influential effect on CSR. In the pre-

industrialization period, which lasted till 1850, wealthy merchants shared a part of their wealth

with the wider society by way of setting up temples for a religious cause. Moreover, these

merchants helped the society in getting over phases of famine and epidemics by providing food

from their godowns and money and thus securing an integral position in the society. With the

arrival of colonial rule in India from the 1850s onwards, the approach towards CSR changed. The

industrial families of the 19th century such as Tata, Godrej, Bajaj, Modi, Birla, were strongly

inclined towards economic as well as social considerations. However, it has been observed that

their efforts towards social as well as industrial development were not only but also the driven by

selfless and religious motives but also influenced by caste groups and political objectives.

THE SECOND PHASE (1914 – 1960) (CSR DRIVEN BY SOCIAL DEVELOPMENT):

In the second phase, during the independence movement, there was increased stress on Indian

Industrialists to demonstrate their dedication towards the progress of the society. This was when

Mahatma Gandhi introduced the notion of "trusteeship", according to which the industry leaders

had to manage their wealth so as to benefit the common man. "I desire to end capitalism almost, if

not quite, as much as the most advanced socialist. But our methods differ. My theory of trusteeship

is no make-shift, certainly no camouflage. I am confident that it will survive all other theories."

This was Gandhi's words which highlights his argument towards his concept of "trusteeship".

Gandhi's influence put pressure on various Industrialists to act towards building the nation and its
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socio-economic development. According to Gandhi, Indian companies were supposed to be the

"temples of modern India". Under his influence businesses established trusts for schools and

colleges and also helped in setting up training and scientific institutions. The operations of the

trusts were largely in line with Gandhi's reforms which sought to abolish untouchability, encourage

empowerment of women and rural development.

THE THIRD PHASE (1960 – 1980) (CSR IN THE MIXED ECONOMY):

The third phase of CSR (1960–80) had its relation to the element of "mixed economy", emergence

of Public Sector Undertakings (PSUs) and laws relating labor and environmental standards. During

this period the private sector was forced to take a backseat. The public sector was seen as the prime

mover of development. Because of the stringent legal rules and regulations surrounding the

activities of the private sector, the period was described as an "era of command and control". The

policy of industrial licensing, high taxes and restrictions on the private sector led to corporate

malpractices. This led to enactment of legislation regarding corporate governance, labor and

environmental issues. PSUs were set up by the state to ensure suitable distribution of resources

(wealth, food etc.) to the needy. However the public sector was effective only to a certain limited

extent. This led to shift of expectation from the public to the private sector and their active

involvement in the socio-economic development of the country became absolutely necessary. In

1965 Indian academicians, politicians and businessmen set up a national workshop on CSR aimed

at reconciliation. They emphasized upon transparency, social accountability and regular

stakeholder dialogues.

THE FOURTH PHASE (1980 ONWARDS) (INTERFACE BETWEEN PHILANTHROPIC

AND BUSINESS APPROACHES):

In the fourth phase (1980 until the present) Indian companies started abandoning their traditional

engagement with CSR and integrated it into a sustainable business strategy. In the 1990s the first
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initiation towards globalization and economic liberalization were undertaken. Controls and

licensing system were partly done away with which gave a boost to economy the signs of which

are very evident today. Increased growth momentum of the economy helped Indian companies

grow rapidly and able to contribute towards social cause. Globalization has transformed India into

an important destination in terms of production and manufacturing bases of TNCs are concerned.

As Western markets are becoming more and more concerned about labor and environmental

standards in the developing countries, Indian companies which export and produce goods for the

development world need to pay a close attention to compliance with the international standards.

CORE CHARACTERISTICS OF CSR

1. Voluntary

Scholars describe CSR as a collection of corporate actions that go beyond what the law requires.

This feature is emphasized by government and other stakeholders in all emerging countries.

2. Managing externalities

Externalities in CSR relate to a variety of issues that have an influence on various stakeholders'

rights but are not directly addressed in a company's decision-making process. Environmental

deterioration is usually considered an externality since the general population is affected by the

manufacturing process. CSR remains a viable discretionary strategy to controlling externalities

like improving safety and reducing pollution by becoming green. Much CSR activity focuses on

externalities such as worker rights, reducing the impact of rationalisation, managing stakeholder

relationships to reduce the accumulation of unsatisfied legitimate claims, and discarding

production processes and products that are not in demand, harmful, or classified as dangerous.

3. Multiple stakeholder orientation

Stakeholder management's fundamental premise is to identify stakeholders' orientations based on

three attributes: power, legitimacy of claim, and urgency. Following that, defining stakeholder
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orientations aids in the identification and prioritisation of stakeholders through the use of a step-

by-step approach that begins with internal preparations, appointing an internal leadership team of

internal stakeholders for marketing, communication, operational unit, human resources, investor

relations, and environmental/government affairs, among other things, limiting expectations to a

realistic level, training on communication skills, stakeholder re-performance, and stakeholder re-

engagement.

4. Harmonization of social and economic obligations

Another key characteristic is the balance of diverse stakeholder interests. CSR emphasize that it is

about aligning social and economic obligations.

5. Values and practices

CSR is obviously about a collection of corporate practices and strategies that address social

challenges, but it is also about something more for many people: a philosophy or set of principles

that drives these activities.

6. Beyond philanthropy

CSR is mostly about philanthropy in several parts of the globe, i.e. corporate discretionary

responsibility or voluntarism toward the general public. CSR is now a legal requirement backed

by rules and an internationally recognized norm that is transitioning from altruistic to instrumental

or strategic CSR. Because of the effects it has on profitability, human resource management,

marketing, and logistic support, which are all part of the fundamental operations of commercial

organizations, it is more than just charity and community development programs.

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PRINCIPLES OF CORPORATE SOCIAL RESPONSIBILITY

1. Respect for human rights:

Upholding human rights involves ensuring that all individuals, including employees,
customers, suppliers, and communities, are treated with dignity, fairness, and respect for
their rights and freedoms.

2. Respect for the differences of views:

Embracing diversity of perspectives and respecting differing opinions fosters inclusivity,

creativity, and innovation within the organization. It promotes an open and inclusive
culture where diverse viewpoints are valued and considered.
3. Diversity & non-discrimination should be the guiding principle:

Promoting diversity and inclusion as guiding principles not only benefits individuals and
society but also enhances organizational performance, creativity, and decision-making by
leveraging diverse talents and perspectives.

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4. Make some social contribution:

CSR involves making meaningful social contributions beyond business operations, such as
supporting community development projects, charitable initiatives, environmental
conservation efforts, and addressing societal challenges.

5. Fair dealings & collaboration:

Fair dealings with stakeholders, including customers, suppliers, employees, and

competitors, build trust and long-term relationships. Collaboration fosters mutual benefits,
shared value creation, and collective solutions to complex challenges.

6. Feedback from the community:

Engaging with the community and seeking feedback on CSR initiatives and business
practices demonstrates a commitment to transparency, accountability, and responsiveness
to stakeholder needs and concerns.

7. Positive value- added

CSR aims to create positive value-added for all stakeholders, going beyond financial profits
to consider social, environmental, and ethical impacts. This includes creating shared value,
addressing societal needs, and contributing to sustainable development.

8. Long term economic & social development:

CSR initiatives should contribute to long-term economic prosperity, social well-being, and
environmental sustainability. This involves balancing short-term business goals with long-
term strategic objectives that benefit society and future generations.

CSR AS A MULTI-DIMENSIONAL CONCEPT

Corporate Social Responsibility (CSR) encompasses a multi-dimensional approach that addresses
various stakeholders and aspects of business operations. By aligning CSR initiatives with the needs
and expectations of employees, communities, consumers, the environment, and stakeholders,
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businesses can create value, build trust, and contribute positively to society while achieving long-
term sustainability and success.

EMPLOYEES

STAKEHOLDERS COMMUNITY

CSR AS MULTI-
DIMENSIONAL
CONCEPT

ENVIRONMENT CONSUMERS

1. Employees:

 Providing a safe and healthy work environment.

 Offering fair wages, benefits, and opportunities for career development.
 Promoting diversity and inclusion in hiring, training, and advancement.
 Supporting work-life balance and employee well-being initiatives.
 Encouraging employee engagement, empowerment, and participation in decision-making
processes.

2. Community:

 Engaging in community development projects, such as education, healthcare, infrastructure, and

poverty alleviation programs.
 Supporting local businesses, suppliers, and social enterprises to stimulate economic growth and
employment.
 Volunteering time, resources, and expertise for community service and charitable activities.
 Building partnerships with community organizations, NGOs, and government agencies to address
social challenges and contribute to sustainable development.

3. Consumers:

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 Ensuring product safety, quality, and ethical sourcing practices.

 Providing transparent and accurate information about products, services, pricing, and policies.
 Listening to consumer feedback and addressing concerns promptly and responsibly.
 Offering sustainable and environmentally friendly products and services.
 Promoting responsible consumption and ethical marketing practices.

4. Environment:

 Adopting environmentally sustainable practices, such as reducing waste, conserving resources,

and minimizing pollution.
 Investing in renewable energy, energy efficiency, and eco-friendly technologies.
 Implementing green supply chain management, including sustainable sourcing and packaging.
 Supporting conservation initiatives, biodiversity protection, and environmental education.
 Setting and achieving environmental sustainability goals, such as carbon neutrality and zero
waste.

5. Stakeholders:

 Engaging with stakeholders through transparent communication, dialogue, and consultation

processes.
 Considering stakeholder interests, concerns, and feedback in decision-making and policy
development.
 Building trust, credibility, and positive relationships with investors, regulators, suppliers, and
other stakeholders.
 Addressing stakeholder expectations related to governance, ethics, compliance, and corporate
accountability.
 Collaborating with stakeholders on shared initiatives, partnerships, and industry collaborations to
address common challenges and opportunities.

CSR PROGRAMMES
Corporate Social Responsibility (CSR) programs across sectors to address social, environmental,
and economic challenges. List of CSR programs commonly undertaken by Indian companies:

1. Education Initiatives:
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 Scholarships and educational support for underprivileged children.

 Infrastructure development for schools, colleges, and vocational training centers.
 Teacher training programs and education technology initiatives.
2. Healthcare and Sanitation:
 Healthcare camps, medical facilities, and mobile clinics in rural areas.
 Awareness campaigns on health and hygiene, disease prevention, and maternal
care.
 Clean water and sanitation projects, including building toilets and providing access
to clean drinking water.
3. Skill Development and Livelihood Enhancement:
 Vocational training programs for youth, women, and marginalized communities.
 Entrepreneurship development initiatives and microfinance support.
 Livelihood enhancement projects in agriculture, handicrafts, and rural industries.
4. Environmental Sustainability:
 Tree plantation drives and afforestation projects.
 Waste management and recycling initiatives.
 Renewable energy projects, such as solar power installations and energy-efficient
technologies.
5. Community Development:
 Infrastructure development, including roads, bridges, and community centers.
 Disaster relief and rehabilitation programs.
 Sports, cultural, and arts initiatives for community development and empowerment.
6. Women Empowerment and Gender Equality:
 Women's skill development and entrepreneurship programs.
 Gender equality and diversity initiatives in the workplace.
 Health, education, and economic empowerment projects for women and girls.
7. Social Inclusion and Welfare:
 Support for persons with disabilities (PWDs) through employment, education, and
accessibility initiatives.
 Elderly care and support programs for senior citizens.

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 Rehabilitation and empowerment of marginalized communities, including tribal

populations and refugees.
8. Technology for Social Impact:
 Digital literacy and technology access programs.
 Information and communication technology (ICT) initiatives for rural development
and e-governance.
 Tech-based solutions for healthcare, education, and agricultural productivity.
9. Corporate Governance and Ethics:
 Ethical business practices, anti-corruption measures, and corporate governance
frameworks.
 Compliance with CSR regulations and reporting standards.
 Stakeholder engagement, transparency, and accountability mechanisms.

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