Corporate Social
Responsibility (CSR)
Introduction
Corporate
Social Responsibility (CSR), characterized by interlinkages with corporate
governance, sustainability practices, social inclusion and economic growth, has
now become an integral element of business practice. The lessons learnt over
the last decade in CSR management and the emerging changes in policymaking,
sustainability practice and value creation have combined to provide a new
understanding of the nuances of the CSR practice. Despite advances and benefits
observed over the years, the existing CSR policy and practices needs a rethink
and corrections of many anomalies. It is time for business to take a reality
check on their CSR journey and what have been the deliverables in terms of
community and social development goals. The performance bar for the industry
has been significantly raised by society, regulators, consumers and several
queries are being raised:
To what
extent has CSR initiatives catalysed socially aware and responsible business
practices?
Have
legislative and regulatory systems been reviewed to identify gaps and
anomalies?
Is the
senior management aware of changing contours of social, economic and ecological
priorities of stakeholders?
Are guidelines for the CSR provisions in the
Act liberating or limiting corporate discussions?
Is there a lack of direction in areas for CSR
investments?
Is there a concentration of CSR investments in
only specific places?
Indian scenario
The changing
policy environment in India makes it imperative for government to support
industry efforts. Today, corporations have learnt to synergize sustainability
principles with their business models. Corporate citizenship is a must in
modern societies and many companies have learnt to embrace it and adopted
systems to manage the process. In the process many have also revamped short-
and long-term agendas and strategies to align with the key intent of ensuring
equity in distribution of economic benefits.
Two of the
key initiatives undertaken to resolve inequity in distribution of economic
benefits are the National Voluntary Guidelines for Social, Environmental and
Economic Responsibilities of Business or the NVGs (accompanied by the Business
Responsibility Reports mandated by Securities Exchange Board of India (SEBI)
for the top 100 companies) and the CSR clause within the Companies Act, 2013.
The present
shifts have also brought in major changes in the way corporations have begun to
engage with the community and stakeholders, regulators and its employees. To
ensure effective CSR project management radically new leadership and community
relation models are needed. Indeed, in the last five years companies have
adopted diverse models needed for dealing with society, environment and
commerce. For multi-locational companies the challenges have been many due to
widely disparate economic and cultural backgrounds they operate in globally.
While the number of corporations that have adopted social responsibility
approaches have slowly begun to increase, there are a large number of firms
which are yet to voluntarily acknowledge any responsibility to social
development projects. According to Indian Institute of Corporate Affairs, a
minimum of 6,000 Indian companies will be required to undertake CSR projects in
order to comply with the provisions of the Companies Act, 2013 with many
companies undertaking these initiatives for the first time.
The
Voluntary Guidelines of 2009 covered care for all stakeholders, ethical
functioning, respect for workers’ rights and welfare, respect for human rights,
respect for the environment and activities to promote social and inclusive
development. The Guidelines specifically drew a distinction between
philanthropy and CSR activities, and highlighted the voluntary nature of CSR
activities that go beyond any statutory or legal obligation. The Guidelines of
2009 were followed in 2011 by the National Voluntary Guidelines of Social,
Environmental & Economic Responsibilities of Business, also issued by the
MCA.
The
transition from a voluntary CSR regime to a regulated regime came when SEBI
required the top listed 100 companies, as part of Clause 55 of the Listing
Agreement, to mandatorily disclose their CSR activities in the Business
Responsibility Reports (BR Reports) accompanying the Annual Reports.
The key
outcome of good CSR should cover:
y The
aspirations of communities that not only provide them with the license to
operate, but also to maintain the license, thereby precluding the ‘trust
deficit’.
y Company’s
ability to attract, retain and motivate employees with their CSR commitments.
y
Initiatives that empower employees.
y Enhancing
community livelihood by incorporating them into their supply chain.
Multiple definitions
A very
complex and ambiguous term like CSR is likely to be subjected to diverse
interpretations. Today, the concept of CSR has radically evolved and
incorporates a vast landscape – triple bottom line, corporate citizenship,
philanthropy, strategic philanthropy, shared value, corporate sustainability
and business responsibility. The European Commission (EC) defines CSR as “the
responsibility of enterprises for their impacts on society”. To completely meet
their social responsibility, enterprises “should have in place a process to
integrate social, environmental, ethical, human rights and consumer concerns
into their business operations and core strategy in close collaboration with
their stakeholders.” (http://ec.europa.eu/enterprise/
policies/sustainable-business/ corporate-social-responsibility/index_ en.htm)
The World
Business Council on Sustainable Development (WBCSD) defines CSR as “the
continuing commitment by business to contribute to economic development while
improving the quality of life of the workforce and their families, as well as
of the community and society at large.” (http://www.wbcsd.org/work-program/
business-role/previous-work/corporate-social-responsibility. aspx)
FOR THE REST SEE
Corporate Social Responsibility
(CSR): A shifting landscape
BY RAJAGOPAL CHEMICAL WEEKLY 9FEB16
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