Friday, February 19, 2016

CSR SPECIAL ..........Corporate Social Responsibility

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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