Man is a social animal by nature. Human beings cannot exist in isolation. They tend to live in a social set-up and depend on each other for their basic needs. Emphasizing the social nature of human beings, the legendary Greek philosopher Aristotle had said, “He who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god’.

Society provides the structural framework within which we all coexist and carry on with our lives and livelihoods. Thus individuals, families, government, enterprises, businesses, corporate houses, public and private institutions all are a part of the social set-up; and it is only fair that progress and preservation of society be a shared responsibility.

 

Corporate Social Responsibility

Corporate Social Responsibility, meaning the social responsibility of companies is a management concept. It is adopted by companies to express their commitment towards the society at large by integrating social and environmental concerns in their business operations. Corporate Social Responsibility (CSR) works towards the idea of sustainability by balancing economic, social and environmental impact while simultaneously addressing the interests of the stakeholders of the company.

 

Evolution of CSR in India

The Father of our Nation Mahatma Gandhi had advocated and introduced the concept of Trusteeship in fuelling socio-economic growth way back in early 1900s. Encouraged by this Gandhian philosophy and prompted by their family traditions many wealthy families from the pre-independence era actively took part in philanthropic activities to give back generously to the society.

 

This was the earliest form of CSR in India where the wealthy not just donated money to the poor and needy but also set up many educational and health institutions for the benefit of the society. Some of these most famous institutions are Sir JJ School of Art, Elphinstone College and Birla Institute of Technology and Science.

 

However, over the years with changing socio-political environment and national & global policies pertaining to corporations the social responsibility of businesses has also evolved and taken various forms with the core objectives of serving people and planet remaining the same.

 

Types of Corporate Social Responsibility

The CSR activities can be divided into the following four major types:

 

 

1. 1.  Environmental Responsibility: With growing industrialization, urbanization, population and modernization, the pace of environmental degradation has also increased. Thus, environmental protection and preservation is one of the foremost areas of Corporate Social Responsibility. Under this responsibility, companies try to ensure that their business operations and decisions are as environmental friendly as possible. Regulating pollution, water consumption, treatment of harmful waste before disposal, more reliance on renewable energy, offsetting negative impacts of business on environment by steps like increasing green cover, funding related researches etc are measures taken in this direction.

1. 1.  Ethical Responsibility: This relates to fair practice on the part of the companies in treatment of its employees, investors, suppliers, customers and all stakeholders. In this direction companies ensure labour welfare by following ethical practices at work place like no discrimination based on gender, race or religion, equal pay for equal work, ensuring safety protocols in workplace, compensating with livable or competitive wages or ensuring that they do not source their materials from suppliers who adhere to wrong and illegal practices like child labour.

1. 1.  Philanthropic Responsibility: This mainly entails the commitment to make the world a better place by actively participating in the upliftment of underprivileged or marginalized populations. In order to fulfill this responsibility, corporate houses usually donate money, time or other resources to charitable organizations or NGOs. Over the years many big corporate houses have taken it a notch higher by setting up their own charitable foundations to work towards various social causes. Examples of such foundations in India are Wipro Cares, Infosys Foundation, Tech Mahindra Foundation, Biocon Foundation, Asian Paints Charitable Trust etc.

1. 1.  Economic Responsibility: This is an interrelated field whereby an organization takes care that its business operations and financial decisions positively impact people, environment and society at large. The objective of economic responsibility is to strike a balance between business and sustainable practices.

 

Benefits of Corporate Social Responsibility

Corporate social responsibility is a constant reminder to all business organizations that they function within the realm of the social framework and derive their resources and market from here. In India, though CSR existed in the form of philanthropic activities from the pre-independence era, the Companies Act 2013 introduced far reaching changes including incorporating an additional section, Section 135 on CSR obligations. India is the first country to mandate a minimum spending of 2% of average net profit of past 3 years by companies with certain turnover, towards CSR initiatives.

 

While companies engaged in CSR activities definitely do a lot of good to the society, there are some inherent benefits in it for the companies as well. Some of these are listed below:

 

Builds Public Trust: Trust is the biggest factor affecting the relationship of any business with its stakeholders. Businesses actively engaged in CSR earn positive reputation and thus have a better brand identity. Consumers are more inclined to give business to companies that engage in social welfare activities.

 

Gives Competitive Advantage in Talent Acquisition and Retention: Companies with good CSR track record have a better potential to attract qualified and competent people to join their workforce. Also they are more likely to provide a good work environment which helps in employee retention.

 

As per the 2022 Edelman Trust Barometer trust and credibility survey, 60% of employees while considering a job want the CEO to speak out on controversial issues they care about and 80% of general population expects CEOs to shape discussion and policies on issues like jobs, wage inequality, global warming and climate change etc.

 

Sustainable Growth: While aligning their business operations with environmental sustainability, the companies benefit as well, by cutting down operational costs like saving on energy bills.

 

Increase Profits: Greater philanthropic visibility results in a stronger brand image. Thus, consumers, suppliers, investors and all stakeholders pride themselves in associating with such brands which results in multiple benefits for the company, leading to greater business and better profits.

 

NGO Corporate Social Responsibility

 

NGOs are non-profit organizations whose core objective is to build a better world based on justice and inclusivity. With businesses acknowledging their role towards social responsibility and increasingly getting involved in CSR activities; NGOs can be their perfect partner to further these activities. CSR funds and other resources from corporate firms paired with community outreach, subject expertise and logistical support by NGOs leads to effective implementation of social outreach programmes.

 

Smile Foundation, having partnered with 350 global brands so far, is one of the best NGOs for Corporate Social Responsibility having transformed lives of over 950 under-served communities across 25 states of India.

 

Concluding Thoughts

 

As William Clay Ford Jr. puts it, “Creating a strong business and building a better world are not conflicting goals – they are both essential ingredients for long-term success.” With an increasing number of corporate houses advancing CSR activities more willingly than out of compliance, the future of societal leadership of businesses looks optimistic; thus giving the hopes of a better tomorrow.