Corporate Social Responsibility (CSR) is viewed as a comprehensive set of policies, practices and programs that are integrated into business operations, supply chains, and decision-making processes throughout the organization addressing the legal, ethical, commercial and other expectations society has for business, and making decisions that fairly balance the claims of all key stakeholders.
Effective CSR aims at “achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” Several terms have been used interchangeably with CSR which are business ethics, corporate citizenship, corporate accountability, sustainability and corporate responsibility.
Firms are social creations whose survival is counted on the willingness of the society to support them.
In order to have continuous support from society, firms need to undertake social activities and report such activities for the society to judge their performance. It is believed that industry sectors that produce goods harmful to society engage in corporate social reporting to legitimize their business activities and improve their image.
The manufacturing of chemicals, textiles and petroleum industry sectors that emits waste into the environment engages in CSR to negate their direct and indirect negative impact on society. On the contrary, it is believed that firms in knowledge-based industries (e.g. banking, finance, accounting, and software firms) create fewer social hazards as these industries provide services useful to the society with socially friendly management processes.
This leads us to assume that unlike industries that produce goods harmful to the society or uses processes that eventually harm the society, knowledge-based industries may not be under pressure for CSR. CSR promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors. The concept of CSR is underpinned by the idea that corporations can no longer act as isolated economic entities operating in detachment from broader society. The benefits of CSR for companies, including increased profits, customer loyalty, trust, positive brand attitude.
The broad rationale for a new set of ethics for corporate decision making, which clearly constructs and upholds a organization’s social responsibility, arises from the fact that a business enterprise derives several benefits from society, which must, therefore, require the enterprise to provide returns to society as well.
This, therefore, clearly establishes the stake of a business organization in the good health and well being of a society of which it is a part. More importantly, in this age of widespread communication and growing emphasis on transparency, the managers should help their company in development of a CSR management and reporting framework.
A detailed CSR review is to be conducted to identify priority CSR risks, opportunities and impacts, followed by an exercise involving stakeholder engagement to obtain the views of all concerned. Once the reporting and management system of the CSR is put into motion, regular audits need to be conducted to ensure that the system is performing as intended. Finally, organizations may report on their CSR practices in their annual performance report. Most of the companies report on donations, renovating schools in villages, mid day meals etc which do not fulfill their criteria’s of social responsibility.
It is expected from a company to at least spend a minimum of 0.2% of income on CSR activities annually. But in most reports there is no mention of the amount spent in any of their balance sheets or annual reports. Well defined expenditure on CSR has been shown by only 4 companies’ viz. HDFC, Infosys, Tata Steel, Titan Industries, NTPC etc.
Companies reach for CSR activities was also unsatisfactory in the sense only 25% companies CSR activities were for employees & rest were focusing on vicinity & society at large. Many companies are only making token gestures towards CSR in tangential ways such as donations to charitable trusts or NGOs, sponsorship of events, etc. believing that charity and philanthropy equals to CSR
Business houses all over the world are realizing their stake in the society and engaging in various social and environmental activities. CSR holds a very important place in the development scenario of the world today and can pose as an alternative tool for sustainable development. As companies have shown great concerns for their immediate community and the stakeholders, it can be safely concluded that much of the fate of economic condition of society lies in the hands of the corporate.
The need of the hour is to formulate effective strategic policies and adopt various instruments according to the company history, its content, peculiarity in relationship with its different stakeholders so that CSR can be best implemented towards its goals – sustained environmental, social and economic growth.
Creating trusts and foundations seem to be a favorite route of CSR practice by Indian companies, but largely such trusts and foundations work at an arm’s length from the company preventing the mainstreaming of CSR into the core business processes and limiting CSR to community development only.
Thus, CSR is becoming a fast-developing and increasingly competitive field. The case for demonstrating corporate responsibility is getting stronger as expectations among key opinion formers, customers and the public are increasing. Being a good corporate citizen is increasingly crucial for commercial success and the key lies in matching public expectations and priorities, and in communicating involvement and achievements widely and effectively.
Considering the limitations of the corporate in their CSR activities, followings are some recommendations which can be used for Economic and Social development of our country.
* Companies should extend their CSR activities in less privileged States rather than concentrate in resource rich States.
* It is essential that companies develop an effective value chain system of their products through their CSR activities, which is essential for competing in the global market.
* It will give better results if activities are based on a more practical & participatory approach and touch the grassroots level.
* Voluntarism among employees should be encouraged and institutionalized through recognition and incentives.
* There is also need for public-private partnership with well-defined controls and process for the best use of resources for social change.
* Special training need to be given to business managers in working with social issues.
* Participation of small and medium business should be encouraged.
* Experience has shown that working with NGOs is more worthwhile and result-oriented. Joining hands with related NGOs is therefore necessary for better socio-economic development.
This article was taken from here.