All to know about Corporate social responsibility


Should companies give something back towards society?

The answer is a big yes!

Now, what is Corporate Social Responsibility?

It is philanthropy and a set of activities that caught with exercise in order to perform their moral duties. It is humanitarian, community work is social work done by the enterprises.  And the people or societies with which they work together.

It is an enduring commitment of the form to act responsibly and fairly add to the economic development of the nation while enhancing the living standards and quality of life of their employees and their families along with the local public and Society.  It is a service to society.

As per the Indian law

  • A company has to spend at least 2% of the last three years’ average net profits on CSR activities as specified in Schedule VII.
  • The provisions of CSR are not only applicable to Indian companies but also applicable to offices of foreign companies in India.  The qualifying company will be required to constitute a CSR committee consisting of three or more directors.
  • India is the first country to bring for incorporating CSR.
  • Some of the CSR activities prescribed in the law are:

          Slum area development.

           Rural development projects.

           Contribution of funds to technology incubators.

           Eradicating hunger poverty and malnutrition.

           Promoting Health Care including preventive health care.

           Promoting gender equality, empowering women.

           Training to promote rural sports nationally recognized Sports.

           Promoting education, including special education.

           Employment enhancing vocational skills.

The concept of responsibility is based on the premise that a business firm is more than an economic Institution.  It is an organ of the society and its activities exercise a decisive influence on social welfare.  Therefore, the business must work beyond the narrow goal of profit-making and should operate in the overall social interest.

Causes of growing concern for social responsibility

  • Social responsibility if a very effective exercise of public relations.
  • Image building of a business house in society.
  • Returning to the society from which it is making benefit.
  • To make the best use of national resources.
  • Creation of more and more employment opportunities for Semi-skilled people.
  • To protect the ecology of the nation.
  • To contribute to the economic development of backward regions of the country.

Importance of CSR

Survival:  Business houses are no longer and an economic unit that intends to earn an only profit.  It cannot flourish in a society where there are social injustice, inequality, and economic disparity.  Hence, CSR is important for business houses to survive in the long run.

Balance:  Balances and satisfies various stakeholders of the company.  Any organization has direct and indirect interested parties.  Direct stakeholders are customers, suppliers, government, dealers, and investors.  Indirect stakeholders are communities living near the production plant for others who can be affected by the operations of the company.  Thus, CSR creates a balance between various direct and indirect stakeholders by obliging the company to act ethically.

Sustainable growth:  CSR focuses on Sustainable growth and long-term objectives rather than short-term economic objectives.

Environmental protection:  There are several environmental issues such as pollution, global warming, deforestation, greenhouse effect, ozone layer depletion.  CSR activities focus on sensitizing other corporations about their responsibilities towards environment preservation.

Demerits of CSR

  • It leads to the dilution of profit maximization
  • There is a loss of incentive
  • Business lacks social skills
  • It leads to power without accountability
  • The burden on consumers increases

Drivers of CSR

  • Increasing competition and globalization
  • Philosophy and vision
  • Investor’s pressure
  • Creating goodwill
  • Good relation with labors
  • The interrelation between community and corporations
  • Risk management and increase in revenue and profit
  • Decisions of the customers

 Social responsibility of business

Responsibility towards employees

  • Fair wages and salaries.
  • Collective bargaining.
  • Insurance coverage.
  • Non-discrimination on the basis of gender caste and religion.
  • Adequate basic service facilities like safe drinking water, electricity, canteen, and hygienic toilets.
  • Medical facilities.
  • Good and safe working environment
  • Retirement benefits and pension schemes.
  • Recognition of employees’ achievements.

Responsibility towards customers

  • Charge reasonable price for products or services
  • Supply the right quality of good in the right quantity
  • Adequate and continuous service
  • Giving adequate choices.
  • Managing good public relations with customers.
  • Share guarantee on products.
  • No use of manipulated or false advertisement.
  • Avoid unfair selling practices.
  • Redressal of customer’s grievances.

Responsibility towards shareholders

  • Holding regular meetings.
  • A fair return on investment.
  • Safety of invested capital.
  • Regular payment of dividends.
  • Regular and completely true and fair information about the Performance and progress of the company.
  • Study appreciation of Investments.

Responsibility towards suppliers and creditors

  • Maintain healthy and cooperative inter-business relationships between different businesses.
  • Provide accurate and relevant information to creditors.
  • Payment of the price of materials on time.
  • Producing original documents for credit processing.

Responsibility towards the public in general

  • Fair and bearable product pricing.
  • Fair service pricing
  • Help the weaker section of the society.
  • Creation of job opportunities.
  • Operate business with environmental protection in mind.
  • To make the best use of society’s resources for their welfare.
  • Improvement in living standards.
  • The building of basic infrastructure like roads.
  • Health and education development schemes

Responsibility towards government

  • Image of Corporate tax incorrect amount of incorrect time.
  • To promote social activities.
  • To pay all types of taxes on time.
  • To improve national income.
  • To concentration of economic power.
  • To avoid monopoly practices.
  • Encourage fair trade practices.
  • To avoid corrupting public servants by offering a bribe.

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