Though information, books & models, to a certain extent, are available on the subject, this article is scribbled primarily to tell you about the latest developments in the concept of CSR in Indian Business context, which can potentially bring in a new dimension to the concept of Corporate Social responsibility.
Background:
World Business Council for Sustainable Development (WBCSD) in its first report - “Meeting Changing Expectations" states:
"Business through the ages has demonstrated varying degrees of responsibility to society. CSR, as an identifiable corporate issue, stretches back to the development of corporations in the 19th century. Their owners and leaders often saw a broader role for themselves in society and participated in development – or nation building – by helping to finance the construction of houses, schools, libraries, museums and universities. Many of the public buildings and institutions in some of the world’s great cities – Chicago, San Francisco, Stuttgart, Manchester – are endowments from business leaders of the previous century".
Definitions of CSR:
"Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large" (WBCSD)
"Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business" (Business for Social Responsibility)
“A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (The Green Paper of the European Union (2001) defines Corporate Social Responsibility)
Corporate Social Responsibility (CSR) is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations (a widely used definition; do not know who defined)
The triple bottom-line (Term coined by John Elkington in 1994). concept - People, Planet & Profit - forms the fundamental principle of CSR
ISO on CSR:
In view of the need to have a global framework for CSR, ISO started its initiative to develop comprehensive guidelines on CSR in 2004 with the help of 99 ISO member countries and 42 liaison organizations. They have published the standards termed ISO 26000 during Nov 2010. Unlike other standards of ISO, these are not for certification.
The same is based on 7 core subjects of social responsibility aimed at Maximising organisation's contribution towards sustainable development. They are:
- Organizational governance
- Human rights (Due diligence, Human rights risk situations, Avoidance of complicity, Resolving grievances, Discrimination and vulnerable groups, Civil and political rights, Economic, social and cultural rights, Fundamental principles and rights at work)
- Labour practices (Employment and employment relationships, Conditions of work and social protection, Social dialogue, Health and safety at work, Human development and training in the workplace)
- The environment (Prevention of pollution, Sustainable resource use, Climate change mitigation and adaptation, Protection of the environment, biodiversity and restoration of natural habitats)
- Fair operating practices (Anti-corruption, Responsible political involvement, Fair competition, Promoting social responsibility in the value chain, Respect for property rights)
- Consumer issues (Fair marketing, factual and unbiased information and fair contractual practices, Protecting consumers' health and safety, Sustainable Consumption, Consumer service, support, and complaint and dispute resolution, Consumer data protection and privacy, Access to essential services, Education and awareness
- Community involvement and development (Community involvement, Education and culture, Employment creation and skills development, Technology development and access, Wealth and income creation, Health, Social investment)
CSR in Indian Business Context:
In India, Tata Group is considered to be the pioneers in CSR. All CPSEs, some way or the other get involved in the development of the nearby villages by way of development of infrastructural/ Educational/ Drinking Water facilities, Health care programmes, reforestation, creation of direct & indirect employment etc. in a major Scale
In addition, many philanthropic business groups also get involved in charitable activities.
However, a systematic way to channelise these efforts to the actual development of the nation was lacking.
The frame work by Department of Public Enterprises (DPE), Govt. of India
The DPE, during April 2010 issued new comprehensive guidelines on CSR, wherein it is made mandatory for Public Sector Enterprises in India to Spend a % of their profits towards CSR activities as follows:
| Type of CPSEs* Net Profit (Previous Year) | Expenditure range for CSR (% of profit) |
| Less than Rs. 100 crore# | 3%-5% |
| 100 crore to Rs. 500 crore | 2%-3% (Subject to a Minimum of 3 crores) |
| Rs. 500 crore and above | 0.5%-2% |
*CPSEs – Central Public Sector Enterprise
#1 Crore = 10 Million
The CSR activities to be undertaken by the CPSE are included as an item in the MoU (Memorandum of Understanding) to be entered into with the Govt. every year; the performance against which would Excellent, Good, Fair etc status be awarded, is determinant in Performance Related Payment to Executives, Navranta etc. status of a Central Public Sector Enterprise etc. In MoU Guidelines from 2010-11 onwards, 5 marks have been earmarked out of the non-financial parameters for CSR activities
The following are some of the areas where CSR activities can be undertaken:
- Drinking Water Facility
- Education
- Electricity Facility
- Solar Lighting System
- Health and Family Welfare
- Irrigation Facilities
- Sanitation and Public Health
- Pollution Control
- Animal Care
- Promotion of Sports and Games
- Promotion of Art and Culture
- Environment friendly technologies
- Promotion of livelihood for economically weaker sections through forward and backward linkages
- Relief to victims of Natural Calamities like earth-quake, Cyclone, Drought & flood situation in any part of the country
- Supplementing Development Programmes of the Government.
- Non-conventional Energy Sources
- Construction of Community Centres/Night Shelters/Old Age Homes
- Imparting Vocational Training
- Setting up of skill development centres
- Adoption of villages
- Taking action on points suggested by Ministry of Forest and Environment pertaining to Charter on Corporate Responsibility for Environment Protection for 17 categories of Industries.
- Scholarships to meritorious students belonging to SC, ST, OBC and disabled categories.
- Adoption/Construction of Hostels (especially those for SC/ST and girls),
- Skill training, entrepreneurship development and placement assistance programmes for youth.
- Building of Roads, Pathways and Bridges.
- Entrepreneurship Development Programme (EDP)
- Disaster Management Activities including those related to amelioration/ mitigation.
- Activities related to the preservation of the Environment/Ecology and to Sustainable Development
Another significant point to be noted here is the Govt. has subsequently given an equal weightage to Sustainable Development activities also in the MoU. In other words, CSR and SD are to be treated as two separate entitities, though seemingly related. The difference and other details on Sustainable Development would be discussed in another article.
Implementation
The guidelines prescribes that Company specific Corporate Social Responsibility strategies should be developed that mandate the design of Corporate Social Responsibility Action Plan (Long-term, medium-term and short-term), with a shift from the casual approach to the project based accountability approach. The business plan under CSR should be integrated with the social and environment concerns related to the business of the company.
The Department Of Public Enterprises, in conjunction with SCOPE (Standing Conference of Public Enterprises) and the CPSEs have created a National CSR Hub which will undertake/ facilitate the CSR activities. This hub is coordinated at the School of Management and Labour Studies (SMLS) at Tata Institute of Social Sciences (TISS), Mumbai. The hub would carry out activities in a partnership mode i.e. TISS, civil society organizations, and the concerned CPSE.
The programmes would be executed, documented & reviewed through Specilised Agencies/ NGOs.
Mandatory extension of CSR to private Sector:
This also is understood to be examined by the Govt. If the same could be implemented, it will mark a new dawn in CSR and the development of the Nation.
Some of the References:
