MEANING
CORPORATE SOCIAL RESPONSIBILITY (corporate social responsibility ) is a term first introduced by American Economist Howard Bowen( Also known as ‘Father Of CORPORATE SOCIAL RESPONSIBILITY”) in 1953 according to him ,”It refers to the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society inverted”. According to the UNIDO ( United Nations Industrial Development Organization) “CORPORATE SOCIAL RESPONSIBILITY is a management concept whereby corporates integrate social and environmental concerns in their business operations and interactions with their stakeholders”. In simple terms the excess contributions made for corporates or corporates to the society for its development or betterment can be termed as corporate social responsibility. These Corporate Social Responsibility activities are usually conducted in low income areas or less developed areas or in rural areas . The activities conducted in such areas mostly focuses on education, healthcare, employment, hygiene, financial assistance, climate change etc. Some of the examples of Corporate Social Responsibility in India would be the SHIKSHA Initiative by the Shiv Nadar Foundation, TATA Steel Ltd.’s Jyoti fellowship and Moodie Fellowship to the students belonging to the lower income groups, etc.
HISTORY
Globally the roots of CORPORATE SOCIAL RESPONSIBILITY can be traced back to the industrial revolution and conducting CORPORATE SOCIAL RESPONSIBILITY activities resulted in better working conditions in the factories, it was here that the facilities like good hygiene, immediate medical treatment, proper meal breaks were introduced. In the west the CORPORATE SOCIAL RESPONSIBILITY activities has been growing and appericiated since olden days. In India the traces of CORPORATE SOCIAL RESPONSIBILITY or philanthropic activities can be traced back to the freedom struggle movement that is since the early 20thcentury. The father of the nation Mahatma Gandhi who was closely associated with several businessmen and had thus encouraged them to contribute their wealth to the nation during the freedom struggle movement which resulted in many wealthy industrialists building hospitals, libraries, factories , etc . India is the among the very few nations which have mandated Corporate Social Responsibility activities , infact India is the first nation to a legally regulated Corporate Social Responsibility system in the world.
PROVISIONS UNDER LAW (IN INDIA)
section 135 of the Corporates Act 2013 legally mandates that CORPORATE SOCIAL RESPONSIBILITY is compulsory for every company who has a net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during [the immediately preceding financial year] shall constitute a Corporate Social Responsibility committee . The section has nine subsections that deals with and prescribes Information about the The formation or composition of the CORPORATE SOCIAL RESPONSIBILITY committee, role of the CORPORATE SOCIAL RESPONSIBILITYcommittee ,applicability of the CORPORATE SOCIAL RESPONSIBILITY activities, functions of the CORPORATE SOCIAL RESPONSIBILITY committee, expenditure to be incurred on conducting CORPORATE SOCIAL RESPONSIBILITY activities, any surplus amount if left ,disclosure of composition, etc .Recently an amendment has been made to the CORPORATE SOCIAL RESPONSIBILITY rules 2022 ,which has prescribed some changes regarding the amount to be spent, the percent of net profit to be spent on CORPORATE SOCIAL RESPONSIBILITY activities by a company, it is also compulsory now to mention or disclose adetailed report about all the CORPORATE SOCIAL RESPONSIBILITY activities conducted by a company in the same financial year,.
WHY DO CORPORATES DO IT ?
Let’s look at the reasons why corporates or corporates nowadays voluntarily conduct CORPORATE SOCIAL RESPONSIBILITY activities
2. It is compulsory by law –as explained above it is now legally binding for certain corporateswhich have a specified turnover to spend on and conduct CORPORATE SOCIAL RESPONSIBILITY activities,which inturn if not done can result in the company facing issues legally and hence to be in the good graces of of both the government and the society corporatesdo not hesitate to spend a certain amount on these CORPORATE SOCIAL RESPONSIBILITYactivities.
3. Transparency – conducting CORPORATE SOCIAL RESPONSIBILITY activities also helps accompany in maintaining transparency with both the government and the society. It also helps them to show a clean image to the society about what the company stands for, what they actually do and what they actually believe in. This in turn gives them a chance to stay in the good graces of the society and the government.
IMPACT ON SOCIETY
1 Corporates take a lot from the society in the form of human resources, natural resources,economic resources, environmental resources, etc. hence now the corporates are becoming aware of the state of the society due to their actions and want to voluntarily give back to the society which would actually help in the development or betterment of the society and conducting these CORPORATE SOCIAL RESPONSIBILITY activities provides the corporates with a chance to do just this.
2 Conducting Corporate Social Responsibility activities helps the corporates in generating goodwill, better brand value and good standing in the society.
3. The biggest impact of conducting these CORPORATE SOCIAL RESPONSIBILITY activities Within the society is that it helps the society in bridging the socio–economic gap since these activities are usually conducted in low income areas or less developed areas or rural areas.
4 . Corporates also benefits in creating a new image for themselves especially if they are expanding in a new country or even in rebranding scenarios .
5. Corporates also view it as being helpful in achieving their sustainable goals and maintaining an image that says that they are sustainable.
6 .Another huge impact of conducting CORPORATE SOCIAL RESPONSIBILITY activities in the society is that it also provides a helping hand to the NGOs that are usually struggling.
7. Conducting these social corporate social responsibilities activities also has shown a very positive environmental change , as corporates are adopting more cleaner and safe use of natural resources, waste management is done with much more ethical ways which also helps in restoring and maintaining healthy environmental systems .
8 . Corporates also view it as a chance or opportunity to assess their standing in this society.
9. Corporates are also favoring the idea of sustainability as they adopting the “REDUCE,REUSE,RECYCLE” method by eliminating single use plastic and other resources.
10. It highly benefits to both the society and the corporates as it leads to many new inventions, innovations and scope for other research work.
11. It also sets with certain ethical standard that a corporate has to abide by and follow and in turn provides the society with better amenities, better working conditions, etc .
CONCLUSION
Hence it can be seen that Corporate Social Responsibility activities have been present in India and globally for a very long time. It is a concept that is mutually beneficial to everyone at large ,to the society as it leads to chances for their own development , the government as it provides a helping hand to them in management and providing facilities to their people and lastly to the corporates as it provides them with a goodwill and clean image for themselves in return for their contribution to the society. It also helps everyone at large to achieve sustainable goals and to deal with global issues like poverty, illiteracy, healthcare, climate change, food management ,betteruse or natural resources ,new inventions and innovations, etc.
Authored by ,
Ashlesha Jadhav, Advocate.
Eamil: ashleshaa.jadhav@gmail.com
