A Comparison of CSR Initiatives by Indian Companies

- A Roadmap for Economic Growth and Sustainability

Abstract
The concept of CSR was originated from USA in 1950 and got a centre stage during 1970-80,
where country was facing severe social problems like poverty, unemployment, pollution, urban
blight etc. when an economy is facing problems or the development of country doesnt lie only
with the government, but it is the obligation of every citizen and every corporate living in the
country.
This need grows by leaps and bounds for a developing country like India. CSR not only plays a
vital role for businesses to grow but it also contributes towards the development of the society in
whole.
In India, we already come across many firms that have undertaken the CSR initiatives, among
them TATA, ITC and Infosys practices like wild life conservation, e-Choupal etc., have met with
varying needs of the society. Thus, in this study an attempt has been made to understand the
contribution of these Indian companies towards the socio-economic growth and sustainability of
the economy in whole through their CSR activities. The study is explorative in nature and
therefore, it explores its ideas from the secondary sources. Secondary sources includes books,
company published reports, working papers, periodicals, journals, articles, conference papers and
websites related to CSR.
Key Words: Corporate Social Responsibility (CSR), Socio-Economic growth, Sustainability,
Contribution and Social Problems.
Introduction:
The age of globalization has made the firms realize that, in order to compete effectively in a
competitive environment they need clearly defined business practices with a sound focus on the
public interest Every business firm has to work under some social environment that is known as
a society and a good corporate entrepreneur has always the responsibility of doing something for
the society where their firm is operating. Helping the society by means of preserving the
environment minimizing the wastage of natural resources, helping the needful, conducting
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educational camps, promoting IT education, running schools/ NGOs, recycling of products,

counseling sessions awareness programs regarding the different diseases and it can be anything
and everything which is good for society. All these type of activities constitutes corporate social
responsibility practices or initiatives, which help the society/inspiring the lives of the
underprivileged and lend a hand in the upliftment of the society. And it is the obligation for every
corporate to develop their place and to make this planet a marvelous place to live.
The main question with respect to CSR is why a company needs to spend commendable amount
of money on the society? As this is not the reason for a companys existence, they are here to
make profit! The answer is simple, for every business, customers are the kings and kings always
love their society or place. Hence, if corporates wants to be loved by their customers, they need
to do something for their society. And moreover it is the responsibility of all the citizens and
corporates to payback something for the society for all its help.
This attitude of the customers can be illustrated by this event, during 2011, in USA, 36% of
consumers said that theyd be willing to spend more on products and services from socially
responsible companies and that percentage has increased to 44% in 2014 (source The Nielsen
Company). It has been observed that consumers consider switching to another company's
products and services, speak out against the company to family/friends, refuse to invest in that
company's stock, refuse to work at the company and boycott the company's products and services
in case of negative corporate citizenship behaviours.
The concept of CSR has brought a wave of change that is sweeping through business. It is
instructive that this change has made leading companies that are recognized around the world, to
acknowledge that there is another way of doing business. A number of companies are
communicating this very message through their own involvement in work with the
environmental defense fund, for example, McDonalds; by promoting fish conservation, for
example, Unilever; by including references about human rights in its business principles, or by
promoting ethical sourcing which Levi Strauss & Co. does. It goes without saying that bigger
companies (Shell, BP, Levi Strauss, etc.) are following in the footsteps of smaller, socially active
companies such as Ben & Jerry's and the Body Shop and putting corporate citizenship at the
heart of strategic planning. When it comes to Indian companies, ITC is committed to a national
agenda of raising agricultural productivity and making the rural economy more socially inclusive
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with e Choupal initiative, while TATA with its Tata Welfare Groups supporting the society in
many ways. Infosys established its Foundation in 1996, a not-for-profit trust to support their
social initiatives. The importance of CSR emerged significantly in the last decade. Over the time,
CSR expanded to include both economic and social interests.
India is one of the largest economies in the world, and an increasingly important player in the
emerging global order; on the other hand, it is still home to the largest number of people living in
absolute poverty without having basic facilities to live. Government is not the sole responsible
for this act and it is the responsibility of all the people of this country and even corporates who
are taking benefit out of this country. Many companies have been quick to sense this
development, and started working for the social cause along with their business.
Conceptual Framework
There is no universally accepted definition for CSR, but each definition that currently exists
underpins the impact that businesses have on society at large and the societal expectations of
them. Although the roots of CSR lie in philanthropic activities (such as donations, charity, relief
work, etc.) of corporations, globally, the concept of CSR has evolved and now encompasses all
related concepts such as triple bottom line, corporate citizenship, philanthropy, strategic
philanthropy, shared value, corporate sustainability and business responsibility.
According to the UNIDO (United Nations Industrial Development Organization), Corporate
Social Responsibility can be defined as a management concept whereby companies integrate
social and environmental concerns in their business operations and interactions with their
stakeholders. CSR is generally understood as being the way through which a company achieves a
balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach),
while at the same time addressing the expectations of shareholders and stakeholders. In this
sense it is important to draw a distinction between CSR, which can be a strategic business
management concept, and charity, sponsorships or philanthropy. Even though the latter can also
make a valuable contribution to poverty reduction, will directly enhance the reputation of a
company and strengthen its brand, the concept of CSR clearly goes beyond that.

Environme
ntal

Economic

Social

CSR can be also referred as to corporate which interacts with social and environmental concerns
in to their business operations and interactions with their own employees, customers,
shareholders, investors, local communities, government on a voluntary basis.
The World Bank group defines CSR as CSR is the commitment of business to contribute to
sustainable economic development by working with employees, their families, the local
community and society at large, to improve their lives in ways that are good for business and for
development.
In nutshell, CSR would mean:

Behavior and conduct of good governance

Responsible impact on society

Accountability and transparency

Stakeholders engagement

Reputation and risk management

Socially responsible investment

Objectives of the Study:

1. To understand the contribution of 3 Indian companies namely, Tata, Infosys and ITC
towards the socio-economic growth and sustainability of the economy.
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2. To make a comparative analysis of their contributions.

CSR - The Indian Scenario
The concept of CSR is not new to India. India has a long rich history of close business
involvement in social causes for national development. In India, CSR is known from ancient
time as social duty or charity, which through different ages is changing its nature in broader
aspect, now generally known as CSR. India has had a long tradition of corporate philanthropy
and industrial welfare has been put to practice since late 1800s. Historically, the philanthropy of
business people in India has resembled western philanthropy in being rooted in religious belief.
Business practices in the 1900s that could be termed socially responsible took different forms:
philanthropic donations to charity, service to the community, enhancing employee welfare and
promoting religious conduct. The ideology of CSR in the 1950s was primarily based on an
assumption of the obligation of business to society (Richa Gautam and Anju Singh, 2010).
The credit of social responsibility in corporate should go to JRD Tata for his contributions. Tata
was the pioneer in providing social benefits to its workers like maternity leave, sick leave, bonus,
and so many other welfare measures. These measures act as a basis for government to come up
with various acts. JRD Tata who always laid a great deal of emphasis to go beyond conducting
themselves as honest citizens pointed out that there were many ways in which industrial and
business enterprises can contribute to public welfare beyond the scope of their normal activities.
He advised that apart from the obvious one of donating funds to good causes which has been
their normal practice for years; they could have used their own financial, managerial and human
resourced to provide task forces for undertaking direct relief and reconstruction measures.
Slowly, it began to be accepted, at least in theory that business had to share a part of the social
overhead costs of. Traditionally, it had discharged its responsibility to society through
benefactions for education, medical facilities, and scientific research among other objects. The
important change at that time was that industry accepted social responsibility as part of the
management of the enterprise itself. The community development and social welfare program of
the premier Tata Company, Tata Iron and Steel Company was started the concepts of Social
Responsibility. (Gupta, 2007)

The 2001 state of CSR in India Poll, a survey conducted by Tata Energy Research Institute
(TERI), the evaluation of CSR in India has followed a chronological evaluation of 4 thinking
approaches:
Ethical Model (1930 1950):
One significant aspect of this model is the promotion of trusteeship that was revived and
reinterpreted by Gandhiji. Under this notion the businesses were motivated to manage their
business entity as a trust held in the interest of the community. The idea prompted many family
run businesses to contribute towards socioeconomic development. The efforts of Tata group
directed towards the wellbeing of the society are also worth mentioning in this model.
Statist Model (1950 1970s):
Under the aegis of Jawahar Lal Nehru, this model came into being in the post-independence era.
The era was driven by a mixed and socialist kind of economy. The important feature of this
model was that the state ownership and legal requirements decided the corporate responsibilities.
Liberal Model (1970s 1990s):
The model was encapsulated by Milton Friedman. As perth is model, corporate responsibility is
confined to its economic bottom line. This implies that it is sufficient for business to obey the
law and generate wealth, which through taxation and private charitable choices can be directed to
social ends.
Stakeholder Model (1990 Present):
The model came into existence during 1990s as a consequence of realization that with growing
economic profits, businesses also have certain societal roles to fulfill. The model expects
companies to perform according to triple bottom line approach. The businesses are also
focusing on accountability and transparency through several mechanisms CSR needs to be
understood within this context captured in the development oriented CSR framework given
below:

As some observers have pointed out, the practice of CSR in India still remains within the
philanthropic space, but has moved from institutional building (educational, research and
cultural) to community development through various projects. Also, with global influences and
with communities becoming more active and demanding, there appears to be a discernible trend,
that while CSR remains largely restricted to community development, it is getting more strategic
in nature (that is, getting linked with business) than philanthropic, and a large number of
companies are reporting the activities they are undertaking in this space in their official websites,
annual reports, sustainability reports and even publishing CSR reports.
The Companies Act, 2013
The Companies Act, 2013 has introduced the idea of CSR to the forefront and through its
disclose-or-explain mandate, is promoting greater transparency and disclosure. Schedule VII of
the Act, which lists out the CSR activities, suggests communities to be the focal point. On the
other hand, by discussing a companys relationship to its stakeholders and integrating CSR into
its core operations, the draft rules suggest that CSR needs to go beyond communities and beyond
the concept of philanthropy. It will be interesting to observe the ways in which this will translate
into action at the ground level, and how the understanding of CSR is set to undergo a change.
In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013, which was
passed by both Houses of the Parliament, and had received the assent of the President of India on
29 August 2013. The CSR provisions within the Act is applicable to companies with an annual
turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit
of five crore INR and more. The new rules, which will be applicable from the fiscal year 2014-15
onwards, also require companies to set-up a CSR committee consisting of their board members,
including at least one independent director.

The Act encourages companies to spend at least 2% of their average net profit in the previous
three years on CSR activities. The ministrys draft rules, that have been put up for public
comment, define net profit as the profit before tax as per the books of accounts, excluding profits
arising from branches outside India. The Act lists out a set of activities eligible under CSR.
Companies may implement these activities taking into account the local conditions after seeking
board approval. The indicative activities which can be undertaken by a company under CSR have
been specified under Schedule VII of the Act.
List of activities under Schedule VII: