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ABSTRACT
Article History:
Key words:
CSR,
International instruments,
Companies Act 2013
JEC Classification:
Copyright 2016 IJASRD. This is an open access article distributed under the Creative Common Attibution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original
work is properly cited.
INTRODUCTION
If you light a lamp for somebody, it will also brighten your own path.
A Buddhist Saying
Business is an integral part of modern society. One of the manifested challenges
of this century is to ensure sustainable development in all spheres by the present
generation without compromising the right of future generations to develop. In this
effort to ensure sustainable development, the businesses world over have a significant
role to play. Basically for any business to prosper the existence of communities and
ecosystems is essential. These enterprises which through their activities also create
wealth in the society have come to realise their accountability towards the society in
which they function. And all the stakeholders in business have in the recent times
shown an increased understanding that a responsible business is not only good business
How to cite this article: Ajitha, E., (2016). Emerging Developments in CSR and Its Implications: An Overview.
International Journal of Advanced Scientific Research & Development (IJASRD), 03 (03/I), [Special Issue Sep 2016], pp.
88 96.
strategy but also evidence of good management as it serves the purpose of attracting
good customers and employees. Furthermore, acting responsibly towards workers and
society in general can help build value for firms and their shareholders.
The concept of Corporate Social Responsibility (CSR) became popular only in the
1990s and all over the world the triple bottom line of people, planet, profit has gained
acceptance. The World Business Council for Sustainable Development has defined CSR
as Corporate Social Responsibility is the continuing commitment by business to
contribute to economic development while improving the quality of life of the workforce
and their families as well as of the community and society at large.[1] CSR includes
commitments and activities of businesses pertaining to corporate governance;
accountability, transparency; conditions of work; corporate philanthropy; customer
satisfaction; community development; among other things. [2]
1.1 Review of Literature
Uvais and Cholasseri (2013)[3] found that CSR policy functions as a in- built
regulatory mechanism for the businesses to monitor and ensure its effective
participation in the society. It is difficult to quantify the benefits of CSR as it varies
with the size and nature of a business enterprise. The link between social performance
and financial performance begins with CSR. The crux is to plough back into society from
which businesses gain their success. Khanna, Parul (2011)[4] held that ultimate motive
of any business is to help society at large. CSR is not just the responsibility of a business
enterprise alone but of the regulating authorities and finally of individuals also. CSR
plays a significant role in fulfilling the development agenda world over. It is important
that these CSR initiatives are in line with the business priorities of an enterprise. CSR
in India is yet to evolve from the basics of corporate philanthropy. Ahmed, (2016) [5].
Business sustainability is evolving as a process .World over CSR has been recognised as
tool to be used by business enterprises not only to achieve success but also fulfil their
commitments to the society. The companies have to determine the best CSR initiative
that not only the challenge for the companies is to determine a strong and innovative
CSR strategy which can provide the desired results. Urmila Moon, (2016) [6]. CSR has
been recognised world over in both developed countries and emerging markets. In India
the CSR is still in its nascent stage. Ghose, (2012)[7]. But it worth highlighting that CSR
has come a long way in India. From being reactionary activities to sustainable
initiatives, corporates have demonstrated their capability to make noteworthy
contributions to the society. In the present social condition, it is impossible for any
single body to cause a desirable change. Businesses have the expertise and money to act
as a catalyst to cause the desired change in the society. Functional partnerships
between Corporates, NGOs and the government will bring about social growth and
development in India. (Usha, 2012)[8].
1.2 Objectives of the Study
1. To examine the principles embodied in the international instruments relating to
CSR
2. To trace the evolution of CSR practices in India
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3. To study the current mandatory provisions of CSR in Companies Act 2013 and
its implications
METHODOLOGY
The research is exploratory and the study is based on secondary data collected
from books, articles, journals and blogs and web sources on CSR.
2.1 International Instruments Relating To CSR
The international instruments are the culmination of efforts by various
government and inter governmental bodies to ensure that standard practices are
implemented and followed by companies world over in integrating CSR into their
business strategy.[9]
2.1.1 United Nations Global Compact
It is a voluntary programme propelled by commitments of businesses to adhere to
principles of sustainable development. The UN Global Compact is recognised by United
Nations General Assembly and other inter-governmental bodies. The UN Global
Compact encourages companies to do business responsibly by aligning their strategies
and operations with Ten Principles on human rights, labour, environment and anticorruption; and take deliberate actions to further goals such as the UN Sustainable
Development Goals. The UN Global Compacts Ten Principles are derived from the
international instruments such as:
Universal Declaration of Human Rights,
International Labour Organizations Declaration on Fundamental Principles and Rights
at Work, Rio Declaration on Environment and Development, and United Nations
Convention against Corruption.[10]
2.1.2 OECD Guidelines for Multinational Enterprises
OECD (Organisation for Economic Co-operation and Development) Guidelines for
Multinational Enterprises: Recommendations for Responsible Business Conduct in a
Global Context[11] are recommendations addressed by governments to multinational
enterprises. They are based on international standards and provide basic principles and
standards to the business enterprises to operate globally in a responsible way adhering
to laws applicable to them. The Guidelines provide a complete code to run a responsible
business and is agreed by countries whose governments promote the codes. The
Guidelines recommendations express the shared values of the governments of countries
from which a major share of international direct investment originate. The purpose of
the Guidelines is to promote significant contributions by enterprises to economic,
environmental and social progress globally. They are supported by a unique
implementation mechanism of National Contact Points (NCPs), agencies which are
established by the governments to promote and implement the Guidelines. The NCPs
support the enterprises and their stakeholders to take suitable measures to further the
implementation of the Guidelines. They also provide for mediation and conciliation
platform to resolve any difficulties that may arise.
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industrialization. Being the oldest form of CSR, charity and philanthropy influence CSR
practices today, especially in community development. In the pre-industrial period up to
the 1850s, merchants made generous donations towards by building temples. Moreover,
the business community occupied a significant place in ancient Indian society and the
merchants provided relief in times of crisis such as famine or epidemics throwing open
godowns of food and treasure chests (Arora 2004)[22]. After the advent of
industrialisation in India in the 19th century the pioneers like the Tata, Birla, Bajaj,
Lalbhai, Sarabhai, Godrej, Shriram, Singhania, Modi, Naidu, Mahindra and Annamali,
were devoted to philanthropically motivated CSR (Mohan 2001)[23].
The second phase of Indian CSR (1914-1960) was characterised by Gandhis
theory of trusteeship in an attempt to augment social development. Gandhi introduced
the concept of trusteeship in order to make companies the temples of modern India.
Consequently, businesses set up trusts for schools and colleges; they also established
training and scientific institutes (Mohan 2001)[23]. The companies aligned the activities
of their trusts with Gandhis reform programmes namely, the abolition of
untouchability, womens empowerment and rural development (Arora 2004)[22].
The emergence of PSUs and legislation on labour and environmental standards,
characterised the third phase of Indian CSR (1960-1980). This phase is also marked by a
shift from corporate self-regulation to strict legal and public regulation of business
activities. Corporate governance, labour and environmental issues rose on the political
agenda and quickly became the subject of legislation. Furthermore, state authorities
established PSUs with the intention of guaranteeing the appropriate distribution of
wealth to the needy (Arora 2004)[22].
In the fourth phase (from 1980 onwards) Indian companies and stakeholders
began abandoning traditional philanthropic engagement and, to some extent, integrated
CSR into a coherent and sustainable business strategy, partly adopting the multistakeholder approach. In the 1990s, the Indian government initiated reforms to
liberalize and deregulate the Indian economy by tackling the shortcomings of the mixed
economy and tried to integrate India into the global market. (Arora and Puranik
2004)[24]. The resultant growth witnessed an increased business willingness as well as
ability to give, spurred by public and government expectations of businesses (Arora
2004)[22]. India in the recent years has emerged as an important economic and political
player in the process of globalization and has become an attractive and important
production and manufacturing site.
2.4 Mandatory CSR Regulation Companies Act 2013
In India from the financial year 2014-15, it has been made a mandatory legal
requirement for the companies to comply with corporate social responsibility. It is
worth highlightingat this juncture, that India is the first and only country in the world
to make CSR a mandatory requirement. The Companies Act as amended in 2013
requires companies with a networth of 500 crores or more, or a turnover of 100 crores or
more, or a net profit of 5 crore or more to spend 2% of average profit of immediate
preceding three years on CSR activities. It should also constitute a Corporate Social
Responsibility Committee of the Board consisting of three or more directors, out of
which at least one director shall be an independent director.[25] Corporate Social
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[4] Khanna, Parrul & Gupta, Gitika. (2011). Status of Corporate Social Responsibility:
In Indian Context. APJRBM, Volume 2, Issue 1, ISSN. 2229-4104
[5] Mohammad Khalil Ahmed, (2016). Corporate Social Responsibility in Indian
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[25] Section 135 of the Companies Act 2013
[26] Schedule VII- Companies Act 2013
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