INTRODUCTION

 MEANING of the term Corporate Social Responsibility

“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...”

Corporate Social Responsibility (CSR) is viewed as a comprehensive set of policies,

practices and programs that are integrated into business operations, supply chains, and decision-
making processes throughout the organization -- wherever the organization does business -- and
includes responsibility for current and past actions as well as future impacts.

CSR involves addressing the legal, ethical, commercial and other expectations society
has for business, and making decisions that fairly balance the claims of all key stakeholders.

Corporate Social Responsibility (CSR) is required in the firms to sustain in the long run
of the business as business is just only a part of the society and it has to work with the society
only. Corporate Social Responsibility is closely linked with the principles of sustainable
development. It focuses on the idea that a business has social obligations above and beyond
making profit.

1. Social responsibility becomes an integral part of the wealth creation process - which if
managed properly should enhance the competitiveness of business and maximise the
value of wealth creation to society.
2. When times get hard, there is the incentive to practice CSR more and better - if it is a
philanthropic exercise which is peripheral to the main business, it will always be the first
thing to go when push comes to shove.

Several terms have been used interchangeably with CSR. They include -- business ethics,
corporate citizenship, corporate accountability, sustainability and corporate responsibility. The
issues that represent an organization’s CSR focus vary by size (small, medium and large), sector
(for example, financial institutions, infrastructure providers, textile manufacturers, supermarket
retailers, etc.) and even by geographic region. In its broadest categories, CSR typically includes
issues related to business ethics, community investment, environment, governance, human rights,
the marketplace and the workplace.

 DEFINITION

According to the guidelines on Corporate Social Responsibility (CSR) designed by the National
Empowerment Foundation (NEF),

“Corporate Social Responsibility (CSR) is the concept whereby companies act to

balance their own economic growth with the sustainable social and environmental
development of their areas of operation. A company performing highly in CSR is one that
goes beyond compliance with the legal framework to actively pursue positive impacts on
local communities and its environmental footprint.”

The World Business Council for Sustainable Development in its publication Making
Good Business Sense by Lord Holme and Richard Watts, used the following definition:

“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.”
 NEED FOR CSR

The broad rationale for a new set of ethics for corporate decision making, which clearly
constructs and upholds a organization's social responsibility, arises from the fact that a business
enterprise derives several benefits from society, which must, therefore, require the enterprise to
provide returns to society as well. A business cannot succeed in a society which fails. This,
therefore, clearly establishes the stake of a business organization in the good health and well
being of a society of which it is a part.

CSR is pursued by business to balance their economic, environmental and social

objectivities while at the same time addressing stakeholder expectations and enhancing
shareholder value. Over the past decade, CSR has risen in global prominent and importance.

Four kinds of social responsibilities constitute total CSR: economic, legal, ethical, and
philanthropic. To be sure, all of these kinds of responsibilities have always existed to some
extent. But it has only been in recent years that ethical and philanthropic functions have taken a
significant place. Each of these four categories deserves closer consideration.

A. Ethical Responsibilities

Although economic and legal responsibilities embody ethical norms about fairness and
justice, ethical responsibilities embrace those activities and practices that are expected or
prohibited by societal members even though they are not codified into law. Ethical
responsibilities embody those standards, norms, or expectations that reflect a concern for what
consumers, employees, shareholders, and the community regard as fair, just, or in keeping with
the respect or protection of stakeholders' moral rights.

B. Legal Responsibilities

Society has not only sanctioned business to operate according to the profit motive; at the
same time business is expected to comply with the laws and regulations promulgated by
governments as the ground rules under which business must operate. As a partial fulfillment of
the "social contract" between business and society firms are expected to pursue their economic
missions within the framework of the law. Legal responsibilities reflect a view of "codified
ethics" in the sense that they embody basic notions of fair operations as established by our
lawmakers. They are depicted as the next layer on the pyramid to portray their historical
development, but they are appropriately seen as coexisting with economic responsibilities as
fundamental precepts of the free enterprise system.

C. Philanthropic Responsibilities

Philanthropy encompasses those corporate actions that are in response to society’s

expectation that businesses be good corporate citizens. This includes actively engaging in acts or
programs to promote human welfare or goodwill. Examples of philanthropy include business
contributions to financial resources or executive time, such as contributions to the arts,
education, or the community. A loaned-executive program that provides leadership for a
community’s United Way campaign is one illustration of philanthropy.

D. Economic Responsibilities

Historically, business organizations were created as economic entities designed to provide goods
and services to societal members. The profit motive was established as the primary incentive for
entrepreneurship. Before it was anything else, business organization was the basic economic unit
in our society. As such, its principal role was to produce goods and services that consumers
needed and wanted and to make an acceptable profit in the process. At some point the idea of the
profit motive got transformed into a notion of maximum profits, and this has been an enduring
value ever since. All other business responsibilities are predicated upon the economic
responsibility of the firm, because without it the others become moot considerations.
 HISTORY OF CSR

The CSR concept evolution started with the concerns related to the damage created by
business on environment and society at large by way of activities linked to their business
operation. Businesses are expected to clean up the mess they have generated to the environment.

The history of CSR dates back many years and in one instance can even be traced back
5000 years in Ancient Mesopotamia around 1700 BC, King Hammurabi introduced a code in
which builders, innkeepers or farmers were put to death if their negligence caused the deaths of
others, or major inconvenience to local citizens.

With industrialisation, the impacts of business on society and the environment assumed
an entirely new dimension. The “corporate paternalists” of the late nineteenth and early twentieth
centuries used some of their wealth to support philanthropic ventures. By the 1920s discussions
about the social responsibilities of business had evolved into what we can recognise as the
beginnings of the “modern CSR movement. “The phrase Corporate Social Responsibility was
coined in 1953 with the publication of Bowen’s Social Responsibility of Businessmen.” The
evolution of CSR is as old as trade and business for any of corporation. Industrialization and
impact of businesses on the society led to a complete new vision. By 80’s and 90’s CSR was
taken into discussion, the first company to implement CSR was Shell in 1998. With well
informed and educated general people it has become a threat to the corporate and CSR is the
solution to it. Customer expectations and demand for “clean and green” companies have led to a
number of benchmarks and guidelines, such as the Sullivan Principles, the UN Global Compact
etc. Hence, CSR has continued to evolve rapidly over the last thirty years and companies now all
over the world are expected to engage in CSR activities to be recognized as a socially
responsible company that not only looks after the interests of itself but also after the interests of
the society.
 KEY DEVELOPMENTS

Several factors have converged over the last decade to shape the direction of the SCSR domain;

1. Increased Stakeholder Activism: Corporate accounting scandals have focused attention

more than ever on companies‟ commitment to ethical and socially responsible behavior.
The public and various stakeholders are increasingly seeking assistance of the private
sector to help with myriad complex and pressing social and economic issues. Companies
are focusing on meaningfully engaging with their various stakeholders.
2. Proliferation of Codes, Standards, Indicators and Guidelines: The recent accounting
scandals, such as , Enron, Worldcom, Parmalat, AIR, LLP and Author Andersen have
created another surge of reforms and voluntary CSR standards and performance
measurement tools continue to proliferate.
3. Accountability throughout the Value Chain: Over the past several years, the CSR
agenda has been characterized by the expansion of boundaries of corporate
accountability. Stakeholders increasingly hold companies accountable for the practices of
their business partners throughout the entire value chain with special focus on suppliers,
environment, labour and human rights practices.
4. Transparency and Reporting: Companies are facing increased demands for
transparency and growing expectations that they measure, report and continuously
improve their social, environmental and economic performance. Companies are expected
to provide access to information on the impact of their operations, to engage stakeholders
in meaningful dialogue about issues of concern that are relevant to either party and to be
responsive to particular concerns not covered in standard reporting and communication
practice. Increasingly, demands for greater transparency also encompass public policy.
As part of this move towards greater disclosure, many companies are displaying detailed
information about their social and environmental performance on their publicly
accessible websites, even when it may be negative.
5. Convergence of CSR and Governance Agenda: In the past several years there has been
a growing convergence of corporate governance and CSR agenda. Most recently an
increasing number of corporate governance advocates have begun to view companies‟
 management of a broad range of CSR issues as a fiduciary responsibility alongside
traditional risk management. In addition more and more CSR activities have begun to
stress the importance of board and management accountability, governance and decision-
making structures as imperative to the effective institutionalization of CSR.
6. Growing Investor Pressure and Market: Based incentives: CSR is now more and more
part of the mainstream investment scene. The last few years have seen the launch of
several highprofile socially and/or environmentally screened market instruments. This
activity is a testament to the fact that mainstream investors increasingly view CSR as a
strategic business issue. Many socially responsible investors are using the shareholder
resolution process to pressure companies to change policies and increase disclosure on a
wide range of CSR issues, including environmental responsibility, workplace policies,
community involvement, human rights practices, ethical decision-making and corporate
governance.
7. Advances in Information Technology: The rapid growth of information technology has
also served to sharpen the focus on the link between business and corporate social
responsibility. Just as email, mobile phones and the internet speed the pace of change and
facilitate the growth of business, they also speed the flow of information about a
company’s CSR record.
8. Pressure to Quantify CSR “Return on Investment”: Ten years after companies began
to think about CSR in its current form, companies, their employees and customers, NGOs
and society. This is leading to questions about how meaningful present CSR practice is
and the answers to those questions would determine both the breadth and depth of CSR
practice for the next decade. Companies want to determine what their CSR initiatives
have accomplished so that they can focus on scarce resources more effectively.
 CORPORATE SOCIAL RESPONSIBILITY IN INDIA

India is the first country in the world to make Corporate Social Responsibility (CSR)
mandatory, following an amendment to The Company Act, 2013 in April 2014. Businesses can
invest their profits in areas such as education, poverty, gender equality, and hunger.