INTRODUCTION
“C” no longer stands for Corporate and cash alone; it stands for care and community development too. can be defined as a Company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates. Companies can fulfill this responsibility through waste and pollution reduction processes, by contributing educational and social programs, by being environmentally friendly, and by undertaking activities of similar nature. CSR is not charity or mere donations. CSR is a way of conducting business, by which corporate entities visibly contribute to the social good. Socially responsible companies do not limit themselves to using resources to engage in activities that increase only their profits. They use CSR to integrate economic, environmental, and social objectives with the company’s operations and growth. CSR is said to increase the reputation of a company’s brand among its customers and society.
The Companies Act[1], has formulated Section 135, Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII which prescribes mandatory provisions for Companies to fulfill their CSR. This article aims to analyze these provisions (including all the amendments therein).
HISTORY OF CORPORATE SOCIAL RESPONSIBILITY
This is not, of course, an entirely new phenomenon; some thirty years ago Holmes[2] noted the importance of morals or ethics to the firm in arguing that part of the role of business was to assist in solving social problems; and twenty years ago, Aupperle et alreferred[3] to ‘an enormous body of literature concerning corporate social responsibility.
Jean Jacques Rousseau writing in 1762, in the traditions of Hobbes and Locke, has said that society and corporations must co-exist and contribute to the well-being of each other.
Mohandas Karamchand Gandhi advocated the “Trusteeship concept” saying that one holds large wealth only as a trustee of the society.
WHAT IS CORPORATE SOCIAL RESPONSIBILITY?
Corporate Social Responsibility which is also known as Corporate self-regulation or Corporate citizenship and Responsible business which can be easily explained under the followings:
Corporate: means organized business
Social: means everything dealing with the people
Responsibility: means accountability between the two
- According to Brown H.R., Social Responsibility is defined as “the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in the terms of objectives and values of society. The definition clears that it is basically to return to society what it has taken from it, in the course of its quest for the creation of wealth.
- CSR is generally understood to be the way a company achieves a balance or integration of economic, environmental, and social imperatives while at the same time addressing shareholders and stakeholder expectations.
- In May 2002 the Department of Trade and Industry[4] now it is known as now the Department for Business, Innovation, and Skills[5]. published its first report on CSR. In the report, the DTI defined CSR in the following terms:
- A responsible organization does three things:
(1) it recognizes that its activities have a wider impact on the society in which it operates.
(2) it takes account of the economic, social, environmental, and human rights impact of its activities across the world.
(3) it seeks to achieve benefits by working in partnership with other groups and organizations.
Main features of Corporate Social Responsibility
1.CSR is behavior by businesses over and above legal requirements, voluntarily adopted because businesses deem it to be in their longer-term interest.
2.CSR is linked to the concept of sustainable development: businesses need to integrate the economic, social, and environmental impact in their operations.
3. CSR is not an optional “add on” to business core activities but also about how businesses are managed.
Why Corporate Social Responsibility?
1. Internal reasons like employee morale and customer and shareholder satisfaction.
2. External reasons like satisfying local communities, publicity, and tax benefits.
3. Enlightened self-interest, wherein a stable social environment and increasing prosperity mean a larger market, and hence more profits in the long term.
Factors influencing CSR
1.Globalization
2.Influenced by Governments and Intergovernmental bodies
3.Advances in Communications technology
4.Growing awareness of consumers and investors
5.Numerous serious and high-profile breaches by corporate
6.Pressure by citizens
7.Businesses are recognizing that adopting an effective approach to CSR can reduce the risk of business disruptions and enhance brand and company reputation.
Responsibility against whom?
CSR, the policy would function as an in-built self-regulating mechanism whereby business would monitor and ensure its adherence to the law, ethical standards, and international norms.
A business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders, and all members of the public sphere.
Relationship between Corporate Governance and CSR
Corporations are also citizens of the place where they are created like other citizens, they have social responsibilities. In good corporate governance, the management should be able to meet their social responsibilities including making sure that their products are not hazardous to people and the environment, sharing their profits for the good of the community as a natural person or human being would do, donating to the social causes and organizing activities to benefit the community.
CONCLUSION
Corporate social responsibility (CSR) encourages business accountability to a wide range of stakeholders, shareholders, and investors. The key concerns are environmental protection, and the social well being of people in society, both now and in the future. CSR has a variety of policies such as giving to an organization, providing products and services to consumers, reducing harmful waste, and treating their employees with moral ethics. Corporate social responsibility is the best thing that was implemented into businesses both large and small, in this way the environment and society can be treated the way it is supposed to, with respect. CSR is something that everyone can benefit from when businesses adopt their policy.corporate social responsibility as social regulation. The subject of CSR continues to fascinate social scientists.
Finally, we can conclude that the concept of corporate social responsibility is now firmly rooted in the global business agenda. Transparency and dialogue can help to make a business appear more trustworthy, and push up the standards of other organizations at the same time. selected PSUs are trying to manage their CSR department in a very good manner. As discussed above PSUs are expecting a huge amount of support from the government for implementing CSR policies and in return, the government is also trying to facilitate them by launching various Guidelines, norms, and procedures. The government while formulation its guidelines has made provisions for 0.5% to 2% net profits to be allocated to social, environmental, and economic sectors. Various positives have been seen in different above mentioned sectors.
REFERENCES
Abrams F. (1951) ‘Management’s responsibilities in a complex world’, Harvard Business Review 29.3: pp. 29–34.
Campbell K. and D. Vick (2009) ‘Disclosure law and the market for corporate social responsibility’, in D. McBarnet, A. Voiculescu and T. Campbell (eds.), The new corporate accountability: Corporate social responsibility and the law, Cambridge University Press, Cambridge: pp. 241–278.
Dahlsrud A. (2008) ‘How corporate social responsibility is defined: an analysis of 37 definitions’, Corporate Social Responsibility and Environmental Management 15. 1: pp. 1–13.
Eberstadt N. (1973) ‘What history tells us about corporate responsibility’, Business & Society Review/Innovation 7: p.22.
Falck O. and S. Heblich (2007) ‘Corporate social responsibility: Doing well by doing good’, Business Horizons 50.3: pp. 247–254.
Gao Y. (2009) ‘Corporate social performance in China: Evidence from large companies’, Journal of Business Ethics 89.1: pp. 23–35.
Handfield R. and E. Nichols (1999) Introduction to supply chain management, Prentice Hall, New Jersey.
Inikori J. (2002) Africans and the Industrial Revolution in England: A study in international trade and economic development, Cambridge University Press, Cambridge.
Jaffe A., S. Peterson, P. Portney and R. Stavins (1995) ‘Environmental regulation and the competitiveness of US manufacturing: what does the evidence tell us?’, Journal of Economic Literature 33.1: pp. 132–163.
Bai Y., M. Faure and J. Liu (2014) ‘The role of China’s banking sector in providing green finance’, Duke Environmental Law & Policy Forum 24: pp. 102–150.
About the author –
This article is written by Nibin Louis, 3rd year BBA+LLB(H) student at Galgotias University, Greater Noida
