IMS , University of Lucknow

Research Paper
BUSINESS COMMUNICATION

Analysis of Corporate Social Responsibility in India

Anisha Rajput
(B.Com Honours)
Abstract
Corporate Social Responsibility (CSR) is a form of corporate self-regulation
integrated into a business model . CSR policy functions as a self regulatory
mechanism whereby a business monitors and ensures its active compliance
with the spirit of law , ethical standards and national or international norms .
Corporate Social Responsibility is a corporation’s initiatives to assess and take
responsibility for the company’s effects on environmental and social wellbeing
. The term generally applies to efforts that go beyond what may be required by
regulators or environmental protection groups .

India is a developing economy , here corporate social responsibility plays an

important role in the organisation . In Indian industry one can easily notice a
paradigm shift from corporate philanthropist to being socially responsible . The
importance of CSR is increasing in Indian corporate scenario as organisations
have realised that the ultimate goal is not just profit making and that trust
building is viable and assertable with societal relationship . CSR is now
accepted as a means to achieve sustainable development of an organisation .
According to New Company Law , 2012 corporates must contribute 2% of ther
net profits towards CSR . The problem with CSR is that nobody is very clear
about what exactly it encompasses . CSR to some companies might mean
either providing lunch to their employees or tackling global warming issues ,
both of which are very contrary or distant to what CSR actually means . The
organisations should understand that any contribution towards the welfare of
the society is Corporate Social Responsibility . Corporates can no longer limit
themselves in using resources of the society and they have to be socially
responsible corporate citizens and must also contribute to the social good .

Nowadays companies have become more transparent in their activities such as

presenting of their balance sheet . They are displaying public reporting in their
accounting . Companies have started incorporating their CSR initiatives in their
annual report . Indian corporates now go beyond Philanthropy (Charity)
concept and concentrates more on its stakeholders . So we can say that CSR
refers to the corporation’s obligations to all the stakeholders . It stems from
the desire to do well and get self satisfaction in return as well as a societal
obligation of business . This could be a strategic marketing idea for the
company to do well by doing good-distinct from sales promotion , corporate
philanthropy , corporate sponsorship , corporate Samaritan acts and public
relations .

This research paper tries to analyse

Keywords
Corporate Social Responsibility , Companies Act (2013) , CSR Initiatives , CSR
Challenges , Corporate Society Relations , Community , Philanthropy .

Definitions
Corporate Social Responsibility has been defined by many authors and
institutions in recent times . At the global level , the concept of CSR was firstly
mentioned in 1953 in the publication ‘Social Responsibilities of Businessman’
by William J. Bowen .

Bowen has suggested that the “social responsibility of businessman refers to

the obligations of businessmen to pursue those policies , to make those
decisions or to follow those lines of action which are desirable in terms of the
objectives and values of our society .”

European Commission described CSR as “a concept whereby companies

integrate social and environmental concerns in their business operations and
interaction with their stakeholders on a voluntary basis .”

According to Forbes (2010) , corporate social responsibility works in two ways .

The company gives back to the society , in turn , people get to know about the
company who helped them most and cater to their products and services .

According to Infosys founder , Narayan Murthy , “Social responsibility is to

create maximum shareholders value working under the circumstances , where
it is fair to all its stakeholders , workers , consumers , the community ,
government and the environment .”
Introduction

Corporate social responsibility is a concept that has become quite familiar in

the world-of-business today. The present-day conception of corporate social
responsibility (CSR) implies that companies voluntarily integrate social and
environmental concerns in their operations and interaction with stakeholders.

CSR involves applying the concept of sustainable development to the corporate

world. Companies that respect and listen to their stakeholders must naturally
be concerned by their growth and profitability, but they must also be aware of
the economic, environmental, social and societal impacts of their activities.
Too often, attaining corporate social responsibility is understood from the
perspective of business generosity to community projects and charitable
donations, but this fails to capture the most valuable contributions that a
company has to make. In general sense social responsibility is seen as the
deposition of organizations to exhibit a ‘missionary’ rather than a ‘mercenary’
attitude to the society or environment in which they operate.

Today, CSR in India has gone beyond merely ‘charity and donations’ and is
approached in a more organized fashion. It has become an integral part of the
corporate strategy (Das Gupta 2010). Now a day’s companies have become
more transparent in their balance sheet. They are incorporating their
corporate social responsibility initiative in their annual report. Companies have
CSR teams that devise specific policies, strategies and goals for their CSR
programs and set aside budgets to support them. Companies in India have
quite been proactive in taking up CSR initiatives and integrating them in their
business processes.

Objectives
1) To develop an understanding of concept of CSR .
2) To understand the CSR status in India .
3) To study the policies governing CSR .
4) To study the challenges faced by CSR in India .
5) To make suggestions for accelerating CSR initiatives .
 6) To analyse the development of CSR in India and its changing trends .

Literature Review
1) According to Anupam Sharma And Ravi Kiran, them CSR is emerging as a
new field in the management research. In India, many firms have taken
the initiatives of CSR practices which have met with varying needs of
society. According to him number of IT and Auto industry is more going
for taking up CSR initiatives while FMCG sector. Authors said that India
has entered or taken a transformational change by involving into new
CSR initiatives.
2) According to Kishor Neelakantan, the enactment of the company act
2013 will create a big regulatory push for CSR activities and this is
mandatory for all company operating in India. So it is good for economic
development but how Shareholder think about it while evaluating
company? So according to author suggests that framework for investors
to evaluate companies’ CSR efforts which is based on four key
parameters- Integrity, strategic orientation, efficiency and transparency.
3) R.S. Raman (2006), in a study on “Corporate Social Reporting in India-a
view from the top”, used content analysis technique to examine the
chairman’s message section in the Annual Reports of the top 50
companies in India to identify the extent and nature of social reporting.
The study concluded that the Indian companies placed emphasis on
product improvement and development of human resources.

Today the concept of CSR has undergone radical change. It has integrated
social as well as environmental issues into their missions and decisions.
Companies take keen interest in informing about their CSR activities to their
stakeholders as well. From the review, we come to know that across the globe,
business enterprises have accepted the concept of CSR as an element of
success and survival of business along with fulfilling social objectives. However,
the challenge for the companies is to determine a strong and innovative CSR
strategy which should deliver high performance in ethical, environmental and
social areas and meet all the stakeholders’ objectives .
Research Methodology
The research paper is an attempt of exploratory research, based on the
secondary data sourced from journals, magazines, articles and media reports.

Looking into requirements of the objectives of the study the research design
employed for the study is of descriptive type. Keeping in view of the set
objectives, this research design was adopted to have greater accuracy and in
depth analysis of the research study.

Available secondary data was extensively used for the study. The investigator
procures the required data through secondary survey method. Different news
articles, Books and Web were used which were enumerated and recorded.

Data Analysis and Interpretation

1) CSR Origin and development
The concept of CSR has been imbibed in Indian society from the very
beginning. Gandhi’s philosophy of trusteeship is similar to CSR of the modern
world; companies like TATA and BIRLA have been imbibing the case for social
good in their operations for decades long before CSR become popular cause.
The avid interest in community welfare among the Tata Group dates back to
the 1860s when the company was founded by Jamshedji Tata. This explains
why nearly two-thirds of the equity of Tata Sons, the Tata Group's promoter
company, is held by philanthropic trusts, which have created a host of national
institutions in science and technology, medical research, social studies and the
performing arts.

Dr.Kurien’s Amul-led Operation flood had pioneered inclusive growth through

work with dairy farmers at grass-root level, changing lives, enhancing income,
empowering women and at the same time reaping benefits to the business.

At Indian Oil, corporate social responsibility (CSR) has been the cornerstone of
success right from inception in the year 1964. The Corporation’s objectives in
this key performance area are enshrined in its Mission statement: "…to help
enrich the quality of life of the community and preserve ecological balance and
heritage through a strong environment conscience."

Before Corporate Social Responsibility found a place in corporate lexicon, it

was already textured into the Birla Group's value systems. As early as the
1940s, the founderi G.D Birla espoused the trusteeship concept of
management. Simply stated, this entails that the wealth that one generates
and holds is to be held as in a trust for our multiple stakeholders. With regard
to CSR, this means investing part of our profits beyond business, for the larger
good of society.

Over the years CSR has gained importance in India as companies are realizing
the importance of investing in CSR for achieving benefits of creating share
holder value, increased revenue base, strategic branding, operational
efficiency, better access to capital, human and intellectual capital and lower
business risk.CSR has emerged as an effective tool that synergizes the efforts
of Corporate and the social sector towards sustainable growth and
development of societal objectives at large.

2) Policy in India
Under the Companies Act, 2013, that replaces the nearly six-decade old
legislation governing the way corporate function and are regulated in India,
profitable companies with a sizeable business would have to spend every year
at least 2 per cent of three-year average profit on CSR works. This would apply
to the companies with a turnover of Rs 1,000 crore and or more, or net worth
of Rs 500 crore and more, or net profit of Rs 5 crore and more. As per new
proposals, from the beginning of 2013- 14, Top earning PSUs like ONGC, BHEL
and NTPC may have to double their expenditure on CSR as per the new draft
guidelines being finalised by the Department of Public Enterprises (DPE). PSUs
with net profit between Rs 100-500 crore are required to earmark 2-3% of
their income. They have to ensure that they spend full amount earmarked for ,
otherwise, they have to disclose why they have not spent these fund. Public
sector companies with a profit of less than Rs 100 crore are required to
contribute 3% of their income for undertaking such activities.
The proposed guidelines stated that if Public Sector Units (PSU's) are unable to
spend the earmarked amount for CSR in a particular year, it has to be spent in
the next two years. The guidelines continue to exempt sick and loss-making
PSUs from allocation of budget for undertaking CSR activities.

3) Changing Trends in CSR

An insight into the history of CSR reveals that till 1990s it was solely dominated
by the idea of philanthropy. Considering CSR as an act of philanthropy,
businesses often restricted themselves to one time financial grant and did not
commit their resources for such projects. Moreover, businesses never kept the
stakeholder in mind while planning for such initiatives, thereby reducing the
efficacy and efficiency of CSR initiatives. However, over the last few years, the
concept of CSR has been changing.

4) CSR Initiatives and Green Measures

India Inc has joined hands to fine-tune all its activities falling under CSR. For
this, it has set up a global platform to showcase all the work done by Indian
firms. Confederation of Indian Industry (CII) and the TVS Group collaborated to
form the CII-TVS Centre of Excellence for Responsive Corporate Citizenship in
2007. It provides consultancy services and technical assistance on social
development and CSR.

According to a National Geographic survey which studied 17,000 consumers in

17 countries, Indians are the most eco-friendly consumers in the world. India
topped the Consumer Greendex, where consumers were asked about energy
use and conservation, transportation choices, food sources, the relative use of
green products versus traditional products, attitudes towards the environment
and sustainability and knowledge of environmental issues.

1) Reliance Industries and two Tata Group firms—Tata Motors and Tata Steel—
are the country's most admired companies for their corporate social
responsibility initiatives, according to a Nielsen survey released in May 2009.

2) As part of its Corporate Service Corps (CSC) programme, IBM has joined
hands with the Tribal Development Department of Gujarat for a development
project aimed at upliftment of tribal in the Sasan area of Gir forest.
3) The financial services sector is going green in a steady manner. With an eye
on preserving energy, companies have started easing the carbon footprint in
their offices. The year 2009 witnessed initiatives including application of
renewable energy technologies, moving to paperless operations and
recognition of environmental standards. Efforts by companies such as HSBC
India, Max New York Life and Standard Chartered Bank have ensured that the
green movement has kept its momentum by asking their customers to shift to
e-statements and e-receipts.

4) State-owned Navratna Company, Coal India Ltd (CIL) will invest US$ 67.5
million in 2010-11 on social and environmental causes.

5) Public sector aluminium company NALCO has contributed US$ 3.23 million
for development work in Orissa's Koraput district as part of its Corporate Social
Responsibility (CSR).

5) Challenges Hindering CSR Initiatives

Now, since the Companies bill has become an act, around 8,000 companies in
India – including private and public companies need to focus on planning,
designing and implementing CSR initiatives pertain to areas, such as, care for
all stakeholders, ethical functioning, respect for workers’ rights and welfare,
respect for human rights, environment and social and inclusive development
etc. The practical implementation of CSR is faced with a lot of issues and
challenges. As a result, there are several key challenges, which are anticipated.

The survey conducted by Times of India group on CSR used a sample size of
250 companies involved in CSR activities through a method of online
administration of questionnaire. The questionnaire was evolved after due
diligence including focus group meetings, consultations with key stakeholders
and a pilot in four metros. Finally 82 organizations responded to the
questionnaire. These comprised 11 public sector undertakings (PSUs), 39
private national agencies and 32 private multinational organizations. The
respondent organizations form a satisfactory percentage of 33 per cent of the
sample size, given the fact that only those companies that had direct or
indirect involvement in CSR activities were chosen to be approached for the
survey.
The survey elicited responses from participating organizations about various
challenges facing CSR initiatives in different parts of the country. Responses
obtained from the participating organizations have been collated and broadly
categorized by the research team. These challenges are listed below:

Lack of community participation in CSR activities: There is a lack of interest of

the general public in participating and contributing to CSR activities of
companies. CSR is largely misunderstood by Indian businesses and their
stakeholders. There is a view that businesses are already socially responsible,
when they are clearly not. The situation is further aggravated by a lack of
communication between the companies involved in CSR and the general public
at the grassroots.

Need for capacity building of the local non-governmental organizations:

There is a need for capacity building of the local non -governmental
organisations as there is serious dearth of trained and efficient organisations
that can effectively contribute to the ongoing CSR activities initiated by
companies. This seriously compromises scaling up of CSR initiatives and
subsequently limits the scope of such activities.

Issues of transparency: Lack of transparency is one of the key issues brought

forth by the survey. There is an expression by the companies that there exists
lack of transparency on the part of the local implementing agencies as they do
not make adequate efforts to disclose information on their programmes, audit
issues, impact assessment and utilisation of funds. This reported lack of
transparency negatively impacts the process of trust building between
companies and local communities, which is a key to the success of any CSR
initiative at the local level.

Non-Availability of Well Organized Non-Governmental Organizations: It is

also reported that there is non-availability of well organized nongovernmental
organizations in remote and rural areas that can assess and identify real needs
of the community and work along with companies to ensure successful
implementation of CSR activities. This also builds the case for investing in local
communities by way of building their capacities to undertake development
projects at local levels.
Visibility Factor: The role of media in highlighting good cases of successful CSR
initiatives is welcomed as it spreads good stories and sensitizes the local
population about various ongoing CSR initiatives of companies. This apparent
influence of gaining visibility and branding exercise often leads many
nongovernmental organizations to involve themselves in event-based
programs; in the process, they often miss out on meaningful grassroots
interventions.

Narrow Perception towards CSR Initiatives: Non-governmental organizations

and Government agencies usually possess a narrow outlook towards the CSR
initiatives of companies, often defining CSR initiatives more donor-driven than
local in approach. As a result, they find it hard to decide whether they should
participate in such activities at all in medium and long run.

Non-availability of Clear CSR Guidelines: There are no clear cut statutory

guidelines or policy directives to give a definitive direction to CSR initiatives of
companies. It is found that the scale of CSR initiatives of companies should
depend upon their business size and profile. In other words, the bigger the
company, the bigger is its CSR program.

Lack of Consensus on Implementing CSR Issues: There is a lack of consensus

amongst local agencies regarding CSR projects. This lack of consensus often
results in duplication of activities by corporate houses in areas of their
intervention. This results in a competitive spirit between local implementing
agencies rather than building collaborative approaches on issues. This factor
limits company’s abilities to undertake impact assessment of their initiatives
from time to time.

6) Effects of CSR
• The contribution of CSR is not to contribute in one sector of society only
rather to help businesses and to nurture the society over a period of time.
Company can contribute under CSR in any of the sector (Education, Health,
Environment, Upliftment for the society etc.) which they like most and which is
beneficial for the organization point of view.

• Corporations should participate effectively and efficiently for CSR

contribution as corporations are involved with numbers' of stakeholders like
customers, employees, suppliers, government, creditor, financial institutions,
etc. so they have the responsibility to take care of the interest of all the
stakeholders for their own sustainable growth.

• Every Corporation must take initiatives for CSR practices to make this planet
a better place to live and not just this, it will also help corporations to build
their goodwill.

• Corporations can differentiate themselves from their rivals by taking CSR

initiatives.

• Company can take CSR as an opportunity and a platform for growth and
survive.

• A properly implemented CSR concept can bring along a variety of competitive

advantages, such as enhanced access to capital and markets, increased sales
and profits, operational cost savings, improved productivity and quality,
efficient human resource base, improved brand image and reputation,
enhanced customer loyalty, better decision making and risk management
processes.

• Neither central government nor state government can tell corporate how to
spend money towards welfare for society. The decision rest on board how
money spend in various CSR activity.

7) Limitations of CSR
• No incentive if company pay more than 2% of net profit.

• Carry forward of such an contribution not being mentioned under the

provision of CSR. It means if any of the company not able to spend 2% of
average profit in any financial year so that expenditure not being carry forward
for next year.

• Company does not have adequate profits or is not in a position to spend

prescribed amount on CSR activities, the directors would be required to give
suitable disclosure/reasons in their report to the members.

• It is not clear whether the Section 25 companies or charitable organisations

set up by them would be included towards CSR.
• According to the proposed rules, activities relating to eradicating extreme
hunger and poverty; promotion of education, gender equality and
empowerment of women; reducing child mortality and improving maternal
health; combating HIV-AIDS, malaria and other diseases; ensuring
environmental sustainability, employment enhancing vocational skills; and
contribution to the Prime Minister’s National Relief Fund or any other Central
or state fund would be considered as CSR activity under the Act.

8) CSR of Indian Companies

Reliance: In areas around its power plant sites in Sasan, Rosa, Krishnapatnam,
Butibori, Chitrangi and others, Reliance Power has been actively involved in
various social and environmental organizations to address the issue of
sustainable development and social uplift. The Company in discharge of its
responsibility as a corporate citizen actively contributes to community welfare
measures and takes up several social initiatives every year. Reliance Power Ltd.
has been closely working with institutions and social organizations and
supporting their programs for social development, adult literacy, adoption of
village, tree plantation schemes etc. and it includes health, education and
employment.

TATA: The Tata Council for Community Initiatives (TCCI) is a unique initiative
that lends structure to the Tata group's approach of sustainable development
while driving its community engagement and improvement programs. The
Tata Council for Community Initiatives is a centrally administered agency
whose purpose is to help Tata companies and employees engage in developing
the community through specific processes.

Tata index for sustainability: The Tata index for sustainable human
development is a pioneering effort aimed at directing, measuring and
improving the social uplift programs that group enterprises undertake. The
index provides guidelines for Tata companies looking to fulfill their social
responsibilities, and is built around the Tata Business Excellence Model.
INFOSYS: Infosys always responds to a human crisis by volunteering and
pledging support. The northern districts of Karnataka were severely affected by
floods after torrential rainfall. It claimed hundreds of lives and rendered
millions of villagers homeless. The employees of Infosys joined hands to
rebuild villages and undertake a mass housing project. Infosys, together with
the Board of Directors and the Infosys Foundation, contributed US$ 6.8 million
towards relief, rehabilitation and reconstruction.

Suggestions
Companies can set a network of activities to be taken up in a consortium to
tackle major environmental issues. It would also provide an opportunity to
learn from each other. Everyone in the organisation needs to recognise their
own role in promoting CSR. Companies should provide wider professional
development activities.

Training, conferences and seminars could be organised by companies to

disseminate and generate new knowledge and information in this sector. A
strong budgetary support would definitely help to grow this sector and
research related to respective industry would enhance their organisation‟s
contribution further. Government regulations which are supporting in this
direction could attract more response from organisations. All this would also
lead to benchmark CSR activities.

Companies need to involve their stakeholders in order to build meaningful and

long term partnerships which would lead to creating a strong image and brand
identity. It is also suggested to review existing policies in order to develop
more meaningful visions for the companies and broaden their contributions to
reach to local communities.

Conclusion
CSR clearly impacts our corporations, society, and educational organizations.
Despite its complexities, the numerous sustainability initiatives point toward
continued, positive impact. CSR policy should function as a built-in, self-
regulating mechanism whereby businesses would monitor and ensure their
adherence to law, ethical standards and international norms. In the recent
years corporate business houses have substantially involved towards societal
responsibilities. Companies have started to realise the importance of CSR and
initiating the steps towards it.
It is found that there is a need for creation of awareness about CSR amongst
the general public to make CSR initiatives more effective. This effort will also
motivate other corporate houses to join the league and play an effective role
in addressing issues such as access to education, health care and livelihood
opportunities for a large number of people in India through their innovative
CSR practices. It is difficult for one single entity to bring about change, as the
scale is enormous. Effective partnerships between corporate, NGOs and the
government will place India's social development on a faster track. The CSR
regime in India is in a nascent stage and there will be hitches, and a lot of fine-
tuning will be required before we hit the perfect balance. What is
commendable is the spirit with which India has made her corporates socially
responsible and in that, led the world’s most developed nations.

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