INTRODUCTION

Corporate

social

responsibility (CSR,

conscience, corporate

also

called corporate

citizenship ) can be defined as -The

Companys sense of responsibility towards the community and

environment (both ecological and social) in which it operates and
that

it

is

form

of corporate self-regulation

integrated

into

a business model. The term "corporate social responsibility" became

popular

in

the

1960s

and

has

remained

term

used

indiscriminately by many to cover legal and moral responsibility

PHASES OF CSR DEVELOPMENT IN INDIA

The history of CSR in India has its four phases which run parallel
to India's historical development and has resulted in different
approaches towards CSR.
The First Phase:
In the first phase charity and philanthropy were the main drivers of
CSR. Culture, religion, family values ,tradition and industrialization
had an influential effect on CSR. In the pre-industrialization period,
which lasted till 1850, wealthy merchants helped the society in
getting over phases of famine and epidemics by providing food from
their godowns and by lending money and thus securing an integral
position in the society.
The Second Phase:
In the second phase, during the independence movement, there was
increased stress on Indian Industrialists to demonstrate their

dedication towards the progress of the society. This was

when Mahatma Gandhi introduced the notion of "trusteeship",
according to which the industry leaders had to manage their wealth
so as to benefit the common man. Gandhi's influence put pressure
on various Industrialists to act towards building the nation and its
socio-economic development. Under his influence businesses
established trusts for schools and colleges and also helped in
setting up training and scientific institutions.
The Third Phase:
The third phase of CSR (196080) had its relation to the element of
"mixed economy, where there was an emergence of Public Sector
Undertakings (PSUs) and laws relating to labour and environmental
standards. PSUs were set up by the state to ensure suitable
distribution of resources (wealth, food etc.) to the needy. In 1965
Indian academicians, politicians and businessmen set up a national
workshop on CSR.
The Fourth Phase
In the fourth phase (1980 until the present) Indian companies
started abandoning their traditional engagement with CSR and
integrated it into a sustainable business strategy. A conceptual
study of CSR development in India took place.
CSR IN INDIA
As discussed above, CSR is not a new concept in India. Ever since
their inception, corporates like the Tata Group, and Indian Oil
Corporation, to name a few, have been involved in serving the
community. Through donations and charity events, many other
organizations have been doing their part for the society. The basic
objective of CSR in these days is to maximize the company's overall
impact on the society and stakeholders. CSR policies, practices and

programs are being comprehensively integrated by an increasing

number of companies throughout their business operations and
processes. A growing number of corporates feel that CSR is not just
another form of indirect expense but is important for protecting the
goodwill and reputation, defending attacks and increasing business
competitiveness.
Companies have specialized CSR teams that formulate policies,
strategies and goals for their CSR programs and set aside budgets
to fund them. These programs are often determined by social
philosophy which have clear objectives and are well defined and are
aligned with the mainstream business. The programs are put into
practice by the employees who are crucial to this process. CSR
programs ranges from community development to development in
education, environment and healthcare etc.

IMPORTANCE OF CSR
Social initiatives taken by the organizations tend to promote
goodwill and corporate trust, and this will contribute to the long
run

success

of

the

business.

Therefore,

by

being

socially

responsible organizations image would be enhanced resulting in an

increase in its market price and ultimately help in finding solutions
to social problems.
BENEFITS OF CSR OR BENEFITS OF GOOD CORPORATE
CITIZENSHIP
1. IMPROVED FINANCIAL PERFORMANCE: Socially
responsible business practices are linked to positive financial
performance.

2. REDUCE OPERATING COSTS: CSR initiatives can help to

reduce operating costs like recycling initiatives will cut own the
waste- disposal costs.
3. ENHANCED BRAND IMAGE AND REPUTATION: consumer
loyalty, easy and quick acceptance of new product.
4. Increased sales and customer loyalty: Studies show an
increasing consumer desire to buy or not to buy based on
value based criteria.
5. Increased productivity and quality: This will be achieved
due to improved working conditions, reduced environmental
impact or increased employee involvement.
6. INCREASED ABILITY TO ATTRACT AND RTAIN
EMPLOYEES: Companies with strong CSR commitments find
it easier to recruit and retain employees resulting in reduction
in labour turnover and training costs.
7. REDUCED REGULATORY SUPERVISION: Such companies
are subject to fewer inspections and are given more freedom
from both national and local government entities.
8. ACCESS TO CAPITAL: Companies with strong CSR
performance have increased access to capital.
The great news is that even the smallest of organizations
benefit when putting CSR at the heart of their business. The
benefits from CSR can be less obvious than say, helping the
environment.
CSR POLICIES: CSR means a commitment to developing policies
that integrate responsible practices into daily business operations
and reporting on progress made towards implementing these
practices.

COMMON CSR POLICIES ARE AS FOLLOWS:

1. Adoption of internal controls reform in accounting scandals.
2. Management team that view employees as assets rather than
costs.
3. Advanced resource productivity focused on the use of natural
resources in a more productive, efficient and profitable fashion
such as recycle content and product recycling.
4. Taking responsibility conditions under which goods are
produced directly or indirectly like contract employees to
domestically or abroad.
A Survey from Net Impact found that 53% of workers said that
Job where I can make an impact was important to their
happiness. Interestingly 35% would take a pay cut to work for
a company committed to CSR.
EXTERNAL STANDARD AND GUIDELINES FOR CSR REPORTING
1. THE GLOBAL REPORTING INITIATIVE (GRI):Globally
applicable guideline for preparing CSR report. GRI is a
performance independent international body with a multistakeholder government structure. It involves active
participation of companies, business associations, NGOs and
other stakeholders from around the world. This is a
sustainability reporting a guideline is a reporting standard
rather than a performance standard.
2. SOCIAL ACCOUNTABILITY 8000: It is a standard that
specifies the request for social accountability. It provides
transparent, measurable verifiable standard for certifying the
performance of companies.

3. UNITED NATIONS GLOBAL COMPACT (2000): Set of

principles for corporate practice and policy.
4. OECD GUIDELINES FOR MNCs (1976/2000):Organization
for economic, co-operation and development guidelines are
recommendations addressed by government to multinational
enterprises.
5. ICCR GUIDELINES FOR measuring business performance
interfaith center on corporate responsibility

INDIA became the worlds first country to enact a mandatory

minimum CSR spending law.

COMPANYS ACT 2013 AND CSR

In present scenario SOCIAL RESPONSIBILITY is emerging as one of
the major goal of financial management along with PROFIT
MAXIMISATION and WEALTH MAXIMISATION.
There are many big entities who have been actively engaged in the
CSR activities but unfortunately the number is relatively less. In
order to encourage more entities to participate in the process of
development of the society via- CSR, the Government of India has
actually implemented the concept of CSR in the new Companies Act
2013, On 27th February, 2014, the Government of India has notified
the rules for CSR spending u/s 135 of the New Companies Act 2013
along with Companies (Corporate Social Responsibility Policy)
Rules, 2014 effective from 1st April 2014.

Eligibility Criteria:
Company (includes foreign company with branches or project in
India) having:
Minimum net worth of rupees 500 Crore.
Turnover up to "1000 Crore"
having a net profit of at least '5crore'.
during any financial year, are covered by this provision
Turning the CSR from voluntary activities to the mandated
responsibilities, also governed by the bundle of regulations as
follows:
Composition of CSR Committee
The Company should constitute a Corporate Social Responsibility
Committee as follows:
1. The Committee shall consist of minimum 3 (three) including 1
(one) Independent Director, however in case of Private
Company or the Company, which is not required to appoint
Independent Director on board, or Foreign Company the
committee can be formulated with (2) two directors.
2. The CSR Policy shall be formulated in accordance with
Schedule VII and the CSR Committee will be responsible for
framing the policy, finalizing the amount to be spent on CSR,
monitoring & implementation of the Scheme.

3. If Company ceases to fulfill the eligibility criteria for three

consecutive years, then the company is not required to comply
until the company will meet the eligibility criteria once again.
Under the rules of CSR, the Government has also fixed a threshold
limit of 2% of the "Average' Net Profits of the block of previous three
years on CSR activities and if Company fails to spend such amount,
disclosures are to be made for the same. But an exemption has
been given to the Companies that do not satisfy the above threshold
for three consecutive years.
BRIEF ON CSR ACTIVITIES AS PRESCRIBED UNDER SCHEDULE
VII OF COMPANIES ACT 2013:
1) Objective to erase the daily life segments including poverty,
malnutrition and hunger while enhancing the standard of living and
promoting for better health.
2) Initiative to promote the different segments of education
including special education and programs to enhance the vocation
skills for all ages like children, women, and elderly people.
3) Aim to bring the uniformity in respect of different sections of
society to promote gender equality and other facilities for senior
citizens and developing hostels for women and orphans and taking
initiative for empowering women.
4) Elevate the segment of flora and fauna to bring the ecological
balance and environmental sustainability in respect of animal
welfare, conservation of natural resources and maintaining the
quality of air, water and soil.

5) Protecting art and culture and measures to restore sites of

historical importance and national heritage and promoting the
works of art and setting up public libraries.
6) Sports programs and training sessions to enhance the level of
rural sports, nationally recognised sports, Paralympic sports and
Olympics sports.
7)

Favouring

to

prime

ministers

national

relief

fund

and

contribution to other fund setup by the central government to

promote socio-economic development and welfare of the backward
classes, minorities and women.
8) To uplift the technology of incubator (a support program for the
development of entrepreneurial companies).
9) Introducing various projects for rural development

CSR TOWARDS DIFFERENT SECTIONS OF THE SOCIETY

Responsibility towards shareholders and investors
* The company must ensure the safety of the funds invested by the
shareholders or owners.
* It must ensure the effective utilization of the funds provided by
the shareholders or owners.
* It must ensure fair, regular and stable return on the investments
of the shareholders.
* It must provide regular, full and accurate information about the
working of the company to the shareholders.

10

* It must ensure capital appreciation in the investment of the

shareholders through growth, innovation and diversification of
activities.
Responsibility towards employees
* It must ensure that there is proper work environment for the
workers to work efficiency.
* It must ensure job security for the workers.
* It must pay fair wages (and not merely the wages determined by
market forces of demand and supply) to the workers.
* It must arrange for proper education and training of workers and
also provide fair treatment to the workers.
* It must encourage effective workers participation in management.
* It must see that there is no discrimination of workers on the basis
of caste, religion, sex, physical appearance in matters of
appointments, training, transfers, promotions etc.
* It must provide opportunities to workers for their promotion,
growth and development.
Responsibility towards customers or consumers
* It must provide to the customers better quality goods at fair or
reasonable prices.
* It must ensure regular, adequate and uninterrupted supply of
goods to the customers.
* It must provide after-sales services to customers.

11

* It must see that no unfair trade practices, such as black

marketing, false weights, using containers which do not give correct
idea of the weight of the product.
*It must provide sufficient and proper information to the customers
about their uses, adverse effects, risks ,and care to be taken by the
customers while using the products.
*It must handle grievances of the consumers satisfactorily.
*It must undertake research and development so as to improve the
quality of the existing products and to produce new products.
Responsibility towards competitors
* It must maintain good relation with its competitors.
* It must not harm interest of its competitors through price cutting
and interference in the production and distribution of its
competitors.
* It must co-operate with its competitors through the forum of the
trade associates, chambers of commerce etc.
* It must not procure business or trade secrets of its competitors
through bribery or other foul means.
Responsibility towards community, society or public at large
* It must maintain cordial relations with the people of surrounding
areas.
* It must use the scarce national resources efficiently without
wastage.
* It must create more employment opportunities for the people.

12

* It must not encourage monopoly and concentration of power in the

hands of a few.
* It should not indulge in anti-social activities like hoarding, black
marketing etc.
* It must provide to the community true and adequate information
about its working.
* It must undertake programs for the development of backward
regions.
Responsibility towards government
* It must follow strictly the directions, policies, rules and
regulations of the government.
* It should pay taxes and other dues to the government fully,
regularly and in time.
* It must co-operate with the government and provide assistance on
implementing its socio-economic activities.
* It should invest its surplus funds in government bonds, and
thereby help the government in financing nation building activities.
Responsibility towards suppliers
* It must maintain cordial and continuous relations with its
suppliers.
* It must see that payments to suppliers are made promptly and
regularly.
* It must pass on the information regarding the change of system of
production to the suppliers so as to enable them to adjust their

13

business to meet the changing needs.

Responsibility towards environment
*Every business must maintain healthy environmental conditions in
the place where its production is carried on by undertaking
preventive and protective measures against air pollution, water
pollution and noise pollution.
* By recycling wastes like paper waste, plastic waste etc, wherever
possible, business enterprises can prevent and control solid waste
pollution.
* By financing the development of parks and gardens in the
residential areas, business houses can help to protect environment.
* By developing and using silencers for industrial machines,
business enterprises can prevent and control noise pollution.

INDIAS BEST COMPANIES FOR CORPORATE SOCIAL

RESPONSIBILITY, 2014:
1} TATA STEEL.
2} TATA CHEMICALS.
3} MAHINDRA GROUP.
4} MARUTI SUZUKI.
5} TATA MOTORS.
6} SIEMENS.
7} LARSEN & TOUBRO (L & T).

14

8} COCA-COLA INDIA.
9} STEEL AUTHORITY OF INDIA.
10} INFOSYS.

1} TATA STEEL:
* TATA STEELS CSR team consists of 550 people and is run like a
professional company
* Tata steel project MANSI UNDERWAY in 167 villages of
SERAIKELA district, has brought down infant mortality rate by
26.5% and neo natal mortality rate by 32.7%.
* It is launching 1000 schools projects in Odisha, aimed at
improving the quality of education in government primary schools.
Sukinda Chromite Mine of the Tata Steel in Odisha won Asian
CSR Leadership Award on 24 September 2014
2} TATA CHEMICALS:
* It joined hands with the wild life trust of India to launch a series
of programs to spread awareness and save the endangered species.
* 30% of the budget of the company is kept for wild life projects and
recently they have conducted a public awareness campaign in
Gujarat on saving the Whale Sharks.
* It has organized women self help groups to encourage traditional
handicrafts skills for a brand called OKHAI in which they are
earning 5000 per month.

15

* Their
3} MAHINDRA GROUP:
* They aim to enable people to live healthier by organizing various
workshops on dental care, hygiene and others.
* They have undertaken water conservation program.
4} MARUTI SUZUKI:
* It concentrates on road safety, education and cleanliness.
* In partnership with local community and government, Maruti has
upgraded the infrastructure of government schools apart from
offering scholarships to meritorious students.
5} TATA MOTORS:
* The company has organized medical camps and has trained
community members in first aid.
* The company runs malnutrition treatment centres in partnership
with UNICEF and the state government.
* It has undertaken waste land for development and planted over
10,00,000 trees partnering with government departments and
NGOs.
* Statistics prove that Over 2.84 lakh people are benefited from Tata
Motors healthcare related CSR activities
* They train farmers on scientific techniques in vegetable
cultivation, social and fertilizer management.
6} SIEMENS:

16

* It supports various social causes with active participation with

employees.
* It has undertaken an initiative of providing equal employment
opportunity for the disabled people.
* It has started an orphanage, a registered NGO in Bangalore
7} LARSEN & TOUBRO:
* It addresses the needs of the communities residing in its
neighbourhood.
* It takes initiatives in the areas of health, education, environment
conservation and infrastructure.
* It provides assistance in situations such as natural calamities.
8} COCA-COLA:
* It provides support for community programs across the country,
with a focus on education and health.
* It also organizes health camps in urban slum and rural areas.
9} STEEL AUTHORITY OF INDIA:
* It has established 54 primary health centres, 12 child health
centres, 17 hospitals and 7 super speciality hospitals for providing
specialized health care.
* 146 schools have been setup to provide modern education to
about 70,000 children.
* It has installed water sources, thereby providing drinking water
access to around 38lakh people.

17

10} INFOSYS:
* It supports programs and organizations devoted to the cause of
rural poor, mentally challenged and economically disadvantaged
sections of the society.
* It helps to preserve certain cultural forms and arts of India.
* It has donated computers to various institutions across India.
Apart from these companies, recently TCS and Bharti Foundation
have announced to spend 200 crore rupees for Clean India
Campaign.
.

ARGUMENTS AGAINST CSR

It is vague :The concept of social responsibility is quite

vague. It does not state specifically what welfare activities
of business undertakings can be regarded as activities
undertaken in discharge of their social responsibilities.

Responsibilities conflict with each other:

Every private business undertaking has economic
responsibility, i.e responsibility to maximize its profits, to
serve the interest of the owners, employees and creditors.
When it also assumes social responsibility, i.e the
responsibility to serve the interests of the society, it
assumes another responsibility. These two responsibility
conflict with each other , which is definitely not in the
best interests of the business enterprise.

18

Additional costs: When business houses assume

social responsibilities and render social welfare services
to the society, they will have to incur additional costs.

Increased price of products:

Being economic

enterprises interested in maximizing their profits for

themselves, certainly they would shift the extra costs of
social services to the consumers by raising the prices of
their products, which is not in the interest of the society.

Political power: Big business houses already have

enough economic and social power. If they assume social
responsibility, it would result in further concentration of
power in the hands of a few big business houses. It is not
advisable for the Government to give additional social
power to the business houses in the name of social
responsibilities.

Use of shareholders funds: A business enterprise,

particularly a joint stock company makes use of capital
that is does not own, but contributed by the
shareholders. So, it should not be forced to take into
consideration social responsibilities in the use of funds
contributed by private shareholders

Managers may not be proficient in public

and social problems:

No doubt, business managers

who manage the business are highly skilled and efficient

in business matters. But they may not be proficient in
public or social problems. As such, they should not be
burdened with social obligations or responsibilities.

19

Time consuming activity: It consumes time to

monitor CSR activities and hiring extra personnel needed
for it.

India recently conducted a CSR Summit,2014, which is a

flagship event on

Corporate

Social

Responsibility

which

awarded the organizations who have been delivering impacts

through CSR partnerships.
And CSR Impact Award function will also be conducted shortly
to encourage CSR project implementing agencies to deliver
high

impacts

through

CSR

projects

and

adopt

multi-

stakeholder approach leading to excellence in project outcomes

CONCLUSION:
There

must

be

more

and

more

Partnerships

between

companies, NGOs and the government, so that a combination

of their skills such as expertise, strategic thinking, manpower
and money can initiate towards extensive social change so as to
put the socio-economic development of India on a fast track.