Corporate World and the Concept of Corporate Social Responsibility [CSR]

Corporate social responsibility is an increasingly used buzz word within academic circles and the business community A corporate earns profits, makes money by operating and utilizing resources, infrastructure and environment belonging to the society; so it becomes a moral duty as well as responsibility of a corporate to give back something to the society, Corporate should operate and conduct their business operations in a socially responsible manner because the activities, roles and functions inevitably have impact on the society at large as no organ in a system network functions in isolation. This has evolved the concept of Corporate Social Responsibility (CSR). Whatever way in which CSR is defined, it assures that a company is responsible for its wider impact on society, and not merely the return on investment to its stock holders. Most of the debate on CSR has been centered on positive benefits to the community. CSR, is all about ensuring that the activities of a corporate entity are carried out correctly and properly. The words "correctly" and "properly" carry a much greater significance in the context of proper governance. These words in the context of governance signify conduct of an "above the board" nature.

INTRODUCTION

A corporate earns profits, makes money by operating and utilizing resources, infrastructure and environment belonging to the society; so it becomes a moral duty as well as responsibility of a corporate to give back something to the society, Corporate should operate and conduct their business operations in a socially responsible manner because the activities, roles and functions inevitably have impact on the society at large as no organ in a system network functions in isolation. This has evolved the concept of Corporate Social Responsibility (CSR).

CSR - Concept and Meaning

Corporate social responsibility is an increasingly used buzz word within academic circles and the business community. There are many definitions of CSR which emphasize different areas of responsibility to society, but the most applicable definition to the majority of the cases, as defined by the World Bank's Department of Foreign Investment Advisory Service is the following one:
"Corporate social responsibility is the commitment of business to contribute to sustainable economic development by working with the local community, their families and society      at large, to improve their lives in ways that are good for business". The term CSR implies "Operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business. In a sense it is a guiding principle for every decision made and in every area of a business". CSR ensures that corporations promote corporate citizenship as part of their culture. CSR is about business transforming their role from merely selling products and services with a view to making profits and increasing their revenue to the development of a society through their abilities of generating capital and investing it for social empowerment. [The Hindu, National Daily.]

In a way, CSR emphasizes the need for organizations to consider the good, welfare of the mass level of the society, local and at the global level within which they function in terms of the economic, legal, ethical and philanthropic impact of their way of conducting business operations. CSR implies an organization be accountable to all the stakeholders with a goal of achieving sustainable development not only in the economic sphere but also in social and environmental spheres.

There exists a co-relation between corporate goals and principles of business ethics and thereby ensuring a connection between the corporate and the community leading to a synergy and convergence of interests. Whatever way in which CSR is defined, it assures that a company is responsible for its wider impact on society, and not merely the return on investment to its stock holders. Most of the debate on CSR has been centered on positive benefits to the community. CSR, is all about ensuring that the activities of a corporate entity are carried out correctly and properly. The words "correctly" and "properly" carry a much greater significance in the context of proper governance. These words in the context of governance signify conduct of an "above the board" nature. The words "carried out properly" mean that whatever activities are carried out by a corporate, they are for the benefit of parties associated with the corporate for securing profit or some material benefit, and also for the corporate. Persons with direct or indirect vested interests in the corporate can be stakeholders, customers, suppliers, employees, out-sourced agencies, government regulatory authorities, logistics providers and supply chain agents. The bottom line is that governance ruled by ethics and proper responsibility to society reflects, not only the proper internally managed affairs of the corporate, but also has far reaching effects with external agencies which associate with the corporate. Manufacturers and distributors of edibles, consumer goods and health care products' have an imbibed irrefutable social responsibility to ensure that their products are of the highest quality standards as claimed by them. This is manifested in the thick vein of integrity existing in their corporate structure through which flows the blood of responsibility to the public at large, and to society.

Another aspect of governance is to  draw focus on its results, be it an increasing volume of sales of its products, adopting HR practices of an exemplary kind, or in-direct activity such as improved research and development for better products. These results contribute immensely towards better direction of the corporate; especially expansion programmes, and provides its management, opportunities for focusing on its goals with regularly assessed corporate behavior.

Difference between CSR and Corporate Philanthropy

Corporate Philanthropy being analogous to the charity is one kind of CSR. CSR is much more dynamic, multi dimensional and comprehensive and comprises societal and environmental concerns along with managerial, technical and financial assistance to meet needs of the under privileged section of the society.

Dimensions, Forms and Ways for Achieving CSR Objectives

There are different stages, forms, dimensions of CSR - Firstly, ethics in business activities and corporate enterprise Governance is the starting point for any good corporate citizen. Such ethical practices and adherence to the Rule of Law should be a part and parcel of daily business activities. Secondly, responsible conduct of corporate towards all the parties including employees is at the heart. Providing good working environment and culture, implementing sound HR policies leading to employee satisfaction and minimizing employee grievances and dissatisfaction, policies to curb use of abusive language, sexual harassment at work place and developing a code of conduct are essential way: How a corporate can be considered to be socially responsible if the in house staff employees are not happy and satisfied with the company policies and practices and be in a position to deliver to the society at large? Third and the next stage is delivering responsibility of a corporate to the society at large. Of course this will be possible and meaningful only if the previous two stages, dimensions are observed and fulfilled in its true sense. In India, CSR is not a mandatory task to be followed and have no legal impact and hence, a corporate must voluntarily inculcate,


initiate conscious efforts to become socially responsible, recognizing that the role and functions they perform inevitably have an impact on the society.

The United Nations Global compact, as prescribed on www.unglobalcompact.org. is a very good effort at the international level to promote corporate citizenship on the basis of a voluntarily accepted set of principles and standards. "The Global Compact is a framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption    The Global Compact is not a regulatory instrument - it does not "police", enforce or measure the behavior or actions of companies. Rather, the Global Compact relies on public accountability, transparency and the enlightened self-interest of companies, labour and civil society to initiate and share substantive action in pursuing the principles upon which the Global compact is based."

Ways for Achieving CSR Objectives

There are different ways by which a corporate can contribute / fulfill its CSR :

•    Best quality products to consumers.
•     Timely discharge of Tax liability.
•     Implementation of Laws, Rules & Regulations in letter and spirit.
•     In house welfare activities, best treatment to the manpower.
•     Providing adequate, inputs for the education of underprivileged section of the society.
•    Conducting night schools.
•    Programmes for health awareness to different section, class of people
•    Conducting adoption campaign for orphan children.
•    Education and welfare activities for street children.
•    Sponsoring medical check ups, treatment for poor people.
•    Running schools and participating in building infrastructure for the villages.
•    Rural development programmes.
•    Planting trees, keeping areas greener.
•    Protecting the abused.
•    Designing products and services and Innovative ways to contribute socially for the poor artisans who are at the bottom of the economic pyramid.


Practices Prevailing at Domestic as Well as International Levels

CSR has much broader implications for the globe as a whole as it reduces dependency on the Government for social welfare and change. Social reforms driven by the community will bring synchronization of efforts, synergies and people together, improve group cohesiveness and lead to state of peace and harmony. Leading Indian corporates like Infosys, Wipro, TATA, TVS, Dr. Reddy's Lab, Reliance, NTPC and ONGC have taken keen initiatives in CSR activities by concrete actions towards healthcare, education, improving the standard of living and reducing poverty. These corporate foundations support numerous Government schools, NGOs, have built orphanages, hospitals, schools. Other big, medium, small business houses can also learn and initiate CSR activities and corporate houses collectively can make India a better country for ideal living. Wagh Bakri Tea Group as a responsible corporate citizen is focused on promotion of Education, Health Care and Rural Development and has been periodically assisting various Schools, Hospitals, Medical Research Institutes, Charitable Trusts and NGOs.


CSR should be nurtured as a culture and tradition. Employees participating in a CSR, community welfare can be given recognition by separate performance evaluation. Many corporations in the U.S. consider the community services undertaken by its employees as part of their Annual Evaluation Report. This will lead to a positive impact for all. 

In the US, admission to elite private and public universities is not only based on academic grades but also participation in community development activities and leadership roles. In advanced countries, it is not uncommon to find high school students volunteering in community development work; in fact, students often accumulate points for school grades by participating in social welfare activities being one of the important factors for grading system. Scholarships are awarded to those who prove an effective community leader simultaneously with good academic performance.
Many corporations in U.S. expect potential employees to be active in the community and to show leadership. Interview processes also emphasizes community work. So these practices encourage students right from their school/college level to cultivate a community feeling which they through out carry to the entire span of life. Unfortunately, India does not have such system and aptitude. Doing what others can do is one way, but doing it our own way with more efficiency, effectiveness, with higher level of motivation, goal oriented, unique both in thought and deed would be even better. The emphasis has been shifted from "producerism" to "consumerism". There is a standard called SA 8000 to measure, monitor and evaluate achievement in social responsibility. A separate set of ways of doing social audit is framed. Further, the Centre for Sodal Responsibility has been created to provide training and consultancy to companies inclined towards CSR. The Centre also provides insight and performance assessments so as to sharpen the effectiveness of CSR.

Need for Legal Regime, Inclusion in Listing Agreement

Unfortunately unless and until compulsorily imposed by a law / Government, there seems to be reluctance in implementing and initiating any newer thing by many of the entities. Some people/ entities will always be there to break, not to follow such legal compulsion and at the same time, some people/ entities will always be there to voluntarily put into operation world class practices for the betterment at the macro level. There is an urgent need to frame a legal frame work for implementation of CSR programme. A comprehensive manual should be framed which contains the applicability of CSR, fulfillment based on the well set criteria on the basis of Turnover, nature of business operations, span of impact of business operations, consumption of natural resources and impact on environment, profitability etc. A disclosure in the Annual Report about the fulfillment of CSR should be mandate. CSR clause could also be included in the Listing Agreement of the stock exchanges. There can not be a universal CSR plan or framework to be adhered by corporate. There must be different set of guidelines, rules for different industries and co-relate the various parameters having impact at the macro level in the economy and society at large. There should also be some incentives/award for the level of achievement of CSR and of course penalty for non fulfillment of CSR.

Direct Nexus to the Board, Can Influence, Cultivate Mindset of the Board towards Fulfilling CSR

Board can play the most important role in CSR formulation and implementation. For this, first of all, the Directors must have a feeling, a desire from the bottom of the heart to do something good for the society, to participate in the welfare of the underprivileged section of the society, to be a reason of smile on the face of poor people, orphan children, underprivileged section of the society. Then only one can cultivate such feeling and effectively lead others for CSR. The Directors should inculcate the sense of and influence CSR. Once CSR is desired and initiated at the top level of the pyramid it will be automatically followed down the line in the hierarchy.



This depends upon the leadership quality, organizational culture, vision and mission, dynamics of the entity, quality and effectiveness of corporate governance practices, etc.
For transforming the CSR policies into action, one must have a clear structure of organization, clear vision and mission, optimum manpower, financial resources etc. The Company Secretary can, right from conceptualization, deciding the legal form, structure of organization, compliances with the statutory requirements to doing overall management of the affairs of the entity, providing leadership can contribute a lot to the noble cause of serving the society at large through the tool of CSR.


CONCLUSION

In summary, corporations exist because they, in a sustainable fashion, enable people to constructively practice their craft and create jobs, economic value, and wealth for the society and the enterprise .the corresponding obligation of the corporation to live and work for the common good – to grow a harmonious and ever-improving society, Stakeholders – customers, employees, investors, communities, suppliers, and competitors – all have a part in the fulfillment of a corporation’s responsibilities. Governance is based on the corporation’s values and is the responsibility of all members of a corporation for development, implementation and oversight. And finally, the greatest beneficiary of good corporate governance and social responsibility will be the people of the developing and emerging worlds, for these ideals are truly our best hope to help close the poverty gap and enable all people to share in a global prosperity.

A popular saying is "Journey begins at home". One cannot every time blame the Government. It should be important for each one of the citizens to give back something to the society in some form or other. Social responsibility needs to be deeply ingrained in the minds of everyone right from childhood. To break the tradition of ignoring social responsibility, there needs to be a radical change in the incentive structure in the educational system, admission and hiring system. Marks, grades should also be awarded based on the effective performance towards discharging social responsibility, leadership role leading to positive societal impact. Seniors should also prove themselves as role models. A child should at a very early stage of life, be inculcated with a sensible "feeling towards the well being of a society, community and should be encouraged to develop the same and nurtured through schooling environment which they carryover to the corporate world. CSR should not be mistaken as socialism but, should perceive as an effective tool for the well balanced growth and development of a nation. Media should also play an important role in this regard by giving coverage to corporate which discharge CSR in its true sense rather than highlighting only the commercial successes. Now, Private Industry has reached a stage where it needs to take active and sustained involvement, and shoulder more and more social responsibilities like public sector. As observed by Peter Drucker - "Profitability is crucial - for the society even more than the business. But it is not the purpose of business, but a limiting factor. It is not the explanation, cause or rationale of business behavior or decisions but the test of its validity.
 
REFRENCES

•    Business Line
•    Chartered Secretary, Publication of Institute of Company Secretaries of India, New Delhi.
•    Corporate Governance and Social Responsibility,Ron Baukol,Member, Board of Directors,  Caux Round Table, TSE Hall, Tokyo Stock Exchange,Tokyo, Japan.
•    The Hindu (National Daily)
•    World Bank report on Corporate Social Responsibility.
•    http://www.csr-asia.com/
•    www.allacademic.com/meta/
•    globalcompactasiapacific.org/india/.../CSR_Corp%20Philanthropy%20&%
•    www.itihas.org.in