A STUDY ON CORPORATE SOCIAL RESPONSIBILITY IN INDIA

ABSTRACT: The importance of Corporate Social Responsibility (CSR) emerged significantly over the last decade. In the recent times CSR has started to include both economic and social interests. Companies have become more transparent in accounting and display public reporting due to pressures from various stakeholders. It is possible for companies to behave in the desired ethical and responsible manner towards consumers, employees, stakeholders, society and environment. They have started incorporating their CSR initiative in their annual reports. India, the second largest democracy saw the initiation of the first generation of reforms in 1991 under the stewardship of the then finance minister of India, Dr. Manmohan Singh followed by the new reforms in the post 2001 era. India, the second largest population in the world is the second fastest growing economy after China. In the purchasing power parity terms, India is among the top four of the world and is ranked the worlds 12 th largest economy. To tap this huge market we have large National and International marketing companies operating here in the Fast Moving Consumer Goods (FMCG), Durables and Service sectors. Most of these companies are highly successful in terms of profitability, market share and growth rates. However, there are concerns raised about the value of these companies place based on their social responsibility and ethics in marketing in their quest for maximization of profits. This paper will attempt to introduce the concept of Corporate Social Responsibility (CSR) and understand the scenario in India on these issues and to suggest the directions which can take the companies towards social entrepreneurship and become corporate citizens. Keywords: Social Responsibility, Ethics, Corporate Citizens, Corporate Social Responsibility and Social entrepreneurship

INTRODUCTION: Prior to 1930s the majority view as to the business objectives was maximizing the profit only. This view has undergone change and now the thrust of enterprises is to create and sustain customers by serving their interests in the best possible manner. Business organizations are no more considered as mere economic institutions, but an integral part of the society. They procure the inputs from society and nature the common wealth of society. Every decision and action of the corporate houses has an impact on the society. Business Organizations, therefore, owes a responsibility towards society to carry on its operation in a manner which are not contradictory to the interest of the society. The concern of the organizations to pursue such policies which do not adversely affect society is the theme of social responsibility. It implies the obligation that every business owes to society as to issues and problems emanating from their activities. It reflects the concern of the business enterprises on impact of their actions and decisions on the society. Corporate Social Responsibility (CSR) can be described as the continuous commitment by corporations towards the economic and social development of communities in which they operate. The concept of corporate social responsibility of large industrial groups has occupied a prominent place in the greater national discourse on economic issues since the pre-independence era in India. Mahatma Gandhi described large business as trusts of the wealth of the people and thus emphasized on the larger social purpose that industrial wealth should serve in independent India. In the early days of the post - independence period, the Indian state under the heavy influence of Nehruvian socialism encouraged private industries to play an active role in the economic and social development of the backward sections of the society, while at the same time setup a mammoth public sector for serving larger societal interests. As Nehrus gentle socialism gave way to the more radical policies of nationalization and extensive state regulation of the Indira Gandhian era, industrial groups desperate to avoid the state policies and regulations in economic affairs resorted to large scale corporate welfare programs to demonstrate that private wealth also played a important role in poverty alleviation and the socio-economic development of the nation and was not antipeople. An impending crisis in Indian economy led the Rajiv Gandhi and Narasimha Rao Governments to dismantle the license raj and introduce much needed economic reforms in the country, which marked the beginning of the economic liberalization and the free market economy in India. The major impact of these economic reforms has been the increased presence of transnational corporations in the country and transformation of Indian businesses into large global enterprises. In this scenario, there is an increased focus on the social role of

these private enterprises by both the proponents and opponents of liberalization in India. Given that almost one third of the countrys population lives in poverty, CSR provides Indian corporations a readily available and highly impactful opportunity to prove and establish the legitimacy of their actions by moving beyond charities and rural developmental activities. More objectively, it will tend to counter-balance to some extent; the impact of the huge negative externalities that commercial activities tend to create in the developing societies they operate in, also new business models emerging out of these innovative hybrid partnerships may give rise to unforeseen fortuitous results that will give a boost to economic growth in this emerging market. OBJECTIVES OF THE STUDY: To study the meaning of Social Responsibility and Corporate Social Responsibility To study the current Corporate Social Responsibility status in India To study Green Marketing as a strategy of Corporate Social Responsibility SOCIAL RESPONSIBILITY: Social responsibility implies adopting such policies and taking such decisions in the course of business which are not contradictory to the culture and value system followed by the society nor the policies or decisions taken by the business be such that adversely affect the society. Social responsibility reflects obligation which business organizations owes to society for dealing with problem emanating from their activities. CORPORATE SOCIAL RESPONSIBILITY: Corporate Social Responsibility means that a Business Organization should be held accountable for any of its actions that affect the people and their environment. World Business Council for Sustainable Development 2001 defines Corporate Social Responsibility as The continuing commitment by business to behave ethically and contribute to the 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 RESPONSBILITY IN INDIA: In developing economies like India, CSR is seen as part of corporate philanthropy in which corporations augment the social development to support the initiatives of the government. However with time, the scenario of CSR has changed from being philanthropic to being socially responsible to multi stake holders. The period of 1960s and 1970s saw an emergence of CSR activities being inbuilt in corporate philanthropy. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms. India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR), released in October 2009. Sustainability in Asia ESG reporting uncovered (September 2010) is based on four parameters viz. General, Environment, Social and Governance. In its study based on 56 companies in India, it observed that India is ranked second in country ranking in Asia and is ranked one ranking in general category. It is observed that reporting is strongly followed by companies as well as they seek international development standards. It could be attributed to the Indian government compelling the public sector companies to provide for community investment and other environmental, social and governance liabilities. A key finding of the survey conducted in June 2008, aimed at understanding of the role of corporations in CSR, carried out by TNS India ( a research organization) and the Times Foundation, revealed that over 90 per cent of all major Indian organizations surveyed were involved in CSR activities. Besides the public sector, it was the private sector companies that played dominant role in CSR activities. A study on the CSR activities of 300 corporate houses, conducted by an industry body in June 2009, revealed that Corporate India has spread its CSR activities across 20 states and Union territories, with Maharashtra gaining the most from them. The study also revealed that about 36 per cent of the CSR activities are concentrated in the state, followed by about 12 per cent in Gujarat, 10 per cent in Delhi and 9 per cent in Tamil Nadu. The companies have on an aggregate, identified 26 different themes for their CSR initiatives. Of these 26 schemes, community welfare tops the list, followed by education, the environment, health, as well as rural development Another study conducted by Economic Times revealed that donations provided by listed companies grew by 8 per cent during the financial year 2008-2009 and that 760 companies donated US$ 170 million in the same year, up from US$ 156 million in the year-ago period. As many as 108 companies donated over US$ 2,16,199 up by 20 per cent over the previous year.

POLICY INITIATIVES: In 2009, the Government made it mandatory for all public sector oil companies to spend 2 per cent of their net profits on corporate social responsibility. The central government is working on a framework for quantifying the CSR initiatives of companies to promote them further. To ensure the active participation of public sector companies in CSR initiatives, the government in planning to introduce certain legislations. The Department of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2 to 5 per cent of the company's net profits. As per the guidelines, companies with net profit of less than US$ 22.5 million will earmark 3 to 5 per cent of profit for CSR, companies with net profit of between US$ 22.5 million - US$ 112.5 million, will utilise 2 to 3 per cent for CSR activities and companies with net profit of over US$ 112.5 million will spend 0.5 to 2 per cent of net profits for CSR. This proposal was discussed two years earlier as well however due to protests from companies, it became voluntary exercise. As reported in Times of India, February 10, 2011, the Ministry of Company Affairs (MCA), which is finalizing the new Companies Bill, has accepted a Parliamentary Standing Committee's recommendation on the issue. However it has proposed that companies with a turnover of Rs 1,000 crores or net profit of Rs 5 crores or more must earmark 2 per cent of their net profit for the preceding three years on CSR. In case if the companies fail to comply with the prescribed spend, it will have to list out the reasons for the shortfall to its shareholders . According to the recently passed Companies Bill 2012, CSR spends and reporting has been made more stringent. Clauses 134 and 135 specifies that companies with net worth more than Rs 500 crores, or turnover more than Rs 1000 crores, or net profit more than Rs 5 crores are required to constitute a CSR committee to formulate CSR policy for the company. Companies now would have to spend a minimum of 2% of average net profit earned during preceding three years before formulation of the policy. Bulk of academic literature suggests that CSR done by organizations is largely self-serving, rather than being useful to society largely. With the shifting of the corporate social responsibility paradigm to a stakeholder centric approach, practices at the ground level have also undergone a radical transformation. In every aspect of corporate social responsibility measures the last decade has seen corporations innovating to increase efficiency, effectiveness and accountability. The focus has been on initiatives that are people-centric with active community participation at all levels. Further, the corporations themselves have moved away from the charitable initiatives like giving financial grants or

sponsorships to providing products and services in a manner that would make a real difference in the target communities. The first perceptible change has been the introduction of a host of innovative programs and schemes in several areas like education, healthcare, rural development, environment protection, protection of artistic and cultural heritage and disaster management that are customized to meet the specific needs of the target group and corporations devote not only financial resources but expertise, manpower, products and services for the successful implementation of these schemes: Lupin India Ltd, Indias third largest manufacturer of pharmaceuticals has started a project for providing sustainable development in 154 villages across Rajasthan. The scheme instead of providing for piecemeal assistance that does not lead to effective alleviation of poverty or adequate development is designed as a holistic action plan that includes an Agricultural Income Generation Scheme, land cultivation and fruit plantation programs, fodder preservation schemes, sericulture and water-recycling programs, establishment of medical and educational centers, adult literacy programs and credit schemes. Cipla, another Indian pharma major has found a novel approach to fulfill its corporate social responsibility obligations by offerering to sell a cocktail of three anti-HIV drugs, Stavudine, Lamivudine and Nevirapine, to the Nobel Prize-winning voluntary agency Medicine Sans Frontieres (MSF) at a rate of $350, and at $600 per patient per year to other NGOs over the world. This offer has led to an significant decrease in the prices of these drugs worldwide increasing the accessibility of these drugs especially in the developing countries. Ranbaxy, one of Indias major pharmaceutical firms operates seven mobile healthcare vans and two urban welfare centers that reach over a lakh people in various parts of northern and central India as part of its corporate social responsibility initiative. Tata Consultancy Services (TCS) has set up a fully-equipped computer training laboratory for children from the Society for the Welfare of the Physically Handicapped and Research Centre, in Pune for imparting basic computer knowledge. NIIT has launched a highly popular hole-in-the-wall scheme where it places a computer on a

public wall in urban and rural areas so that neighborhood children can learn computer basics using the play-way method. Bharat Electronics Ltd built cyclone proof houses for the victims of the super cyclone in with the help of the victims themselves so that the houses are built according to their needs. Ion Exchange has founded a profitable venture for environmental protection through water treatment, afforestation and organic farming

CSR INITIATIVES AND GREEN MEASURES: Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This makes the firms believe that they must achieve environmental objectives as well as profit related objectives. This results in environmental issues being integrated into the firms corporate culture. 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 Corporate Social Responsibility. 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. 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. 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 tribals in the Sasan area of Gir forest.

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. State-owned Navratna Company, Coal India Ltd (CIL) will invest US$ 67.5 million in 2010-11 on social and environmental causes. 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). Kansai Nerolac Paints Ltd., has always been committed to the welfare of society and the environment. Kansai Nerolac has worked on removing hazardous heavy metals from their paints. Lead in paints especially poses danger to human health where it can cause damage to Central Nervous System, kidney and reproductive system. Children are more prone to lead poisoning leading to lower intelligence levels and memory loss. Tata Motors is setting up an eco-friendly showroom using natural building material for its flooring and energy efficient lights. The Indian Hotels Company which runs the Taj Chain is creating Eco rooms which will have energy efficient mini bars, organic bed linen and napkins made from recycled paper. And when it comes to illumination, the rooms will have CFLs or LEDs. The worlds fourth largest wind-turbine maker Suzlon Energy is amongst the greenest and best Indian Companies in India. Tulsi Tanti, the visionary behind Suzlon convinced the world that wind is the energy of the future and built his factory in Puducherry to run entirely on wind power. Suzlons corporate building is the most energy-efficient building ever built in India.

SUGGESTIONS: Small companies do not take adequate interest in CSR activities and those which undertake them fail to disclose it to the society. In the process they lose out on people and their trust in them. Media can come up with strong

support for informing the people at large about the CSR initiatives taken up by the companies. It can sensitize population and also make them aware of the benefits of CSR to them. However, media is not doing enough in this regard. The increasing demand for more transparency and accountability on the part of the companies and disclosure of information through formal and improved reporting is also inevitable for the companies. The more the open and honest disclosure, the stronger and trusting relationships can be built with the stakeholders and consumers. 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 organization needs to recognize their own role in promoting CSR. Companies should provide wider professional development activities. Training, conferences and seminars could be organized 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 organizations contribution further. Government regulations which are supporting in this direction could attract more response from organizations. 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: The new economic era in India i.e. the post-liberalization phase of the Indian economy was a catalyst for the radical transformation in the corporate social responsibility related practices in the country. The change was two fold: transformation of the conceptual understanding of corporate social responsibility and innovations at the implementation level. At the conceptual level, there was a fundamental transformation from the charity-oriented approach to the stakeholderoriented approach where the target group was seen as stakeholder in the community whose well-being was integral to the long term success of the

company. However, the real revolution occurred at the implementation stages where companies have started committing manpower, expertise in addition to financial resources in order to provide a host of services, programs and schemes that are flexible enough to accommodate the needs of the target community. The CSR initiatives have also seen greater people participation at all stages and tighter accountability standards. Corporate sustainability is an evolving process and not an end. The Companies Bill 2012 is a good initiative on the part of the Government. Across the globe, the concept of CSR has been accepted as an element for 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. Companies that can rightly address the needs of the largest middle class along with other consumer segments have the potential to become social entrepreneurs and follow the ethical marketing practices towards corporate Citizenship.
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