Corporate
Social Responsibility (CSR)
Corporate Social Responsibility
(CSR) is a concept whereby companies not only consider their profitability and
growth, but also the interests of society and the environment by taking
responsibility for the impact of their activities on stakeholders, environment,
consumers, employees, communities, and all other members of the public sphere. The basic premise is that
when the corporations get bigger in size, apart from the economic
responsibility of earning profits, there are many other responsibilities
attached to them which are more of non-financial/social in nature. These are
the expectations of the society from these corporate to give something in
return to the society with whose explicit or implicit help these entities stand
where CSR is understood to be the way firms integrate social, environmental and
economic concerns into their values,
culture, decision making, strategy and operations in a transparent and
accountable manner and thereby establish better
practices within the firm, create wealth and improve society.
Corporate Social Responsibility
is nothing but what an organisation does, to positively influence the society
in which it exists. It could take the form of community relationship, volunteer
assistance programmes, special scholarships, preservation of cultural heritage
and beautification of cities.
The term Corporate Social
responsibility refers to the concept of business being accountable for how it
manages the impact of its processes on stakeholders and takes responsibility
for producing a positive effect on society.
Why CSR at All ?
Business cannot exist in
isolation; business cannot be oblivious to societal development. The social
responsibility of business can be integrated into the business purpose so as to
build a positive synergy between the two.
1. CSR creates a
favorable public image, which attracts customers. Reputation or brand equity of
the products of a company which understands and demonstrates its social responsibilities is very high. Customers trust the products of such a company
and are willing to pay a premium on its products. Organizations that perform
well with regard to CSR can build reputation, while those that perform poorly
can damage brand and company value when exposed. Brand equity, is founded on
values such as trust, credibility, reliability, quality and consistency.
2. Corporate
Social Responsibility (CSR) activities have its advantages. It builds up a
positive image encouraging social involvement of employees, which in turn
develops a sense of loyalty towards the organization, helping in creating a
dedicated workforce proud of its company. Employees like to contribute to the
cause of creating a better society. Employees become champions of a company
for which they are proud to work.
3. Society gains
through better neighborhoods and employment opportunities, while the
organization benefits from a better community, which is the main source of its
workforce and the consumer of its products.
4. Public needs
have changed leading to changed expectations from consumers. The industry/
business owes its very existence to society and has to respond to needs of the
society.
5. The company's
social involvement discourages excessive regulation or intervention from the
Government or statutory bodies, and hence gives greater freedom and flexibility
in decision-making.
6. The internal
activities of the organisation have an impact on the external environment,
since the society is an interdependent system.
7. A business organisation has a
great deal of power and money, entrusted upon it by the society and should be
accompanied by an equal amount of responsibility. In other words, there should
be a balance between the authority and responsibility.
8. The good public image secured
by one organisation by their social responsiveness encourages other
organizations in the neighborhood or in the professional group to adapt
themselves to achieve their social responsiveness.
9. The atmosphere of social
responsiveness encourages co-operative attitude between groups of companies.
One company can advise or solve social problems that other organizations could
not solve.
10. Companies can better address
the grievances of its employees and create employment opportunities for the
unemployed.
11. A company with its “ear to
the ground” through regular stakeholder dialogue is in a better position to
anticipate and respond to regulatory, economic, social and environmental
changes that may occur.
12. Financial institutions are
increasingly incorporating social and environmental criteria into their assessment
of projects. When making decisions about where to place their money, investors
are looking for indicators of effective CSR management.
13. In a number of jurisdictions,
governments have expedited approval processes for firms that have undertaken social
and environmental activities beyond those required by regulation.
National
Voluntary Guidelines on Social, Environmental and Economic
The Corporate Social Responsibility Voluntary Guidelines issued by
the MCA in December 2009 was the first step towards
mainstreaming the concept of Business Responsibilities. Through these
Guidelines, the Ministry urged the business sector to adopt the principles
contained in the Guidelines for responsible business practices. The document
also said that “after considering the experience of the adoption of these
Guidelines by the Indian corporate sector and consideration of relevant
feedback and other related issues, the Government may initiate the exercise for
review of these Guidelines and further improvement after one year.
CORPORATE
SOCIAL RESPONSIBILITY UNDER THE COMPANIES ACT, 2013
The Companies Act, 2013 has introduced the concept of Corporate
Social Responsibility in India to the forefront. It aims to
promote greater transparency and disclosure. The Ministry of Corporate Affairs
notified Section 135 and Schedule VII of the Companies Act 2013 as well as the
Companies (Corporate Social Responsibility Policy) Rules, 2014 which came into
effect from April 1, 2014. The MCA further issued Circular No. 21/2014 and
36/2014 to clarify on certain matters. Notification making further amendments
in Schedule VII was issued on August 2014 and Companies (Corporate Social
Responsibility Policy)
Amendment Rules, 2015
were released on January 2015. The provisions of the Act and the Rules amended
till July 2015 are given below-
Definition
of CSR
The term ‘CSR’ is
defined in the Companies (Corporate Social Responsibility Policy) Rules to mean
and include but not limited to:
-projects or programs relating to
activities specified in the Schedule VII of the Act; or
-projects or programs relating to
activities undertaken by the Board in pursuance of recommendations of the CSR
Committee as per the declared CSR policy subject to the condition that such
policy covers subjects enumerated in the Schedule VII of the Act.
Corporate
Social Reporting : [mandatory Disclosure Requirements]
It is mandatory for
companies to disclose in Board’s Report, an annual report on CSR. The report of
the Board of Directors attached to the financial statements of the Company
would also need to include an annual report on the CSR activities of the
company in the format prescribed containing following particulars –
○ A brief outline of the company's CSR policy, including overview
of projects or programs proposed to be undertaken and a reference to the
web-link to the CSR policy and projects or programs.
○ The Composition of
the CSR Committee.
○ Average net proflt
of the company for last three financial years
○ Prescribed CSR
Expenditure
○ Details of CSR
spent during the financial year.
○ In case the company
has failed to spend the two per cent of the average net profit of the last
three financial years or any part thereof, the company shall provide the
reasons for not spending the amount in its Board report.
○ A responsibility
statement of the CSR Committee that the implementation and monitoring of CSR
Policy, is in compliance with CSR objectives and Policy of the company. If the
company has been unable to spend the minimum required on its CSR initiatives,
the reasons for not doing so are to be specified in the Board Report. If a
company has a website, the CSR policy and the report containing details of such activities have to
be made available on the company’s website for informational purposes.
Tata
Steel [TISCO] – A company that also makes steel
Tata
Steel’s Vision strikes a balance between economic value as well as ecological
and societal value by aspiring to be "a Global Benchmark in Value Creation
and Corporate Citizenship". In the initial years, Tata Steel's CSR
interventions were more as a 'provider' to society where the community was
given support for its
overall needs, both
for sustenance and development. Gradually, the shift in approach led to Tata
Steel being an 'enabler' focusing on building community capacity through
training programmes; focusing on providing technical support rather than giving
aid. At present, CSR interventions of Tata Steel focus on 'sustainable
development' to enhance the quality of life of people. It guides the Company in
its race to excel in all areas of sustainability. J R D Tata the Chairman of
the Tata Group believed that, "to create good working conditions, to pay
the best wages to its employees and provide decent housing to its employees are
not enough for the industry, the aim of an industry should be to discharge its
overall social responsibilities to the community and the society at large,
where industry is located." Guided by this mandate, Tata Steel has for
decades uses its skills and resources, to the extent it can reasonably afford,
to give back to the community a fair share of the product of its efforts.
The
Company supports and propagates the principles of the United Nations Global
Compact as a Founder Member, is a signatory to the Worldsteel Sustainability
Charter and supports the Affirmative Action programme of the Confederation of
Indian Industry. Tata Steel’s approach to business has evolved from the concept
that the wealth created must be continuously returned to society. The
responsibility of combining the three elements of society - social,
environmental, and economic - is of utmost importance to the way of life at
Tata Steel. Today, Tata Steel’s CSR activities in India encompass the Company’s
Steel Works, Iron ore mines and collieries, reaching out to the city of
Jamshedpur, its peri-urban areas and over 800 villages in the states of
Jharkhand, Odisha and Chhattisgarh. Community involvement is a characteristic
of all Tata Steel Group companies around the world. It can take the form of
financial support, provision of materials and the involvement of time, skills
and enthusiasm of employees. The Group contributes to a very wide range of
social, cultural, educational, sporting, charitable and emergency assistance
programmes. The Company works in partnership with the Government, national and
international development organisations, local NGOs and the community to ensure
sustainable development.
The
Corporate Services Division delivers these responsibilities through several
institutionalised bodies:
• Tata Steel
Corporate Social Responsibility and Accountability Policy
• Corporate Social
Responsibility
• Tata Steel Rural
Development Society (TSRDS)
• Tribal Cultural
Society (TCS)
• Tata Steel Family
Initiatives Foundation (TSFIF)
• Tata Steel Skill
Development Society (TSSDS)
• Education
• Medical Services
• Urban Services
• Sports Department
• Tata Steel Adventure
Foundation
• JUSCO
• Other societies
like Ardeshir Dalal Memorial Hospital, Blood Banks, Kanti Lal Gandhi Memorial
Hospital etc.)
• Tata Relief
Committee
To
assess the effectiveness of its social initiatives Tata Steel has innovatively
devised a Human Development Index (HDI). In 2012-13, HDI assessment was
completed for 230 villages. The Corporate Social Responsibility Advisory
Council was also created with the objective that this apex body along with the
results of the measurement of HDI will enable the Group to direct its social
initiatives better and allocate resources more efficiently
