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Corporate Social Responsibility is a growing and important part of an organisation’s overall strategy. The voluntary compliance of social and ecological responsibility of companies is called Corporate Social Responsibility. It is basically a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. It is a concept whereby companies integrate social and environmental concerns into their business operations and their interaction with their stakeholders on a voluntary basis. It is represented by contributions undertaken by companies to society through its business activities and social investment.
CSR is also linked with the principal of sustainability, which argues that enterprises should make decisions based not only on financial factors such as profits or dividends, but also based on the immediate and long term social and environmental consequences of their activities. CSR is the responsibility of an organisation for the impact of its decisions and activities on society, the environment & its own prosperity known as the TRIPLE BOTTOM LINE of people, planet and profit.
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. 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.
Benefits to the Company: 1. Improved financial performance 2.
Lower operating costs 3. Product safety and decreased liability 4. Workforce diversity 5. Access to capital 6. Reduced regulatory oversight 3 7. More ability to attract and retain employees 8. Greater productivity and quality 9. Increased sales and customer loyalty 10. Enhanced brand image and reputation
Benefits to the Community and the General Public 1. Corporate involvement in community education, employment and homelessness programmes 2. Product Safety and quality 3. Charitable contributions 4. Employee volunteer programmes Environmental Benefits 1. Greater material recyclability 2. Greater use of renewable resources 3. Better product durability and functionality 4. Integration of environmental management tools into business plans.
Is not new to India. Development of CSR can be traced back in different phases which are as follows: The first phase of CSR was predominantly determined by culture, religion, family tradition and industrialisation. Business operations and CSR engagement were based mainly on corporate self-regulation. Being the oldest form of CSR, charity and philanthropy still influence CSR practices, especially in community development. In the pre-industrial period up to the 1850s, merchants committed themselves for the religious reasons, sharing their wealth, for instance, by building temples. Moreover, ”the business community occupied a significant place in ancient India and the merchants provided relief in times of crisis such as famine or epidemics by opening go-downs of food and treasure chests” (Arora, 2004). Under colonial rule, Western type of industrialization reached India and changed CSR from the 1850s onwards. The pioneers of industrialization in the 19th century in India were a few families such as the Tata, Birla, Bajaj, Lalbhai, Sarabhai, Godrej, Shriram, Singhania, Modi, Mahindra and Annamali, who were strongly devoted to philanthropically motivated CSR (Mohan, 2001). The second phase of Indian CSR (1914-1960) was dominated by country‟s struggle for independence and influenced fundamentally by Gandhi‟s theory of trusteeship, which aimed to consolidate and amplify social development. During this period, Indian businesses actively engaged in the reform process. Not only the companies saw the country‟s economic development as a protest against colonial rule; but also they participated in its institutional and social development (India Partnership Forum 2002).
The paradigm of the “mixed economy”, with the emergence of PSUs and ample legislation on labour and environment standards, affected the third phase of Indian CSR (1960-1980). This phase was also characterized by shift from corporate selfregulation to strict legal and public regulation of business activities. In this scenario, the public sector was seen as the prime mover of development. The 1960s was described as an “era of command and control”, because strict legal regulations determined the activities of the private sector. The introduction of a regime of high taxes, quota and license system imposed tight restrictions on the private sector and indirectly triggered corporate malpractices. As a result, corporate governance, labour and environmental issues rose on the political agenda and quickly became the subject of legislation. Furthermore, state authorities established PSUs with the intention of guaranteeing the appropriate distribution of wealth to the needy (Arora, 2004). In the fourth phase (1980 until the present) Indian companies and stakeholders began abandoning traditional philanthropic engagement and to some extent integrated CSR into a coherent and sustainable business strategy, partly adopting the multi-stakeholder approach. In the 1990s, the Indian government initiated reforms to liberalize and deregulate the Indian economy by tackling the shortcomings of the “mixed economy” and tried to integrate India into the global market. Consequently, controls and licence system were partly abolished, and the Indian economy experienced a pronounced boom, which has persisted until today (Arora & Puranik, 2004).
At present, Indian companies are now expected to discharge their stakeholders‟ responsibilities and societal obligations, along with their shareholders‟ wealth maximization goal. In India as in the rest of the world there is a growing realization that business cannot succeed which fails in a society. An ideal CSR has both ethical and philosophical dimensions, particularly in India where there exists a wide gap between sections of people in terms of income and standards as well as socio-economic status. Nowadays, India has been named among the top ten Asian countries paying increasing importance towards Corporate Social Responsibility (CSR) disclosure norms. Besides the public sector companies, it is the private sector companies that played dominant role in CSR activities.
Tata Group, one of India’s oldest, largest and most respected business conglomerates, is a leader in the CSR scene. The Tata Group has been recognized by its endeavor to institutionalize CSR in its 96 companies and integrate CSR with its business processes. With a strong commitment from its top management, it has developed tools such as the Tata Index for Sustainable Human Development, a model for measuring the social work that the group enterprises undertake. With investments as high as Rs 380 crore, the Tata Group is a benchmark for Indian companies.
Tata Group‟s CSR investments include all major themes, such as education, health, environment, rural development, sports, arts and employee relations.
Community Initiatives Each Tata company has its own priorities in social development. The main companies in the group, such as Tata Steel, Tata Tea and Tata Chemicals, have in-house organizations dedicated to Community Initiatives. There are several projects, in different areas such as education, health, women-children welfare, rural development, income generation, sports, arts and others. Employee Relations: The Tata Group has more than 245,000 employees. Tata‟s were the pioneers in employee benefits that were later mandated through legislation in India and elsewhere in the world. The eight-hour working day, free medical aid, welfare departments, grievance cells, leave with pay, provident fund, accident compensation, training institutes, maternity benefits, bonus and gratuity were introduced by the group before any legal rules were framed on them. Community Initiatives: “Temples of Knowledge” Under the Group‟s program to develop centers of learning and research, knowledge and intellectual capital, Tata funds five Indian „Temples of Knowledge‟:
TATA group has chosen the following channels to drive its CSR initiatives:
Thus, as far as India is concerned, the relationship between CSR and sustainability can be summarized as follows:
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