Recent trends in corporate social responsibility in India – A critical analysis

Introduction

Corporate Social Responsibility (CSR) refers to the voluntary actions that companies take to improve the social and environmental well-being of their stakeholders, such as employees, customers, and the communities in which they operate. CSR is not a legal requirement, but rather a voluntary effort by companies to go beyond their legal obligations and make a positive impact on society.

CSR can encompass a wide range of activities, including environmental sustainability, community development, and ethical business practices. Companies may choose to focus on specific areas of CSR, such as reducing their environmental impact, or they may implement a broad range of CSR initiatives. The specific activities a company undertakes will depend on its own priorities, values, and the needs of its stakeholders.

One of the key benefits of CSR is that it can help companies to build positive relationships with their stakeholders. By demonstrating a commitment to social and environmental responsibility, companies can improve their reputation and build trust with their customers, employees, and the communities in which they operate. This can lead to increased loyalty, improved employee morale, and better relationships with local communities.

CSR can also have a positive impact on a company’s bottom line. By implementing sustainable business practices, companies can reduce their environmental impact and save money on resources. Additionally, investing in community development can help to create a stable and prosperous local economy, which can benefit the company in the long term.

However, it is important to note that CSR is not just about philanthropy or charitable giving. CSR activities should be integrated into a company’s overall business strategy and should align with the company’s core values and objectives. CSR activities should also be evaluated and measured to ensure that they are having the intended impact and that resources are being used effectively.

There are also challenges to implementing CSR, such as a lack of accountability and transparency. Many companies do not provide clear information about the activities they undertake and the impact they have, making it difficult to evaluate their effectiveness. Additionally, there is a lack of monitoring and enforcement of CSR, which means that companies may not be meeting their obligations.

Corporate Social Responsibility (CSR) is a voluntary effort by companies to go beyond their legal obligations and make a positive impact on society. CSR can encompass a wide range of activities, including environmental sustainability, community development, and ethical business practices.

The specific activities a company undertakes will depend on its own priorities, values, and the needs of its stakeholders. CSR can have a positive impact on a company’s reputation and bottom line, but it’s important to ensure that it is integrated into a company’s overall business strategy and that it is evaluated and measured for effectiveness.

Development of corporate social responsibility in India

Corporate Social Responsibility (CSR) in India has been evolving over the past few decades, with an increasing number of companies recognizing the importance of CSR and taking steps to implement it in their operations. The development of CSR in India can be traced back to the early 2000s when the Indian government first introduced legislation mandating CSR for certain companies.

The Companies Act of 2013 was the first legislation to mandate CSR in India. Under this act, companies with a net worth of at least Rs. 500 crore (approximately $70 million), or a turnover of at least Rs. 1,000 crore (approximately $140 million), or a net profit of at least Rs. 5 crores (approximately $700,000) in any financial year, are required to spend at least 2% of their average net profit for the immediately preceding three financial years on CSR activities. The act also requires companies to disclose information about their CSR activities in their annual reports.

The introduction of mandatory CSR in India has led to an increase in the number of companies undertaking CSR activities. According to a study by the Confederation of Indian Industry (CII), the number of companies reporting on their CSR activities increased from 7% in 2014 to 92% in 2018. Additionally, the amount of money spent on CSR activities increased from Rs. 3,620 crores (approximately $500 million) in 2014 to Rs. 8,913 crores (approximately $1.2 billion) in 2018.

However, despite the increase in the number of companies undertaking CSR activities, there is still a lack of understanding of what constitutes effective CSR in India. Many companies view CSR as a tick-box exercise and focus on activities that are easy to implement and measure, such as charitable donations, rather than activities that are aligned with their core business and have a greater impact.

One of the challenges facing CSR in India is the lack of clear guidelines and monitoring. The Companies Act of 2013 does not provide specific guidelines on what constitutes CSR activities, leaving companies to interpret the requirements for themselves. Additionally, there is a lack of monitoring and enforcement of CSR, which means that companies may not be meeting their obligations.

Another challenge facing CSR in India is the lack of stakeholder engagement. Many companies do not involve their stakeholders, such as employees and local communities, in the development and implementation of their CSR activities. This can lead to CSR activities that are not aligned with the needs and priorities of the stakeholders, and that do not have the intended impact.

In recent years, there has been a shift towards more sustainable and impactful CSR activities in India. Companies are starting to focus on activities that align with their core business and that have a greater impact on society and the environment.

This includes activities such as sustainable sourcing, energy efficiency, and community development. Additionally, there has been an increase in the number of companies engaging with their stakeholders to develop and implement CSR activities that are aligned with the needs and priorities of the stakeholders.

The development of CSR in India has been evolving over the past few decades. The introduction of mandatory CSR in India has led to an increase in the number of companies undertaking CSR activities. However, there is still a lack of understanding of what constitutes effective CSR in India, and many companies view CSR as a tick-box exercise.

There are also challenges facing CSR in India, such as the lack of clear guidelines and monitoring, and the lack of stakeholder engagement. In recent years, there has been a shift towards more sustainable and impactful CSR activities in India, with companies focusing on activities that align with their core business and have a greater impact on society and the environment.

Corporate social responsibility of public sector undertaking (PSUs)

Corporate Social Responsibility (CSR) of Public Sector Undertakings (PSUs) in India refers to the voluntary initiatives taken by these organizations to contribute to the society and environment in which they operate. PSUs, also known as state-owned enterprises, are organizations that are owned and controlled by the government of India.

They play a significant role in the Indian economy and have a large impact on society and the environment. Therefore, it is important for PSUs to take responsibility for their actions and contribute to sustainable development.

Additionally, the Public Sector Undertakings Policy of 2018, issued by the Indian government, lays down the guidelines for CSR activities of PSUs. It emphasizes the need for PSUs to undertake CSR activities that align with the United Nations Sustainable Development Goals (SDGs) and to engage with stakeholders in the development and implementation of CSR activities.

PSUs in India have undertaken a wide range of CSR activities, including education, healthcare, community development, and environmental protection. For example, Indian Oil Corporation Limited (IOCL), a PSU in the oil and gas sector, has undertaken CSR activities such as providing drinking water facilities, building toilets, and promoting education and skill development in the communities surrounding its operations.

Bharat Heavy Electricals Limited (BHEL), a PSU in the power sector, has undertaken CSR activities such as providing healthcare facilities, promoting education, and undertaking environmental protection activities.

However, there are also challenges facing the CSR of PSUs in India. One of the challenges is the lack of clear guidelines and monitoring. The Companies Act of 2013 does not provide specific guidelines on what constitutes CSR activities for PSUs, leaving them to interpret the requirements for themselves. Additionally, there is a lack of monitoring and enforcement of CSR, which means that PSUs may not be meeting their obligations.

Another challenge is the lack of stakeholder engagement. Many PSUs do not involve their stakeholders, such as employees and local communities, in the development and implementation of their CSR activities. This can lead to CSR activities that are not aligned with the needs and priorities of the stakeholders, and that do not have the intended impact.

Furthermore, many PSUs tend to focus on charity and philanthropic activities, rather than activities that align with their core business and have a greater impact. For example, many PSUs may focus on building schools or hospitals, rather than addressing issues such as sustainable sourcing or energy efficiency.

In recent years, there has been an increasing focus on sustainability and impactful CSR activities among PSUs in India. PSUs are starting to focus on activities that align with their core business and that have a greater impact on society and the environment.

For example, some PSUs in the oil and gas sector are implementing sustainable sourcing practices and investing in renewable energy. Additionally, some PSUs are engaging with their stakeholders to develop and implement CSR activities that are aligned with the needs and priorities of the stakeholders.

The CSR of PSUs in India has been evolving over the past few years, with an increasing number of PSUs recognizing the importance of CSR and taking steps to implement it in their operations. PSUs have been undertaking a wide range of CSR activities, including education, healthcare, community development, and environmental protection.

However, there are still challenges facing the CSR of PSUs in India, such as a lack of clear guidelines and monitoring, lack of stakeholder engagement, and a focus on charity and philanthropic activities rather than activities that align with their core business and have a greater impact.

To address these challenges, it is important for PSUs to develop clear guidelines and policies for their CSR activities and to engage with stakeholders in the development and implementation of these activities. Additionally, PSUs should focus on activities that align with their core business and that have a greater impact on society and the environment. They should also invest in sustainable sourcing practices, renewable energy, and other initiatives that promote sustainable development.

Furthermore, it is also important for the government to play an active role in monitoring and enforcing CSR regulations for PSUs, as well as providing support and guidance for the implementation of CSR activities.

Overall, the CSR of PSUs in India has a lot of potential to contribute to sustainable development and the well-being of the communities and the environment in which they operate. With the right policies, guidelines, and engagement with stakeholders, PSUs can play a crucial role in promoting sustainable development in India.

CSR of multinational companies (MNCs)

Multinational Corporations (MNCs) have a significant presence in India and are playing an increasingly important role in the country’s economy. As a result, the Corporate Social Responsibility (CSR) activities of these companies have become a major concern for the Indian government, civil society, and other stakeholders.

Multinational corporations (MNCs) operating in India have a significant impact on the country’s economy and society. As such, their corporate social responsibility (CSR) activities can have a significant impact on the communities and environment in which they operate. However, there are several challenges that MNCs face when implementing CSR in India.

One challenge is the lack of a clear and consistent legal framework for CSR in India. CSR is not legally mandated in India and companies have discretion in deciding the nature and extent of their CSR activities. This can lead to a lack of consistency in CSR practices across different companies and industries.

Another challenge is the lack of local understanding and community engagement. MNCs may struggle to fully understand the needs and priorities of the communities in which they operate, leading to CSR initiatives that are not well-targeted or effective. Additionally, MNCs may have difficulty engaging with local communities and building trust, which can be critical for the success of CSR initiatives.

A third challenge is a potential for CSR to be seen as a form of “greenwashing,” where companies use CSR activities to distract from negative impacts they may be having on the environment or society. This can lead to scepticism and mistrust of MNCs and their CSR efforts.

Despite these challenges, MNCs can also bring valuable resources and expertise to CSR initiatives in India. They can use their financial and technical resources to support large-scale projects and programs that can have a significant impact on society. Additionally, MNCs can also play a role in promoting best practices and raising awareness about the importance of CSR in India.

Recommendations for MNCs to effectively implement CSR in India include:

1. Developing a deep understanding of the local context and engaging with communities to understand their needs and priorities.
2. Building partnerships with local organizations and NGOs to support and amplify the impact of CSR initiatives
3. Being transparent and accountable for their CSR activities and clearly communicating their impact to stakeholders.
4. Using CSR activities to address underlying structural issues rather than just addressing symptoms of the problem.
5. Incorporating CSR into the core business strategy and making it an integral part of their operations.

There are many examples of successful CSR initiatives by Indian MNCs. Some examples include:

1. Tata Group: The Tata Group has a long history of CSR initiatives in India. They have programs that focus on education, healthcare, and community development, as well as initiatives to promote sustainable business practices and environmental conservation.
2. Mahindra Group: Mahindra Group has a wide range of CSR initiatives including education, healthcare, and community development. It also focuses on environmental sustainability, including initiatives to promote clean energy and reduce carbon emissions.
3. Infosys: Infosys has a strong focus on education and community development. It has implemented programs to improve access to education for underprivileged children and has also established several community development programs.
4. Reliance Industries: Reliance Industries has a wide range of CSR initiatives that focus on education, healthcare, and community development. It also has a focus on environmental sustainability, including initiatives to promote clean energy and reduce carbon emissions.
5. Wipro: Wipro has a strong focus on education and community development. It has implemented programs to improve access to education for underprivileged children and has also established several community development programs.

These are just a few examples of the many CSR initiatives being undertaken by Indian MNCs. Many of these companies have a long-term commitment to CSR, with programs that have been running for several years and have a measurable impact on the communities and environment.

Overall, MNCs can have a significant impact on society through their CSR activities in India, but it is important for them to navigate the challenges and take a responsible and community-centred approach to CSR.

Effects of corporate social responsibility in India

Corporate Social Responsibility (CSR) refers to the voluntary actions taken by companies to improve the social and environmental well-being of the communities in which they operate. In India, CSR has been a topic of increasing importance in recent years, as the country’s economy has grown and companies have become more aware of their impact on society.

In terms of positive effects, CSR can lead to improved social and environmental outcomes for the communities in which companies operate. For example, CSR initiatives such as building schools, and healthcare facilities, and providing clean drinking water can have a direct impact on the lives of people living in those communities. Additionally, CSR can also lead to improved brand image and reputation, as well as increased employee satisfaction and motivation.

However, there are also some negative effects of CSR in India. One of the main criticisms is that CSR is often seen as a way for companies to absolve themselves of their responsibilities to society, rather than as a genuine commitment to social and environmental causes. Additionally, CSR initiatives are often not well-coordinated or monitored, which can lead to inefficiencies and a lack of impact.

Furthermore, in India, many companies have been found to be using CSR as a means of tax evasion by routing profits through charitable activities, this is also a way to avoid paying taxes to the government.

Another criticism is that CSR often focuses on short-term, superficial solutions rather than addressing underlying structural issues. For example, building a school in a community does not address the underlying issue of poverty that may be preventing children from attending school in the first place.

Conclusion and recommendations

CSR in India has grown significantly over the past few years, with many companies recognizing the importance of contributing to the social and environmental well-being of their stakeholders. The statutory framework established by the Companies Act, 2013 has ensured that companies are investing in CSR activities that align with the country’s development priorities.

However, there are certain challenges that need to be addressed, such as the lack of transparency and accountability, lack of alignment of CSR activities with the development priorities of the country, and lack of participation from SMEs. With the right approach and implementation, CSR can play an even more significant role in the overall development of India.

CSR is becoming an increasingly important aspect of corporate culture in India. Companies are recognizing the importance of giving back to the communities in which they operate, and are investing in CSR activities that align with the country’s development priorities.

However, there are challenges that need to be addressed, such as lack of transparency, lack of alignment with development priorities, and lack of participation from SMEs. With the right approach and implementation, CSR can play an even more significant role in the overall development of India.

CSR in India has the potential to bring about positive social and environmental outcomes for communities, but there are also criticisms that it can be used as a way for companies to absolve themselves of their responsibilities and as a way to evade taxes. To maximize the positive impact of CSR in India, the following recommendations can be considered:

1. Greater transparency and accountability: Companies should be more transparent in their CSR activities, providing detailed information on how they are using funds, how they are engaging with the community, and what impact they are having. This will help to build trust with stakeholders and ensure that CSR initiatives are having a meaningful impact.
2. Greater coordination and monitoring: CSR initiatives should be better coordinated and monitored to ensure that they are having a meaningful impact on society. This can be done through the creation of a national CSR database that tracks the activities of companies and assesses their impact.
3. Addressing underlying structural issues: CSR initiatives should focus on addressing underlying structural issues that contribute to social and environmental problems. This will require companies to take a more holistic and long-term approach to CSR.
4. Government’s role: The government should work closely with companies to establish a clear set of guidelines for CSR activities and ensure that companies are held accountable for their actions. This will help to ensure that CSR initiatives are having a meaningful impact and that companies are not using CSR to evade taxes.
5. CSR as a part of the business: CSR should be integrated into the core business strategy of companies, rather than being treated as a separate activity. This will help to ensure that CSR is aligned with the overall goals of the company and that it is having a meaningful impact on society.

Overall, CSR can be an effective tool for promoting social and environmental well-being in India. However, it is important for companies to take a responsible and transparent approach to CSR, and for the government and society to hold them accountable for their actions.

By: Sampurna Singha Roy