According to the World Business Council for Sustainable Development “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to 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 Responsibility (CSR) as a concept is nothing new to India. Much before it came to be used as a term-in-itself and a cause that should be undertaken by the big conglomerates worldwide, Tata and Birla were already doing their bit towards the Indian society. At the same time, one shouldn’t forget that it was Ratan Tata of the Tata group only who offered to bailout Union Carbide (accused in Bhopal Gas Disaster) in 2006.
The concept of CSR became all the more important due to globalization when corporates started expanding beyond national boundaries and started using (read exploiting) resources on the lands of other nations. A CSR initiative undertaken by a company has three major areas that need to be addressed—people (workers and their families), environment and infrastructure (like road, transport etc).
Barring a few companies, the idea of CSR is almost unknown to the companies in a developing economy like India. In fact, after a lot of agitation by India Inc, Corporate Affairs minister Veerappa Moily declared in the Lok Sabha that it is not mandatory for the corporates to spend 2 per cent of their annual profits towards CSR. Even though, the Department of Public Enterprises has made it mandatory for the central Public Sector Units to create a CSR budget of a specified percentage of net profit of the previous year.
Karmayog, a Mumbai-based online non-governmental organization, documented the need for improved CSR performance in its 2009 report from which found that while 51 per cent of Indian companies practice CSR in some form; only 3 per cent report the amount they spend.
A study done by TNS India, a leading market research company, on the behalf of Times Foundation covered 11 PSUs (Public Sector Units), 39 private national agencies and 32 multinationals which include companies like Tata, Infosys, Wipro, Indian Tobacco Corporation (ITC), Larsen & Tubro, Ambuja Cement, Anil Dhirubhai Ambani Group among others. It found out that about 90 per cent of the 82 organisations—all the 11 PSUs, 85 per cent of the private national agencies and 94 per cent multinationals are involved in various CSR initiatives across India.
The results of the survey showed that a major part of the CSR goes towards education (82 per cent), health (81) and environment (81) apart from others like sanitation (61), HIV/AIDS (54), childcare (51), slum improvement (50), women empowerment (63).
In October 2011, Azim Premji of Wipro declared that his foundation (Azim Premji Foundation) is planning to open 1,300 schools across the country- two per district – which will be free, will impart education in the local language and be affiliated to the state board. But, in a society as stratified as India, these kinds of projects tend to fail due to caste and class rigidities.
Oil and gas major ONGC Limited (Oil and Natural Gas),a government enterprise, has also paid Rs 20 lakh to Virinchi Charities towards construction of Home for the Aged in Rajahmundry (Andhra Pradesh) under Corporate Social Responsibility.
However, the initiatives under CSR are indubitable way to earn a brand name as they publicize their ‘charitable’ work extensively. Also, companies get a tax exemption under Section 80 G of the Income Tax Act for their developmental projects. So, one should not be misled into taking CSR as a philanthropic cause carried out by these big conglomerates. It has its own advantages (‘profit’) for them.