Small Businesses and CSR I India CSR

By Shweta Bapat

From an individual street vendor to the country’s largest business establishment each one has its own set of stake holders, they also have both negative as well as positive impact on the society. Still it is believed that Corporate Social Responsibility (CSR) is to be done by the big companies only. As the big companies have more impact on the environment and society, it is there responsibility to take care of it. Additionally there is also a belief that if the company is having surplus, then only they are supposed to do CSR.

Companies Act 2013 and CSR Spending

The new Companies Act 2013 is also responsible to spread this belief in India. One of the criterions as per the act says that the companies need to spend 2 % of the average net profit for preceding three years. So indirectly if there is no profit then nothing should be spent on CSR.

Equality in CSR Application

Ideally CSR should apply to the organisations irrespective of size and sector because the basic reason for getting involved in CSR is because businesses owe something to the society. The size of business or amount of profit/turnover/net worth must not matter when it comes to CSR. If the business is small then they can carry on small CSR activities as per their capacity to make difference. Painting a single classroom of a nearby school can also be counted as a CSR.

Legal Freedom for Small Businesses

In fact small businesses have legal freedom of doing the activities that they think fit. They do not have any pressure of having CSR policies or compulsion of spending a specific amount on CSR. As these businesses are having small impacts the small CSR activities are enough for them to be responsible because it is not the size of initiative that matters but it’s a willingness of doing something for the society.

Collaboration for CSR

Though for large businesses the CSR resources available are more and it becomes comparatively easy for them to take big CSR initiatives like adopting a village, small businesses with their limited resources can also make a noticeable difference. Many businesses have willingness to get involved it to CSR but because of limited manpower and funds it becomes a challenge for them. Collaboration can be a better idea for small business to get involved in to CSR. A group of small businesses can collaborate with each other and take up the CSR activities as per their combined agenda. This method will help all the entities to contribute towards the community work with their limited resources and funds.

Benefits of CSR for Small Businesses

As large business units enjoy some benefits because of their involvement in to CSR small businesses also enjoy similar benefits like customer retention, improving business reputation, attracting, retaining and engaging responsible employees etc. The main benefit of CSR to small business units can be; they are likely to get the contracts of large businesses because large businesses hold their entire supply chain accountable for ethical practices. Therefore it is clear that small businesses can enjoy more benefits including economic or business development opportunities because of CSR.