Having a positive impact is increasingly important for every business.
In India, Corporate Social Responsibility (CSR) implies a concept, whereby companies decide to contribute to a better society and a cleaner environment. It is a concept, whereby the companies integrate social and other useful concerns in their business operations for the betterment of their stakeholders and society in general in a voluntary way.
Basically, “Corporate Social Responsibility” means and includes but is not limited to:
Projects or program relating to activities specified in Schedule VII to The Act.
Projects or program relating to those activities which are undertaken by the Board of directors of a company in ensuring the recommendation of the CSR Committee of the Board as per declared CSR Policy of the Company along with the conditions that such policy will cover subjects specified in Schedule VII of the Act.
That’s why corporate social responsibility (CSR), an obligation a company makes towards supporting people, communities, and the world at large is a must. Between humanitarian projects, environmental projects, and companies that go above and beyond to support their employees, there are many, diverse corporate social responsibility trends.
The concept of Corporate Social Responsibility (CSR), introduced through Companies Act, 2013 puts a greater responsibility on companies in India to set out a clear CSR framework.
But first, let’s define what is corporate social responsibility?
The United Natiions Industrial Development Organization (Unido) defines corporate social responsibility,
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“CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line-Approach”), while at the same time addressing the expectations of shareholders and stakeholders.”
Meanwhile, the European Union, said corporate social responsibility is the voluntary integration of companies’ social and ecological concerns into their business activities and their relationships with their stakeholders. Being socially responsible means not only fully satisfying the applicable legal obligations but also going beyond and investing “more” in human capital, the environment and stakeholder relations. This was published in 2001 by the European Union on a Green Paper on CSR.
Meanwhile, the International Organization for Standardization (IOS), an international standard-setting body, defines CSR as “the responsibility of an organization for the impacts of its decision and activities on society and the environment, resulting in ethical behavior and transparency which contributes to sustainable development, including the health and well-being of society; takes into account the expectations of stakeholders; complies with current law and is consistent with international standards of behavior and is integrated throughout the organization and implemented in its relations.”
Importance of Corporate Social Responsibility
CSR is an immense term that is used to explain the efforts of a company in order to improve society in any other way.
CSR improves the public image by publicizing the efforts towards a better society and increase their chance of becoming favourable in the eyes of consumers.
CSR increases media coverage as media visibility throws a positive light on the organisation.
CSR enhances the company’s brand value by building a socially strong relationship with customers.
CSR helps companies to stand out from the competition when companies are involved in any kind of community.
Strategies for sustainable CSR
These local guidelines reflect globally accepted frameworks for reporting non-financial information, susch as the Global Reporting Initiative (GRI) Sustainability Reporting Standards, which is aligned with the UN Global Compact — a voluntary agreement by businesses to uphold sustainability principles.
CSR attracts and retains employees
Companies engaged in CSR are attractive for new employees and better at retaining existing employees. Research has found that companies engaged in CSR reported staff turnover rates that were an impressive 50 percent lower.
Research has also demonstrated that organizations that adopted a CSR program reported an astounding 16 percent boost in employee productivity.
CSR improves stakeholder perception
The 2021 PwC Global Consumer Insights Pulse Survey, found that 53 percent chose to support companies “very often or often” that had strong company values and demonstrated a commitment to doing the right thing. Seventy seven percent of American consumers were motivated to do the same, while 74 percent of UK consumers also consider brand values before making a purchase.
Related:
Business will not prosper without a healthy planet and society
Corporate Social Responsibility (CSR) helps both society and the brand image of companies
Minimise Risk
Most investors consider CSR as a sign of ethical corporate behavior that minimizes risk. A 2022 study found that CSR can boost a business’ bottom line by creating value, increasing innovation, improving customer and employee relations, and expanding growth options.
CSR has the potential to make a company more competitive, lower financing costs, and increase overall economic value. Not only that, but it’s the way of the future. Business as usual is harming our planet. Using business as a force for good has the potential to save it.
When it comes to corporate social responsibility examples, some of the most common CSR actions include:
measuring and reducing environmental impact (by partnering with an organization);
improving labor practices;
participating in ethical sourcing;
engaging in charitable global giving;
using renewable energy;
providing opportunities for workplace volunteering;
adopting corporate policies that benefit the environment (like recycling through TerraCycle);
making socially and environmentally conscious investments; and
committing to diversity, equity, and inclusion.
It’s important to recognise socially responsible companies, not just to commend their efforts, but to encourage other organizations to incorporate social good into their missions. With so many types of corporate social responsibility, it’s easy for a company to engage with one or several that best suit their size, business model, and operational goals. When we all work for impact, we can help to support a greener, more equitable future.
Also Read: What is corporate social responsibility and how does it affect industries?
Fines and Penalties for Non-Compliance
In case a company fails to comply with the provisions relating to CSR spending, transferring and utilising the unspent amount, the company will be punishable with a minimum fine of Rs 50,000 which may increase to Rs 25 lakh. Further, every officer of such company who defaults in the compliance will be liable for a punishment which is imprisonment for a term which may extend to three years or with a minimum fine of Rs 50,000 which may increase to Rs 5 lakh, or with both.
Reason For Introduction of CSR for Companies
We live a dynamic life in a world that is growing more and more complex. Global-scale environment, social, cultural and economic issues have now become part of our everyday life.
Boosting profits is no longer the sole business performance indicator for the corporate and they have to play the role of responsible corporate citizens as they owe a duty towards society.
The concept of Corporate Social Responsibility (CSR), introduced through Companies Act, 2013 puts a greater responsibility on companies in India to set out a clear CSR framework.
Many corporate houses like TATA and Birla have been engaged in doing CSR voluntarily. The Act introduces the culture of corporate social responsibility (CSR) in Indian corporate requiring companies to formulate a CSR policy and spend on social upliftment activities.
CSR is all about corporate giving back to society. The Company Secretaries are expected to be known about the legal and technical requirements with respect to CSR in order to guide the management and Board.
Also Read: What is Corporate Social Responsibility (CSR) in India? – India CSR Network
