Without a sense of caring, there can be no sense of community - Anthony J.
The notion of give and take underpins the concept of corporate social
responsibility (CSR). Because corporate organizations use important resources
from society in the form of raw materials, human resources, and other resources
for their operations, they should function as trustees of the society and must
provide something to the society's well-being.
Keeping in mind the resource utilization by companies, environmental concerns
and sustainable growth, India with its major amendment in the Companies Act in
2013 became the first ever country to make CSR mandatory by adding section 135
to the Act which changed the option from willingness to obligation and upon
which companies with total finances of Rs. 5 billion, a turnover of Rs. 10
billion, or a total profit of around Rs. 50 million must now spend at least 2%
of their average net profit.
Albeit introduced as a legislation in 2013, the notion of corporate social
responsibility is not new in India. The rich history of trade and commerce
provides volumes of evidences of outstanding consultants promoting ethical
ideals at the start. Contributions were frequently used to build temples,
educational buildings, and public building in addition to extending help through
philanthropy as their contribution to the society one way or another. As time
went on, philanthropy changed to corporate social responsibility, and firms
began to focus on crucial issues. Many leaders, on the other hand, who were
inspired by Gandhi's ideas, implemented ethical practises in their enterprises.
Throughout the pre-mandate era, society was improved during the period of
independence (1914-1960), and the economy was subsequently shifted to a mixed
economy, with public-sector companies flourishing until the late 90s, during
then while a handful of companies like the Tata Group and Birla Group did have
CSR policies, most just maximised profits.
A look back at the history of CSR indicates that it was dominated by the notion
of charity until the 1990s. Businesses which saw CSR as a philanthropic gesture
frequently limited themselves to one-time cash donations and did not devote
their resources to community programmes. Furthermore, firms seldom considered
the stakeholder while developing such programmes, lowering the efficacy and
efficiency of CSR efforts.
Addressing the problem of social responsibility, the MCA enforced CSR pursuit
for select corporations after thoroughly examining the situation. This historic
step was taken by the Companies Act, 2013, which replaced the previous act,
which had been in place for a very long time. During this time, there was a lot
of agreement and a lot of conflict. While some businesses welcomed the new
legislation, others took a defensive stance toward the obligation.
Impact of CSR mandate on Indian Companies
In order to fix the abovementioned issue, the Companies Act made monitoring and
evaluation (M&E) a basic programme requirement and a vital role of the CSR
committee. Education in the shape of PGD programmes, short-term training, and
even seminars has been developed. The number of CSR consultants has exploded.
And businesses have been preparing to comply with the obligation, particularly
those with single-person departments that have historically outsourced all CSR
Others have large budgets dedicated just to people, with programme budgets in
the hundreds of crores. Both must measure impact in order to comply with the
ACT's reporting requirements.
The "Companies Amendment Rules, 2020" were also introduced by the MCA in 2020.
These guidelines change the meaning of CSR policy, include new requirements for
international organisations, and allow the government to create the "National
Unspent CSR Fund," which will distribute cash from the CSR budget that have not
been spent on CSR activities. This rule also specifies the requirements created
for CSR-compliant firms, in addition to the new benchmarks set. There is
stringent penalty for non-compliance too under subsection 7 of section 135 of
Corporates will now always have to strike a balance when it comes to designing
and conducting CSR operations. With the least amount of money spent, they would
try to have the most influence. More significantly, they must be "shown" doing
good under the Act. Needs assessments, baseline surveys, and research are all
important components of planning for long-term results and impact. Compliance
and visibility may be sacrificed on the altar of fast victories to show
accomplishments when executing initiatives, in order to achieve change on the
ground and actual effect.
Most of Corporate India is still figuring out the technology to make this work
for them, given the large quantities of money that will be required of them and
a crucial restriction: CSR initiatives must benefit their workers and fall
within the scope of normal business. Sustainable initiatives with a clear
business value were stalled, altered, or eventually dropped from the CSR fold.
While the argument rages over whether this will continue to effect corporate
hunger for emerging markets and the exploration of underprivileged populations
as customers, the author would argue that CSR actions provide valuable data for
market intelligence even when they are not directly related. The majority of CSR
activities are carried out in the physical location of operations, as required
There has been an increase in requests for tools that not only assist
corporations in implementing more community engaging CSR programmes, but also
enhance the company's expertise and interests like hitting two birds with one
stone and making a whole new corporate structure around it.
There is also seen a slew of digital solutions for CSR project administration,
staff volunteerism, data collecting, and other purposes. Both the NGO
implementation partner and the business field workers have boosted their
efficiency by using technology to monitor remote places. Social Impact
Assessment may be combined with traditional market research and stakeholder
interactions in a variety of methods, such as brand perception analysis and NGO
ranking for a Performance Index.
Few Indian companies which led to an impact in society due to their CSR
activities are ITC which is a hotel industry also involved in agriculture and
packaging. This group has been active in the creation of a livelihood as well as
environmental conservation projects. According to records, the company's CSR
actions have resulted in the livelihood of more than six million individuals and
Tata Steel which has a well-defined CSR policy that focuses on critical areas
such as health, education, and livelihoods.
This industry has influenced change by not only propelling the corporation to
new heights, but also by assisting in the improvement of society. It offers
scholarships, participates in women's empowerment programmes, promotes rural
development, raises awareness, has an environmentally responsible approach, and
assists in the healthcare sector. There are more companies under this list such
as Reliance Industries Ltd., Wipro Ltd., NTPC etc.
Despite the fact that CSR has gained popularity in India, there are a number of
obstacles that limit its efficacy and reach. CSR efforts face a variety of
problems, including a lack of awareness of the idea of CSR, the absence of
accurate data and precise information on the types of CSR activities, coverage,
policy, and so on. Reduced CSR endeavors are exacerbated by a lack of training
and underdeveloped workforce. A Times Group poll received comments from
participating organisations regarding the numerous problems that CSR programmes
face in various parts of the country.
Lack of community interest in CSR activities: There is a lack of community
enthusiasm in participating in and contributing to company CSR initiatives. This
is primarily due to the fact that local populations have little or no
understanding of CSR, and no major attempts have been made to raise awareness of
CSR and create trust in local communities about such projects.
Openness concerns: One of the primary issues raised by the poll is a lack of
transparency. Companies have stated that there is a lack of openness on the side
of local implementing agencies, since they do not make sufficient attempts to
share information on their programmes, audit issues, effect assessment, and
money use. This stated lack of openness has a detrimental influence on the
process of creating trust between businesses and local communities, which is
critical to the success of any local CSR effort.
Game of mere numbers: Measuring influence will never be simple, and monitoring a
process filled with subjective elements like as culture, behaviour, and
attitudes will always need careful consideration and analysis. One of the main
reasons qualitative research and ethnography are being employed increasingly in
the social sphere is to combat quantitative research's heavy emphasis on
More qualitative methods, such as PRA, have been created to uncover layers of
social needs and effects. According to "The Theory of Change," it also helps
distinguish between a program's output and results. The danger is that, with
mandatory reporting of CSR efforts, the "number game" would resurface, which
corporations are all too acquainted with and eager to pursue.
Non-availability of well-organized non-governmental organisations: It is also
reported that in remote and rural areas, there is a lack of well-organized
non-governmental organisations that can assess and identify real community needs
and collaborate with businesses to ensure successful CSR implementation. This
also strengthens the rationale for investing in local communities by enhancing
their capacity to carry out local development initiatives.
It is a well-known truth that when businesses demonstrate real interest in
socially responsible behaviour, the public favours them. Furthermore, CSR not
only benefits society, but it also benefits the company because it enhances the
public's perception of the organisation. Firms frequently engage in "Nation
Building" initiatives in order to establish a personal connection with the
public and build a stronger reputation.
Another important topic is if CSR can compensate for a company's lack of
expertise. The argument is that, as a result of the company's CSR initiatives,
stakeholders have more trust in the company and are ready to overlook ineptitude
at the corporate level.
CSR has been shown to have a favourable influence on developing countries with
poor institutions for assuring long-term economic growth. This is because CSR
initiatives provide corporations with a chance to be more cautious in their
corporate operations while also contributing to society. In a country where
corporations and the government collaborate on CSR initiatives, CSR activities
pave the path for filling institutional deficiencies.
While the debate rages over whether this has and will continue to affect
corporate appetite to innovate for emerging markets and explore undeserved
communities as consumers and suppliers, we would argue that even when CSR
activities are not directly associated with business, they can still reveal
significant data for market intelligence. After all, most CSR activities must
take place in the actual region of business, as mandated by law.
- Section 135 of Companies Act, 2013 - Corporate Social 24 Mar. 2022
- An Analysis Of Corporate Social Responsibility In India Dr. Reena Shyam
- MCA notifies the Companies (CSR) Amendment Rules, 2020." https://www.argus-
- Impact of CSR - an opportunity or a hindrance - iPleaders
- https://www.indiacode.nic.in/show- data?actid=AC_CEN_22_29_00008_201318_1517807327856§ionId=1326§ionno=135&orderno=13-9
- Impact Of The Companies Act On Csr Activities In India - CSR Mandate
- Top Education CSR Projects (csrbox.org)