Corporate Social Responsibility: A brief study

Guest Post By A. Sri Mukesh

As per the definition of the UNO, Corporate Social Responsibility (CSR) can be understood as a management concept and a process that integrates social and environmental concerns in business operations and a company’s interactions with the full range of its stakeholders. The stakeholders for an enterprise or a firm are the people who work in the organization, the people who stay around the industry (the effluents and the gaseous exhaust might affect them and hence they become the stakeholders), the shareholders of the company, the customers of the company and the government. All these stakeholders come to a common consensus and plan out the CSR guidelines of the company.

Government of India (GOI,) amended an act which states that a minimum of 2% of average net profits in three preceding financial years must be spent annually on CSR. This spending must be planned and monitored by a CSR committee who’s existence is mandatory by the rule of law. This law was outrageously criticized by most of the industries. They argue that the need to give back to the society is a thing which should come from within. It shouldn’t be done by framing new rules. Few critics say that the whole CSR concept is a sham. CSR was brought into existence because, to survive in this highly competitive environment, you need to have an edge over the other. By proclaiming yourself to be a CSR driven company, you earn the goodwill of the consumers and thus increase your sales and thereby the profit margin. And the icing over the cake is the tax cuts that you receive from the government because you are a socially responsible company. Take the example of Nestle or Coca Cola. Nestle’s bottling plant in Pakistan or Coca Cola’s bottling plant in India, both experienced the same situation wherein the ground water levels of the regions nearer to the bottling plant, diminished. Kala Dera in Rajasthan, Palakkad in Kerala are a few examples of the many bottling plants of Coca Cola which deplete the ground water levels for their own profits. 510,000 liters of water are drawn out everyday from one bottling plant. And it requires 3.5 liters of water to produce 1 liter of Coca Cola.

But Coca Cola was given the Golden Peacock Award for their CSR activities for three consecutive years. Why would this happen? It is evident from the above information that profit making is the company’s primary motive. Not just for Coca Cola, but for every company, it is the same. But then, due to the new formed act by the GOI, Coca Cola started to abide by it and bagged the award. The companies like Tata, Infosys, who are known for their philanthropic values need no rules to be framed to serve the society. But for the other companies, where the drive to serve isn’t natural, laws have to be formulated.

How does CSR benefit the organizations?

  1. CSR helps to build a brand image which helps the company to increase its sales and thereby profits.
  2. By being CSR driven, the government gives tax cuts.
  3. CSR creates employment opportunities. Most of the CSR work of the companies is outsourced. Hence a well versed CSR Manager is the need of the hour.
  4. By being a CSR practitioner, the enterprise cuts down the competition in an industry. The new entrants and the smaller players of the industry are pushed away because of the brand image that was strengthened using the tools of CSR.

The author has a B.Tech degree in Biotechnology and is currently pursuing his P.G.D.M. (Bio-Technology) from the Institute of Public EnterpriseHyderabad, India.

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6 Comments

  1. This post is interesting however a bit quixotic in the context of objective reality. Social responsibility and corporate responsibility are almost mutually exclusive. The priority of a CEO is to increase shareholder value. Unfortunately, this comes at nearly any cost. For an illustration of greed in the private sector, please see my piece on how investment banks really work at danteruffalo.com.

    http://danteruffalo.com/2014/02/27/the-secret-investment-banks-dont-want-you-to-know/

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  2. 🙂 …. Perspective & nothing more. & in a pluralist society/country like ours i am sure we have space for each one of them. Allow me to share that most of your blogs are interesting,informative & i generally wait for the next one to come up. Good work!.,.. happy blogging.

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  3. Its confusing to say the least.. .I mean, if i am doing a legitimate business, abide by the rules of the land what’s wrong in making profits? even if by anyone’s definition profits are obnoxious. I believe not just CSR ( i being staunch supporter of the inner voice TATA, INFOSYS way) but recent “Banning Management quota in Pvt. School” seems to be a political symbolism than anything else. Why should unaided/non-funded pvt. school be forced to not have any say in how and to whom seats will be allocated? We are such hypocrites. A doctor is a goon if he charges a premium for his diagnostic effort, a teacher/institution is a goon if that charges a premium, a businessman is a goon if he makes profit. I would like your comments/views on this

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    1. According to the writer of this post, extrapolating CSR to the Banning of Management seats for nursery schools in Delhi, the initiative definitely sounds legitimate. RTE doesn’t just promise education, it promises education with proper amenities. The Government banned, only the capital fee taken for admission into the nursery. There is still Primary, Middle and Secondary school for the institutions to benefit from. And moreover I personally don’t think believe that complying to these norms would dent the profits of the education industry.

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