TITLE: CSR- A COLLABORATIVE APPROACH TOWARDS CORPORATE DEVELOPMENT

AND ENVIRONMENT SUSTAINABILITY

AUTHOR: Chetna Rathi, Soumyabrata Nayakii, Satya Ranjan Garuiii
OBJECTIVES:
This paper was framed keeping in view, the following objectives:
i. To examine the way in which both the business and the surrounding environment can progress in a
sustainable way.
ii. To analyze the medium in which business can use different environmental aspects to enhance its
profitability and to study the mutual effects of doing the same.
RESEARCH METHODOLOGY:
The methodology adopted for the study is descriptive in nature wherein data are collected from various
secondary sources like books, websites, case studies, bare act etc
INTRODUCTION:
The Vedic philosophy of ‘Sarva Loka Hitam’ i.e. ‘well being of all stakeholders has found its
prominence in the current business environment. Corporate Social Responsibility(CSR) a concept that
has evolved over years, which is presently used as a basic strategy for enhancing shareholders’ goodwill.
The basic motto underlying it; is to return to the society what it has taken from it in its process of wealth
creation. It is a concept whereby companies not only consider their profitability and growth, but also the
interest of the society and the environment surrounding it. It takes responsibility to integrate social,
environmental and economic concerns for the well being of various stakeholders’ viz. consumers,
employees, communities and all other members of the public sphere. From the corporate side, it is an
adoption of such practices into their values, culture, decision making, strategy, operations etc in a
transparent and accountable manner. This helps the organizations to create wealth and improve society
simultaneously, to achieve all-round development.
EVOLUTION OF CSR:
Though the act of philanthropy has been ruling over years, a full fledged concept of CSR emerged around
1950s as a modern concept. Father of Modern CSR, Howard Bowen, is largely credited with coining the
phrase ‘Corporate Social Responsibility’. This emergence has undergone various phases as stated below:

PHASE 1 (1850 TO 1914)

The first phase of CSR is known for its charity and philanthropic nature. CSR was influenced by family
values, traditions, culture and religion, as also industrialisation. The wealth of businessmen was spent on
the welfare of society, by setting up temples and religious institutions. In times of drought and famine
these businessmen opened up their granaries for the poor and hungry. With the start of the colonial era,
this approach to CSR underwent a significant change. In pre-Independence times, the pioneers of
industrialisation, names like Tata, Birla, Godrej, Bajaj, promoted the concept of CSR by setting up
charitable foundations, educational and healthcare institutions, and trusts for community development.
During this period social benefits were driven by political motives.
PHASE 2 (1910 TO 1960)
The second phase was during the Independence movement. Mahatma Gandhi urged rich industrialists to
share their wealth and benefit the poor and marginalised in society. His concept of trusteeship helped
socio-economic growth. According to Gandhi, companies and industries were the ‘temples of modern
India’. He influenced industrialists to set up trusts for colleges, and research and training institutions.
These trusts were also involved in social reform, like rural development, education and empowerment of
women.

PHASE 3 (1950 TO 1990)

This phase was characterised by the emergence of PSUs (Public Sector Undertakings) to ensure better
distribution of wealth in society. The policy on industrial licensing and taxes, and restrictions on the
private sector resulted in corporate malpractices which finally triggered suitable legislation on corporate
governance, labour and environmental issues. Since the success rate of PSUs was not significant there
was a natural shift in expectations from public to private sector, with the latter getting actively involved in
socio-economic development. In 1965, academicians, politicians and businessmen conducted a
nationwide workshop on CSR where major emphasis was given to social towards social responsibility.
What started as charity is now understood and accepted as responsibility accountability and transparency.
PHASE 4 (1980 ONWARDS)
In this last phase CSR became characterised as a sustainable business strategy. The wave of liberalisation,
privatisation and globalisation (LPG), together with a comparatively relaxed licensing system, led to a
boom in the country’s economic growth. This further led to an increased momentum in industrial growth,
making it possible for companies to contribute more.
Table no 1.1
Phase 1 (1850 - 1914)
Phase 2 (1910 - 1960) P Phase 4 (1980
h onwards)
a
s
e

(
1
9
5
 0

1
9
9
0
)
Purely philanthropy and CSR as social CSR under the “mixed CSR in a globalised
charity during development during the economy paradigm”; world is in a confused
industrialisation; Independence struggle; corporation is state; corporation is
corporation is only corporation is responsible to owners, responsible to owners,
responsible to owners and responsible to owners, managers and other managers, other target
managers. managers and target environments. environments and the
employees. public at large.

Source:

COLLABORATION BENEFITS:
As we commonly know, business cannot exist in isolation. CSR practices instill a positive synergy in the
business as well as in the environment through mutual benefit of both the parties. It is like an implied
agreement between the business and the society, on a whole.
Towards Business:
1. CSR creates a favourable public image, which attracts customers. Reputation or brand equity of
the products of a company which understands and demonstrates its social responsibilities is very
high. Customers trust the products of such a company and are willing to pay a premium on its
products. Organizations that perform well with regard to CSR can build reputation, while those that
perform poorly can damage brand and company value when exposed. Brand equity, is founded on
values such as trust, credibility, reliability, quality and consistency.
2. Corporate Social Responsibility (CSR) activities have its advantages. It builds up a positive
image encouraging social involvement of employees, which in turn develops a sense of loyalty
towards the organization, helping in creating a dedicated workforce proud of its company.
Employees like to contribute to the cause of creating a better society. Employees become
champions of a company for which they are proud to work.
3. Society gains through better neighborhoods and employment opportunities, while the
organization benefits from a better community, which is the main source of its workforce and the
consumer of its products.
4. Public needs have changed leading to changed expectations from consumers. The industry
 business owes its very existence society and has to respond to needs of the society.
5. The company's social involvement discourages excessive regulation or intervention from the
Government or statutory bodies, and hence gives greater freedom and flexibility in decision
making.
6. The internal activities of the organization have an impact on the external environment, since the
society is an inter-dependent system.
7. A business organization has a great deal of power and money, entrusted upon it by the society
and should be accompanied by an equal amount of responsibility. In other words, there should be a
balance between the authority and responsibility.
8. The good public image secured by one organisation by their social responsiveness encourages
other organizations in the neighborhood or in the professional group to adapt themselves to achieve
their social responsiveness.
9. The atmosphere of social responsiveness encourages co-operative attitude between groups of
companies. One company can advise or solve social problems that other organizations could not
solve.
10. Companies can better address the grievances of its employees and create employment
opportunities for the unemployed.
11. A company with its “ear to the ground” through regular stakeholder dialogue is in a better
position to anticipate and respond to regulatory, economic, social and environmental changes that
may occur.
12. Financial institutions are increasingly incorporating social and environmental criteria into their
assessment of projects. When making decisions about where to place their money, investors are
looking for indicators of effective CSR management.
13. In a number of jurisdictions, governments have expedited approval processes for firms that
have undertaken social and environmental activities beyond those required by regulation.
Towards Environment
1. reduce the consumption of raw materials and energy,
2. reduce production of hazardous waste and pollution,
3. environmental effects,
4.introduce mechanisms to internalize external environmental costs,
5. take into account environmental objectives at the stage of product design
6. protect and restore natural ecosystems,
7.implement technologies to reduce harm done to the environment in production processes,
8. promote ecological behavior within the company, as well as saving energy and water in
every department of the company
CSR UNDER COMPANIES ACT, 2013:
Highlighting the importance of responsibility of corporates towards the environment, the Companies Act,
2013 has brought about certain mandatory provisions for certain specified classes of companies. They are
stated below:
Definition of CSR
The term ‘CSR’ is defined in the Companies (Corporate Social Responsibility Policy) Rules to mean and
include but not limited to:
• projects or programs relating to activities specified in the Schedule VII of the Act; or
• projects or programs relating to activities undertaken by the Board in pursuance of
recommendations of the CSR Committee as per the declared CSR policy subject to the condition
that such policy covers subjects enumerated in the Schedule VII of the Act.
Applicability
As per section 135 of the Companies Act 2013, the CSR provision will be applicable companies which
fulfills
any of the following criteria during any of the three preceding financial years =
○ Companies having net worth of rupees five hundred crore or more, or
○ Companies having turnover of rupees one thousand crore or more or
○ Companies having a net profit of rupees five crore or more
The CSR Rules have widen the ambit for compliance obligations to include the holding and subsidiary
companies as well as foreign companies whose branches or project offices in India which fulfills the
criteria
specified above.
According to the CSR Rules, the CSR provision will also be applicable to every company including its
holding
or subsidiary, and a foreign company having its branch office or project office in India having net worth
of
rupees five hundred crore (500 Crore)or more, or turnover of rupees one thousand crore (1000 crore) or
more or a net profit of rupees five crore (5 Crore) or more during any financial year.
If a company ceases to be a company covered under subsection (1) of section 135 of the Act for three
consecutive financial years shall not be required to -
(1) constitute a CSR Committee; and
(2) comply with the provisions contained in sub-section (2) to (5) of the said section till such time it
meets the criteria specified in sub-section (1) of section 135.
Thus, the CSR Rules specify that a company which does not satisfy the specified criteria for a
consecutive
period of three financial years is not required to comply with the CSR obligations, implying that a
company
not satisfying any of the specified criteria in a subsequent financial year would still need to undertake
CSR
activities unless it ceases to satisfy the specified criteria for a continuous period of three years. This could
increase the burden on small companies which do not continue to make significant profits.

LIST OF ACTIVITES TO BE CARRIED OUT:

Schedule VII of the Companies Act,2013 has specified a list of activities to be carried out by companies
through their CSR policies, so as to capture the essence of the subject matter. These activities relate to-
i. Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation & making
available safe drinking water;
ii. Promoting education, including special education & employment enhancing vocation skills especially
among children, women, elderly & the differently unable & livelihood enhancement projects;
iii. Promoting gender equality, empowering women, setting up homes & hostels for women & orphans,
setting up old age homes, day care centers & such other facilities for senior citizens & measures for
reducing inequalities faced by socially & economically backward groups;
iv. Reducing child mortality and improving maternal health by providing good hospital facilities and low
cost medicines;
v. Providing with hospital and dispensary facilities with more focus on clean and good sanitation so as to
combat human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other
diseases;
vi. Ensuring environmental sustainability, ecological balance, protection of flora & fauna, animal welfare,
agro forestry, conservation of natural resources & maintaining quality of soil, air & water;
vii. Employment enhancing vocational skills
viii. Protection of national heritage, art & culture including restoration of buildings & sites of historical
importance & works of art; setting up public libraries; promotion & development of traditional arts &
handicrafts;
ix. Measures for the benefit of armed forces veterans, war widows & their dependents;
x. Training to promote rural sports, nationally recognized sports, sports & Olympic sports;
xi. Contribution to the Prime Minister‘s National Relief Fund or any other fund set up by the Central
Government for socio-economic development & relief & welfare of the Scheduled Castes, the Scheduled
Tribes, other backward classes, minorities & women;
xii. Contributions or funds provided to technology incubators located within academic institutions, which
are approved by the Central Government;
xiii. Rural development projects, etc
xiv. Slum area development.
Explanation.— For the purposes of this item, the term slum area‘shall mean any area declared as such by
the Central Government or any State Government or any other competent authority under any law for the
time being in force.
The Above list is illustrative not exhaustive. All activities under the CSR activities should be environment
friendly and socially acceptable to the local people and Society. Contribution towards C.M relief fund
shall be a part of CSR activities above 2% of Net profit other than the activities mentioned above.

CORPORATE CITIZENSHIP BY TATA STEEL-A CASE STUDY:

Tata Steel’s Vision strikes a balance between economic value as well as ecological and societal values by
aspiring to be a “Global Benchmark in Value Creation and Corporate Citizenship”. It focuses on
Sustainable Development to enhance the quality of life of the people. Its approach has evolved from the
concept that wealth created must be continuously returned to the society. Some of the instances include,
Eight-Hour Workday in 1912, free medical aid in 1915, leave with pay, Maternity Benefit for ladies in
1928 etc. The company supports and propagates the principles of the United Nations Global Compact as a
Founder Member, is a signatory to the Worldsteel Sustainability Charter etc. It has taken the responsibility
of combining three elements of society-social, environmental & economic.
FINDINGS: The Company works in partnership with the Government, national and international
development organisations, local NGOs and the community to ensure sustainable development.
The Corporate Services Division delivers these responsibilities through several institutionalized bodies:
• Tata Steel Corporate Social Responsibility and Accountability Policy Corporate Social Responsibility
• Tata Steel Rural Development Society (TSRDS)
• Tribal Cultural Society (TCS)
• Tata Steel Family Initiatives Foundation (TSFIF)
• Tata Steel Skill Development Society (TSSDS)
• Education
• Medical Services
• Urban Services
• Sports Department
• Tata Steel Adventure Foundation
• JUSCO
• Other societies like Ardeshir Dalal Memorial Hospital, Blood Banks, Kanti Lal Gandhi Memorial
Hospital etc.)
• Tata Relief Committee
To assess the effectiveness of its social initiatives Tata Steel has innovatively devised a Human
Development Index (HDI). In 2012-13, HDI assessment was completed for 230 villages. The Corporate
Social Responsibility Advisory Council was also created with the objective that this apex body along with
the results of the measurement of HDI will enable the Group to direct its social initiatives better and
allocate resources more efficiently
FINDINGS
.Leading sustainability companies display high levels of competence in addressing global and industrial
challenges. CSR is no longer viewed as just a regulatory or discretionary cost but as an investment that
brings financial returns. It is a great opportunity for the corporates for getting sound financial returns,
efficient human capital, customer relationships, government support etc, thereby earning goodwill and
reputation.
This as a result enhances its duration of business to sustain & exist in this era of competition.
CONCLUSION:
The time has come to be cautious about the impact of various dimensions of CSR activities on business.
Efforts have to be made from the grass-root level by the enterprises through its plans & policies.
Moreover, its proper implementation is the key for success, The common motto of firm’s existence
should be-“Live and let others live”
i
MCom( Part II), Berhampur University, [email protected] ,Mob-8763830179
ii
MCom( Part II), Berhampur University, [email protected], mob-7205102156
iii
MCom( Part II), Berhampur University, [email protected], mob-8338046728