United Nations Industrial Development Organization defines CSR as a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR can be 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. Building a society which focuses on inclusive growth and reduces disparities can only be undertaken as a collective responsibility and corporates can contribute significantly in this agenda of a holistic development.
It is also important to make a strict distinction between initiatives assumed under the handle of CSR and philanthropy and charity. The concept of CSR goes beyond merely enhancing the reputation of the company but making it a responsible actor of the community by actively contributing towards the development of societies and stakeholders. This, in turn has a rippling effect which brings along a variety of competitive advantages for the corporate such as improved access to financial capital, efficient human resources base, enhanced customer loyalty and better risk management processes.
Unlike earlier times, today a lot of strategy and systematic thought is put into implementing CSR projects and programmes. The recent combination of regulatory as well as societal pressure is pushing companies to pursue their CSR activities more professionally. Government intervention has also largely succeeded in making corporates accountable for their operations through mandatory disclosure and reporting such as Business Responsibility and Sustainability Reports. In addition to this, several guidelines and circulars such as NVG and SEBI directives are regularly issued to direct corporates to undertake CSR programs. The most important step in this direction has been the new Companies Act 2013 which has introduced a section on Corporate Social Responsibility, Section 135, making CSR mandatory for all companies operating in India, with an eligible criterion based on their finances.
If implemented properly, CSR programs can bring forth significant advancement in areas such as education, health, women empowerment, skill development, rural infrastructure, sanitation etc. Studying the situation, it is imperative that the leading conglomerates of India Inc take their social responsibilities more seriously and contribute strategically.