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Published : November 07, 2011 | Author : mini.anshuman
Category : Company Law | Total Views : 7410 | Unrated

Mini Gautam, B.S.L LL.B from ILS Law College and currently pursuing LLM in International Financial Law from Kings College London. Anshuman Chanda, B.S.L LL.B from ILS Law College and currently pursuing LLM in Tax Law from Kings College London.

The Art of Giving-Corporate Social Responsibility in India

“..Society is not just the environment of the enterprise. Even the most private of business enterprise is an organ of society and serves a social function... The very nature of the modern business enterprise imposes responsibilities on the manager.”

Simply put, Corporate Social Responsibility (CSR) maybe defined as “the ethical behavior of a company towards the society.

The incentives in CSR are:
(A) Compliance in letter of the law;
(B) Observing norms of common morality, like ethics and fair play, in its internal management and dealings; and
(C) A social trusteeship mindset in deploying its resources.

According to Sunil Mittal, Chairman of India’s telecom giant Bharti Airtel CSR should not be made compulsory and that voluntary compliances are always better than forced.

Over the years CSR has become an effective marketing strategy, a way for a company to enhance its positive image. CSR creates short term employment opportunities for the company by undertaking various projects. It improves operational efficiency of the company and is accompanied by increase in productivity. It gives a feeling of satisfaction and meaning to the lives of all those associated.


CSR originated in the 1930s and 1940s. It became concretized in 1953 with the publication of “Social Responsibilities of the Businessman”, by Howard Bowen, the Father of CSR. Bowen asked: “what responsibilities to society can business people be reasonably expected to assume?” The meaning expanded during the 1960s with Keith Davis’ definition of CSR as “..businessmen’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.

The concept of voluntarism was seen first in Clarence.C.Walton’s 1967 book, Corporate Social Responsibilities, when he linked CSR with the idea that companies need to voluntarily accept their obligations to society.

The 1970s and 1980s saw attention being focused on the responsibilities of a corporation. Peter Drucker, the Father of Modern Management said that the organisation’s first ‘social responsibility’ was to make a profit to cover operational costs in future.

Gradually, corporations started to realise the importance of their public image. They began to understand that they needed a strategy to convince the public that they could play a meaningful role within the society.

CHARITY BEGINS AT WORK: Exemplary CSR Initiatives in India
You can spend a lot of time making money. The tough time comes when you have to give it away properly.”- Lee Iacocca.

Sachin Kaushik reported that he was surprised that more than 90% organizations surveyed by TNS India and The Times Foundation, were involved in CSR initiatives. A majority of CSR ventures are being done as internal projects whereas a small proportion are in the form of support extended as direct financial assistance to voluntary organizations or communities.

CSR in India has followed a chronological evolution of 4 thinking processes:
Ethical Model (1930s-1950s) - Businesses were motivated to manage their business entity as a trust held in the interest of the community.

Statist Model (1950s-1970s) -Important feature of this model was that state ownership and legal requirements decided the corporate responsibilities.

Liberal Model (1970s-1990s) –As per this model encapsulated by Milton Friedman, CSR is confined to its economic bottom line. It implies that it is sufficient business to obey the law and generate wealth, which through taxation and private charitable choices can be directed to social ends.

Stakeholder model (1990s-Present) - The model came into existence as a consequence of the realisation that with growing economic profits, businesses also have certain societal roles to fulfil.

The First “Kind Merchants”

Respect is the first thing we look for when doing anything,” says N.R. Narayana Murthy, Chairman Infosys Technologies. It is no surprise that Narayanmurthy holds J.R.D. Tata in great esteem. Quoting Late J. Tata;

Be sure to lay wide streets planted with shady trees, every other of a quick-growing

Variety, be sure that there is plenty of space for lawns and gardens, and reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches.

Explains the chairman of the Tata Group, Ratan N. Tata, “We do not do it for propaganda. We do not do it for publicity. We do it for the satisfaction of having really achieved something worthwhile.”

Ages ago when CSR was not in “fashion”, Tata initiated various labour welfare laws, like the establishment of Welfare Department was in 1917 and enforced by law in 1948 or Maternity Benefit was introduced in 1928 and enforced in 1946. They introduced the eight-hour working day in 1912 – an astonishing thirty-six years before the Indian government.

About 7000 villages benefit from programmes run by the Tata Steel Rural Development Society. The Community Development and Social Welfare Department at Tata steel carries out medical and health programmes, mass screening of Tuberculosis patients and drug de-addiction and AIDS awareness. Tata Steel’s Centre for Family Initiatives was successful in influencing 59 per cent of Jamshedpur’s couples practicing family planning (compared to the national figure of 35 per cent). The Tata Council for Community Initiatives has created the Tata Guidelines on Community Development. An effort of over three years from the field evolved into a framework of best practices.

Tata Tea’s Social-Cause Marketing (SCM) initiative, Jaago Re! is a huge success with the youth. As part of this campaign, Tata Tea aired commercials on social problems – corruption, bad roads, irresponsible politicians, etc.

Padhega India Badhega India
FMCG major Procter & Gamble (P&G) in partnership with Child Relief and You (CRY) and Sony Entertainment Television launched ‘Shiksha’, with the motto “padhega India, badhega India,” a programme to educate underprivileged children. It allows consumers to participate via simple brand choices.- all an individual has to do is purchase a large pack of common-use products like soaps and shampoos and he/she will help support one day’s education of one child per pack purchased.

P&G India closed Shiksha '08 with the largest-ever contribution of Rs 3.2 crore to CRY.

Irrespective of the sale from Shiksha, P&G has committed a minimum of Rs. 1 crore to CRY.

For The Girl Child
The K. C. Mahindra Education Trust was established in 1953 by late Mr. K. C. Mahindra with an objective to promote literacy and higher education. The Nanhi Kali project was initiated in 1996 with the aim of giving primary education to the underprivileged girl child. The Project supports over 57,000 children under it.

Technologically Yours
Computer Based Functional Literacy Solution is a promising teaching method started by Tata Consultancy Services to eradicate illiteracy. It uses multimedia software to teach adults to read within 30-45 learning hours over a period of 10 to 12 weeks in 1 to 1.5 hour sessions thrice a week. Taking one-third of the time required by writing-oriented methods and solving the problem of lack of infrastructure and qualified teachers, the project is a win-win. Till date 1, 20,000 people have been trained.

Lasting Legacy
G.D.Birla, the founding father promoted the concept of holding wealth as a trust for stakeholders. Aditya Birla carrying on the legacy believes in creating “sustainable livelihood.” He opines “Give a hungry man fish for a day, he will eat it and the next day, he would be hungry again. Instead if you taught him how to fish, he would be able to feed himself and his family for a lifetime.” The Birla group runs as many as 18 hospitals in India and has touched lives of more than 5000 physically challenged individuals.

Acts of Faith
Novartis and the Novartis Foundation for Sustainable Development (NFSD) are involved in the fight against leprosy. Novartis has worked with the World Health Organization leading to the cure of 4.5 million patients so far. The Novartis Comprehensive Leprosy Care Association, a project sponsored by NFSD and Novartis India, helps in recovering leprosy patients with rehabilitation, including income generation assistance.

We Care
Reliance Industries Limited has made great progress in the field of health care. Its various initiatives include the Dhirubhai Ambani Hospital, Lodhivali which renders quality medical services to the rural population and prompt service to highway accident victims. Trauma patients are provided free life saving treatment.

A community medical centre was established in Moti Khavdi, a village near Jamnagar Manufacturing Division, which provides services free of cost.

The Reliance HIV and TB control centre provides treatment and support to patients afflicted from these two dreaded diseases.

RIL extends financial support and professional expertise to Sir Hurkisondas Nurrotumdas Hospital and Research Centre, a charitable hospital offering tertiary health care facilities to all strata of society and providing free and subsidized services to the poor patients. The Hospital continues its tradition of rendering free treatment to all in the casualty ward.

Go Green
The ITC Green Centre in Gurgaon is the physical expression of commitment to sustainable development. It is one of the world's largest green buildings and the first non-commercial complex in the country to be awarded the United States Green Building Council-Leadership in Energy and Environmental Design's platinum rating- the highest in the order.

The building is designed to maximize the effect of natural light during daytime, largely eliminating the need for artificial ones. The window glass, while allowing light inside, does not allow heat. With a water re-cycling plant, the building is now a zero water discharge building.

Waste To Wealth
“You cannot escape the responsibility of tomorrow by evading it today.”- Abraham Lincoln

Excellent example for waste minimisation is Mc Donald in which all napkins, bags and tray liners are made from recycled papers.

Ambuja Cements Ltd. established a foundation, called the Ambuja Cement Foundation in 1993. Natural Resource Management (NRM) by far forms the largest part of the community initiatives of ACF. Water being the prime mover in rural life and an essential factor for rural development, presets their work in the area of water resource management.

Milk Miracle
Till 1961, Moga was a non-descript village in Punjab until Nestle stepped in. Nestle decided to help create a farmer-centric model. Starting with coverage of 180 farmers, it has expanded to over 85,000. Apart from improving production and quality of milk, Nestle has undertaken the responsibility of general betterment of the district. From providing infrastructure to the schools to funding treatment of tuberculosis patients, Nestle has transformed Moga into an industrial hub.

Think Grass Root
E-Choupal is an initiative which provides farmers with know-how and services, timely and relevant weather information, transparent price discovery and access to wider markets. Farmers can access the latest local and global information on weather, scientific farming practices as well as marker prices at the village itself through a portal. It assists rural farmers in procurement of agricultural/aquaculture produce.

Today 4 million farmers use e-Choupal to advantage. Being linked to futures markets is helping small farmers to better manage risk.

Launched a decade ago e-Choupal has won over even the staunchest sceptics.

Woman Power
Project Shakti was started in 2001 in Nalgonda district, Andhra Pradesh, by Hindustan Unilever Limited with the objective to uplift rural underprivileged women by providing them with small scale employment enterprise opportunity. Women are trained to become direct – to –home distributors of HUL products through various self-help groups. Not only does it give them the much needed money but more importantly a sense of self-esteem.

Promoting Well-Being Among The Cola Generation
Unhealthy produc such as potato chips, chocolates and burgers being advertised on five 24-hour children’s TV channels in India set the panic alarm ringing. Seven food and beverage companies have come together for a voluntary initiative to promote healthier lifestyles among children. Their commitment is no advertising products (except for products that fulfil specific nutrition criteria based on scientific evidence) where more than half of the audience is below the age of 12 from December 31, 2010. India is the 12th country to be party to such a pledge.

CSR can make a valuable contribution to society. Organisations consider the interests of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. However, to make CSR a success it should be treated like any other aspect of business and not merely philanthropy. The organization as a whole should be involved in it.
# Peter Drucker, The Practice of Management (1955), Page 375
# Definition proposed by World Business Council for Sustainable Development
# Business Daily from THE HINDU group of publications, Friday, Oct 12, 2007, e Paper
# H.R.Bowen, Social responsibilities of the Businessman, Harper and Row, 1953, pg xi
# Davis, K. (1960). Can business afford to ignore social responsibilities? California Management Review, 2, pp.70-76.
# “The New Meaning of Corporate Social Responsibility” California Management Review, Winter, Vol. XXVI, No. 2, pp. 54-62.
# “A Spotlight on Corporate Social Responsibility in India”, Wharton Journal, issue date 9/15/08.
# “Altered Images : the 2001 State of Corporate Responsibility in India Poll”, a survey conducted by Tata Energy Research Institute (TERI)
# In a 1902 letter to his son about building a workers' city around his Tata Steel works
# Forerunners in corporate social responsibility, The Indian Express — March 16, 2005
# http://www.tatasteel.com/corporatesustainability/family.asp
# “Enhancing Business-Community Relations-Tata Steel Case Study”-Aparna Mahajan with Kate Ives, October 2003.
# Meaning Wake Up
# Educating India can help prosper India
# http://www.pg-india.com/gillette2/shiksha08.pdf
# Meaning Tender Bud
# http://www.tcs.com/SiteCollectionDocuments/Case Studies/CSR_Casestudy_Computer_Based_Functional_Literacy_08_09.pdf
# http://www.wikipedia.org/
# “Trust and Corporate Social Responsibility Lessons from India ”-Ashwani Singla, CEO, Genesis Public Relations Pvt. Ltd. and Prema Sagar Founder, Genesis Public Relations Pvt. Ltd., Feb 03,2009.
# Novartis India received the Reader's Digest Pegasus CSR Gold Award in Mumbai on December 12, 2008.
# http://www.karmayog.org/
# headquarters of ITC's Hotels Business
# LEED is an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies intended to improve performance in metrics such as energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.
# http://www.nestle.in/mogasuccess.aspx
# http://www.itcportal.com/rural-development/echoupal.htm
# E-choupal has won numerous awards including United Nations Industrial Development Organisation (UNIDO) Award 2008, The Stockholm Challenge 2006 award, Innovation for India Award 2006.
# Meaning Power
# “Where HLL’s Shakti Comes From?”-Vinay Kamath, The Hindu Business Line, Internet edition, Thursday May 29, 2003.
# “7 Food Majors Pledge Responsible Advertising”- Shubham Mukherjee, Times of India, July 19, 2010.
# The other countries are Australia, Brazil, Canada, Chile, France, Ireland, The Netherlands, New Zealand, Spain, the U.K. and the U.S.A.

Authors contact info - articles The  author can be reached at: mini.anshuman@legalserviceindia.com

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Posted by shailja.sullere on June 15, 2014
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Posted by H C D Maini on March 04, 2013
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becomes untracable under suit filed under section 138 of N I Act,
whether there is provision to attach his property as he is going to
before going underground during the pendency of the case

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