AMITY LAW SCHOOL, AMITY UNIVERSITY, NOIDA,

UTTAR PRADESH

CORPORATE GOVERNANCE
LAW 343

PROJECT TOPIC: CORPORATE SOCIAL RESPONSIBILITY

IN INDIA: A REVIEW

SUBMITTED TO: DR. DEEPIKA PRAKASH

SUBMITTED BY: ANIRUDH ALEX VICTOR
A032170122097
LL. B (HONS)
Section B
SEM 5

Corporate Social Responsibility in India: A Review

Abstract: -

Corporate social responsibility (CSR) is a popular buzzword across the world. In today's
globalized world, one of the most significant issues that businesses confront is integrating
They include CSR into their business. Stakeholders want firms to do more than just chase
revenue and growth. CSR has gone a long way in India and other emerging economies. From
immediate initiatives to long-term projects, companies have proved their ability to have a
significant impact on society and enhance people's quality of life. This article investigates the
concept of CSR, its various facets, and relevance in emerging economies, with a particular
focus on India.

Introduction: -

The concept of CSR has earned support from all sides. The present social marketing
paradigm of firms is continually evolving. Many of the world's greatest firms recognized the
value of being connected with financially relevant issues as a way to improve their brands. It
arises from a drive to succeed and get enjoyment in return, as well as a societal commitment
to business. As an economic development engine, CSR allows firms to meet their duties in an
ever-changing environment. For Indian businesses, CSR may bring opportunity, innovation,
and competitive advantage while simultaneously enabling them to make a difference for the
advancement of society. Corporations in India have proven to be extremely cautious in
implementing CSR initiatives and embedding it into the way they conduct business. It has
progressively gained hold in the Indian corporate landscape as firms recognize that, in
alongside growing the companies they run, they must create responsible and constructive
relationships with the greater society.

CSR genesis and growth in the Indian context: -

The 1st Phase : -

In the initial stages, philanthropy and altruism were the key catalysts of CSR. The concept of
culture, faith, morals, customs and history, as well as the Industrial Revolution, all
affected social responsibility for businesses. In the pre-industrialization period, which
spanned until 1850, wealthier tradesmen shared some of their wealth with the general public
by erecting temples for purposes of religion.
Furthermore, these traders helped society get through times of starvation and plagues by
providing supplies and cash from their warehouses, establishing a key position in society.
With the foundation of colonial authority in India in the 1850s, the attitude to CSR changed.
Economic and social difficulties had a significant impact on nineteenth-century
manufacturing dynasties such as Tata, Godrej, Bajaj, Modi, Birla, and Singhania. However, it
has been acknowledged that their endeavours for social and economic development were
motivated primarily by humanitarian and spiritual decisions, in addition to by caste divisions
and political ends in mind.

The 2nd Phase: -

During the second phase of the independence war, Indian manufacturers faced growing
challenges to reveal their dedication to societal improvement. This is when Mahatma Gandhi
introduced the concept of "governance," which Industry executives have to manage their
money to serve the common man. "I want to eliminate capitalism nearly as much as the most
sophisticated communist. However, our methodologies differ. My trusteeship hypothesis is
not a gimmick, and it surely does not disguise itself. I am convinced that it will withstand all
other hypotheses."

The 3rd Phase :-

The third phase of CSR (1960–80) was distinguished by the "mixed economy" aspect, the
establishment of Public Sector Undertakings (PSUs), and labour and regulations regarding
the environment. Throughout this era, private business was forced to remain in the back seat
of government. The public sector was seen as the key engine of advancement. The time was
dubbed the "era of command and control" due to the rigorous legal norms and regulations
governing private sector activity. Corporate malpractices resulted from industrial licensing
policies, hefty taxes, and private sector constraints. This culminated in the enactment of laws
addressing corporate governance, labor, and sustainability issues. They prioritized
transparency, accountability to society, and constant stakeholder contact. Despite these
attempts, CSR has been unable to acquire momentum.

The 4th Phase :-

In the fourth phase (1980-2015), Indian corporations began to forsake their conventional CSR
participation and integrate it into a long-term commercial plan. Globalisation and economic
liberalisation began in the 1990s. Controls and licensing systems were partially eliminated,
resulting in an economic boom that is still visible today. The economy's increased economic
velocity aided Indian corporations' fast expansion, making them more ready and able to
donate to social causes. As Western markets become increasingly worried about labour and
environmental norms in poorer nations, Indian enterprises that export and manufacture items
for the developed world must pay strict attention to international standards.

Shifting Developments in CSR: Beyond Philanthropy to Accountability

A glance back at CSR's history reveals that charity was the dominant notion until the 1990s.
Businesses often see CSR as a kind of charity. They limited itself to sporadic cash handouts
and failed to allocate any funding to such efforts. Furthermore, corporations seldom
addressed stakeholders while organizing such programs, reducing the usefulness
and effectiveness of CSR initiatives. However, throughout the past couple of decades, the
concept of CSR has changed. Contributing as an approach or responsibility looks to have
surpassed giving as a duty or charity. A survey of instances and CSR activities carried out by
Indian firms reveals that CSR is rapidly changing beyond philanthropy and dependency and
in the direction of empowerment and partnership.

Drivers of CSR

1. Respect and react to all stakeholders, particularly shareholders, venture participants,

and the community in its entirety, to produce value for everyone. They ought to
establish a structure for actively interacting among all parties involved, alerting them
about possible dangers and minimizing them as they occur.

2. Responsible competence: Their governance mechanisms should be ethical,

transparent, and accountable. They should not engage in business actions that are
vindictive, unfair, tainted or disruptive.

3. Tolerance for Human Rights: Corporates should uphold human rights for all and
avoid committing abuses by themselves or other individuals.

4. Environmental Respect: Industries ought to take steps to avoid or mitigate pollution;

recycle, manage, and minimize waste; oversee the environment sustainably and
guarantee ideal utilization of materials including land as well as water; respond
preemptively to issues related to climate change by implementing cleaner
manufacturing practices, encouraging reliable power use, and utilizing
environmentally friendly technologies.

5. Prioritize Cultural and Economic Inclusion Activities: Companies should

prioritize economic and social growth within populations and areas near their place of
business, depending on their fundamental strengths and business objectives.
CSR Current Scenario in India :-

Nevertheless, CSR may be linked directly to a company's charitable contributions. The

modern era presents unprecedented challenges and opportunities as a result of globalization,
the need for fair growth, and the necessity of environmental degradation. Indian business,
which is now recognized throughout the world as an essential element of India's progress, is
prepared to take the lead on today's challenges. In India, CSR has evolved to encompass
workers, customers, customers, and long-term growth, often known as good corporate
citizenship. Several groups evaluate corporations' accomplishments in corporate social
responsibility.

Challenges of CSR :-

Insufficient knowledge of CSR activities: The public at large has little curiosity for
participating in and supporting companies' CSR activities. This is caused by the lack of
knowledge on CSR. The situation is worsened by a breakdown of interaction between CSR-
focused businesses and ordinary citizens.

Necessity to Develop Regional Infrastructure: There is an urgent need to increase the

ability of regional non-government organizations since there is a serious scarcity of educated
competent and effective organizations who are capable of making effective contributions to
the ongoing CSR activities initiated by corporations. This severely stunts the spread of CSR
activities and, as a result, limits their reach.

Transparency Issues: One of the most significant challenges for corporations is small
companies lack openness when it comes to disclosing information about their initiatives,
audit difficulties, evaluations of impact, and money mobilisation. It adversely affects the
procedure of building trust among businesses, which is important to the sustainability of any
CSR program.

Non-availability of well-organised nongovernmental organisations: Remote and rural

locations lack well-organised nonprofit organisations capable of identifying community
needs and collaborating with corporations to successfully conduct CSR operations.

Exposure Factor: The media's engagement in displaying effective CSR operations is

encouraged since it spreads positive stories and enhances the general knowledge of various
companies' ongoing CSR initiatives. This apparent benefit of raising consciousness and
branding frequently leads a lot of NPOs to participate in event-specific development, leading
to neglected possibilities for meaningful grassroots initiatives.
Restricted Conception of CSR Operations: Non-governmental organizations and
government departments frequently have a restricted outlook on corporations' CSR
operations, considering them as donor-driven. As a consequence, firms can't figure out
whether to pursue such activities in the short and long run.

Insufficiently Defined CSR regulations: There are not any specific legislative regulations
or policy directives governing firms' CSR activities. Companies' CSR initiatives should be
tailored according to their size and importance. In simple terms, the more significant the
company, the broader its CSR program.

The absence of Consensus: This lack of unanimity frequently leads to corporate houses
duplicating their actions in areas of involvement. This fosters a competitive mentality among
implementing agencies rather than collaborative responses to difficulties. This aspect inhibits
the company's ability to periodically examine the impact of its activities.

Suggestions

1. Under the Companies Act of 2013, a corporation may only be penalised for failing to
file CSR data; there is no penalty for non-performance. As a result, there should be
more clarity on criminal action.

2. Raising public awareness of CSR activities and strengthening communication

between CSR-related firms and the general population at the grassroots level.

3. Local non-profit organizations require building their capabilities due to a scarcity of

educated and productive organizations competent of supporting enterprises' ongoing
CSR initiatives.

4. Small firms should increase their transparency by offering details about their
programs, audit concerns, impact evaluation, and money use, which is crucial for the
accomplishment of any CSR venture.
5. To enable the successful implementation of CSR operations, non-governmental
organisations must be well-organised.

6. The media's role in exposing successful CSR projects is praised since it distributes
positive tales and raises public awareness about different current CSR activities.

7. Non-governmental organizations and government agencies sometimes have a

restricted viewpoint on corporate social responsibility (CSR) efforts, referring to them
as donor-driven programs.
 8. Clear legislative regulations and policy instructions are crucial for guiding firms' CSR
operations.

9. Lack of unanimity among executing authorities on CSR initiatives might result in

redundancy of efforts by business houses in relevant sectors.

10. The Act should clarify legitimate grounds for corporations to avoid paying 2% on
CSR, since it now does not.

11. Companies' CSR operations should prioritise education, poverty alleviation programs,
job creation, roads, and power, among other things.

Conclusion

The contemporary social marketing philosophy of corporations is constantly

developing. Though the concept of corporate governance might seem to be new in the Indian
context and connected with the liberalization period, it is important to remember that ancient
Indian literature is the true originator of good corporate governance.

The economy of India is quickly growing, with a flourishing domestic and international
corporate sector. Meanwhile, the Indian subcontinent faces a variety of socioeconomic
challenges, such as impoverishment, population growth, and illiteracy. As a result, it has
become even more important that Indian enterprises be properly sensitized to CSR
to encourage the development of an enabling environment for equitable partnership between
civil society and private sector businesses.
Companies that prioritize CSR ought to actively advance the general interest by encouraging
advancement and growth in the community and willingly eradicating bad activity,
irrespective of it being legal.

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