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Corporate Social Responsibility

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CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR), though known for quite some time, has gained prominence in the recent times, particularly in the last decade of the 20th century. Perhaps the importance of the phrase has grown with the rise in importance or growing clout of the multi-national corporations. Till recently the burden of social responsibility was considered to be on the governments more so in the wake of existence of Marxist and socialist ideology as a counter to the capitalist ideology. With the break up of the erstwhile Soviet Union and rejection of Marxism in favor of free economy by many of the countries the counter to the capitalist ideology has lost its force/appeal. With it the role of government in the state of affairs is getting limited. At the same time most of the governments are finding it more and more difficult to maintain the welfare programmes and social subsidies with their limited resources. Thus a need originated for some agency to fill in the vacant space left by the government in the area of welfare of society including the social subsidies. The Corporates with their size and resources available at their disposal definitely meet the criteria to fill in the vacancy. On one hand the governments need them to share a part of their responsibility and on the other the public, with its growing awareness, expects them to payback to the society in-lieu of profits gained from the society. Corporates too have realized that while sharing the burden of CSR, there is also an opportunity in the form of both tangible and intangible benefits.

The concept of CSR has different meanings depending on the stakeholder. Similarly depending on the specific situation the expectations of enterprises can also vary. A CSR project can begin in response to a crisis or adverse publicity that a company may suffer. The motive for launching CSR can vary between philanthropy or notions of corporate citizenship. In India, over time, the expectations of the public has grown enormously with demands focusing on poverty alleviation, tackling unemployment, fighting inequality or forcing companies to take affirmative action. Many large companies enter into CSR through acts of philanthropy including, for example, Bill Gates or Warren Buffet. Often, for such companies, the tax advantages are attractive or it may merely be a clever way to retain control of resources. India has been a major beneficiary from the Gates Foundation, particularly in health care. From the perspective of a common man, CSR has been hugely important. For example, after 1945, TATA implemented social welfare provisions for its employees that have since become the legislative norm. Similarly, on account of poor quality, Sony recently recalled, on a global basis, the batteries it used in Dell computers. In Japan, allegations that a particular form of packaging promoted cancer equally led to huge product safety concerns.

From the perspective of stakeholders in the community, the bigger the company the greater should be its effort in terms of contribution to the society. However, CSR activities should remain voluntary because at the time of decline in profits it may increase the burden on business. Though critics may argue that quantum of sufficient profits to contribute to CSR will always be a subjective issue yet companies cannot take this alibi in a long run. The benefits of taking CSR initiative shall always outweigh the short term gains. Managing one’s social responsibility is like any other aspect of managing one’s own business. Well managed CSR supports the business objectives of the company, builds relationships with key stakeholders whose opinion will be most valuable when times are hard, and should reduce business costs and maximize its effectiveness.

Corporate Social Responsibility is thus just about two aspects:

1) The steps taken by a company to neutralize, minimize or offset the harmful effects caused by its processes and product-usage e.g. Indian Tobacco Company (ITC). The company has made a name for itself in CSR activities and is known more for its �e-chaupal’ initiatives and food products rather than tobacco products.

2) The

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