Concept and evolution of csr f inal2

CONCEPT AND EVOLUTION
OF
CORPORATE SOCIAL RESPONSIBILITY

• THE IDEA OF CSR IN NEITHER NEW NOR
RADICAL
• IT HAS LONG HISTORICAL ROOTS
• DURING LAST 60 YEARS, CSR CONCEPT HAS
GOT TRACTION AND INTEGRATED WITH
BUSINESS STARTEGY AND OPEARTIONS

Evolution of concept
• Early phase
• CSR initiation phase (1950- 1990)
• CSR momentum building phase ( 1990- 2000)
• Mainstreaming phase ( 2000 – onwards)

Evolution of Concept
Early Period : Role of Religions and Faiths
• Around the world, ancient civilizations have a rich history
of understanding the symbiotic connection between
human beings and nature
• The Vedic traditions of Hinduism offer imagery that
attests to the power of the natural world. Scholars of the
Vedas have identified various texts and rituals that extol
the earth (bhu), the atmosphere (Bhuvah), and sky (sva),
as well as the goddess associated with the earth (Prithvi),
and the gods associated with water (Ap), fire and heat
(Agni) and wind (Vayu).

• In the Atharva Veda, for instance, a hymn goes, “May
that Mother Earth, like a Cosmic Cow, give us the
thousand fold prosperity without any hesitation, without
being outraged by our destructive actions.”
• When a classical Bharata Natyam dancer steps on to the
stage, she touches the floor and asks forgiveness from
the Earth for the as she is going to stamp hard on the
ground while she dances

“The whole emphasis of the present as also the ancient
Hindu religious practices is that human beings cannot
separate themselves from their natural surroundings,
because Earth has the same relationship with man as
that of mother with her child”
• The first verse of the Upanishad is:
“Ishavasyam Idam Sarvam Yat Kim Cha Jagatyam Jagat
Tena Tyaktena bhunjitha, ma gradha kasyasvid dhanam”.
(Know that all this whatever moves in this moving world is enveloped by
God. Therefore find your enjoyment in renunciation, do not covet what
belongs to others.)

• Apostle Paul says “if one part suffers, every part suffers
with it; if one part is honoured, every part rejoices with
it”
• There are numerous citations from Holy Quran and the
Hadiths on sustainability and wise utilisation of natural
resources.
• All elements, species, habitats, and ecosystems are part
of the perfect universe created by the Al- Mighty

• Basic premise of Budhism sees all things and phenomena
as interdependent and arising from multiple causes and
conditions
• Core values of major religious traditions are
“REVERANCE, RESPECT, RESTRAINT, REDISTRIBUTION,
RESPONSIBILITY and RENEWAL”.

Early Period : Role of Intellectuals
•Even prior to word “social responsibilities was coined”, in
1916 J.M.Clark in the Journal of Political Economy noted that
“if men are responsible for known results of their own actions,
business responsibilities must include the known results of
business dealings, whether these have been recognised by law
or not”
•Peter Drucker, who is regarded as father of management
argued in his book “The Future of Industrial Man” in 1942
argued that companies have a social dimension as well as
economic purpose.
•Mahatma Gandhi espoused the concept of “ Trusteeship”.

CSR Initiation Phase (1950- 1990)
Howard R. Bowen in 1953 published a book whose title
was “Social Responsibilities of the Businessman” and he
underscored the importance of social responsibilities of
business.
Bowen is being called “Father of Corporate Social
Responsibility”

•During 60s and 70s many management thinkers Geroge
Goyder, Keith Davis, Clarence C. Walton, Mlikeorrel Heald,
Harold Johnson etc. popularized the term and gave many
dimensions to CSR.
•Controversy generated by Milton Friedman’s dictum in 1970
that “the social responsibility of business is to increase its
profits”
•A landmark contribution to the concept of CSR was made
by Committee for Economic Development (CED) and in its
report in 1971 it was underscored that “business functions
by public consent and its basic purpose is to serve
constructively the needs of society – to the satisfaction of
the society

• CSR moved to mainstream of management theory by
publication of Edward Freeman’s classic “Strategic
Management: A stakeholders Approach” in 1984
• Concept of CSR was fuelled by some international events
like The Bruntland Commission appointed by the UN in
1986 to study connection between development and
environment and its report introduced and defined the
term “Sustainable Development”.

CSR initiation phase (1950- 1990)
• During initiation phase, especially during 60s and 70s,
the focus was on environmental issues. In 80s issues
were poverty, social inequality etc.
• As a result of various efforts and academic interest, CSR
became a topic of discussion in business circles.

CSR Momentum Building Phase ( 1990- 2000)
• During this period CSR got unparalleled prominence in
political – economic discourse.
• Corporates in UK , USA and a few countries formed
membership organisations espousing the efficacy of
responsive business
• World Business Council for Sustainable Development was
formed in 1995 to act as catalyst for change of mindset
among businesses.
• SA8000 was launched in 1997 It is an international
standard to keep oversight of voluntary verifiable social
accountability standards

• In 1997, John Elkington came out with the concept of TRIPLE
BOTTOM LINE which caught the fancy of business thinkers
and thought leaders.
• In 1997, Global Reporting Initiative (GRI) was launched to
develop a monitoring framework of reporting on
environment, social and economic performance of
companies
• In 1999 at the initiative Kofi Annan Ex Secretary General, UN
GLOBAL COMPACT was formed comprising of business
leaders to support and follow ten principles which are at the
core of CSR agenda

• In 1999, Dow Sustainability Indexes came into being
tracking the financial performance of leading
sustainability – driven companies worldwide.
• During this phase concept of CSR became a living and
compelling idea and also acquired specifics and
acceptance among businesses and tools for
measurement and comparison were available

Mainstreaming Phase ( 2000 – onwards)
• During this phase CSR moved from periphery to centre of
business strategy and being viewed as a source of
competitive advantage and also in many situations an
instrument to get a “social license” to operate a business.
• In 2002, European Commission launched a European
Strategy and Action Framework for promoting CSR
• In 2009, at Global Forum for Responsible Management
Education attended by 260 business school leaders from
43 countries discussed as to how academic institutions
can instill a sense of social responsibility among future
business leaders.

• In 2009, Ministry of Corporate Affairs issued National
Voluntary Guidelines on Social, Environmental and
Economic Responsibilities of Business (amended in 2011)
• Department of Public Enterprises (DPE), GoI issued
instructions in respect of CSR in 2010. (amended in 2013)
• After passage of Companies Act in 2013 by both houses of
Parliament, CSR expenditure has been made mandatory
for certain category of corporate.
• DPE issued fresh guidelines in October 2014 for PSUs
advising compliance of provisions of the Companies Act
2013 and also going beyond compliance provisions.

Defining CSR
Foundation for defining CSR
Historical roots and basic urge to serve society
Role of thought leaders like :
• Howard R.Bowen (1953) : Father of CSR in modern times
• John Elkington (1997) : Triple Bottom Line Approach
• Edward Freeman (1984) : Stakeholders Approach
• Archie B. Carroll (1991) : The Pyramid of CSR

Definitions of CSR
“Corporate social responsibility is the commitment by
business to behave ethically and contribute to economic
development while improving the quality of life of the
workforce and their families as well as the local
community and society-at-large.”
(World Business Council for Sustainable Development)
“CSR is a concept whereby companies decide voluntarily
to contribute to a better society and a cleaner
environment”
(European Commission)

Definitions of CSR
CSR is a management concept whereby companies integrate
social and environmental concerns in their business operations
and interaction with their stakeholders. CSR is a way in which
companies achieve a balance of economic, environmental and
social imperatives. (UNIDO)
“CSR AND SUSTAINABILITY IS A COMPANY’S COMMITMENT TO ITS
STAKEHOLDERS TO CONDUCT BUSINESSES IN AN ECONOMICALLY,
SOCIALLY AND ENVIRONMENTALLY SUSTAINABLE MANNER THAT IS
TRANSPARENT AND ETHICAL”
( PSU Guidelines)

EVOLUTION OF CSR IN PRACTICE
Corporate profit
Philanthropy
Strategic Community
investment
Good corporate
citizenship
Pure self interest
Passive donations to charities
Investment in social development as part of the
Business plan (NVGs)
We are getting here
Section 135 Compliance
Strategic giving linked to business interest
24

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