Corporate Social Responsiblity in India


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The History of Corporate Social Responsibility in India

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Corporate Social Responsiblity in India

  2. 2. The term corporate social responsibility was coined in 1953 with the publication of “Social Responsibility ofBusinessmen” by Bowen.But, the seeds of CSR in India were sown much before the term was coined in the west.The TATAs and the BIRLAs; large businesses in India under the colonial rule, were practitioners of ethicalbusiness, were actively involved in community development and regularly contributed to development of themarginalized in society.The father of the Indian nation, Mahatma Gandhi had gone so far as to suggest that the business owners andcapitalists in India should see themselves as the trustees (The Trusteeship Model) of the capital that theyhave generated which should not only be used to expand the business but also enable the importantstakeholders in the business (namely the workers and their families, civil society and the masses) to improvetheir lives. This was quoted by Mahatma Gandhi well before the term CSR was written and debated in thewest.In India, CSR is not clearly defined in any official policy document or charter. However, given the long historyof corporate philanthropy in the country, largely managed by family owned trusts, one could say that CSR hasexisted in India, albeit in a different form from how it is understood in the west.Contemporary understanding of CSR, based on western models have encouraged Indian businesses to re-model their existing family run and managed philanthropy initiatives and establish their own CSR chartersand weave that into their overall corporate strategy.They have also been encouraged to adapt and adopt contemporary CSR practices, by the thought leadershipprovided by policy think tanks like the CII (Confederation of Indian Industry), FICCI (Federation of IndianChambers of Commerce) and ASSOCHAM (Association of Chambers of Commerce).The Indian government has also begun to realize that its long cherished goal of creating an inclusive society ina large country of 1.2 billion people will not be successful if they do not establish a strong PPP (PUBLIC-PRIVATE PARTNERSHIP) model, where the government (PUBLIC) plays the role of facilitator; the corporate(PRIVATE) plays the role of implementer and the partnership in mutually beneficial. Various positive policyinitiatives by the government have encouraged the corporate in India to adopt CSR as an important part oftheir strategic initiatives for the long term.
  3. 3. CSR in corporate India has gone beyond mere charity and donations, and is now a fully functional institutionwithin the corporate managed by professional teams who devise strategies, goals and policies for theirinitiatives and have budgets. CSR initiatives focus on the immediate stakeholders, the employees and then onthe society at large. Focus areas for these initiatives would largely depend on the core business focus; forexample, GSK pharmaceutical in India focuses on healthcare in the tribal areas of India. There would beexceptions like the TATA group who are strong in IT, automotive and steel, but their CSR focus is wideranging, focusing on education of the girl child, renewable energy for the rural communities etc. CSR focus inIndia is primarily focused on education, healthcare, energy, affordable shelter although most CSR initiativesdo mention protection of the environment.An excellent example of a corporate CSR initiative in India would be the TATA group. They have a long historyin serving the interests of both the shareholders as well as the stakeholders and this is part of their corporateDNA. Not only have they demonstrated their empathy for the stakeholders in the Indian sub-continent, butalso at a global scale. When the TATA group bought Jaguar-Land Rover in the UK, they promised themanagement that no one would be fired after the takeover. Subsequent to the takeover, they fulfilled theirpromise and the result is that the company is back in profit and in fact has grown in the segment, the staff ismotivated and there have been more hiring’s in the JLR business.On the other hand CSR initiatives by the VEDANTA group would qualify as a bad example because the groupis engaged in mining in the tribal heartland in India, and have gone at length to engage with the stakeholdersto sell their proposal claiming that in the process they will not harm the environment. Subsequent studies byNGOs and independent environmental activists have revealed large scale pollution and deforestation by thegroup who are now under scrutiny by the ministry of environment in India.Certain practices that are unique to India may be construed as unacceptable globally. Prime example is thecustomary practice of exchanging sweets and gifts during the festival of lights, Diwali. It is acceptable andquite common place to exchange gifts between business associates in India during this festival, however it isfrowned upon by all Multinational corporations as being akin to a subtle form of bribery. But most MNCs haveadjusted to this by restricting the gifts to only sweets or chocolates and under a certain value. Some have evengone a step further by stating that instead of the employee receiving gifts from their suppliers or distributors,the company would send them gifts during the festival to reciprocate the gesture and mitigate the negativetag associated with this practice.
  4. 4. Most corporate in India would be willing signatories to the UN GLOBAL COMPACT initiative.The reasons are elucidated below.Most large Indian corporate houses are of recent origin and have global ambitions. In order to map a globalfoot print they need global acceptability as a business entity that believes in ethical practices and is aresponsible global corporate citizen.By embracing the UN GLOBAL COMPACT charter in totality, they will have taken the first steps towardsacceptance by the global community and this would be strategic as well as tactical.With a strong media, independent watch dogs and vibrant democracy, corporate in India adhere to humanright laws and thus will be comfortable with the first 2 principles of the charter.Corporate in India are governed by strong labor laws that protect the right of the workers- therefore theprinciples in the charter addressed at the labor will be acceptable to all corporate in India.India is committed to protection of the environment and an active member of the UN lead initiatives. It is astrong defender of the rights of the poor and has aggressively negotiated with the west on these issues. It isalso committed to green technologies to meet its energy needs and has policy framework in place toencourage corporate to invest in green technologies to meet its energy needs and protect the environment atthe same time. Indian corporate will therefore have no issues with adhering to the principles on environmentas set out in the UN GLOBAL COMPACT charter.And lastly, the Indian corporate have lent their vocal support to a strong anti corruption bill recently tabled inthe Indian parliament, the LOKPAL Bill. This collective voice from corporate India demonstrates that thiscommunity has had enough of graft and corruption which they rightly believe is dragging the country downon many indicators in the League of Nations. Indian corporate will have no hesitation in signing the UNGLOBAL COMPACT charter.The Indian corporate is ready to take its rightful place in the global community of business and it brings asagacity and ethos to the international business community that is borne out of a culture where giving is asnatural as breathing.
  5. 5. References KPMG – ASSOCHAM Corporate Social Responsibility, Towards a Sustainable Future, A white paper, 2008. Corporate Social Responsibility in India, by Sunyoung Lee (A Case study for the Oxford- Achilles Working group on Corporate Social Responsibility) CSR in India, C.S. Venkatraman, Director International Management Institute , New Delhi.