Corporate Social Responsibility

Published by MBA Skool Team, Published on August 17, 2011

We have heard the term ‘Corporate social responsibility’ (CSR) many times during group discussions, classroom discussions, in newspapers etc. But what does CSR mean? The problem with CSR is that nobody knows what exactly it means. The debate is still on what constitutes CSR. In the name of CSR some companies provide free lunch to their employees while for some it is about tackling global warming and environmental issues.


Government of India, in an unsuccessful attempt, tried to make it mandatory of the companies to spend 2% of their net profits on CSR. But before making such attempt it is essential to understand what constitutes CSR.  Even if it is made compulsory, companies will resort to camouflaging activities to meet such regulations particularly during recessionary periods and economic downturns. CSR is something which should come voluntarily. If the government wants that corporates put money in the social programs, then why the government can’t do it itself. If required, government can tax the corporates and put the money into social programs.

Often CSR activities and corporate philanthropy are used interchangeably. Philanthropy means charity. While CSR means sustainable development optimizing financial position while not depleting social and environmental aspects. Several Indian companies take CSR as responsible business or triple P (people, planet and profit). It aims to measure the financial, social and environmental performance of the corporation over a period of time. Only a company that produces a TBL is taking account of the full cost involved in doing business.

In India some of the companies like Infosys, Tatas, Birla etc are engaged in CSR activities but there are various challenges in carrying out CSR activities. Some of the challenges are:

  • Minimal community participation in CSR activities: People at the grassroot level are not aware about CSR activities. There is no communication between the company and the local community at the grassroots.
  • Lack of local capacities: There is need to build capacity for the local non-governmental organizations that can effectively contribute to the ongoing CSR activities initiated by companies.
  • Issues of transparency: Lack of transparency is one of the key issues on the part of the local implementing agencies as they do not make adequate efforts to disclose information on their programs, audit issues, impact assessment and utilization of funds. Reported lack of transparency negatively impacts the process of trust building between companies and local communities, which is a key to the success of any CSR initiative at the local level.
  • Non availability of clear CSR guidelines: There are no particular guidelines defined for CSR in India.
  • Visibility factors: Many times successful CSR initiatives are highlighted by media. This apparent influence of gaining visibility and branding exercise often leads man nongovernmental organizations to involve themselves in event-based programs; in the process, they often miss out on meaningful grassroots interventions.
  • Perception towards CSR initiatives: More often these initiatives are seen as philanthropic activity. Many times Non-governmental organizations and Government agencies usually do not participate in the initiatives taken by the companies.
  • There are not enough well organized nongovernmental organizations that can identify issues in rural & remote areas and work along with companies to ensure successful implementation of CSR activities.

CSR activities of the company can yield positive outcome for the society, environment and for itself provided it support from government and non governmental organizations.

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