In this growing age where sustainability has become a buzzword, a company’s Corporate Social Responsibility (CSR) is of utmost importance. Consumers place more value on a company’s reputation than on the perception of the company’s products. These days, it’s not enough to produce a great product or deliver exceptional service; people want to know they’re doing business with a company that cares about its impact on its surroundings and wants to do the right thing for society.
Evolution of CSR in India:
India has a long tradition of paternalistic philanthropy. Since ages immemorial, philosophers like Kautilya have followed ethical practices while doing business. The concept of helping the poor and disadvantaged was cited in several ancient literatures. The industrial families of the 19th century had a strong inclination towards giving back to society but it was governed out of personal motive and savings. They built temples, schools and other infrastructure. The term CSR came into common use in the early 1970s. The last decade of the twentieth century witnessed a shift from just personal involvement to more corporate involvement. In India, there is a growing realization that business cannot succeed in isolation and social progress is necessary for sustainable growth. Owing to this, CSR became a full-fledged business concept.
Currently, as per The ministry of corporate affairs (MCA), Section 135 and Schedule VII of the Companies Act, 2013, which relate to Corporate Social responsibility (CSR), companies will have to spend 2% of their three-year average annual net profit on CSR activities in each financial year.
3 P’s of CSR
One of the key components of a sustainability mission is to nurture a corporate culture with high ethical standards which the employees and managers both inculcate. Maintaining a culture where health, safety, education, training are valued are key drivers.
It is now a strategic priority to identify effectively, “lean” processes and initiatives throughout the organization to promote the efficient use of materials and to reduce waste. Aiming for global process excellence can include collaboration across all the organization’s regions, teams and external partners – to introduce standardized processes by identifying best practices.
Partnerships between a company and its clients now extend deeper into the realm of sustainability than ever before. Whatever the industry, creative solutions need to be developed that reflect the ethics and the image that clients wish to project to their customers for example having impeccable supply chain and logistics.
How CSR acts as an enabler in organizations;
- Strengthening relationships with stakeholders
- Enabling continuous improvement and encouraging innovation
- Attracting the best industry talent as a socially responsible company
- Additional motivation to employees
- Risk mitigation because of an effective corporate governance framework
- Enhanced ability to manage stakeholder expectations
Companies are individually doing their part in contributing to the CSR in India. However, a more inclusive and standardized approach with a national level policy framework needs to be adapted to meet the concerns of Corporate Social Responsibility.
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