Why Is Discussing Corporate Social Responsibility Important

Suppose you are good at making ‘Chole Bhature’. Motivated by your friends and family, you decide to open a small stall in front of Vishwavidyalaya Metro Station, Delhi. The stall starts with a bang and with time, you end up delivering more and more plates per day.

At the end of each day, you are left with some food that you do not want to waste. So you decide to feed the homeless around your stall, free of cost, every night. This act is part of your social responsibility, as a small business owner. From the profit that you made, you also start to conduct a ‘Bhandara’ every month.  This, again, is part of your social responsibility.

In a similar fashion, big corporate houses use a certain percentage of their profit to help the society in whatever manner they deem fit. This is called ‘Corporate Social Responsibility’ or CSR.

Defining CSR Better

In simple words, Corporate Social Responsibility is a business initiative, where the company uses a portion of their profit to bring about a positive change in the society.

Operations of a small business do not require a lot of resources. But this is not the case with big multinational corporations, whose activities take up a huge amount of resources from nature as well as the state. Their activities sometimes also end up impacting the environment. This is why CSR is important. A company’s social responsibility holds them accountable for the impact they created on the environment and the people, while making profit.

Not many countries have made Corporate Social Responsibility mandatory for companies operating within their borders. However, according to the National CSR Portal, India is the only country which has regulated and mandated CSR under an act. Section 135 of The Companies Act 2013 provides that companies, with certain levels of profit, must mandatorily contribute towards CSR activities. The board of directors of every company, on which this act applies, ensures an expenditure of at least 2% of their last three financial years’ average net profit on CSR activities.

It is true that CSR initiatives provide a lot of benefits to the corporate houses. It is a tool to improve their public image, which also gets them media attention, enhances their brand value in front of investors and stakeholders and helps them stand out.

But largely speaking, CSR is all about the people. It is about you and me. So how is CSR linked to every citizen of the country and why should one be aware of it at all?

CSR for Every Indian Citizen

Accountability Check: Being aware of the CSR initiatives of corporate houses operating in your city is important. It is only then that every citizen can hold companies responsible for any negative impact they caused.

Take the example of PepsiCo. The company’s beverage and snack units in India used approximately 6.98 billion liters of water, according to The Economic Times. When the residents in Kerala and Tamil Nadu got to know about the same, they started boycotting PepsiCo, Coca-Cola, and other foreign soft drink brands. Soon the company had to add 19.7 billion liters of water through various water saving programs, as part of their CSR initiative. In this way, the people of Kerala could hold the company accountable and could eventually get to use water.

Economic redistribution: CSR initiatives are highly crucial in countries like India. According to the World Inequality Report 2022, the top 10% of the population hold approximately 60% of the total national income of India. This is the effect of a lot of factors combined, like faulty land reforms, inaccurate policy formation, wealth concentration by a certain caste, high population, lack of education, gender inequality and technological deprivation.

For the country to be in the state of harmony and peace, inequality needs to be reduced. This is where CSR becomes important. It helps channel resources from the wealthy to those in need.

Highlighting the Importance of Goodwill: Act done by corporate houses with the intention of goodwill sets a good example. When an MNC takes up an initiative to educate young children, provide healthcare to senior citizens or conduct a plantation drive, it attracts the eyeballs of many. People feel hopeful and positive about the world they live in. It also creates an environment of general goodwill and compassion amongst all the members of the society.

Gandhi Philosophy of Trusteeship: The practice of Corporate Social Responsibility also finds its roots in pre-independence India. Mahatma Gandhi’s idea of trusteeship was that big industrialists cannot acquire the wealth they have without help from workers and the poorer section of the society. And so, Gandhi urged big business holders to share some share of their wealth with the marginalized. He suggested that this can be done by opening up trusts that can work for basic needs of education, health, sanitation, etc.

In this way, CSR has historically been part of Indian philosophy. And every individual should make sure that these ideas stay alive, in the present and even in the future.