- What is Corporate Social Responsibility?
- Examples of CSR?
- Why CSR?
- Methods of CSR?
- Companies Bill 2012
- Who is covered?
- Provision?
- Punishment?
- CSR: Pro-Arguments
- CSR: Anti-Arguments
What is Corporate Social Responsibility?
- Corporate social responsibility.
- Activities done by a company to give social-economic-environmental benefits to the society.
Examples of CSR?
- IndianOil gives special allotment of petrol/diesel station dealerships and LPG distributorships to beneficiaries from among SC/ST/PH/Ex-servicemen, war widows, etc.
- Installation of hand pumps/bore well/tube wells/submersible pumps
- Rainwater harvesting projects,
- Aquaguard water purifiers/water coolers to schools/community center etc.
- Organising Medical/Health Camps on Family Planning,
- Immunization, AIDS awareness
Big companies like Tata, Wipro, Birla, Essar have done many such projects.
Why CSR?
- The term âCorporate social responsibilityâ was coined in late 50s, but it remained just an academic concept for many years.
- The issue was raised in Rio Earth Summit (1992). But MNC-giants were non-committal and lobbied heavily against such moves. (recall  how American corporate giants did not allow UN to get control over DNS registry in the recent WCIT Dubai conference. Click me)
- In the 90s, big NGOs such as Greenpeace started exposing the environmental and human rights abuse done by American oil and mining companies abroad. (particularly Shale company in Africa.)
- This led to huge negative publicity for those companies particularly among the consumers in first world.
- Hence the MNC giants started taking up CSR initiatives in third world (Asia, Africa) as a PR-image improvement exercise.
Apart from that, CSR is done for
- Pure philanthropic reasons.
- Earning Good will among customers and local community members.
- Long term interest: e.g. a company spends money in child-education of XYZ, in long term those kids grow up= can provide skilled labour, or atleast earn more money than their parents= more purchasing powers =good for all companies.
- Getting tax-benefits from Government.
Methods of CSR?
Via Charity | Company will just donate money to Red Cross, UNICEF etc. |
Via Contract | Company will hire an NGO/another special agency to carry out a project and pay them money. |
By itself | Company will create separate Administrative machinary and staff of its own, to do the social welfare work. (E.g.in big companies like Microsoft, IBM, Dabur etc.) |
Companies Bill 2012
Itâll replace the Companies Act 1956
Lok Sabha | Passed it in Winter session (Dec 12) |
Rajya Sabha | Likely to pass it during Budget Session (Feb 13) |
- Companies bill is likely to come in effect from April 1, 2013.
- This Companies bill contains provisions regarding CSR.
- In Budget 2013, Chindu is likely to allow some tax-deduction /benefits to companies who spend money for CSR, thus making it attractive for the companies to spend money for CSR.
- An estimated 2,500 companies fall into this âmandatoryâ CSR-reporting category.
- CSR activities in the first year would be between Rs 9,000 crore and Rs 10,000 crore spent in social welfare. This could significantly benefit the society at large.
CSR: Pro-Arguments
- Big Companies in India are already making a killing, particularly in mining, real-estate and IT sector, so spending a few crores on CSR shouldnât be an issue. Besides, Corporate Social Responsibility spending has been kept very low: only 2%.
- Government could increase the tax-rates to collect additional 2% and then spend the money on its own for various social welfare schemes. But instead Government has given flexibility to the companies to do take up projects on their own= there would be corruption and leakages. So, If the companies themselves spend the money on CSR, more likely to show some result.
- Media is unnecessarily creating panic- CSR âspendingâ is not compulsory, CSR-âreportingâ is compulsory.
- This provision will lead to about 30% increase in CSR-linked jobs. (those special project officers, MSW degree etc). For example, Dabur is reviewing its existing CSR programmes in the wake of the latest developments. It will hire more professionals if it feels the need to extend the existing CSR-programmes.
CSR: Anti-Arguments
- Companies already paying so much in taxes + global economic crisis= decline in profit.
- It is the job of Government to do all the social welfare stuff. Companies are only responsible to their shareholders and not to society as a whole.
- If company has to spend 2% of profit in CSR= means less profit will be shared among the shareholders.
- Might lead to âcreative accountingâ (only showing work on paper) or doing work that actually benefits the company rather than society. Corporate Affairs ministry doesnât have the manpower to manually inspect the CSR-projects done. Thus making the whole exercise useless to society.
- NGOs often feed journalists stories of supposed corporate malpracticies, tribal exploitation etc, which the reporters are happy to print without much background check.
- Hence companies just throw off donation money to such NGOs in the name of CSR and to media houses in the name of âadvertizemenstâ, just to keep them both in âgood humorâ. So in many cases, CSR is done because of yellow-journalism and âyellow-NGOism.â Thus, CSR doesnât cleanse the sins of a company. often it merely allow companies to continue bad behavior in the shadows. (child labour, environmental degradation etc.)
Youâre welcome to add your own pro-anti agruments in comments.
Anti-Argument: Company may show the less profit %, To avoid investment in CRS project. so, there is the possibility for Black money.( if anything wrong, comment)
Well that might be a case but since CSR is not mandatory i think they can furnish enough excuses to avoid spending.
The expenditure of a company on CSR should be made public, that might give them some fillip to advertise that they care.
Well , showing less profits would amount to loss of investor confidence, in a long term not a good idea, as spending 2% of the profits will boost up the image of the company. :)
One has to think at a higher level. The name of the bill itself says CSResponsibility. It is the responsibility of each one of us to give back something to the earth since we have established ourselves by taking so much from it. Of course one can give pro and anti arguments to it by saying that it is someone elseâs job to do it and etc.etc. and that companies and businesses live to earn profit, agreed but this definition has to be changed if we as a humans have to survive. It is to inculcate this value of responsibility in each one of us. I mean I wonder many times that during school days teachers and some special alumni who used to visit us used to ask the same question repeatedly that what did we want to become when we grew up and there used to be no counter question after our replies that whatever that we become, what would be our social responsibility, what would we give back the people and the earth from whom we would take so much to become someone. I wonder. I know that I have taken this topic to a different platform but I believe that itâs high time that we start thinking long term and not just react spontaneously to an event. All of these great companies and the work they do could be proven foolish by presenting simple facts. But what to do, it is human nature that will see only what it wants to see and even if you present n no.of facts to prove them otherwise, it wouldnât work. They probably need a Big BangâŚ. To realize that itâs high time that we start thinking and acting smart. That bang is going to come someday but that day it would be too late, I just wish I could create a fake bang to make them realize.
in fact it good for the companies and society. as the provision is providing some flexibility to the companies in spending commonly they spend on local community developmental projects like renewal of hospitals creating community halls or some other form of infrastructures or supporting local NGOs. as a result they command some sort of good will in local communities. it provides no more conflicts between local communities and the companies.smooth functioning of the companies. people also welcome new companies in their locality or at least offers less friction during expansion projects of existing companies which are offering some CSR funds on them. so better synergy. better production.
MRUNAL SIR,THANKS FOR THE TOPIC
SIR,I WOULD LIKE 2 ADD THAT,IN OUR COUNTRY THEIR IS TRADITION THAT BIG BUSINESS MEN (LIKE MARWADIS,JAINS ETC)SPEND MONEY 4 THE CAUSE OF SOCIETY LIKE DHARMSALAS,HOSPITAL,MANDIRS,SCHOOLS ETC.
SO,IN MY VIEWS CSR IS NOT NEW CONCEPT 4 INDIA.
hello mrunal…..plz provide the link for the NOS BIODIVERSITY material….m not getting it…i think u have only provided polity,eco,geog.,and culture of NOS…plzz help…
dude can u give me link of eco,geo,history,general studies link..i think u r well known abt these links..thank u SAM…thanks in advance 4 sending or writing abt these links.. cool.guy4024@gmail.com =my address..please send the links of above subjects..
hey ishant…..it is in the mrunal’s blog itself…..just go to post where he has written CSAT GS STUDYPLAN on the top…in that post go to 2nd step of the 5 steps and at the end u can get what u want…thanx
hey mrunal…if u r reading it plz reply….plzzz provide the NIOS BIODIVERSITY MATERIAL link…what u hav mentioned in ur CSATGS STUDYPLAN…plzzzz
Pro-Argument:
Considering that any good done by the CSR is always invited, it is always better than nothing. The amount of money that goes to waste even in non-scam related inefficiencies is high. So even if out of 40 companies out of 100 are looking at using the loopholes, the rest 60 can make a huge difference.
I do accept that corporate branding has been crossed new boundaries into the social sector. But one can only optimistically hope that it will be put to good use than bad.
Anti-argument:
Companies when doing sponsorship of any good event lay too much stress on making sure that their company logo and their brand is visible in all forms. Yes! They provide the money and have the right to seek attention. It sometimes crosses boundaries into diluting the cause.
great benefit of bill is that atleast company has to publish CSR report..
Yes, companies should be made accountable as the profit they r earning is from people and reciprocity is expected…
it will lead to transperency in work.. where the corporate companies will directly spend the money instead of paying to govt. however there should be some regulatory or control to be kept for monitoring the usage. this will bring more efficiency and imrpove the standards…
as i work for a corporate company. we do perform activites like educating the school children as teachers and social activites under corporate social responsibilty. i had a chance to see it practically, which is way far better than the govt’s own implementations.
pls explain the difference between turnover and net worth
Hi…Turnover represents the total Revenue received by the company.
ie., Sale of goods, Service Revenues (Depending upon the nature of the business).
Net worth means total assets – total liabilities (debts) of a company. (deducting total debts from total assets)
kind regards,
V
If the corporate can understand, only exploitation of public goods and leaving society in troublesome
will only reciprocate in EXTORTION CALLS, KIDNAPINGS OF THEIR KIDS,INSECURITY AND OTHER CRIME AGAINST MAALDARS. SO,THEYDO CSR
If corporates can understand , only exploiting public goods and leaving society in misery
will only reciprocate in EXTORTION CALLS,KIDNAPINGS OF THEIR KIDS, INSECURITY AND OTHER CRIME against maaldars .then only they do CSR
Happy new year mrunal Bhai…… happy new year,,,, may god fulfill your wishes as well that of those who are part of this platform….
wish you a very happy new year sir
wish u happy new year 2013
Mrunal Upsc publish different type of vacancies through direct recuritment process.Candidate apply for this post, but after few month or a year upsc display the result of this post . thats why i have write a letter to upsc (in octber 2012), that they publish the rejected candidate list with reason, the interview date,written test date on his website because other state psc also publish this type of thing .and i also sent a letter to secretary of human resource but still upsc didnt update their website.
You can file an RTI and ask what has done on your letters .
I WISH EVERY ONE A HAPPY NEW YEAR AND HOPE ALL OUR DREAMS COME TRUE.
mrunal. plz write some more article about FISCAL CLIFF. till now you have written only 1 article on this topic…………… plz……………
Though CSR Bill having some negative point. But it Must be understand that it may leads some watch on them as well as NGO’s. At least some people of Soceity may have this benefit.
ITs works also depend on who it should be PRACTICALLY applied.
mrunal sir please explain problem of fiscal cliff in america
The first two points of anti CSR points are actually mean.It is not the responsibility of the govt alone.All the well of sections needs to provide protection to the unprivileged sections.So those who say it is not our responsibility or whatever are actually SOB’S..
Secondly,about less profits..If a company is earning Rs.5 crore a profit,paying 10 lacks will not suffocate the share holders.They still have the 98% of the profits..
Thirdly,it is a good policy altogether as imposing higher taxes on hard working corporates can demoralize them plus the govt itself would have to spend some money as tax collection charges.
Last but not the least a huge mass of population is derived of even basic amenities.The GOI cannot cater to all of them.It is the moral responsibility of the corporate giants to help the govt in its effort.
Thank you sir!!
for upsc ias prepartion..please guys write down the essential detials. BOOKS name 4 history,public aidmin,eco,geo,general studies…i wil be thankful to u 4 ur kind efforts written down on this page..thanks
Anti-argument:
Corporate Social Responsibility is, per se, voluntary commitment in the part of Corporate houses to provide compensation for the harm and damage done to the society, knowingly or unknowingly. Most of the corporates have been involved in such activities for years without any legislature provisional for philanthropic reasons. Making it compulsory, or reporting say, would make the very idea of CSR futile as the emphasis, then , would be just on legal fulfillment and not actual commitment.
Moreover, even in the western capitalist countries, where the economy is completely in the hands of private players, the social sector reform are the sole liability of the government.So, in Indian context as well, CSR should be seen as a “top-up” or bonus rather than a complement to the social responsibility of the state.
Pro: 1.Improvement in skill set of youth via spending through CSR will benefit both company and youth hence win win situ. for all Anti: 1. If spending is not mandatory, companies may find excuses for not spending the money by giving excuses of economic recession, loss in business etc..
Sir,
Please provide answer key of UGC NET Dec 2012 Economics Paper II & Paper III.
Regards,
sorry i don’t have it. i suggest you file R.T.I to UGC.
wait 4 a few days. it’l be uploaded on ugc site!My God have some patience! Exam was on 30th only! You have the duplicate! It’s given so you may check it when the answer key is uploaded. No need for RIT, it’ll hardly take a month or 2.
Philanthropy is a very good activity for the upliftment , betterment and welfare of society . Many Big names like Gates , Azim premji , Tatas etc are already contributing and its a good move from the govt. In my opinion PSU’s don’t find any problem in donating and there are guidlines for psu’s for CSR by govt. PSUs like SAIL , ONGC , SBI etc etc make huge profits and the directors of these companies don’t hesitate in practising CSR as it will keep them in Good books of GOVT. and Govt also asks them to do so , also it will improve the image of Govt.
It will atleast provide the money to NGOs without much corruption as it is in Govt. funded schemes like Raju or INdu garib tiraskar yojana which goes in the swiss accounts of politican and bureaucrats. But at the same time jhola chaap NGOs(not good NGOs) and trust can fill their pockets too by misappropriating funds in lack of monitoring mechanisms but monitoring can be done by the donors . In the end it must be welcome as stats also says and we have many example of NGOs working with a commitment to change and more better society . Thanks to Mrunal again as he is also doing the same kinda work and May his efforts produce honest officers who will behave responsibly and cherish the joy of giving and ultimately flourish the humanity and our country.
A govt is supposed to do its job of social welfare, not request the corporates to do it.
If a corporate wants to do it voluntarily, then let them. But making it quasi-obligatory is not the way to go.
Moreover, this could be a legal way for companies to lobby / mobilise NGO’s etc for a certain causes which can’t be done openly by the company. NGO’s will become extended arm of companies to accomplish certain not so legal activities funded legally from shareholder’s money.
The mandate given by the govt In companies bill 2012 does not make any major change in the attitude of private companies but the companies understands that it is the society which has given profit to these companies and it is the society because of which the company will survive in future. So it becomes the primary duty of the company to look after the society. Moreover, if the company will show his work only on paper then it will lose its stakeholders in which society has a big share.
initiative taken by government for making CSR in law should be viewed as a good step towards the participative approach.No economy can be successful alone without participation of market,government and civil socities(including NGOs).History itself over the world showed the real mirror of failure of state lies in fuctioning of Government alone,market alone so state moved to mixed resposibility over the time-sometimes called roll back of state and cummulative participation.
Yes,ofcourse some negative aspects cannot be denied related to bussiness corruption,lack of transparency and absence of regulatory body(direct monitoring) but other positive aspects like participative approch,business-society interaction,government burden reduction,more efficiency in fuctioning as enterprenuer approch for this also,good will for bussiness from AMM JUNTA,more media participation(always busy with big corporate functions LOL…).