CHAPTER –VII

CONCLUSIONS AND SUGGESTIONS

 CHAPTER VII
CONCLUSIONS AND SUGGESTIONS

7.1 Conclusions

After a thorough discussion of the research topic in the foregoing chapters the

following conclusions are drawn based on the research conducted in this area. The

conclusions drawn in this chapter are based on theoretical discourses and they hold well

as on the date of submission of this work. It is further submitted that all conclusions

drawn are based on facts available at the time of completion of this thesis. The following

concluding remarks are based on the discussion made in each chapter of this work.

First chapter of this research work contains an introduction of Corporate Social

Responsibility with meaning and development of the responsibility of Company towards

society. The corporate sector is a key component of the socio-economic structure of any

country and right thinking corporates are fully aware of their social responsibility. The

concept of Corporate Social Responsibility has been developing since the early 1970’s.

CSR is a concept whereby organizations serve the interests of society by taking

responsibility for the impact of their activities on customers, employees, shareholders,

communities and the environment in all aspects of their operations. In simple term CSR

may be described as the responsibility of a corporation towards the society in

consideration of the support given and the sacrifices made by the society. This chapter

also discusses the foundation of CSR, where primary importance was given to the

Constitution of India and said that attempts of the court should be to expand the reach and

ambit of the fundamental rights by process of judicial interpretation. Law must constantly

be on the move adapting itself to the fast changing society and not lag behind. It is

admitted that CSR has gone through many phases in India and it is still in its nascent
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stages. But, a beginning has been made and the growing pressures from an increasingly

‘aware’ stakeholders group will ensure that the concept spreads far and wide and fast to

all corporate. Besides, the law is also undergoing rapid changes, especially in the matters

of disclosures to society. Several leading and forward looking companies with an

understanding of their commitment to society have already embarked on serious CSR

initiatives. The companies have already done the country proud in the comity of nations

and have taken upon themselves the role and onerous responsibility of contributing their

mite for the improvement of society. The nature and scope of Corporate Social

Responsibility has changed overtime. The concept of CSR is a relatively new one- the

phrase has only been in wide use since the 1970s. But, while the economic, legal, ethical

and discretionary expectations placed on organizations may differ, it is probably true to

say that all points in time have had some degree of expectation that organizations would

act responsibly. Gandhiji’s idea of trusteeship has the humanitarian ground that “bread

for all before cakes for some”. The rich man ought to recognize that he is a trustee for all

the wealth that he collects with the help of the members of the society. This leveling

down of the few on the one hand and the leveling up of the naked millions on the other is

really a scientific- cum- psychological approach of establishing economic equality, in

place of exploitation of the poor by the rich and of the employee by the employer. The

idea of social responsibility is very old in our country. The concept of parting with a

portion of one’s surplus wealth for the good of society is neither modern nor a western

import into India. The business community occupied a significant place in ancient Indian

society. Merchant were treated with respect and civility and regarded as an instrument of

social good, not least because of their philanthropy. Nourished by a social and religious
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ethic which put charitable giving high on its list of virtues, charity was an ingrained part

of the life of most hereditary merchant communities that form the backbone of the

modern business class. The practice of business giving continued through the ages,

though as economic, political and social conditions changed, so did business response to

social needs. This can be summed up as a shift from merchant charity to corporate

citizenship to corporate social responsibility.

Second chapter of this study discusses the origin and development of Corporate

Social Responsibility both at domestic and international level. The concept, definition

and nature of Corporate Social Responsibility are discussed at length. Its philosophical

background and historical evolution in different phases till present day are discussed. The

various CSR approaches all lead to some type of corporate activity integrated into the

organization’s business model whereby the business would ensure its adherence to law,

ethical standards, and international social norms (i.e. expected patterns of behavior) and

would include businesses accepting responsibility for the impact of their activities,

regardless of legality on the environment, consumers, employees, communities,

stakeholders and all other relevant members of the public sphere. Corporate Social

Responsibility is qualitatively different from the traditional concept of corporate

philanthropy. It acknowledges the debt that the corporation owes to the community

within which it operates, as a stakeholder in corporate activity. It also defines the

business corporation’s partnership with social action groups in providing financial and

other resources to support development plans. There is an increasing recognition of the

triple-bottom line: People, Planet and Profit. The triple bottom line stresses the following:

• The stakeholders in a business are not just the company’s shareholders.

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• Sustainable development and economic sustainability

• Corporate profits to be analyzed in conjunction with social prosperity.

This chapter also explains the philosophy of CSR from an ancient Indian

perspective with reference to Kautilya’s Arthashastra (4th BC). Although these ideas are

limited to Indian context, some of these ideas of CSR can also be applied universally.

The Kautilya’s Arthashastra provides an inside- out approach to CSR, which is

development of the individual leader’s self conscience, contrary to the western approach

that takes an outside- in perspective. The leaders and the role they play in corporations

are crucial in ensuring transparency, good conduct and governance towards the ultimate

aim of achieving CSR. In the Indian context, the origin of CSR can be traced from the

Vedic literatures such as the Valmiki Ramayana, the Mahabharata (includes the

Bhagavad-Gita) and the Puranas. CSR refers to the obligation which considers the

interests of all their stakeholders which includes the customers, employees, shareholders,

communities and ecological considerations in all aspects of their operations. This

obligation is seen to extend beyond their statutory obligation to comply with legislation.

CSR goes beyond the normal charity activities of an organization and this requires that

the responsible organization take into full account of its impact on all stakeholders and on

the environment when making decisions. In a nutshell, CSR requires the organizations to

balance the needs of all stakeholders with its need to need to make a profit and reward

shareholders adequately.

Third chapter explains the Corporate Social Responsibility towards better

environment. Environmental protection is a practice of protecting the natural

environment on individual, organizational or governmental levels, for the benefit of both

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the natural environment and humans. Due to the pressures of population and technology,

the biophysical environment is being degraded, sometimes permanently. This has been

recognized, and governments have begun placing restraints on activities that cause

environmental degradation. Corporate Social Responsibility is nothing but what an

organization does will positively influence the society in which it exists. The philosophy

is basically to return to the society what it has taken from it, in the course of its quest for

creation of wealth. CSR makes corporations responsible for the impact of their activities

on the customers, employees, shareholders, communities and on the environment, in all

the various aspects of their operations. This is because the wealth maximization goal

cannot be achieved by ignoring these responsibilities. Now when corporate world has

grown and covers all the world economy and help in the progress of all the nations, it has

the highest responsibility to protect the environment and to reduce the environment

pollution. The International Chamber of Commerce (ICC), World Business Council for

Sustainable Development (WBCSD), and Business Charter for sustainable Development

identified sixteen key principles for environment management, like Corporate priority,

integrated management, process improvement, employee education, prior assessment,

produces and services, facilities and operations, Research, precautionary approach,

emergency preparedness, transfer of technology, contribution to the common effort,

openness to concerns and compliance and reporting. Environmental programmes of

firms mainly result from standards established by government agencies. The Government

of India enacted the Environment Protection Act 1986, the main objective of the Act is to

protect and improve the environment and the prevention of hazards to human beings,

other living creatures, plants and property. Pollution Control Boards set up under the
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provisions of the Act, have laid down norms that firms are expected to comply with.

Discussion concerning environmental protection often focuses on the role of government,

legislation and law enforcement. However, in its broadest sense, environmental

protection may be seen to be the responsibility of all people and not simply that of

government. Decisions that impact the environment will ideally involve a broad range of

stakeholders, including industry, indigenous groups, environmental groups and

community representatives. Gradually, environmental decision- making processes are

evolving to reflect this broad base of stakeholders and are becoming more collaborative

in many countries. Many constitutions acknowledge the fundamental right to

environmental protection, and many international treaties acknowledge the right to live in

a healthy environment. Many countries also have organizations and agencies devoted to

environmental protection. There are international environmental protection organizations,

as the United Nations Environment Programme.

The need for collective responsibility has been recognized throughout the world

and is referred to as sustainable development. The term has been increasingly used since

the 1987 World Commission on Environment and Development’s report on ‘Our

Common Future’. It is a philosophy that allows for present generations to meet their own

needs without compromising the ability of successive generations to meet their own

needs. It has to be accepted that it is difficult to find a balance in reconciling the range of

conflicting interests, particularly as there is relatively limited information on the

dynamics of economic development and its impact on the natural environment. Our

country is coming out of the traditional view of ‘doing for the sake of it’ and coming

forward and realizing their responsibilities. When the concept of CSR begins to be
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understood as a business oriented concept, without which the business would become

difficult, it will be the time when India may be ready for statutory backing to the CSR.

Ultimately, we have to remember Milton Friedman’s Famous quote that “ the business of

business is business” which reinforces the view that all CSR is driven by business

interests and it is best left to the judgment of a corporate as to what makes good business.

As it is discussed in the chapter the environmental aspects of corporate activity might

affect a range of human rights, such as the right to clean air, drinking water, and right to

live in a healthy environment. Many factors and influences have led to increasing

attention being devoted to the role of companies and CSR towards the eco-system. These

include: (1) Sustainable development, i.e., which is the need of hour to protect natural

resources for future generations. (2) Globalization, i.e., which helps to protect

environment, health and safety, human resources, etc. Therefore, Corporate Social

Responsibility means the responsibilities on the companies for the development of the

environment and for the community welfare and for the betterment of the society. CSR is

highly responsible for the protection of the environment and to reduce the environment

pollutant.

The Fourth chapter focuses on Corporate Social Responsibility and consumer

protection in detail. The stakeholders of a company, apart from its members, are

consumers, suppliers, dealers who deal in its products and services. There has been a

tradition of exploitation of consumers in India due to shortage of commodities and

seller’s market. Consumers are buyers and always have a poor bargaining power.

Manufacturers and traders often follow unfair and unethical practices. Though a number

of legislations have been enacted, they have failed to provide any effective protection to
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consumers due to lack of effective implementation. It is well known that a number of

deaths take place every year due to food adulteration, spurious liquor, and contaminated/

substandard medicine, etc. Many manufacturers and traders including multinationals,

indulge in unethical practices. They make tall claims for their products, which turnout to

be false. The service sector is no exception to unethical practices and allurements. To

check the onslaught on consumers, a host of legislations have been enacted from time to

time. These include the Sale of Goods Act, 1930; the Essential Commodities Act, 1955;

the Prevention of Food Adulteration Act, 1954; the Prevention of Black Marketing of

Supplies of Essential Commodities Act, 1980; the Standards of Weights and Measures

Act, 1976; the AGMARK Act, 1937; the Indian Standards Institution Certification Act,

1952; the MRTP Act, 1969; etc. The need has been felt for more comprehensive

consumer protection legislation. In order to provide speedy justice, the Consumer

Protection Act, was enacted in the year 1986. The main objective of the Act is to promote

and protect the rights of the consumers. Consumerism is a movement to inform

consumers and protect them from business practices. The movement focuses on inferior

and dangerous merchandise, unfair business practices and false or misleading

advertisements. Unfair business practices by businessmen abound. Artificial scarcities are

created; prices are unreasonably hiked; adulteration is unabashedly practiced; under-

measurement and under- weighment are rampant; money is accepted in advance

promising delivery of product in question within a specified time but seldom honored;

after- sale services are mostly an un kept promise. Ads and labels are misused and are full

of false claims and half truths. This chapter explains legal, ethical, economic and

philanthropical responsibility of the companies and also the Consumer Rights under the
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Consumer Protection Act in India. Besides enacting legislations, the government has

taken other measurement to protect consumer interest. The government has included

consumer protection as an item of the 20 Point Programme. A Consumer Advisory

Council has been set-up by agencies, including state governments, the Textile Committee

and the Department of Science and Technology. Apart from what the government does,

the consumer should himself assert his rights and protect himself against business mal-

practices. This is the genesis of consumerism.

Fifth Chapter of the research work deals with social responsibility of company

towards labors and workers. The chapter discusses about the human rights and corporate

social responsibility, and various labor legislations dealing with corporate social

responsibility in detail. Workers are not only a vital industrial input they are part of

society participating in corporate effort to benefit society. If corporate behavior harms

workers, it will be against the principle that companies should not harm the society. This

principle should be more rigorously implemented in case of workers, since they are

devoting their entire working lives for the companies unlike other sections of the society.

The Global Compact, United Nations Global Compact programme launched by UN in

2000 calls on companies to embrace nine principles in the areas of human rights, labor

standards and environment. The Global Compact is a value-based platform designed to

promote institutional learning. It utilizes the power of transparency and dialogue to

identify and disseminate good practices based on universal principles. The nine principles

are drawn from the Universal Declaration of Human Rights, the International Labor

Organization’s Fundamental Principles on Rights at work and the Rio Principles on

Environment and Development. According to these principles, business should:

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• Support and respect the protection of internationally proclaimed human rights,

• The benefits of responsible engagement for business include a greater chance

of a stable and harmonious atmosphere in which to do business, and a better

understanding of the opportunities and problems of the social context.

• Ensure that they are not complicit in human rights abuses:

• Uphold the freedom of association and the effective recognition of the right to

collective bargaining:

Freedom of association and the exercise of collective bargaining provide

opportunities for constructive rather than confrontational dialogue which harness energy

to focus on solutions that result in benefits to the enterprise, its stakeholders and the

society at large.

• Support the elimination of all forms of forced and compulsory labor.

• Support the effective abolition of child labor:

Child labor results in scores of under-skilled, unqualified workers and jeopardizes

future skills, improvements in the workforce. Children who do not complete their primary

education are likely to remain illiterate and will not acquire the skills needed to get a job

and contribute to the development of a modern economy.

• Eliminate discrimination in respect of employment and occupation:

• Support a precautionary approach to environmental challenges:

It is more cost effective to take early actions to ensure that irreversible environmental

damage does not occur. This requires developing a lifecycle approach to business

activities to manage the uncertainty and ensure transparency.

• Undertake initiatives to promote greater environmental responsibility:

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• Encourage the development and diffusion of environmentally friendly

technologies.

In March 2000, the MNE Declaration1 was revised to include the fundamental

principles and rights at work. This encouraged all parties to make the declaration on

Fundamental Principles and Rights at Work a reality. In the last update of the MNE

Declaration, approved in March 2006, a specific recommendation was added to

encourage firms to take immediate and effective measures in their sphere of influence to

achieve the prohibition and elimination of the worst forms of child labor as a matter of

urgency. In addition, the ILO, the World Bank and the International Monetary Fund have

joined forces, to establish a coordinated framework of the UN system to address the

challenges posed by climate change.

The Sixth chapter of the research work looks at the impact of Corporate Social

Responsibility on society at large. Corporate social responsibility (CSR) is about how

businesses align their values and behavior with the expectations and needs of

stakeholders - not just customers and investors, but also employees, suppliers,

communities, regulators, special interest groups and society as a whole. CSR describes a

company's commitment to be accountable to its stakeholders. With businesses focusing

on generating profits, sustainability was not a popular concern among companies up until

recently. In this era of globalization, multinational corporations (those that conduct

business in more than one country) and local businesses are no longer able to conduct

destructive and unethical practices, such as polluting the environment, without attracting

negative feedback from the general public. With increased media attention, pressure from

1
The ILO drafted the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social
Policy (known as MNE Declaration) in 1977. This declaration is a valuable instrument for promoting CSR.
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non-governmental organizations, and rapid global information sharing, there is a surging

demand from civil society, consumers, governments, and others for corporations to

conduct sustainable business practices. In addition, in order to attract and retain

employees and customers, companies are beginning to realize the importance of being

ethical while running their daily operations. The corporate response has often meant an

adoption of 'a new consciousness', and this has been known as Corporate Social

Responsibility (CSR) since the 1970s. Successful corporations need a healthy society.

Education, health care, and equal opportunity are essential to a productive workforce.

Safe products and working conditions not only attract customers but lower the internal

costs of accidents. Efficient utilization of land, water, energy, and other natural resources

makes business more productive. Good government, the rule of law, and property rights

are essential for efficiency and innovation. Strong regulatory standards protect both

consumers and competitive companies from exploitation. Ultimately, a healthy society

creates expanding demand for business, as more human needs are met and aspirations

grow. Any business that pursues its ends at the expense of the society in which it operates

will find its success to be illusory and ultimately temporary. Corporate Social

Responsibility also plays major role in community development. Community

development (CD) refers to initiatives undertaken by community with partnership with

external organizations or corporation to empower individuals and groups of people by

providing these groups with the skills they need to effect change in their own

communities. These skills are often concentrated around making use of local resources

and building political power through the formation of large social groups working for a

common agenda. Community developers must understand both how to work with
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individuals and how to affect communities’ positions within the context of larger social

institutions. CD is the process of developing active and sustainable communities based on

social justice and mutual respect. It is about influencing power structures to remove the

barriers that prevent people from participating in the issues that affect their lives.

Community workers facilitate the participation of people in this process. They enable

linkages to be made between communities and with the development of wider policies

and programs. CD expresses values of fairness, equality, accountability, opportunity,

choice, participation, mutuality, reciprocity and continuous learning. Educating, enabling

and empowering are at the core of CD. The key purpose is to work with communities

experiencing disadvantage, to enable them to collectively identify needs and rights,

clarify objectives and take action to meet these within a democratic framework which

respects the needs and rights of others. Community work recognizes the need to celebrate

diversity and appreciate differences among ethnic and social groups in the community.

The success of CSR is determined by both internal and external factors. Internal factors

are economic considerations, culture of the firm including the CEO and employees, and

ethical influences while external factors are compliance with legal requirements and

technological influences as well as national culture. Skills possessed by CSR managers

are among the internal factors determining the success of CSR practices especially in

helping community. Because CSR profession is so new, transferable skills and

knowledge from other related specialization such as environmental management,

business ethics, community development, and human resource development are valuable.
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7.2 Answers to the research questions

Followed by these chapter wise conclusions the following are the list of broad

conclusions in the light of answers found for the research questions evolved at the

beginning of this work.

1. Business is viewed as legitimate and an integral part of society according to

Vedic philosophy but it should create wealth for the society through the right

means of action. In accordance with the Indian philosophy, the characteristics

of business excellence are intricately weaved around spiritual threads of Vedic

and Bhagavad-Gita teachings. In India, the concept of CSR has been

incorporated in the various religious laws where a part of one’s earnings are

donated for the benefit of the poor and community welfare. Gandhiji’s

philosophy of trusteeship is similar to the modern business world; the

Gandhian notion of trusteeship has been followed by the Tatas and Birlas ever

since their inception. After World wars, protection of interests of stakeholders

in business started to receive phenomenal attraction. In the modern times, the

relationship between corporate objectives and corporate obligations is

becoming critical in view of internationalization of the concept of CSR.

2. The concept of CSR has grown historically in consonance with the social and

economic developments across the world. Recently it is finding place in many

of the National legislations also. Even the United Nations has responded to

this concept by releasing some guiding principles to build consensus regarding

corporate obligations towards the society.

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3. Over the decades the economic and legal systems have identified different

stakeholders and their interests in CSR. But the efforts to create values in

corporations are not fully successful, because of lack of political and social

will in countries like India.

4. Business entities are required to function within the legal framework. Acting

within this framework may not necessarily ensure ethical compliance on the

part of corporations. More often than not corporate entities are guided by the

inclination to avoid penalty than by the value imbibed.

5. Business has to respond to the social security requirements. Workers are the

important stakeholders and this research work has found that the social

security obligations are less effectively enforced in the recent past.

6. Human Rights are universal and respect to them is an obligation for the

business groups. The State should ensure that the business respects the human

rights. It is found that law is inadequate to ensure human rights protection by

the private business entities.

7. Sustainable development has been advocated and practiced widely in the

recent years. But there are inequalities in the imposition of sustainable

development obligations. This inequality is prevalent industry wise and

country wise.

8. Though the Companies are required to actively adhere to environmental

protection, they are not proactive, nor automatically responding.

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9. Companies are required to undertake many initiatives to answer CSR. One

such step is to go for social and inclusive initiatives. The government needs to

collaborate and facilitate these initiatives at the corporate level.

10. The Companies Act, 2013 contains several provisions touching CSR. The

CSR which was almost in the form of voluntary contribution has now become

a legal obligation. The Indian Courts have been very critical of enforcing CSR

obligations against the corporate entities but a clear decision with a ratio on

the issue is yet to be pronounced by Superior Courts in India.

11. CSR stakeholders can be recognized not only through Industrial Laws but

also through various other legislations. These legislations include Consumer

Protection Act 1986, Competition Act 2002, Indian Constitution, Human

Rights Protection Act, Customs and Exercise Laws.

12. Under the Companies Act, companies are required to spend 2% on CSR

activities. But the Income Tax Act does not provide any incentives for such

expenditure. The expenditure on CSR activities is not for the purpose of

business, hence it cannot be allowed for deduction for computing tax liability

of the company. However, the deduction could be allowed for serving CSR

activities. For e.g., expenditure on rural development projects, protection of

national heritage, establishment of public libraries etc, are some of the items

for which deductions can be claimed.

13. It can be inferred from the evolution of corporate liability under English law

and Indian law, that corporate management was gradually made more and

more answerable to the investing public. In the post- independence India, the
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Central Government was gradually being more and more empowered to

control the corporate management to protect the interest of the investors, the

company itself and the public interest. The most recent development has been

to make the Company Law Board independent and give it more power against

corporate misdeeds to protect these interests. During evolution, the concept of

corporate liability as separate and distinct from that of the shareholders of the

company emerged giving rise to the concept of limited liability of the

shareholders. The English concern was to protect shareholders from corporate

impact. The same concern was transplanted into the Indian Law. In India, the

shareholders’ control over corporate management was gradually increased.

The Central Government’s supervision and power over corporate sector was

gradually grown to protect shareholders’ interest and public interest.

14. CSR within a company corporate philanthropy, In case of corporate

philanthropy- donations may go to specific charities or nonprofit organization.

CSR has a much broader scope, as it addresses the overall attitude of an

organization towards its employees, customers, the environment, local

community, and the society at large. CSR is an integral part of business can

enhance the profit of a company and image also. Success in business and

commitment to CSR go hand in hand.

7.3 Verification of Hypotheses

Researcher began this study with a set of hypotheses as enunciated in the first

chapter. After collection of data in the form of different materials the hypotheses are

tested and this process has defined the direction of this research work. The same process
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has guided the researcher to fine tune the research objectives. The process of testing of

hypotheses has helped the researcher to objectively conclude whether the research

assumptions are proved to be right or wrong.

The hypotheses framed in this research work are tested as under-

1) The process of building relationship between business and society is at its

initial stage both at corporate and government levels. The concept of

Corporate Social Responsibility has not been exhaustively defined under any

official document. The government has taken initiatives to bring about

awareness among corporates about their social responsibilities. It is found that

the corporate sector in India is favoring the concept of Corporate Social

Responsibility in the form of public documents than through the private

adherence based on societal conscience.

2) The concept and practice of Corporate Social Responsibility has been a mere

statement of corporate intention and the interests of different stakeholders

necessitate that it should be institutionalized so as to subserve the human

rights practice and protection.

3) The present legal system, except 2013, companies’ amendment to some

extent, is conducive to ignore social responsibilities as the corporate Social

Responsibility provisions are inadequate therein. Until 2013 the lack of

specific mandatory legislation had resulted in total ignorance of corporate

social responsibility.

4) The welfare state agenda of making corporate interests to subserve the societal

interests has not been implemented in India. Social actions are finding place in
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annual reports of public sector undertakings and same is not true of most of

the private sector undertakings especially MNCs and TNCs.

5) The recent enactment provides for earmarking of 2% of the net profit towards

corporate social responsibility heads, but consequence of not spending the

same have not been spelt out explicitly. Financial and accounting laws

pertaining to corporates are also silent on this issue.

7.4 Findings and suggestions of Research

Based on the research questions evolved at the beginning of research and the

hypotheses framed thereafter the following findings and Corresponding suggestions are

made.

1. The existing economic and legal framework is not suitable for ensuring

Corporate Social Responsibility compliance in India and legislations like

Companies Act and other Corporate Laws lack efficacy in ensuring the same.

2. Corporate Social Responsibility statements are more often part of documents

issued to public and government authorities, the same will not suffice the

ultimate object of realisation and protection of human rights.

3. The present legal setup, barring the CSR Act, 2013, to some extent, is more

likely to help corporations to avoid regulations, gain legitimacy and access to

market and decision makers and shift the path towards privatisation of public

functions.

4. Many legal provisions including the New Companies Act, 2013 do contain

CSR provisions, but these provisions make corporate sector penalty conscious
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than CSR conscious. There is no legal or economic initiative to ensure CSR

culture in Companies on the basis of self introspection.

5. Presently Companies are required to earmark 2% of their average net profit of

a specified period. This rate is less from the point of view of both broader and

technical approaches to CSR.

Suggestions

1. There must be a separate legislative provision to ensure CSR culture among

corporations. The provision in the new companies act, 2013 could be considered as

analogous to the Small and Medium Enterprises (SMEs) which significantly

contributes to the economic growth as well as the welfare of the citizens. It should be

strictly monitored that the companies perform literally as per the provisions of section

135. Preference shall be given to the local area and areas around particular company

for spending the amount earmarked for corporate social responsibilities activities. The

CSR obligation is required to be imposed on the basis of nature of business.

2. The CSR compliance needs to be made statutory obligation and there must be

mechanism to monitor the compliance.

3. The CSR compliance must be insisted hierarchically. While insisting this compliance

distinction must be made between types of corporations on the basis of size, nature,

etc. Accordingly the other economic legislations, including Tax laws must be fine

tuned.

4. In addition to penalty for non-compliance, other disincentives must be evolved to

curtail the non-compliance of CSR. This can be done through inserting cross-
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checking measures in some economic legislations and schemes of Government of

India.

5. The rate at which companies are required to earmark funds for CSR activities must be

enhanced to at least 3%. In addition the basis of contribution viz, average net profit

itself is not suitable as the CSR requirement is like social security obligation which

needs to be complied irrespective of the profit.

In India, till very recently, the focus was on charity, which is not really CSR.

Sustainable CSR programmes mean a cohesive mix of economic, legal, ethical, and

philanthropic tenets. In today’s changed business scenario, there is an increased focus on

giving back to society and creating a model which works long term and is sustainable an

it is imperative that the best practices for inclusive growth are shared with stakeholders.

Getting multinationals to comply with local laws is not an easy task. Many north and

south countries do not have direct sufficient resources for enforcement. Management

practices that evade regulations persist. Furthermore, labour laws can be difficult to

interpret. But suppliers, companies, and countries can’t point to these difficulties to elude

legal accountability. Legal compliance will be hard to achieve, whether within the CSR

rubic or not, but extracting legal compliance from CSR has the advantage of bringing to

light a range of workplace and wage issues that companies are required by law to attend

to.. In the light of a comprehensive discussion made in this chapter the following remarks

are submitted.

Feel good returns: When a business invests in community and philanthropic

efforts, one or more stakeholders often receive the benefits of these actions. A company
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has to remember that it is in business to create a profit so that it can continue to provide

these benefits to society.

Public relations: Each CSR effort can offer many public relations and media

opportunities. If a company makes a donation to a community service project, they would

likely to send a press release to relevant media outlets. Their story could be picked up and

included in publications, broadcasts and online new sites, thereby spreading their

company message in several directions for little additional cost.

Human resources: Corporations that can demonstrate their commitment to the

social good can be attractive to top talent who share their set of values.

Sponsoring Marketing Opportunities: Corporate sponsorship of charitable events

can keep the company’s name in front of target audiences in a more subtle way than

traditional sales efforts. If an audience realizes that a company shares their own personal

values, they may be more likely to buy from that company.

Team Building: Particularly when a company’s values are shared by employees,

charitable efforts can become team building exercises that improve staff morale and job

satisfaction.

Reduced costs: While CSR projects do have costs, often those costs can be less

than traditional marketing channels. The resulting benefits of the efforts can also reduce

other costs. CSR efforts, as discussed can attract top talent which can reduce human

resource recruitment costs. Green and sustainability initiatives could reduce waste and its

associated costs. Projects that generate positive mentions in the media can reduce the

need for paid marketing and advertising.

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Changing social expectation: Consumers and society in general expect more from

the companies whose products they buy. This sense has increased in the light of recent

corporate scandals, which reduced public trust of corporations and reduced public

confidence in the ability of regulatory bodies and organizations to control corporate

excess.

Increasing affluence: This is true within developed and also in comparison to

developing nations, affluent consumers can afford to pick and choose the products they

buy. A society in need of work and inward investment is less likely to enforce strict

regulations and penalize organizations that might take their business and money

elsewhere.

Globalization: The growing influence of the media sees any ‘mistakes’ by

companies brought immediately to the attention of the public. In addition, the Internet

communication among likeminded groups and consumers- empowering them to spread

their message, while giving them the means to co-ordinate collective action.

CSR provide greater incentive for companies to focus on the law: Corporate

leaders and their general counsels would give compliance issues a higher priority, if they

recognize the risk of increased scrutiny on the legal angle of their global operations. If the

company were mandated to report legal compliance, this would be a much stronger

indicator of actual working conditions.

Give greater accuracy to CSR ratings: Company CSR assessment questionnaires

frequently put more emphasis on aspirational issues. The socially responsible investment

community would do well to separate out legal requirements and form one assessment on

these, and then evaluate a company on “company compliance” issues.

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Support company compliance staff, who must often make unpopular requests. In

the experience of many staff, it seems as if upper management must be persuaded to

support not only CSR goals, but regulatory recommendations as well.

CSR is particularly important within a globalizing world because of the way

brands are built- on perceptions, ideals and concepts that usually appeal to higher values.

CSR is a means of matching corporate operations with stakeholder values and demands,

at a time when these values and demands are constantly evolving. Therefore CSR can be

described as a total approach to business. It creeps into all aspects of operations. Like

quality, it is something that business today should be genuinely and wholeheartedly

committed to. The dangers of ignoring CSR are too dangerous when it is remembered

how important brands are to overall company value; how difficult it is to build brand

strength; yet how easy it can be to lose brand dominance. So CSR is also something that a

company should try and get right in implementation.