Corporate Social Responsibility in India

Corporate Social Responsibility is the most neglected issue in developing economies. India is a classic example of being a hub of unfair trade practices, which invariably undermine the interests of the communities and damage their environments. While the victims of Bhopal Gas Tragedy have not received a fair compensation even after twenty long years of legal battle, Indian subsidiary of another MNC –Nike has set records in flouting the international labour standards. Both Indian companies and the MNCs have little regard for well-being of the communities where they operate. Thus, while an independent research agency comes up with a report of presence of pesticides in the cold-drinks, the concerned companies start questioning the veracity of the report and competence of the laboratory instead of introspecting and initiating enquiries within their own work-systems.Generally people think that the Corporate Social Responsibility relates to companies’ funding of some social development projects through their welfare departments or some non-government organizations. However, the concept is not as simple as it appears. Lord Holme and Richard Watts in their report on Making Good Business Sense published by the World Business Council for Sustainable Development, have defined contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Indeed, Corporate Social Responsibility concerns quality of management both in terms of human resources as well as processes and impact of their business on the communities vis-à-vis environmental degradation, climatic changes, health hazards, social safety, labour practices etc.Maintenance of an interactive relationship with the various stakeholders such as workers, suppliers, local population, consumers, social organizations and public authorities on the basis of transparency and dialogue is the hallmark of Corporate Social Responsibility. Fair competition, transfer of science and technology, labor and socio-economic values, supply chain responsibilities, stakeholder involvement, transparency in reporting and independent verification, respect for national sovereignty and local communities, preventive action and precautionary approach in rectifying environmental damage at source, use of environmental friendly technologies, preservation of biodiversity, judicious use of energy, material and water, proper management of emissions, effluents and waste are some of the important components of Corporate Social Responsibility. Stakeholder involvement is an important condition for effective implementation of the Corporate Social Responsibility as a management strategy to boost company’s goodwill, market share, brand loyalty, workers commitment etc.Most of the companies in India as elsewhere generally tend to be compliance oriented while tackling the issue of corporate social responsibility. They somehow manage to meet the prescribed labour standards, environmental and safety norms, product quality norms, social security provisions for their workforce etc so that they can evade the legal action. However, consumer activism and human rights movements have changed the entire socio-economic scenario in which the businesses operate and flourish. It is now imperative that the companies take interest in more active management of changing social expectations concerning corporate governance, compliance and risk management, transparency and disclosure etc. Now, people are not bothered about mere compliance of norms set by the government under different heads. They expect the companies to be pretty serious about their moral liability in terms of fair trade and fair pricing among other things. Proper management of Corporate Social Responsibility may arrest the declining trust in business.A number of large companies including some MNCs are engaged in health-care, education, rural development, sanitation, micro-credit and women empowerment, arts, heritage, culture, and conservation of wildlife and nature, etc. Some of them have created their own trusts and foundations while others are generous towards their favourite NGOs. They have in deed confused corporate philanthropy aimed at social welfare and community development with Corporate Social Responsibility, which has failed to become a part of the core business process. The corporate philanthropy is basically the part of their business tradition rather than a reflection of their social obligation. Possibly due to their indulgence in corporate philanthropy, there is not much demand for policy-formulation and implementation of Corporate Social Responsibility in the country. However, the Corporate Social Responsibility Survey 2002 conducted by British Council, UNDP, CII and Pricewaterhouse Coopers indicated a growing recognition among companies that passive philanthropy is no longer sufficient so far as Corporate Social Responsibility is concerned. However, a common understanding of Corporate Social Responsibility is still in an evolving stage in India. Much emphasis in the country is on value aspect while operational aspects are generally neglected. Besides, there is a remarkable gap between corporate policies and practices. Large MNCs generally fail to ensure compliance of norms related to Corporate Social Responsibility in their supply-chains. On the other hand, the MNCs do not monitor implementation of Corporate Social Responsibility policy by their local partners/subsidiary companies or suppliers and they generally do not check if the production in sub-contracting chain follow the internationally agreed labour and other human rights and environmental standards as indicated by a joint survey conducted in 2003 by Consultancy and Research for Environmental Management (The Netherlands) and Partners in Change (India). Some of the bottlenecks in the growth of CSR in India identified by Centre of Social Markets such as unclear policy of the government, ineffective bureaucracy, poor monitoring record, complicated tax systems, and poor infrastructure provide further leverage to the MNCs and their Indian subsidiaries to evade Corporate Social Responsibility.Certain policy changes in India regarding competition, monopolies, state control of trading activities, price regulation, labour reforms, tariff wall, privatization of state assets, rationalization of direct and indirect taxes; fiscal deficits, social expenditures, subsidies, user charges for public services and utilities, trade liberalization, market-driven exchange rates, norms of current account transactions, foreign direct investments etc have changed the way business and trade are conducted in the country.However, positive results of the reforms process have failed to reach the masses. On the other hand incidence of unemployment, income-inequality, and regional development disparity have increased while social infrastructure development, social security and trade union activism have taken back seat. The emerging scenario has necessitated the proper development of a national perspective on Corporate Social Responsibility so as to build people’s confidence in trading activities and improve the overall quality of life in the society.