Special Article (April-2018)
Social responsibility : Profit to purpose
"By putting the industry in this area, we are generating employment, this is the best CSR we are doing". One of the Industrialists whose company has the turnover of around 3 million was referring CSR to employment generation. His industry has taken the land on lease in discounted rates, he had enjoyed the tax holidays, he is using natural resources like water, his industry is polluting land, air and water and his definition of CSR was very limited to employment generation. He is right according to his limited perspective but he has not reflected on the purpose of his business and CSR.
There were people who even didn't want to spend small amount on the CSR before April 2014 where amendment was done in Companies Act. After the introduction of mandatory spend on CSR, companies are forced to spend on - CSR activities. When you go back in past, India has witnessed the great industrialist like Tata, Birla who has solid CSR programmes. They are not doing this just for the compliances.
India has the good background of Gandhian Industrialists. This is moreover Philanthropic nature. Some Indian Industries are contributing very well in CSR. India is the country that lay heavy emphasis on CSR disclosure norms. However, MNCs also have the strong emphasis on CSR. Industries which are using the sources which belong to the society and not doing anything on CSR may have to change their attitude. Government has mandated compulsory 2% of profit spend on CSR under Companies law (with a turnover of more than 1,000 crores). If we study fundamental principles in CSR, it has three levels.
Level 1 : Compliance :
Most of the organizations focus on the complenace level of CSR. Industries does this just by compulsion. Sometimes, law demands, local community demands and companies can't ignore these demand. This is done mererly for the compliance of laws and obligations under putting the factory/company in specific areas. Some companies think that they are using the resources, hence same should be reciprocated. "We are good company feeling."
Examples of this level are :-
So called employment generation, tree plantations around the area, health check ups for local community, community service, education support to local children etc.
Level 2 : Philanthropy :
This is a holly reciprocation of industry voluntarily giving back something to the society. There are very few organizations that focus on this. Best example is Tatas and Birlas. These actions are inspired by a sense of earning good name in market, philanthropy, etc.
Examples of this level are :-
Support in building education facilities, street light in village, solar equipments, skill development programmes, foundations supporting health, education, relegious activities etc.
Level 3 : Innovations, value creation and Key business strategy : profit to purpose
This is linked to the business strategy. There is long terms strategy in CSR. Lot of innnovative products are offer to the community. This is based on win-win basis and is based on key business strategy and driver.
It is part of core business strategy. It is broadly adopted by the managing board. It involes brand, sustainability and "we make the difference for future generations" feeling. For exapmle companies manufacturing health products working for educating people on malnutrition or companies manufacturing toothpaste doing soomething positive for improving oral hygine in slum areas.