Corporate social responsibility in simple words is a business approach that prefers the contribution to the sustainable development while providing social, economic and environmental benefits to all stakeholders. Corporate social responsibility works as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of law, ethical standards and national or international norms.
In 2014. India enacted a mandatory law under COMPANIES ACT,2013 about corporate social responsibility according to which any company having a net worth of 500 crores, a turnover of 1,000 crores or a net profit of 5 crores must spend 2% of their net profits on CSR activities. The rule came into effect from April 1, 2014
Corporate social responsibility is a broad concept that defines many practices such as human rights, health and safety, fair means of advertisement, protecting environment, corporate governance, working conditions and contribution to economic development.
It differs from company to company. Different companies have different approach towards corporate social responsibility and the application is also different. They basically focus on what matters for the stakeholders and customers first.
Business dictionary defines corporate social responsibility as “A company’s sense of responsibility towards the community and environmental (both ecological and social) in which it operates. companies express the citizenship through their waste and pollution reduction processes, by contributing educational and social programs and by earning adequate returns on the employed resources”.
One motivation for the companies to adopt CSR practices is to satisfy stakeholders.
Some authors describe the stakeholder’s perspective of CSR as the combination of views of corporate responsibility held by all groups or constituents with a relationship to the firm. Company ought to accept this views as long as they don’t hinder the organisation.
Environmental sustainability: Corporate social responsibility basically includes recycling, waste management, water management, reusable materials, reducing paper use.
Ethical marketing: All the companies adopt different and the most effective marketing techniques but the companies adopting CSR techniques are placing high value in the economy. They do not adopt false measures or do not try to manipulate people to increase the sales.
Common interests: Company should work by considering a common objective i.e. benefit of all. Focusing the profits in monetary terms is not the option according to CSR but the company has to consider the stakeholder’s benefit and the customer satisfaction also
Values: Pursuing moral values such as honesty, integrity and fairness while carrying out activities and decisions
Example of Practise of CSR in Organization
After experiencing the devastating effects of CSR, companies are focusing more on their impacts of their operations on society and environment rather than preferring only profits
We can take the example of Unilever company. It is a multinational company in FMCG sector. It has its headquarters in London, UK. It has a turnover of over 50 billion euros. It is divided into four main divisions - foods, refreshment, home care and personal care. India also has the research and development facility of Unilever
One of the major and unique initiative by the company is SUSTAINABLE TEA programme. On a partnership model with RAINFOREST ALLIANCE (AN NGO), Unilever aims to source all of its Lipton and PG tips tea bags from rainforest alliance certified farms by 2015. The rainforest alliance certification offers farms a way to differentiate their products as being socially, economically and environmentally sustainable.
CSR term has been revaluated with an aim to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, corporate citizenship, social performance, employees, communities and all the stakeholders.
In shorts, it can also be termed as Corporate Organizations to behave responsibly.