Corporate Social Responsibility: A new dimension to corporate functioning

During 1950’s and 60’s, when American capitalism was at its pinnacle, a need was felt among different sections for more participation and engagement from the corporates in the cultural, social and environmental development of the society in which they operate and earn their profits. To make corporates more responsible and empathetic towards the society, primordial notions of governments being the sole proprietor of the development and upliftment of the society had to be squashed away. 

To achieve this feat, a phenomenon known as “Corporate Social Responsibility” came into existence during 1960’s to make corporates more liable towards the society and trigger a massive change in the dimension of their functioning. Though, in Indian context, it took more than 5 decades for the phenomenon to assume relevance. With the enactment of the new companies act, 2013, India has officially made it obligatory for the firms operating on and through Indian soil to comply with CSR norms. 

What is Corporate Social Responsibility?

Corporate social responsibility is basically defined as the responsibility of the corporates to undertake certain actions, which go beyond the personal profits of the firms, to do social good and hence benefit the society by engaging in the development process with their contributions. In India, firms, having a net worth of more than Rs 500 crs, or having a total turnover of more than Rs 1000 crs, or having a net profit of more than Rs 5 crs, have been asked to spend atleast 2% of their last 3 years average profit on society development as part of their CSR compliance. 

CSR is a step in the right direction for a highly underprivileged society like India where majority of the population is still sulking under poverty. According to the various estimates, CSR contribution from corporates in India would stand at something in between 15000 to 20000 crores for the year 2013-2014, which is not even 0.1% of India’s GDP. But still, a contribution is better than no contribution. It is important for any prospering society to share the burden of the development. Just relying on the govt. to do all the development work won’t do a lot of good. Hence, the onus rests not only on the corporates but also on us to share that burden. Purchasing items of a brand or a company which regularly engages in CSR activity can be a one to start with.