CORPORATE SOCIAL RESPONSIBILITY (CSR) IN INDIA - ISSUES AND PJAEE, 18(4) (2021)

CHALLENGES

"CORPORATE SOCIAL RESPONSIBILITY (CSR) IN INDIA - ISSUES

AND CHALLENGES"

Mr. Ravindra Kumar

Research Scholar,
Email Id: - ravindra.r.kumar@gmail.com
Agarsen PG College, Sikandrabad, Bulandshahar
Chaudhary Charan Singh University, Meerut

Ms. Preeti Ruhela

Research Scholar,
Email Id: - preetiruhela978@gmail.com
Jayoti Vidyapeeth Women’s University, Jaipur

Mr. Ravindra Kumar, Ms. Preeti Ruhela : Corporate Social Responsibility (CSR) in India - Issues
And Challenges.--Palarch’s Journal of Archaeology Of Egypt/Egyptology 18(4). ISSN 1567-214x

ABSTRACT
CSR as a significant subject of public policy has been occupying a vital place in the Indian
corporate scenario, as it has build up sustainable relationship with the society at large with the
increasing socio-regulatory forces. The theory of Social responsibility says that an
organization or individual, has an obligation to act to benefit society at large. Social
responsibility is the duty of every individual or organization has to perform so as to maintain a
balance between the economy and the ecosystem. The first reference of the term corporate
social responsibility was mentioned in the publication ‘Social Responsibilities of Business’ by
William. Bowen in 1953. In India, there has been a persistent close business involvement in
societal issues for national development, known as social duty or charity donations,
philanthropy, and service to community, industrial welfare, now particularly termed as CSR.
All the economic enterprise presumes Human resource as the backbone. The main purpose
of this research will be to investigate the attitudes towards Corporate Social Responsibility
(CSR) among India’s future business leaders. In India companies like Tata & Nestle are
practicing the Corporate Social Responsibility (CSR) for decades, long before CSR
become a popular basis. In spite of having such good illustrious examples; In India
Corporate Social Responsibility (CSR) is in an extremely risining stage. Many large
companies are undertaking these Corporate Social Responsibility (CSR) activities superficially

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and promoting/ highlighting the activities in Media. This research paper bases on the finding
& reviewing of the issues and challenges faced by Corporate Social Responsibility (CSR)
activities in India.
Keywords: Social Responsibility, Sustainable Development, Companies, Corporate Social
Responsibility, CSR Issues & Challenges.

INTRODUCTION:
Within the area of business the most responsibility of corporations has historically been to form
money and increase shareholder value. But, now in an era of globalization corporations put
their emphasis on contributing to a far better society and cleaner environment. With enhanced
media focuses, pressures from non-governmental organization there's surging demand from
society consumers, governments et al. for organizations to conduct sustainable business
practices. The company response has often meant an adoption of a ‘new consciousnesses and
this has been referred to as Corporate Social Responsibility (CSR) since 1970s. India has one
among the richest traditions of Corporate Social Responsibility (CSR) among other countries.
Much has been wiped out recent years to form Indian Entrepreneurs conscious of social
responsibility as a crucial segment of their commercial activity but Corporate Social
Responsibility (CSR) in India has not yet to receive widespread recognition. In India history
Corporate Social Responsibility (CSR) has four phases.
There are quite 1,000,000 registered companies in India out of which but one-hundredth
companies are traded on the Indian stock market. A replacement Trend has started in Corporate
is that the establishment of special committees within the board of directors to oversee
Corporate Social Responsibility (CSR) activities. Groups of corporate are being encouraged to
return together to market CSR. In 2006, Europe created the Alliance for Corporate Social
Responsibility (CSR). It currently consists of 70 multinational corporate houses and 25 national
partner organizations and has become a singular resource for building capability in Corporate
Social Responsibility (CSR).
In a societal structure, we've many stakeholders, one of them are companies or Corporate
Houses. These Companies or Corporate houses are significantly rendering from their kitty
which impact their internal stakeholders and also openhanded support societal initiatives. In
India companies like Tata & Nestle are practicing the company Social Responsibility (CSR)
for many years, long before Corporate Social Responsibility (CSR) become a well-liked basis.
Business Organizations have played an active role in many areas via Corporate Social
Responsibility. This includes social areas like health (Primary to Specialized), Education
(Primary to Higher), food security and environment. They have launched various programs
which have helped in the above areas.

DEFINITIONS OF CSR:
The World Business Council for Sustainable Development (WBCSD) defines CSR as “the

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continuing commitment by business to contribute to economic development while improving

the quality of life of the workforce and their families as well as of the community and society
at large.”
European Union’s Official Definition of Corporate Social Responsibility (CSR): - “The
European Union, in an attempt to offer a framework for companies wishing to invest in
sustainable development, published in 2001 a Green Paper on Corporate Social Responsibility
defining CSR as: “The voluntary integration of companies’ social and ecological concerns into
their business activities and their relationships with their stakeholders. Being socially
responsible means not only fully satisfying the applicable legal obligations but also going
beyond and investing ‘more’ in human capital, the environment, and stakeholder relations.”
ISO 2600 Official Definition of Corporate Social Responsibility (CSR): - “The International
Organization for Standardization (ISO) is an international standard-setting body that also
addressed the definition of Corporate Social Responsibility (CSR) through its ISO 26000
standards on Corporate Social Responsibility. In these guidelines, ISO defines Corporate Social
Responsibility (CSR) as: “The responsibility of an organization for the impacts of its decisions and
activities on society and the environment, resulting in ethical behavior and transparency which
contributes to sustainable development, including the health and well-being of society; takes into
account the expectations of stakeholders; complies with current laws and is consistent with
international standards of behavior; and is integrated throughout the organization and implemented
in its relations.”
According to the Indian Corporate:”Sustainable development implies optimizing financial
position while not depleting social and environmental aspects and CSR implies supporting
issues related to children, women and environment. These corporate refer in its definition of
CSR to community development. In the context of Western community, development is often
seen as charity. In the Indian context it is seen as a large responsibility of a corporate, not
only by stakeholders but also by the local Indian management. The background of this is that
stakeholders see the large western companies as capitalist islands in a developing country. This
position gives them a certain responsibility towards the community. Nearly all leading corporate
in India are involved in corporate social responsibility (CSR) programs in areas like
education, health, livelihood creation, skill development, and empowerment of weaker
sections of the society. Notable efforts have come from the Tata Group, Infosys, Bharti
Enterprises, ITC Welcome group, Indian Oil Corporation among others.

OBJECTIVES:
The Present paper is basically concerned with the following objectives:
1) To understand the present scenario of corporate social responsibility.
2) To study the Issues and Challenges for CSR in India.

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RESEARCH METHODOLOGY:
Looking into requirements of the purposes of the research paper the research design employed
for the study is of descriptive type. Keeping in view of the set objectives, this research design
was developed to possess greater accuracy and thorough analysis of the research study. The
secondary available data has been substantially used for the study. The investigator procures
the specified data through secondary survey method. The various news articles, Books and
Websites have been observed and used which are enumerated and recorded.
LITERATURE REVIEW:
Vishwakarma, Vijay (2019), in his research paper stated that Corporate Social Responsibility
(CSR) is not a new term. Previously only few companies use to do something for the betterment
of the society. As they feel all the stakeholders are the integral part of any business
organization. If they being served in a better way, definitely it will help the organization to
sustain. The aim of this paper is to understand the importance of CSR for the economic
development of the society.
Tiwari, Bindu and Kumar, Dr Naveen (2018), in their paper stated that to find out the impact
of Digital Marketing on CSR performance of the company. This paper helped to find out the
ways to make worth out of CSR investment by optimally using the digital facility. The
article also focuses on how CSR helps in the marketing of various goods and services. Research
is based on secondary data. The paper has tried to find out the ways related to sustainability
and publicity by maintaining Goodwill of the organization. Digitization has made it easier to
initiate and promote CSR activities.
Baluja, Garima (2017), in her paper titled “CSR Practices by Banks: A Comparative Study”,
stated that many nationalized banks have started taking various social initiatives in the area of
social welfare and community development, but still there is a huge gap in this area. Banks are
mainly engaged in CSR activities in the area of sustainable livelihood, Rural Development,
Education, Community Welfare, Women and Children. However, public sector banks are more
engaged in CSR activities as compared to private and foreign banks.
Corporate Social Responsibility literature is related with the perceived dichotomy of the
normative and instrumental approaches. Much of the literature promotes the ‘business case’
for CSR with many claiming that “can be good for business” (Swain in The Independent,
2007) It is stated that CSR requires to be made pertinent to the concerns of corporate
people by emphasizing and focusing on this ‘instrumental’ approach:”CSR requires to be
reconstructed in an stakeholder praxis to be meaningful to managers in their daily tracking of
organizational goals and objectives” (Amaeshi & Adi, 2006). Many HR advocates proposed
that corporations should protect human rights because it is the right thing to do, whether it is
profitable or not” (Steinhardt in Alston, 2005). It is stated that an instrumental approach would
only require acting ethically as long as it was profitable to do so, whereas a normative
approach recommend a more consistent ethical performance (Gond & Matten, 2007).
Research demonstrates that the driving force for corporations to adopt CSR values is
often catalyzed by particular events. A series of experiments conducted by The University of

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Western Ontario’s Ivey School of Business revealed that it pays companies to invest in social
responsibility (The Wall Street Journal, May 12, 2008). Fombrun & Van (2004) observed that
once a company hits certain socially responsible thresholds, they will have measured to some
reputation levels. In return, consumers will reward it by paying higher prices, recommending
other stakeholders and customers to the company, etc. However, works of Birch (2003) stated
that effective corporate social responsibility (CSR) does not need outside approval, nor should
it necessarily be a measure of how ‘good’ or ‘ethical’ a company is. He emphasized that it’s
essential that corporate social responsibility is made a part of all decision making in the
company. According to ACCSR’s (Australian Canadian Corporate Social Responsibility)
State of CSR in Australia Annual Review report Full understanding of CSR still emerging;
There are many obstacles which are emerging while adopting successful CSR strategies
include the difficulty in making a business case for CSR, difficulty in integrating CSR with
organizational values and practices, and the lack of organizational buying and commitment to
CSR. On another note, Visser (2005) stated that CSR May be associated with a series
of bottom-line benefits. For example, socially responsible organizations have increased brand
image and reputation. Nikko & Katamba (2010) observed that CSR oriented companies May
implement stricter and, thus, more costly quality and environmental controls, but they run less
risk of having to recall ineffective product lines and pay heavy fines for excessive polluting.
CSR PYRAMID:
In the first phase charity and philanthropy were the most drivers of CSR. In the pre
industrialization period, which lasted till 1850, wealthy merchants shared a neighborhood of
their wealth with the broader society by way of fixing temples for a spiritual cause. The
approach towards CSR has changed with the arrival of colonial rule out India from 1850
onwards.

CSR
PYRAMID

In the second phase, during the independence movement India industries focused on the progress

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of the society. Gandhi’s influence put pressure on various industrialists to place a stress on the
socio-economic development of the state. In the third phase (1960-80) there was an emergence
of public sector. During this era the private sector was forced to require a backseat. The public
sector was seen because the first cause of development. They were set up by the state to ensure
suitable distribution of resources (wealth, food etc.) to the needy. In the fourth phase (1980 until
the present) Indian companies started ignoring their conventional engagement with Corporate
Social Responsibility (CSR) and integrated it into a sustainable business strategy. . Increased
growth momentum of the economy helped Indian companies grow rapidly and this made them
more willing and ready to contribute towards social cause.

CSR PROMOTION:
To promote CSR activities during a strategic way, The FICCI- Aditya Birla CSR Centre for Excellence in
New Delhi was set-up on February 17, 2010. The Ministry of Corporate Affairs issued voluntary
guidelines for CSR in India, which signifies that CSR policy should include the subsequent core subjects:
➢ Care for all stakeholders
➢ Ethical functioning
➢ Respect for Worker’s rights and Welfare
➢ Respect for human rights
➢ Respect for Environment
➢ Activities for social and Inclusive Development

ISSUES & CHALLENGES: -

Many companies say that corporate social responsibility may be a peripheral problem for his
or her business and customer satisfaction more important for them. They imagine that customer
satisfaction is now only about price and repair, but they fail to means on important changes
that are happening worldwide that would blow the business out of the water. The change is
known as social responsibility which is a chance for the business.

The issues are given below:

1. Developed Consumers Interest: Through a current survey by International
Environics, one out of five costumers reported having either awarded or punished
companies supported their perceived social performance.
2. Lack of Transparency: Lack of transparency is one of the key issues brought forth
by the survey.
3. Demands for more Disclosure: there is a rapidly increasing demand for companies
disclosure from stakeholders, including customers, employees, communities,

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suppliers, investors, and activist organizations.

4. Competitive Labor Markets: so as to rent and retain skilled employees,
companies are being forced to reinforce working conditions.
5. Lack of Community Participation in CSR Activities: there is a scarcity of
interest of the world people in participating and contributing to CSR activities of
companies.
6. CSR Initiatives & Narrow Outlook: Government and Non-government
companies generally possess a narrow outlook towards the Corporate Social
Responsibility initiatives of companies, often defining CSR initiatives more donor-
driven than local in approach.
7. Need to Build Local Capacities: there is a requirement for capacity building of the
local nongovernmental organizations as there's serious dearth of trained and
efficient organizations which can effectively contribute to the continued CSR
activities initiated by companies.
8. Branding Activities: The media has an important role to spread good stories and
sensitizes local public about the different coming corporate social responsibility
initiatives of companies.
9. Negligence of Implementing CSR Issues: there's a scarcity of consensus amongst
local agencies regarding CSR projects. This ignorance of consensus often results in
duplication of activities by companies in areas of their intervention.
10. Unavailability of Well established NGOs: it is also reported that there is
unavailability of well established non-governmental organizations in remote and
rural areas.
11. Corporate Social Responsibility Initiatives & Narrow Outlook of companies:
Governmental and Non-governmental organizations agencies generally possess a
narrow outlook towards the CSR initiatives of companies, often defining CSR
initiatives more contributor than local in approach.
12. Deficiency of CSR Guidelines: There aren't well defined statutory guidelines or
policy directives to supply a definitive direction to CSR initiatives of companies.

CSR: CHALLENGES: It can be summarized as follows:

➢ Issues of Transparency
➢ Narrow perception towards CSR initiatives
➢ Lack of community participation in CSR activities
➢ Need to build local capacities
➢ Non-availability of well organized non-government organizations

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➢ Visibility factor
➢ Narrow perception towards CSR initiatives
➢ Lack of consensus on implementing CSR issues
➢ Non-availability of clear CSR guidelines

OUTCOMES OF THE STUDY:

Some of the positive outcomes that can arise when businesses adopt a policy of
social responsibility include:

Company Benefits
i. Better performance financially with lowering of cost of operation
resulting in better quality and productivity;
ii. Enhanced brand image and reputation;
iii. More sales and increase in customer loyalty with increase in retention
rate of employees and building a diverse workforce;
iv. Decrease in government regulations which results in increase in capital
access and decrease in liability;
v. Very beneficial for public in general and communities specifically;
vi. Contribution via charity and volunteering by employees for safety
programs which increases safety and quality of life;
vii. Education communities by the business houses helping in their
employment and skill enhancement. Also helping in providing homes to
homeless.

Benefits to the Community and the General Public

i. Charitable contributions, Employee volunteer programs & Product safety
and quality.
ii. Companies involvement in society environment, education, employment
and homelessness programs;
Environmental Benefits
i. Greater material reprocess, effective product durability and functionality;
ii. Better use of sustainable resources;

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iii. Integration of environmental management instruments into business plans, including

life-cycle assessment and costing, environmental management standards, and eco-
labeling.

RECOMMENDATIONS:
In order to crystal gaze the long duration of Corporate Social Responsibility in India and take
time bound steps to mainstream it, the recommendations of the survey are firm indications of
the prevailing state of affairs within the CSR domain; they correspondingly involve necessary
and appropriate steps to be initiated to place CSR on firmer ground. With the keen observation,
the next recommendations are listed for serious consideration by all concerned stakeholders for
his or her effective operationalization to deepen CSR within the company’s core business and
to make collaborative relationships and effective networks with all involved. Recommending
few focused points- Introducing Awareness; Partnership between Stakeholders; Pooling
resources; Intervention in rural Areas; Incentives & Exemptions; CSR As a Subject;
Accreditation Mechanism; Pooled Resources; Participatory Approach.

CONCLUSION:
As per United Nations and therefore the European Commission, Corporate Social
Responsibility (CSR) results in triple bottom-line: profits, protection of environment and fight
for social justice. The great success of Corporate Social Responsibility (CSR) lies in practicing
it as a part of a company’s development strategy. It is significant for the companies to identify,
promote and implement successful policies and practices that achieve triple bottom-line results.
At one end of the spectrum, Corporate Social Responsibility (CSR) can be observed simply as
a collection of good citizenship activities being engaged by various organizations. At the
opposite end, it is often how of doing business that has significant impact on society. For this
latter vision to be enacted in India, it'll be necessary to create Corporate Social Responsibility
(CSR) into a movement. That is to mention, public and personal organizations will got to close
to line standards, share best practices, jointly promote Corporate Social Responsibility (CSR),
and pool resources where useful. A key challenge facing business is that the need for more
reliable indicators of progress within the field of Corporate Social Responsibility (CSR),
alongside the dissemination of Corporate Social Responsibility (CSR) strategies. Transparency
and dialogue can help to form a business appear more trustworthy, and push up the standards
of other organizations at an equivalent time.

References: -
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