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Corporate
Social Responsibility in India
Dr
Srirang Jha
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 Corporate Social Responsibility as the
continuing commitment by business to behave ethically and
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-ŕ-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.
Dr
Srirang Jha
Chairman,
Human
Resources Development Trust, New
Delhi 110075.
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