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Corporate Social Responsibility
 

What we recall

The moment Corporate Social Responsibility is sounded; one can famously recall Tata Nagar, IISC, Tata Institute of Fundamental Research, ITC's E-Choupal Movement, Unilever's support to microfinance institutions, TCS's role in encouraging use of Information and Communication Technologies (ICT) in Education. Mind Tree's support for inclusion of Autistic Children and Times of India's Each One-Teach One initiative.

Current Trends

However, corporates have been also doing more than providing direct financial assistance to the society.

Wipro prepared the "Strategic Vision on the UIDAI Project" as consultant for the design phase and program management phase of the Pilot UIDAI project. It envisaged the close linkage that the UIDAI would have to the electoral database.

Azim Premji University has a clear social purpose - to make significant contributions towards a just, equitable, humane and sustainable society.

ThinkQuest is an initiative by Oracle that urges students to participate in the process of social awareness across various cultures by creating educational websites. Besides this, having acquired Sun Microsystems, the company steers a program that addresses the need for accessible and low-cost IT skills training in local communities. Most of these initiatives are designed on Free and Open Source Software Platforms.

In early 2010, Facebook engineers developed a programming language, HipHop for PHP, which allows its servers to do the same amount of work with half the number of servers. The company has open sourced the programming language so that other companies can achieve the same energy-saving benefits. Besides this, Facebook launched a new "green" page as an environmental resource for individuals and organizations that details what the company is doing in the environmental space, along with providing environmental news from around the Web. At the same time, the company has joined the Alliance to Save Energy and the Digital Energy Solutions Campaign (DESC).

Steering a New-Wave

Harish Hande took Entrepreneurship to a whole new level when he began SELCO- a solar electric light company which since 1995, has lit up over 120,000 rural households.

In fact, Tata's Jagriti Yatra is exactly aimed to fill the gap of creating sustainable entrepreneurial and sustainable solutions to a plethora of India's gnawing problems. Jagriti Yatra is an annual train journey that that takes hundreds of India's highly motivated youth on an eighteen day national odyssey, to open up possibilities and awaken the spirit of entrepreneurship - both social and economic - within India's youth by exposing them to individuals and institutions that are developing unique solutions to India's challenges.

When one watches the trend closely, one can see that today's CSR has taken a diverse set of responsibilities- from creating solutions for specific problems to creating platforms where a varied set of problem solvers can be nurtured.

Trend So Far

A survey by TNS India (a research organization) and the Times Foundation in 2008noted that over 90 per cent of all major Indian organizations were involved in CSR initiatives with the private sector contributing more to CSR activities than the public and government sectors.

The leading areas that corporations were involved in were livelihood promotion, education, health, environment, and women's empowerment. Most of the CSR ventures were done as internal projects while a small proportion were as direct financial support to voluntary organizations or communities.

The Asian Governance Association, ranks India in the top three countries amongst the top 10Asian countries on corporate governance parameters. In another study by TNS Automotive, India ranks second in global corporate social responsibility.

The Indian corporate sector spent about US$ 6.31 billion on social benefits during 2007-08 and this expenditure is only growing. Now there are definite plans to also introduce CSR in the small and medium enterprises (SME) sector to increase its reach in remote areas.

Why is CSR so important?

CSR has become a key differentiator for businesses today. Businesses are fast moving towards a more holistic and inclusive business model which has a direct correlation with business performance. This includes a system of triple bottom-line reporting -economic, social and environmental - and a focus on transparency and accountability. Companies are now expected to discharge their stakeholder responsibilities and societal obligations, along with their shareholder-wealth maximization goal.

Policy Provisions and its Effect

While investments in CSR have been a much preferred way adopted by Companies to achieve Income Tax Relief, statistics have proven that they do give the much needed support to developmental goals of the society.

The Parliamentary Panel looking into the provisions of the Companies Bill wants to make it mandatory for the corporate sector to spend a portion (about 1-2%) of its profit on activities that are socially beneficial. The Department of Public Enterprises has issued comprehensive CSR guidelines for Central Public Sector Enterprises in April, 2010 wherein these enterprises, except those making a loss, have to create mandatorily, through a board resolution, a CSR budget as a specified percentage of net profit of the previous year.

Therefore, as the environment for corporate spend on social initiatives grow more favorable, more and more corporates and SMEs would take the route. However, 'Austerity Fiscal Policies' by the Government that mandates cut in expenditures so as to save for the next fiscal year would have welfare programs as their first casualties.

 

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