The concept of Corporate Social Responsibility (CSR) is not new in India. It emerged from the ‘Vedic period” when history was not recorded in India. In that period, Kings had an obligation towards society and merchants displayed their own business responsibility by building places of worship, education, inns and wells.
Although the core function of business was to create wealth for society and was based on an economic structure, the business community with their rulers believed in the philosophy of “Sarva loka hitam” which means ‘‘the well-being of all stakeholders.
Indian society is witnessing a market in rapid transition, characterized by a growing degree of liberalization, privatization and globalization. The acceptance of social responsibility is redirecting Indians to their cherished values and teachings of their ancestors and their religious scriptures in the field of business. There are different ways through which a firm can exert positive social change in society and collaborate with partners who have the explicit power to trigger such change. Changes that led to power and authority are being transferred from government to the private sector. With the growing power and authority vested with the corporations, corporations are now answerable for a wider range of issues and are held responsible for their actions to a multiple level of stakeholders.
Firms should have in-depth understanding of the circumstances that lead them to pursue various CSR activities and implement those activities that demonstrate a convergence between the firm’s economic objectives and the social objectives of society. Beckmann and colleagues point out that CSR is becoming more explicit and argues that this shift entails that firms can no longer practice a “silent strategy” and is gradually being replaced by a more visible approach to CSR activities. The requirements for how corporations communicate their CSR activities are however large. CSR communication is gaining its importance, and there is an increasing awareness and interest in the challenges and practices of communicating CSR.
The National Voluntary Guidelines 2011 released by the Ministry of Corporate Affairs, India was set up as part of the multi-stakeholder platform on CSR making it mandatory for companies to disclose their CSR projects.
“In a bid to turn companies’ management decisions more transparent, the corporate affairs ministry may mandate more disclosures in their annual financial statements and the reports of boards of directors. The manner in which companies carried out their Corporate Social Responsibility (CSR) activities during the year will become part of the annual mandatory disclosure.” (International Bar Association, CSR e-bulletin, October, 2011).
To find out how well this mandate of disclosing CSR activities is accepted by Indian companies the author chose to study 23 companies belonging to private sector companies in Kolkata, India. These companies operate mainly in the manufacturing or heavy engineering sector. The nature of their business may often results in polluting the atmosphere or displacement of inhabitants. The websites of the companies was studied in detail and other relevant documents found online.
A Gap Analysis tool in the form of a score card was developed by the author along with her colleague having 46 criteria which highlighted areas such as stakeholder engagement, performance and compliance, management systems and procedure, scope and boundaries of CSR reporting, targets and achievements and assurance of the report writing. Scores were given in the denomination of ‘1’ or ‘0’ depending upon the information available.
Most of the companies revealed a very low CSR score, the average being 6-7 out of 46. The declaration made in the websites on CSR was inadequate and did not reveal much about the CSR health of the company. Most of the activities were altruistic in nature without generating any value creation towards the bottom line growth of the companies. None of these companies have embedded CSR in their core business strategy.
They are yet to realize the role of stakeholders for their business and often choose to ignore them in communicating their CSR activities. The websites are outdated and the information available is often a couple of years old. The booklet depicting CSR activities in a few companies were not written under any global guidelines and resemble picture albums glorifying un-coordinated philanthropic activities.
In order to make their CSR activities more strategic in nature companies are required to embed CSR in their core business strategy and to use the framework laid down by Ministry of Corporate Affairs, Govt. Of India, National Voluntary Guidelines 2011 or the framework suggested by Global Reporting Initiatives (GRI) to disclose their CSR activities through a well written Sustainability Report.
The research provides further scope of assessing the cultural dimensions of corporations engaging in CSR, their definition of CSR, their motives for engaging in CSR and how they plan to communicate CSR to their stakeholders in the future.