Basic concepts and fundamentals
This section will contain more or less unchanging information on definitions, approaches, and models of CSR answering the basic questions of - What ? Why ? How ? When ? Where ? Who ?
During the long and distinguished history of the "company" or businesses / corporates in India and other parts of the world, business leaders have been trying to make a positive impact on the society, communities around them and the world, in some way or the other.
Henry Ford is reputed to have said, "I want to pay my workers well so that they can buy my cars !" This could be interpreted as one form of expression of CSR which had the desire for a direct business benefit.
It is well known that subsequently the Ford Foundation came into existence which has supported worthy causes over decades in distant corners of the world. (www.fordfoundation.org).
There are many such examples of socially relevant institutions (which go beyond pure business interests) created by industrialists-philanthropists : The Rockefeller Foundation; the Bill and Melinda Gates Foundation; the Infosys Foundation; the Azim Premji Foundation; etc.
Of course, the interpretation and realization of CSR has taken diverse forms. To look at the Indian scenario specifically - the Birlas manifested their CSR through building of magnificent temples at many locations across India; the Tatas created various educational institution (TISS, Mumbai; IISc, Bangalore; etc).
So, we believe that it would be constraining and limiting to define CSR in any narrow sense. As long as any company is looking beyond its own immediate business interests and is trying to make a positive difference in the surroundings (with varying radii of influence and impact), we should say that that company is alert to and aware of its CSR commitment.
The actual manifestation of a company's CSR activities and commitments could take myriad forms. The sectoral impact could range across Agriculture; Education (primary, higher, vocational, etc); Health; Women's empowerment; Urban development; Bridging the digital divide; Enhancing employment opportunities; Improving the quality of life of differently enabled / variously challenged people; Improving the ecological environment; etc etc.
Many corporates chip in to ameliorate the disastrous impact of natural calamities (e.g. tsunamis, earthquakes, floods, etc).
There are instances where large and powerful corporations try to influence national policies and / or propagate certain values like Democracy, Human Rights etc. This can lead CSR into some sensitive and even controversial areas.
There is tremendous variation seen in the visualization of the geographic range of CSR. Some companies limit themselves to making an impact on the immediate communities around their factories, offices, etc. On the other hand, many companies strive to make their CSR-related impact on national or even international levels.
It can be stated with a fair degree of exactitude that most CSR initiatives target some or the other under-privileged / needy groups among the society.
Having attempted to define "what is CSR", in the interest of clarity, it would be useful to make some statements about what may not fall under the umbrella of CSR :
Any steps to improve the company's own profitability, e.g. say through energy conservation, should not be put under the rubric of CSR.
Similarly, if the company pays its employees well and / or has very enlightened HRM policies, that does not fall within the domain of CSR.
If the company's business has a direct social benefit - for example, a company that manufactures wind-turbines or one that makes solar photovoltaic cells - they should not claim that they are discharging their CSR.
In a way, it could be said that we at CSRWorld tend to think of a significant overlap between Community Development and CSR.
Like in many other fields of human endeavour and particularly in the corporate world, there is a surfeit of jargon in the context of CSR too - Sustainability; Clean Development Mechanisms; Clean Manufacturing; and many such terms are used with elastic interpretations. For the sake of simplicity and clarity of focus we at CSRWorld believe that as long as the intent is clear, all these various coinages are subsumed under CSR.
Why CSR ?
It would be inaccurate to say that "Corporates" are involved in or take initiatives related to CSR. It is specific individual human beings - be it the CEO, be it the owner, be it the promoters, be it the board of directors, etc - who decide that a particular company should actually do something in the field of CSR.
Since human beings are involved in decision-making related to CSR, just like they themselves are of vastly varied disposition, the motivations for actualizing CSR (in other words - Why CSR?) are also very varied.
There is the pious, religious model commonly seen in Birla Group of companies who have created a very large number of magnificent temples. The myth goes that a Birla patriarch saw a deity in a dream who told him that the day the sound of hammer-and-chisel stops in his empire, it would start declining. And so the story goes that any given time one or the other of Birla temples is coming up somewhere in the country.
There is also the purely philanthropic model most recently portrayed by the commitments made by Mr. Azim Premji of Wipro with a declared intention of making a significant positive impact on the society through Education.
Many corporates see a rewarding branding opportunity in CSR -for example, by calling their products or services "green" (Tata automotive batteries, Ecotel Hotel etc could be put in this category).
Some companies are impelled by the fact that their activities, in some way or the other, have negative impacts on society - either through pollution or through overexploitation of natural resources or through any products which are harmful to human beings, etc. There could also be issues related to hazardous waste management, emission control, effluent treatment or safety at the work place.
To mitigate the negativity and the generation of adverse image / publicity some companies could take up CSR as a compensatory measure.
Through the process of globalization, corporates, particularly in India and in most other developing countries, are being influenced by values and philosophies prevalent in the companies in the developed countries. It is a well-known fact that companies in the first world do evaluate their vendors in the third world on some stringent criteria and one of them is the vendor's commitment to CSR and it could be even at a very basic level whether vendor company employs child labour?!
Many standards and quality-related assessment processes do include CSR and therefore any company desirous of obtaining such a rating (for example, a relevant ISO certification) would need to devote resources to CSR.
Of late, media has been reporting that there is a climate of opinion building up in the Indian government circles that CSR should be made mandatory for Indian companies. If and when such a regulatory framework does become a reality, CSR would be become a compliance activity.
So as we have seen above there are a variety of answers to the question Why CSR? The famous economist Milton Friedman tried to argue that "business of business is business" and therefore there was no need for companies to think of CSR but that approach ignores long-term perspective to a potentially disastrous level. The very long-term survival of any company advocates taking the road of enlightened self-interest where there is a realization that a company cannot prosper unless the society around it is safe, healthy, and prosperous.
We at CSRWorld subscribe to the well-known wisdom - "Breathing is essential to life but it cannot be said that breathing is the purpose of life. In the same manner, making profits is necessary for a company but it would be very limiting to say that that is the sole purpose of a business !"
(For a more detailed analysis of "why csr", please refer to the article .. In the Articles section of this website).
Implementing CSR ( How? of CSR )
Probably there are as many diverse approaches to implementing CSR as there are companies active in that domain.
The simplest form of conducting CSR activities could be what is known as "chequebook charity" - donate money to favourite charities and / or causes.
In a more structured model, a corporate entity creates a foundation (properly registered under the relevant laws and taxation regulations) which takes primary charge of undertaking CSR related projects / activities.
In some cases, CSR maybe added as one more function within the organizational structure of the company.
We at CSRWorld are more in favour of a structured approach to CSR. As mentioned in the article listed in Annexure 1, apart from financial resources, companies bring some unique competencies to making a positive impact on the society through CSR. These strengths include - accountability, responsibility, the concepts of efficiency and effectiveness, results-orientation, project management skills, etc. In other words, companies should and can take a professional management approach to CSR as they would do with any other functional activities in the course of whatever business they are engaged in.
Any company wanting to do serious work in CSR field should try to develop focus in two areas - geographic coverage and domain preference. Many companies prefer to concentrate on communities around their plants or offices. Others may want to go for national or even international coverage.
Choices can be made among social sectors like - Health, Environment, Education, Energy, Women's Empowerment, Microfinance, etc etc. Further refinements and fine tuning could also be possible - for example, a company may want to focus upon children's education; another could concentrate on the girl child etc etc.
Another relevant question could be - how much money should a company allocate towards CSR activities / function ? We at CSRWorld believe - more the better ! As a thumb-rule, some companies do talk about spending say 1% of net annual profits towards CSR.
In terms of managing the CSR activities, many companies create a team within their own organizations; others go for partnerships with credible and sincere NGOs. CSRWorld favours the latter approach as it obviates the need to manage the HRM issues which would emerge with an in-house team. Also, diverse NGOs can be engaged depends upon the expertise required for working in several different socio-economic areas chosen as foci (as mentioned above). NGOs also have pre-existing linkages and rapport with the target communities; which otherwise would need a long gestation period for a company to develop by itself.
Of course, there are NGOs and NGOs and we recommend application of strict "vendor development" and "vendor assessment" approaches.
It is interesting to note that in a large number of (at least Indian) companies, the CSR function is carried out with the involvement of wives of the promoters or CEOs.
Another, somewhat controversial, issue related to CSR is employees' involvement in CSR. CSRWorld believes that though surely companies can encourage their employees to participate in their CSR activities (by providing some rewards, by allocating some work time to CSR, etc) but such employee-involvement should be purely on a voluntary basis. To "persuade" employees to allocate time and effort to CSR would tend to infringe upon their other priorities and responsibilities e.g. towards their family.
As with many other aspects of life, what is more important is that something good is achieved (through CSR) rather than how exactly it is done.
When a disaster strikes - tsunami, earthquake, floods, etc - many companies do respond with help in the form of cash and / or in kind. Again, a very simple (simplistic?) response would be to donate some money to the Prime Minister's Relief Fund. Another way would be to help NGOs who are working in rescue, relief and rehabilitation. An important contribution any company can make is to raise questions relating to priorities (ABC analysis) and make sure that right resources are provided at the right time - and to ensure elimination or minimization of wastage. It could also be possible to send a team of employee-volunteers to participate in the disaster management efforts. Of course, care has to be exercised that such a team is self-reliant and does not become a burden on the local, already stretched resources and infrastructure.
Just as it is essential for a company to determine what would be its focus in CSR, it also needs to define exclusions. Questions like - "Should we help individuals?"; "Should we support religion-related activities?" "How to interface with political groups ?" etc - should be better answered pretty much as a part of defining a company's very initial CSR policy and approach.