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Environmental Management Centre

May 2005

Research Capsule: The Status of Corporate Social Responsibility in India – A Note 1. Corporate Social Responsibility (CSR) – An Introduction 1.1 What is the meaning of the term Corporate Social Responsibility? Corporate Social Responsibility (CSR) is viewed as a comprehensive set of policies, practices and programs that are integrated into businessoperations, supply chains, and decision-making processes throughout the organization -- wherever the organization does business -- and includes responsibility for current and past actions as well as future impacts1. CSR involves addressing the legal, ethical, commercial and other expectations society has for business, and making decisions that fairly balance the claims of all key stakeholders.Effective CSR aims at “achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” Simply put it means “what you do, how you do it, and when and what you say.” Several terms have been used interchangeably with CSR. They include -- business ethics, corporate citizenship, corporate accountability, sustainability and corporateresponsibility. The issues that represent an organization’s CSR focus vary by size (small, medium and large), sector (for example, financial institutions, infrastructure providers, textile manufacturers, agri-producers, supermarket retailers, etc.) and even by geographic region. In its broadest categories, CSR typically includes issues related to business ethics, community investment, environment, governance,human rights, the marketplace and the workplace.

Figure 1: Areas of Corporate Social Responsibility2
“Issue Brief: Overview of Corporate Social Responsibility”. Business for Social Responsibility Website. Available at: 2 Source:

The Status of CSR in India

1.2 What is theneed for CSR? While the interests of shareholders and the actions of managers of any business enterprise have to be governed by the laws of economics, requiring an adequate financial return on investments made, in reality the operations of an enterprise need to be driven by a much larger set of objectives that are today being defined under the term CSR. The broad rationale for a new set of ethicsfor corporate decision making, which clearly constructs and upholds a organization's social responsibility, arises from the fact that a business enterprise derives several benefits from society, which must, therefore, require the enterprise to provide returns to society as well. A business cannot succeed in a society which fails. This, therefore, clearly establishes the stake of a businessorganization in the good health and well being of a society of which it is a part. More importantly, in this age of widespread communication and growing emphasis on transparency, customers of any product or service are unlikely to feel satisfied in buying from an organization that is seen to violate the expectations of what is deemed to be ethically and socially responsible behaviour. It is becomingincreasingly evident that organizations that pay genuine attention to the principles of socially responsible behaviour are also finding favour with the public and are the preferred choice for their goods and services. 1.3 How do organizations pledge their commitment towards CSR? Typically, an organization interested in making a pledge towards CSR, will start by first outlining a commitment towards theconcept. Given the gravity of the action and its huge responsibility, this commitment will be deliberated on extensively by the top management of the business, before it is made public. This declaration is somewhat analogous to a Quality Policy of an ISO 9000 organization. Such a declaration is followed by the development of a CSR management and reporting framework. Here, a detailed CSR review...
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