CORPORATE SOCIAL RESPONSIBILITY AND A RITUAL OF DAAN

The Author is Shreya Maheshwari, who is pursuing BBA.LL.B (Hons.) from Jagran Lakecity University School of Law, Bhopal.

There is a long and varied history associated with the evolution of the concept of Corporate Social Responsibility (CSR). However, a historical review is missing in the academic literature that portrays the evolution of the academic understanding of the concept alongside with the public and international events that influenced the social expectations with regards to corporate behavior. The aim of this paper is to provide a distinctive historical perspective on the evolution of CSR as a conceptual paradigm by reviewing the most relevant factors that have shaped its understanding and definition, such as academic contributions, international policies and significant social and political events. To do so, the method used is a comprehensive literature review that explores the most relevant academic contributions and public events that have influenced the evolutionary process of CSR and how they have done so. The findings show that the understanding of corporate responsibility has evolved from being limited to the generation of profit to include a broader set of responsibilities to the latest belief that the main responsibility of companies should be the generation of shared value. The findings also indicate that as social expectations of corporate behavior changed, so did the concept of Corporate Social Responsibility. The findings suggest that CSR continues to be relevant within the academic literature and can be expected to remain part of the business vocabulary at least in the short term and as a result, the authors present a plausible future for CSR that takes into consideration its historical evolution. Finally, this paper gives way for future academic research to explore how CSR can help address the latest social expectations of generating shared value as a main business objective, which in turn may have practical implications if CSR is implemented with this in mind.

For Chaffee (2017), the origins of the social component in corporate behavior can be traced back to the ancient Roman Laws and can be seen in entities such as asylums, homes for the poor and old, hospitals and orphanages. This notion of corporations as social enterprises was carried on with the English Law during the Middle Ages in academic, municipal and religious institutions. Later, it expanded into the sixteenth and seventeenth centuries with the influence of the English Crown, which saw corporations as an instrument for social development (Chaffee 2017). In the following centuries, with the expansion of the English Empire and the conquering of new lands, the English Crown exported its corporate law to its American colonies where corporations played a social function to a certain extent(Chaffee 2017).

Corporate Social Responsibility (CSR) has come a long way, morphing from a nice thing to do to what it is today: a necessity for a successful business.

Today’s CSR programs have their roots in corporate philanthropy. Wealthy businessman and philanthropist Andrew Carnegie challenged wealthy people to support social causes, following his belief in the Gospel of Wealth. In the late 1800s, John D. Rockefeller, taking inspiration from Carnegie, followed suit in donating more than half a billion dollars.

In 1914, Frederick Goff, a well-known banker in Cleveland, founded the Cleveland Foundation, a trustee of the Cleveland Trust Company. Its purpose was to give power to the community by accepting gifts from multiple donors rather than one fortune, who could collectively assess needs and respond to the community. This was the first community foundation.

It wasn’t until the 1940s, however, that businesses, and not their owners or shareholders, could support charities.

Corporate Social Responsibility or CSR is a business model that company follows to integrate social and environmental concerns in their business operations. CSR is Company’s effort to pay back the stakeholders and public, who contributed in their growth and success. CSR cannot be termed as charity. It is a way to make social good towards various aspects of  society and environment. CSR also helps company to make brand name towards its customers and also bolsters the goodwill & growth amongst the general public.

Ministry of Corporate Affairs (MCA)  has made Corporate Social Responsibility mandatory for certain class of Companies from 01.04.2014 as per the provisions of Section 135 of Companies Act 2013 along with Companies(Corporate Social Responsibility Rules) 2014 & Schedule VII.

Net worth of Rupees 500 Crores or more, or

2) Turnover of Rupees One Thousand Crores or more, or

3) Net profit of Rupees 5 crores or more.

It includes every Foreign company defined under section 2(42) of the Act having its branch office or project office in India which fulfills the above criteria shall comply with the provision of Section 135 of the Act along with rules.

CSR and COVID 19

Keeping in view the spread of the Corona Virus (COVID-19) in India, its declaration as pandemic by the World Health Organisation (WHO) and decision of the Government of India to treat this as a notified disaster, the Ministry of Corporate Affairs vide its General Circular No. 10/2020 dated 23rd March, 2020 has clarified that spending of CSR funds for COVID-19 shall be considered as an eligible CSR activity. As per the circular, funds may be spent for various activities related to COVID-19 under item nos. (i) and (xii) of Schedule VII relating to promotion of health care, including preventive health care and sanitation, and, disaster management. Further, as per General Circular No. 21/2014 dated 18th June, 2014, items in Schedule VII are broad based and maybe interpreted liberally for this purpose.

Government has declared that money spend on COVID relief shall be considered as CSR fund. Why is it so?

It is because a need of an hour it was step by government to raise lots and lots of funds from corporate sector this was the reason where multinational companies, private companies came up with funds for COVID 19 relief fund. A move of company shall save many lives.

Earlier CSR activities were not mandatory on companies; one or two companies out of concern come up with CSR funds. Then with evolution of time when resources started depleting and population was increasing the mandate came into existences to maintain overall development of the society.