According to the late Prime Minister Lal Bahadur Shastri, “Too often the community views the businessmen’s aims as a selfish gain rather than the advancement of the general welfare. That impression can be removed only if the business is fully alive to its social responsibilities and helps our society to refrain to function in harmony as one organic whole.” In the past, corporate responsibility has taken the form of codes of conduct written by public relations departments, without serious involvement of employees or other stakeholders, and without any process for monitoring and verification of implementation. Too often it has been measured in terms of charitable contributions, consultations with stakeholders chosen by the corporation, and the corporation’s own definitions of “best practices” with regard to worker safety or environmental impact. Today, business organizations are considered to be social institutions, apart from being economic entities, for two reasons. Firstly, business organizations exist and operate within a social structure. They need to win social acceptance, for their survival. Secondly, business organizations need to be socially responsible as they exercise a wide influence on society’s lifestyle. Corporations no longer exist to earn only profits, but also strive to satisfy various societal needs. Thus, corporations need to be socially responsible, for their business activities. Also, they need to be socially conscious and consider the social and ethical implications of their decisions. Keith Davis defined Social Responsibility as “Social Responsibilities refer to the businessman’s decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest.” In this definition, “Social Responsibility of business is understood from two different angles of business obligations, i.e. Socio-Economic obligation, and Socio-Human obligation. Corporate Social Responsibility is the sense of obligation on the part of companies to build certain social criteria and manage the business activities by taking strategic decisions. Socially responsible companies should consider various issues, from the organization of the firm to building relationships with the community. The issue of corporate responsibility has come into focus through the industrial revolution. In the modern world, business firms are making good profits, benefiting their owners, their managers, the shareholders, and consumers. These businesses have been using the resources of the community, available in the form of land and other natural resources, affecting the life and the environment of the neighborhood where the business is located. There have been allegations of forcible land acquisition without proper rehabilitation of the land losers, environmental degradation, and depletion of natural resources. The Government on the other hand, with its limited financial resources and skills, has not been able to meet the desired standards of social development in the field of education, health, employment, etc. The gulf between the haves and have not’s, the fragile law and order and an unskilled young population has hindered the growth of a conducive business environment with a major segment of population questioning the contribution of the business world to the society. Therefore there has been demand from various academics and experts that the business with its skills, finances, and resources is in a good position to involve itself in social development issues as part of its responsibility towards the society whose resources the business has been using for long. Many firms have started taking the initiatives of CSR practices for different sections of society. They are helping the society by preserving the environment, decreasing the wastage of natural resources, conducting awareness programs and educational camps, promoting NGO’s and IT education running schools, counseling, recycling products, etc. There are many problems which are associated with CSR and its implementation. Few of the most prominent problems are like lack of awareness in the community about CSR, capacity building of nongovernmental organizations, CSR term does not have an exact definition, absence of a clear policy for CSR, absence of clear information about CSR in companies’ annual report. The economically viable model of corporate social responsibility which is proposed is focused on the minimization of the social loss. The companies affect the society and environment in a negative manner but they do not do anything directly for minimizing them. For compensating it they use CSR in an entirely different manner. For example, if a company is causing water pollution one side and as its CSR initiative it opens a school, then what exactly it is doing for benefiting the society and environment. With one hand it is providing education and with other hands, it is continuously creating pollution. Opening a school is a good thing but companies should concentrate on the negative effect of their which cause society and environment to suffer. Recommendations are given in consideration of CSR in Companies Bill, categorization of companies and awareness in society. The categorization of the company should be there. The companies which are causing more have more responsibility as compared to the companies causing less social loss. The Ministry of Corporate Affairs and the Ministry of Education together can do a lot in the implementation of CSR and creating awareness regarding this.
Keyword: Corporate Governance, Industrial Revolution, Corporate Responsibility, Role of Business in Society
Abhigyan Ashok Binit Kumar Sinha