The title of the post itself is an oxymoron. Social responsibility is the last thing that comes to mind when one thinks of big corporations. The image that’s set in the minds of people about large corporations is that they’re mostly only money minded greedy people in their sharp business suits and ties. People think, what would these sly creatures know about social issues that plague, say, middle class women, or lower class daily labourers.
By definition, Corporate Social Responsibility means is a corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social well being. So why would a company need to have a CSR wing in the first place? By virtue of the size of corporations they’re very powerful entities backed by rich lobbyists and political parties. As such, they get away with lots of unethical stuff. Also, even a small mistake on their part can be hugely detrimental to the environment.
For example, if there is an oil spill in the ocean that wipes out the immediate ecosystem, the company contracted to dig/transport oil is responsible. Another glaring example of this would be the 1984 Bhopal Gas Tragedy where thousands of innocent people lost their lives because of a easily avoidable gas leak.
Another reason why people feel alienated from large corporations is because they don’t relate to them on a personal level. Even a lower management salaryman working in a large corporation would feel disconnected from a rich and powerful CEO.
In light of this dark legacy that corporations hold, some areas of corporate culture have begun to embrace a philosophy that balances the pursuit of profit with a commitment to ethical conduct. The same money and influence that enable large companies to inflict damage on people and the environment allows them to effect positive change. At its simplest, a corporation can give money to charity. This is especially true in case of India where the Companies Act of 2013 was passed requiring all corporations to donate 2% of their profits to charity.
While the concept of 2% donations is noble in theory, there are a lot of challenges that arise in practice. For one, the reported expenditure on CSR projects is not a good metric of societal welfare. These numbers overstate the effect of the law. It is not clear whether firms have really increased their CSR spending after the law compared to what they were spending voluntarily before the law, because CSR spending was not well reported historically. It is speculated that while firms that were initially spending less than 2% increased their CSR activity, but those that were initially spending more than 2% reduced so. Another possibility is that firms spent money on CSR activities that also lead to increasing firm profits, such as inculcating goodwill and good public relations. There is evidence indicating CSR spending leads to brand building and employee engagement. In that case, firms would have carried out these activities with or without the law.
Another factor that needs to be taken into consideration is that the company decides on what issues to spend their CSR money on. Of the nine different schedules prescribed by The Companies Act, two schedules: combating various diseases and promotion of education accounted for 44% of the total CSR expenditure, while reducing child mortality received no funding and eradicating extreme hunger and poverty received only 6% of the total CSR expenditure. Given that about 50% of children in India are malnourished due to pervasive poverty, it is unlikely that the above allocation of resources reflects the democratic will of the Indian people.
Yet another factor that shows that these gestures are not of goodwill but possess ulterior motives is the discrepancy in geographic equity. States where there aren’t many factories and offices of large corporations tend to get the least of CSR spending while the states with policies favourable to large scale investments see a lot of money flowing in. This is extremely contrary to the spirit of charity and only reinforces the notion that in corporations, everything is done for profits, be it monetary profit or goodwill profit.
In conclusion, while Corporate Social Responsibility does benefit the society in a miniscule way, the demerits far outweigh the merits. It is not entirely wrong either, as such firms never get into business for the purpose of social welfare but for the simple purpose of making profits. It isn’t illegal or unethical to work for profits, so we can’t really incriminate them for anything, however, these companies could do with a little bit of genuine compassion.
What are your thoughts on Corporate Social Responsibility? Have you ever taken part in community service on behalf of your company? Do let me know in the comments section below.
Job well done. As always. Your perspectives and thoughts are always a delight to read!
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Thank You Shreya. Means a lot. 🙂
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Very interesting, I work for a larger company and it gave me a lot to think about.
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So do you agree with the point that Social Responsibility should come from self motivation and not just to boost public image?
Thanks for commenting by the way. 🙂
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I’m not sure that the two can be separated in a corporation. The company I work for encourages local employees to be involved in local charities along with national charity campaigns, but are also always looking for pictures and documentation of our work, probably for self promotion. I guess for me as long as the results are positive the motivation doesn’t matter.
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True. The end result is all that matters.
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I was very happy to read this post. I was curious what the perspective would be since I work for a company whose motto is Happiness, Laughter & Love and works on motivating a gratitude movement.
I have done charity work on behalf of my company that I wouldn’t have done otherwise. I am also fortunate to be in a lower-level position that allows me to have close contact with key officers. I know this isn’t the norm as my previous jobs weren’t similar to this.
I really enjoyed your post. The writing was very well done and the content was intriguing.
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Thanks for the wonderful comment Barbara!
The company you work for is fine, as the USP itself is based on gratitude. The kind of companies I have a gripe with are the ones that do charity just to boost their own public image.
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Corporate social responsibility is just as important as you claim if not more. I was fortunate to go to a college that really emphasized social responsibility, civic engagement, and service learning. Although, I do not own a corporation, I make it a priority to give back by offering my time in the community working with the youth in the area, and also serving as a mentor. That being said I’d like to do more to convince others to do the same. Thanks for a great article!
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Exactly. That’s the spirit. With mutual community building, the need to make corporations spend money on such will only lessen, ensuring that the help that does come through is of genuine good will. Your suggestion in this matter is quite impeccable. Wish more people realized this.
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I think the impact that CSR can have on the world is mostly good, though I wish that it didn’t take trying to look good in the public eye to motivate companies to make positive differences in their communities!
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Of course. Charity should always be voluntary and free from ulterior motives.
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Great read! Currently I am working on projects to enforce sustainable operations and start getting our company involved in local volunteer work. This is all coming from passionate team members who wish to make a difference, not for publicity.
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Now that’s the spirit. It’s just so much more sincere this way.
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Companies in my country are expected to give back to the society once they have reached a certain amount of money. Before I read this article I thought it was such a noble act then I considered a popular betting company in my country that has seen people sell their property just to try their luck at winning the lottery; this company has driven people to poverty and yet it has a foundation which by the way they use to advertise their brand by saying that once you bet some of the money goes to charity.
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That’s really sly of that company. It is hypocritical behavior like this that drives people away from believing in corporations. Betting can be legal in moderated circumstances but taking advantage of people with gambling addiction and then “helping” a portion of them get back on their feet? That’s just plain manipulation.
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I know right….This is so sad
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Nice post
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great post
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Social Responsibility should definitely come out of “genuine compassion” as you have put it. It was a nice read.
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What an interesting line of thought! I agree – corporations don’t set out to improve social welfare but rather to make profit therefore we can hardly expect huge amounts from them, Having said that though, I do believe every corporation has a certain amount of responsibility in the way that they look after their employees.
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Sorry for taking forever to reply. There is nothing wrong or immoral in doing business for profit, in fact, that accelerates development in the first place but more often than not it only has adverse consequences for the environment and society. CSR is not only about doing something for the employees but also for the society in general, as such they need to look beyond profits for a change, which should come out of genuine compassion.
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There will always be pros and cons regarding CSR. To be very honest… most of it is done for marketing reasons or as a way to improve morale of their own employees. Ofc there will be organisations with a strong and authentic commitment – though it will always be hard to tell. Thanks for this piece. I’m going to tweet it 🙂
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Thanks for that. 😀
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Corporations aren’t geared towards helping in big way simply because it is not profitable but the way they make money is unsustainable.
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Of course it is not profitable in the short run but goodwill and brand image derive long term sales. That being said, if they really want to help people they should do it regardless of the benefits. As you said, money making should be sustainable.
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👏👏 U have a good writing skills
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Thanks. I’m flattered.
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Well done 🌸
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Excellent article that explains CSR in layman terms. One of the points I discussed in my dissertation for my LL.M. was CSR thought the shareholder activism. Considering how huge an impact corporations make to regional through international policies, it’s imperative that they be held responsible and nurture a
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Sustainable environment that helps with the holistic growth of people.
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Oh you’re a lawyer, didn’t know that. In my opinion, if CSR is forced, the quality of service is really going to be questionable. If the effort is sincere, then there shouldn’t be a problem.
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Well actually, practically speaking, no company ever wants to it willingly. Those who do seek an ulterior motive, but heck what…. At least start giving back the society. CSR should be like tax…. You hate it but you have to pay it. That’s what’s I feel.
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That’s the most relevant analogy I’ve heard with respect to the topic. Only problem we can’t really quantify the impact of CSR with respect to the tax rate.
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Thanks. And yes it’s true that you can’t quantify the impact of CSR in that sense, but what I meant was that the current ceiling of 2% should be increased to soemthing more substantial so that companies are forced to make meaningful contributions to society.
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Of course. There’ll still be problems both for the corporations and beneficiaries alike but at least it’ll be a start. Even I have benefitted from some CSR projects and I can’t deny their impact. More money seems the logical way to go right now.
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I’m glad you agree because money really DOES make the world go around. Btw, if you dont mind my asking, how have you benefited by CSR?
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Well not me personally but my family, we got a lot of medical benefits through CSR (in addition to the regular benefits as an employee)
More importantly, it made the rural folk here aware of their rights and benefits.
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That’s nice to know. I’m glad it’s actually benefitting people rather than just being on paper. Boy am. I glad to have this discussion with you 😁😁 Very stimulating. Almost makes me want to grab my law books and read some again 😊
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My God am I that boring? That you’d rather study than discuss with me? 😀
haha just kidding. I am glad you like my stuff. 🙂
I hope you keep visiting, I’ve got a lot more similar topics to write on.
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Oh please write on them. Maybe I’ll go back to law again as a result of those discussions. Glad to have this conversation with you. And no, you aren’t boring 😉😊
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Go back to law? What do you do anyway?
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I’m not practicing anymore. I’m a freelance writer now.
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And a good one at that. 🙂
It’s great knowing about you.
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Likewise. 🙏🙂
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It has been mandated in companies Act 2013 that all listed companies have to spend 2% of their profit on CSR activities . It is indeed a good initiative but once again poorly executed. It’s a diktat that organizations have to follow and in their haste to spend the money it is not going where should ideally be going. I feel there is no harm if organizations generate some good will by doing good social work. There is surely a method to the madness in the way organizations are spending money. Check out my article where in I have urged organizations to do something for our disabled.
Follow the blog if you find it interesting
https://www.obsoletereality.com/some-dignity-is-it-too-much-to-ask/
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Thanks for the wonderful comment Siddhartha, I’ll be sure to check your post.
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Wow learnt so much. I agree to you absolutely they certainly do have ulterior motives.CSR is just yet another way of corporates to gain profits maybe their image or anything which works in their favour. As you mentioned abt malnourished children,why is that these big corporates ignoring this.
I would sum it up saying still let’s be positive
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Oh yeah, something is better than nothing.
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Yea lets put it that way:)
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