Introduction: From Philanthropy to Responsibility
The roots of corporate social
responsibility lie in philanthropy. The basic fundamental idea behind this is
that businesses must contribute to the well-being of the society. Or you may
see it with a different perspective- Businesses pick their resources from the
society for their growth and CSR is basically their moral duty to give them
back to the society.
Since ancient times, businesses
and individuals have been contributing social causes for the prosperity of the
community and to ensure its long-time survival. Eventually, this act of
goodwill turned into a legally mandated responsibility in India and many other
countries.
In the current scenario, CSR has
become an essential part of corporate strategy, which ensures that businesses
not only make profits but also contribute to the sustainable development of the
society.
CSR in India:
India’s cultural and religious values
always influenced corporate philanthropy. Industrial giants like Tatas, Birlas,
and Godrej have always been engaged in social welfare activities. Over the
period, these philanthropic efforts went through a series of key milestones.
Let’s take a look
Pre-1990s- CSR was more or less a
voluntary thing which wealthy individuals used to do due to their goodwill.
1991: in the era of
liberalization and globalization, companies started integrating CSR in their
business models
2013: this was the year when CSR
spending became mandatory through Companies Act, 2013. Under section 135,
companies reaching a certain threshold of their profits must spend at least 2%
of it on CSR activities.
Due to this legal framework of
CSR, it became mandatory for corporates to take CSR initiatives for child
education NGOs in India, healthcare sector, poverty alleviation and
environmental sustainability. Since this mandate has come into effect, the
country has witnessed several NGOs in India working for key social areas.
CSR in other countries:
While India has made CSR as a mandatory
step for corporations, in other countries, CSR is encouraged through tax
incentives, voluntary guidelines and regulatory requirements. Let’s see how CSR
is practiced in different countries
United States:
In the US, CSR is mostly
voluntary but it is strongly encouraged due to public perception, corporate
branding, consumer expectation and investors’ pressure. Due to this most of the
corporates contribute significant funds from their earnings towards social and
environmental causes. Also, although it’s a voluntary effort, companies are
reporting on Environmental, Social and Governance Metrics. Their key focus
areas are sustainability, diversity and community engagement.
United Kingdom:
In the UK also, there is no such
law like in India but the companies must disclose their CSR and sustainability
efforts. As of now, it has become a core business strategy and many firms are
adopting ESG frameworks. The Companies Act 2006 in the UK requires large
companies to report on environmental, employee welfare and community engagement
impacts.
Besides, there is a Modern
Slavery Act 2015, that mandates businesses to report on any human right in
their supply chain.
China:
China was among the first countries that introduced the word
“CSR” in their corporate statute. According to the Company Law of the People
republic of China 2006, businesses and companies must take responsibility
towards social welfare.
In China, CSR is more of a judicial review standard rather
than a corporate behaviour.
European Union:
Started as a voluntary commitment, CSR eventually became a
regulatory requirement in the EU. According to The EU Non-Financial Reporting
Directive (2014), companies and large businesses need to submit reports on CSR
initiatives focusing on ESG factors. Now, it has become a part of corporate
governance and companies have to disclose their social efforts and
sustainability in their annual reports.
Japan:
Surprisingly, in Japan, CSR is neither voluntary nor
mandatory. It is self-regulated as it is deeply rooted in their cultural values
of respect, harmony and long-term sustainability. Here, the business giants
align their CSR practices with international standards. The Keidanren (Japan
Business Federation) Charter of Corporate Behavior was introduced to encourage
companies to integrate CSR into their business models and companies do it
voluntarily. Their key focus areas are consumer rights, social development and
environmental protection.
Conclusion:
Almost everywhere, CSR has evolved from a philanthropic
concept to a structured corporate responsibility. Some countries have turned it
into a law while others are doing it voluntarily. In India, after the
implementation of companies ACT 2013, corporates are seriously focusing on key
areas like education, healthcare and environment. Countries like India where
millions of people still lack access to quality education, healthcare
facilities and proper infrastructure, CSR funding is crucial to bridge the gaps
and reach the most underserved communities.
At TrueGiv,
we recognize the immense potential of CSR and are leveraging technology to
align CSR funds and resources to the right place. With our efforts and
dedication, we wish to become the best NGO to support child education in India.