CSR & The Companies Act 2013

India always strives for peace, justice & giving back to the society is well known to the world it is in our DNA. But from last few decades we are struggling for equitable, inclusive and sustainable growth.

India is a country of many contradictions at one hand, it has grown to be one of the largest economies in the world and an important player of the global economy and on the other hand we are with largest number of people living in absolute poverty and undernourished children. This is due to uneven distribution of the benefits of growth which is the root cause of social unrest.

With increasing awareness of this gap between the haves and the have-nots many companies are more proactive sensing the need of the time and societal expectations but a large number of companies need to be pushed to respond the situations.

The inclusion of the CSR mandate under the Companies Act, 2013 is an attempt to supplement the government’s efforts of equitably delivering the benefits of growth and to engage the Corporate World with the country’s development agenda.

This combination of regulatory as well as societal pressure has meant that companies have to pursue their CSR activities more professionally.

The Global understanding of CSR

• The CSR approach is holistic and integrated with the core business strategy  for addressing social and environmental impacts of businesses.
• CSR needs to address the well-being of all stakeholders and not just the company’s shareholders.
• Philanthropic activities are only a part of CSR, which otherwise constitutes a much larger set of activities entailing strategic business benefits.

India is a first country to make CSR mandatory through The Companies Act, 2013 with an idea to bring CSR on the forefront and through its comply-or-explain, promoting greater transparency and disclosure. Schedule VII of the Act, which lists out the CSR activities, suggests communities to be the focal point.

A well thought of company’s relationship to its stakeholders and integrating CSR into its core operations, the rules suggest that CSR needs to go beyond communities and beyond the concept of philanthropy. It is an opportunity to corporate fraternity to participate in the process of inclusive growth of the country by translating their CSR mission & vision into action at the ground level to make a change in the society.

Section 135 of The Companies Act 2013

In India, the concept of CSR is governed by section 135 of the Companies Act, 2013, which was passed by both Houses of the Parliament, and had received the assent of the President of India on 29 August 2013.

1.Applicability

        a)On all Companies;

        b)If

            I.Net worth of rupees five hundred crore or more, or;

           II.Turnover of rupees one thousand crore or more, or;

          III.A net profit of rupees five crore or more during any financial year.

       c)Applicable from the fiscal year 2014-15 onwards.

2.Governance

Section 135 of the Act lays down the guidelines to be followed by companies while developing their CSR program. The CSR committee will be responsible for preparing a detailed plan on CSR activities, including the expenditure, the type of activities, roles and responsibilities of various stakeholders and a monitoring mechanism for such activities. The CSR committee can also ensure that all the kinds of income accrued to the company by way of CSR activities should be credited back to the CSR corpus.

3.Framework

a)Formation of CSR Committee

• A CSR committee of the Board should be constituted.
• It should consist of at least three Directors out of whom at least one is an independent director. This composition will be disclosed in the board’s report as per sub-section (3) of section 134.
• Unlisted public company or private company, which is not required to appoint an independent director can have CSR committee without an independent director; two directors in case of a private company having only two directors; at least two persons in case of a foreign company — one person nominated by the foreign company and the other person as defined in Section 380(1)(d) of the Act;

b)Responsibility of CSR Committee & Board

The CSR committee shall:

• Formulate and recommend to the Board, a CSR policy, which shall indicate the activities to be undertaken.
• Recommend the amount of expenditure to be incurred on the activities referred above.
• Monitor the CSR Policy of the company from time to time.

The board of every company shall :

i.Approve the CSR Policy for the company after taking into account the recommendations made by the CSR Committee; disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed

ii.Ensure that the activities as are included in CSR Policy of the company are undertaken by the company

iii.Provided further that if the company fails to spend such amount, the Board shall, in its report made, specify the reasons for not spending the amount.

The board of every company shall :

i.Approve the CSR Policy for the company after taking into account the recommendations made by the CSR Committee; disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed

ii.Ensure that the activities as are included in CSR Policy of the company are undertaken by the company

iii.Provided further that if the company fails to spend such amount, the Board shall, in its report made, specify the reasons for not spending the amount.

c)CSR Policy

The Companies Act, 2013 requires every company to give wide publicity to its CSR policy in the public domain and CSR Policy should:

•Exclude normal business activities of th

•Contain a list of the CSR projects or programs which the company plans to undertake.

•Contain a Monitoring framework for such projects and programs.

4. What is the “2% of net profits” & How to Compute

Section 135(5) places a responsibility on the Board for ensuring that at least 2% of the “average net profits” for the preceding three financial years on CSR activities.

Also the “Average net profits” would have to calculated as per provisions of Section 198 [Explanation to Section 135]

For calculating average net profit, the individual net profit for preceding three financial years would be calculated as mentioned below :

After calculating individual net profits for preceding three years, their average has to be taken:

In computation of net profits as above following shall not be included: [Rule 2(f)]

a)Any profits arising from any overseas branch or branches of the company, whether operated as separate company or otherwise;

b)Any dividend received from any company in India, which is covered under and complying the provisions of Section 135.

In case of foreign company covered under section 135, Net Profit would mean net profit of the company as per Profit & Loss Account prepared  in terms of Section 381(1)(a) & Section 198.

5.CSR Activities [Rule 4]

The CSR activities would include activities undertaken by the Company pursuant to its CSR Policy, excluding activities undertaken in normal course of its business, provided these activities are covered under the activities mentioned in Schedule VII of the Act.

As per Rule 4(4) and subject to proviso to Section 135(5), only activities undertaken in India would amount to CSR Expenditure.

Moreover, contribution of any amount directly or indirectly to any political party u/s 182 would not be considered as a CSR activity. [Rule 4(7)]

CSR activities undertaken solely for the benefit of employees of the Company or their family would not be treated as CSR expenditure. [Rule 4(5)]

*Give details of implementing agency

In case of a Foreign Company Balance Sheet filed under Section 381(1)(b) shall contain annexure regarding report on CSR. [Rule 8(2)]

Note :

Report on CSR would be signed by the CEO or Managing Director and Chairman of CSR Committee. In case company has failed to spend two percent of net profit on CSR, the company shall have to provide reasons for such failure in the Board Report.

9.Dissemination of Information on CSR Activities

The CSR Policy as approved by the Board shall be included on the Board’s Report and same shall be displayed on the website of the Company, if any.[Section 135(2) & Rule 9]

10.Activities to be undertaken under Corporate Social Responsibility Policy

(As per Schedule VII of The Companies Act, 2013)

i.Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care “including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation” and making available safe drinking water;

ii.Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently-able and livelihood enhancement projects;

iii.Promoting gender equality, empowering women, setting up homes and hostels for women and orphans, setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward classes;

iv.Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water; “including contribution to the Clean Ganga Fund setup by the Central Government for rejuvenation of river Ganga;”

v.Protection of national heritage, art and culture including restoration of building and sites of historical importance and works of art, setting up public libraries, promotion and development of traditional arts and handicrafts;

vi.Measures for the benefit of armed forces veterans, war widows and their dependants;

vii.Training to promote rural sports, nationally recognized sports and Olympic sports;

viii.Contribution to Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Caste, the Scheduled Tribe, Other Backward Classes, minorities and women;

ix.Contributions or Funds provided to technology incubators located within academic institutions which are approved by Central Government;

x.Rural development projects.

xi.Slum area development.

xii.Disaster Management, including relief, rehabilitation and re construction activities.

11.Penalties for Non Compliance

12.Tax Treatment of CSR Expenditure

No specific tax exemptions have been extended to CSR expenditure per se. Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemption has been extended to expenditure incurred on CSR, spending on several activities like contributions to Prime Minister’s Relief Fund, scientific research, rural development projects, skill development projects, agricultural extension projects, etc., which find place in Schedule VII, already enjoy exemptions under different sections of the Income Tax Act, 1961.

* Here “Officer in Default” means officer as defined under section 2(60) and would normally include a whole time director, Key managerial person, or any director who was aware of such contravention and didn’t object to it or any other person authorized by the Board for doing such act, etc.

Planning, Strategizing & Management of CSR

in accordance of rules:

STEP 1

Frame working CSR strategy :

• Constitution of a CSR committee as per the specifications in the Companies Act, 2013.
• A CSR committee of consist of at least three directors out of whom at least one is an independent director. This composition will be disclosed in the board’s report as per sub-section (3) of section 134.
• They will be responsible for preparing a detailed plan of the CSR activities including, decisions regarding the expenditure, the type of activities to be undertaken, roles and responsibilities of the concerned individuals and a monitoring and reporting mechanism.
• The CSR committee will also be required to ensure that all the income accrued to the company by way of CSR activities is credited back to the CSR corpus.
• If the company already practices CSR, this committee can guide the alignment of the company’s activities with the requirements of the Act.
• The CSR committee develops systems, process, guidelines & mechanism for effective implementation of CSR initiatives to deliver its proposed value to the company & society.One-time development of institutional mechanism, finalization of the implementation partner, project approval, contracting, budgeting and payments, monitoring, impact measurement and reporting and communication.
• The CSR committee shall:
  • formulate and recommend a CSR policy to the board, indicating the activities as specified in Schedule VII of the Act.
  • recommend the amount of expenditure to be incurred on the activities indicated in the policy
  • monitor the CSR policy regularly
• The Companies Act, 2013 requires every company to put out its CSR policy in the public domain and it should exclude normal business activities of the company, contain a list of the CSR projects or programs which the company plans to undertake during the implementation year.

Explanation :

While specifying the annual report requirements, the draft rules says that company must provide:

• A brief outline of its CSR policy, including ‘the statement of intent reflecting the ethos of the company, values, interest, sectors overview.
• A web link to the CSR policy including ‘the full list of projects, activities and programs proposed to be undertaken by the company’
• Long-term (three to five years) vision and strategy which is reviewed annually and the activities and budgets are planned on an annual basis.
• CSR strategy refers to what the company expects to achieve in the next three to five years and incorporates the vision, mission and goals on a broader level. It also entails how it plans to achieve these in terms of organization and approach.
• CSR policy refers to what the company expects to achieve over the next year. This is aligned with the requirements of the Companies Act, 2013.
• Program refers to a sector or an issue that the company proposes to address through its CSR. Such as “promotion of education” ‘agriculture development’.
• Program goals will be achieved through a series of individual projects and, a project refers to a set of interventions, typically in a specific geography and addressing a specific stakeholder group, with a definite set of goals, beginning and end and a budget attached to it.
• Each project in turn will consist of a number of activities. All of which contribute towards the project goal.

STEP 2

Strategy  :

• Decide your target group i.e. to whom wishes to address.
• What will be the geographical area?
• Which sectors or issues corporate wishes to address.
• Matching business and the need of society.
• Whether surrounding to work area or anywhere.
• Core area, affected area, peripheral area.
• Take Guidance from the board through CSR committee.
• Match with Companies Act requirements.
• Align with business strategy, plan and supply chain.
• Fix priorities: for both societal responsibility & business interests.

Actions :

• Reviewing the past as well as the current CSR activities and examining their alignment with Schedule VII of the Companies Act, 2013.
• Collect information’s of social development priorities.
• Discuss with natives, government agencies, NGO, social worker and community leaders to identify potential areas of intervention.
• Analyze and access in department, inter department & with CSR committee about relevance of potential CSR activities to the company’s core business.
• Examine good CSR practices of other companies and their achievements.
• Formulate CSR strategy that defines for the next three to five years, what  the company’s CSR activities will cover in terms of:
  • vision and mission
  • sectors and issues
  • geographies: states and districts
  • beneficiaries
• Determining the implementation mechanism:
  • direct implementation or Participatory.
  • own department, corporate foundation, partnerships with other NGOs
• Develop systems, methods for monitoring and reporting,
• Arrange man power and other resources.

STEP 3

Implementation mechanism :

Corporate/company has to decide how they want to implement their CSR projects, they have many options that too permitted by the Act.

To get the best return of their intellectual and financial investment they are required to select their implementation agencies.

• Company’s own CSR department.
• Company foundation, trust, Society or sec 8 companies (under the statutory provisions).
  • It generates funds from other sources i e the government schemes and other foundations.
  • Since the skills, job titles, career paths and cost structures required for the execution of CSR projects are quite different from a company’s operations, a separate foundation enables the company to work for CSR.
• With an independent implementation partner (which has a track record of at least three years in similar activities).
• Through contribution in fund created by the Indian Govt. for relief, socio economic development of SC, ST, other backward classes, Minorities & Women
• Contribution to technology incubators located in academic institutions.

The above decisions should be based on the financial, geographical, Societal requirement and the business need of the company. For large infrastructure company they require combination of all, for SME self & partnership with NGO or the development agencies, for service sector company other implementing partner seem to be better choice.

Some important key points for understanding :

• Creation or re organizing a CSR Department is long range planning for business sustainability and inclusive growth.
• Its work force needs special grooming and capacity building because CSR is combination of various subjects and sectors, team must be build with specialization.
• In own department there is flexibility of customizing a CSR project to suit the company needs along with society.
• Company’s dept. will be always in control over day to day activities, efficiencies and outputs.
• Management of Projects & programs, develop accordingly with on the issues related with development & business.
• Access of right implementation partner’s for targeted area & identified sector is difficult.
• Customizing in CSR project is difficult for NGO & CBO’S because of their charity and philanthropical background.
• Implementation partners can run the project in lower cost, more focused to some of the sector, more expertise in certain field and of higher efficiency.
• Enabler to tap multiple sources of funding including government assistance.
• It important that any mechanism the company chooses, it must have a basic CSR department to support the CSR committee. The role and structure of the department will be determined by the CSR committee.

STEP 4

Selection of the implementation partner :

Company must assess, evaluate & examine about the implementation partner, determine the risks as well as the benefits of working with partner.

It requires intelligent and skilled approach to ensure the reputation, integrity, competence of the partner in delivering the program on ground.

The process consists of five primary areas for investigation:

• Competence of the implementation partner Capacity, expertise and the number of years of experience with the geography under consideration.
• Legal identity, whether the organization is registered either as a trust, a society or Section 8 company, a charitable company, a co-operative society or is unregistered, the number of years the implementation partner has been in existence
• Affiliations with governments, local administration and international bodies.
• It is essential to examine the partner agency’s Management, Profile of the members and Vision, mission and strategy, depth of experience and relevant achievements, Regularity of meetings, attendance records and the management personnel responsible for the day-to-day activities any conflict of interest between the members etc.
• Their procedure of disclosure and the transparency requirements for all stakeholders (including regulators and funders) like periodic reporting, external audits and ratings.
• Financial position, reserve fund, financial statements with audited account statements
• Status of Section 12 A registration, 80 G registration, FCRA registrations are point of consideration.
• Organization structure, operations systems and processes, human resource and capacity of mitigating risks.

STEP 5

Identification of the projects :

• To move with Company’s CSR strategy one must be proactive while identification of the programs and projects of CSR. It must be planned in advance with time schedule, budgetary support, implementation agencies with clear objectives of output and impact over the community and business. Whether the projects are short term or long term duration the concept of must be clear.
• Company may decide that the project will run by themselves through the department or own agency or with external partner, in any way the project should be designed on the base line data, clear roadmap, execution system & process, monitoring system and communication planning.
• While selecting a program or project there must be consultation with key stakeholder groups, local community, local government or bodies, academia and research institutions, investors, etc.
• Must do need assessment to assess development priorities. The methodology for this can be participatory processes, surveys or a combination of the two.
• Get information from available sources about similar challenges in the area and any attempt made by any other their experiences or lessons then develop your approach and plan.
• Detailing of the project: the objectives, the beneficiaries and the impact on the beneficiaries, the assumptions, the expected outputs and outcomes, detailed activities, potential to influence public policy and practice.
• Identify the indicators of success with the means of verification and establish the baseline for each. This can be commissioned as a separate study or can even be included in the needs assessment stage.
• Estimate the budget and how it will be funded specifying the community contributions, leveraging of the government schemes and contributions from the other donors.
• Develop the monitoring and evaluation methodologies for impact measurement.

STEP 6

Project approval, Monitoring & Reporting :

• Every project, whether implemented directly or externally must be formally examined and approved. This is to ensure that each project is in line with the CSR strategy and policy, the monitoring indicators are clearly defined and relevant and there is an adequate budget available. Projects that go on for longer durations or demand a larger amount of resources must be scrutinized more carefully than the others.
• The CSR committee is ultimately responsible for every project. It can, however, choose to delegate authority to a project approval committee consisting of company staff.
• Ensure programs, projects & activities must approve and authenticated by board with budgetary involvement aligned with policy and the Act.
• In case external agency engaged a formal arrangement i.e. MOU must be arrived with clear reference of roles, responsibilities, deliverables, commitments and consequences in case of any breach.
• Smooth functioning & deliver the desired results, it should have sufficient funds to carry out the planned activities.
• Continuous & constant monitoring is essential to find any slippages and helps to determine a corrective action that must be taken if need. It provides an excellent opportunity for learning: what right and what is wrong. This is important for other projects also to be continued in right directions.
• This is an essential part of the directors’ report as per the CSR clause of the Companies Act, 2013.
• Internal monitoring system must be developed along with external agencies of credibility. Determine the monitoring schedule for each project based on relevant progress reports from the project, analyze them and find out the gaps and corrective measures.
• Conduct open discussions with the implementation team on reasons for slippages (if any) and agreeing on a corrective action. This may be done through a field visit, understand the issues; take lesions and how the corrective measures can be applied.
• Reporting and communication are crucial element of the CSR process. In the context of the Companies Act, 2013 this is also a mandatory requirement as it provides crucial inputs to preparing the directors’ report.
• Project-level reporting forms the base and hence getting it right is critical it has to be consolidated in program related reports, aligned with the CSR policy stated by the company as a requirement under the Companies Act, 2013.
• The report has to conform to the requirements of CSR rules under the Companies Act, 2013 in terms of form and content as non-compliance attracts penalties.
• Communications of reports are also very important for the board of directors, investors, government agencies, beneficiaries, etc. Select the appropriate reporting framework that is aligned with the requirements of the Companies Act, 2013 and the global best practices. The reporting format will be as per CSR rules of the Companies Act 2013.

India & Role of CSR

India in 21st century moving with great pace in economics, trade, industry, agriculture, education, infrastructures and science, we are now exporting country without taking loans and grants from international agencies or country, this is one face of development on the other side India still striving with population pressure, poverty, hunger, health, quality education, inequality & gender equality, potable water, clean environment and many more.

As the country endeavor to occupy an important position in the world. The 21st century gave business an effective tool i.e. “CSR” for sustainable business and as an opportunity to give back to society & make a better planet. Mandatory "CSR" in India provide a defined framework with clear objectives to make the Nation strong, recognizing the managerial efficiency and effectiveness of program implementation.

Companies have to target those sectors where people are unable to get the bare minimum basic livelihood and infrastructure in the country. Adaptation of inclusive development process as business practice and with increasing awareness of this gap between “the haves and have-nots”, societal expectations will be on the higher side from the corporate sector.  

Irrespective of the caste, creed, gender, worker, professional, economic level, Government or Corporate all should come together to make INDIA shining by endeavoring to remove sufferings.

Many companies have been aware of this development, and have responded proactively while others have done so only when pushed. Governments as well as regulators have responded to this unrest and first National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Business and then a new Act enacted by Indian parliament in 2013, replacing more than six decade old Company Act including compulsory CSR in section 135 to bring Corporate to contribute in National inclusive growth.

Some estimates indicate that CSR commitments from companies can amount to as much as 20,000 crore INR. To me this act does not pressure to company, rather it gives direction to make them prepared for futures of sustainable business. This combination of regulatory as well as societal pressure has meant that, companies have to pursue their CSR activities more professionally. More structured practices for companies and grant-making foundations so as to assist companies pursue their CSR activities effectively, while remaining aligned with the requirements of the Companies Act, 2013.

TATA, ITC, Birla and many more companies are practicing the Corporate Social Responsibility (CSR) for decades, more than regulatory expectations long before CSR become a popular basis. CSR is in infancy in India with lack of understanding, inadequately trained personnel, coverage etc.

Corporate can create a great impact on their internal stakeholders and also support societal initiatives. There are many instances where corporate have played a dominant role in addressing issues of education, health, environment and livelihoods through their corporate social responsibility interventions across the country.

As per United Nations and the European Commission, Corporate Social Responsibility (CSR) leads to triple bottom-line: profits, protection of environment and fight for social justice. Time has come when CSO, NGO Government and corporate sectors should work together to create appropriate means and avenues for the marginalized and bring them to the mainstream. In India, CSR needs to identify core issues and align them to company’s development strategy. It is important for the corporate sector to identify, promote and implement successful policies and practices that achieve triple bottom-line results.

CSR cannot be viewed simply as a collection of good citizenship activities; it should be the business culture that has significant impact on society. India needs this vision to be enacted in to build CSR into a movement. The public and private organizations will need to come together to set standards, share best practices, jointly promote CSR and use the resources in Nation building.

The 2010 list of Forbes Asia’s ‘48 Heroes of Philanthropy’ contains four Indians. The 2009 list also featured four Indians. India has been named among the top ten Asian countries paying increasing importance towards corporate social responsibility (CSR) disclosure norms.

India was ranked fourth in the list, according to social enterprise CSR Asia's Asian Sustainability Ranking (ASR), released in October 2009. Although corporate India is involved in CSR activities, the central government is working on a framework for quantifying the CSR initiatives of companies to promote them further.

Besides the private sector, the government is also ensuring that the public sector companies participate actively in CSR initiatives. The Department of Public Enterprises (DPE) has prepared guidelines for central public sector enterprises to take up important corporate social responsibility projects to be funded by 2-5 per cent of the company's net profits.

“Sustainable development implies optimizing financial position while not depleting social and environmental aspects and according to Companies Act, CSR implies supporting issues related to children, women, hunger, poverty, rural development and environment”.

Now CSR in India has gone beyond merely charity and donations, and is approached in a more organized fashion. It has become an integral part of the corporate strategy. Companies have CSR teams that devise specific policies, Strategies and goals for their CSR programs and set aside budgets to support them. India has become one of the countries where CSR is mandatory.

These programs, in many cases, are based on a clearly defined social philosophy or are closely aligned with the companies’ business expertise. A handful corporate houses are dedicated and practicing the CSR as they are dictated by the very basis of their existence.

It is observed that many companies are promoting their CSR activities and uses it as a tool for Marketing. This denotes that the companies are far from perfect as their emphasis is not on social good but as a promotion policy.

A CSR strategy that is focused on avoiding regulatory liability and maintaining a license to operate in the current business will neither lead to current competitive advantage nor an imagination of future business models.

In order to leverage its CSR/sustainability strategy for competitive advantage, an organization needs the advanced capabilities of organizational learning and sustainable innovation. These two capabilities are critical for building sustainable business models that will lead to future sustained competitive advantage.

CSR has come a long way in India. From responsive activities to sustainable initiatives, corporate have clearly exhibited their ability to make a significant difference in the society and improve the overall quality of life.

In the current social situation in India, it is difficult for one single entity to bring about change, as the scale is enormous. Corporate have the expertise, strategic thinking, manpower and money to facilitate extensive social change. Effective partnerships between corporate, NGOs and the government will place India’s social development on a faster track.

Issues & Challenges

• Misunderstandings of Corporate : Many companies think that CSR is a peripheral issue for their business and customer satisfaction is more important for them, but they fail to point out on important changes that are taking place worldwide, which are critical to their business.
• The Shrinking Role of Government : In the past, governments have relied on legislation and regulation to deliver social and environmental objectives in the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of regulatory initiatives.
• Demands for Greater Disclosure : There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations.
• Increased Customer Interest : There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. Consumer Protection Act is there for protecting consumer’s interest, also it can cause major loss i.e. is the loss of reputation & Brand image.
• Growing Investor Pressure:-Investors are changing the way they assess companies' performance, and are making decisions based on criteria that include ethical concerns. A separate survey by Environomics International revealed that more than a quarter of share-owning Americans took into account ethical considerations when buying and selling stocks so is with ‘Banking and investment' sectors.
• Competitive Labor Markets:-Employees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and operating practices match their own principles. In order to hire and retain skilled employees, companies are being forced to improve working conditions.
• Supplier Relations:-As stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner. Some are introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation. In India, over time, the expectations of the public has grown enormously with demands focusing on poverty alleviation, tackling unemployment, fighting inequality or forcing companies to take affirmative action.

After the Second World War, a variety of national and international regulations arose through bodies such as the International Labor Organization (ILO) emphasizing the need for an active social policy, This additional driver, international institutions, has relevance for India through the work of the ILO, the OECD, Socially Responsible Investment (SRI), the SA8000 Social Accountability scheme and through the work of the UN Commission on Human Rights which tackled the human rights responsibilities.

In India, some public sector companies even spend more than mandatory percentage of their profits on CSR activities. Pressure groups have been quite successful in inducing companies to fund CSR schemes.

The survey conducted by Times of India group on CSR used a sample size of 250 companies involved in CSR activities through a method of online administration of questionnaire. The questionnaire was evolved after due diligence including focus group meetings, consultations with key stakeholders and a pilot in four metros. Finally 82 organizations responded to the questionnaire. These comprised 11 public sector undertakings (PSUs), 39 private national agencies and 32 private multinational organizations. Only 33 per cent of the sample size given the facts.

• Lack of Community Participation in CSR Activities: There is a lack of interest of the local community in participating and contributing to CSR activities of companies. This is largely attributable to the fact that there exists little or no knowledge about CSR within the local communities as no serious efforts have been made to spread awareness about CSR and instill confidence in the local communities about such initiatives. The situation is further aggravated by a lack of communication between the company and the community at the grassroots.
• Need to Build Local Capacities: There is a need for capacity building of the local    non-governmental organizations as there is serious dearth of trained and efficient organizations that can effectively contribute to the ongoing CSR activities initiated by companies. It is also reported that there is non-availability of well organized nongovernmental organizations in remote and rural areas that can assess and identify real needs of the community and work along with companies to ensure successful implementation of CSR activities. This also builds the case for investing in local communities by way of building their capacities to undertake development projects at local levels.
• Issues of Transparency: Lack of transparency is one of the key issues brought forth by the survey. There is an expression by the companies that there exists lack of transparency on the part of the local implementing agencies as they do not make adequate efforts to disclose information on their programs, audit issues, impact assessment and utilization of funds.

• Visibility Factor: The role of media in highlighting good cases of successful CSR initiatives is welcomed as it spreads good stories and sensitizes the local population about various ongoing CSR initiatives of companies. This apparent influence of gaining visibility and branding exercise often leads many nongovernmental organizations to involve themselves in event-based programs. 

• Narrow Perception towards CSR Initiatives: Non-governmental organizations and Government agencies usually possess a narrow outlook towards the CSR initiatives of companies, often defining CSR initiatives more donor-driven than local in approach. As a result, they find it hard to decide whether they should participate in such activities at all in medium and long run.

Recommendations

In order to crystal gaze the future of CSR in India and for understanding of issues at the ground level it is necessary :

• Effective  Operationalization to deepen CSR in the company’s core business and to build collaborative relationships and effective networks with all involved.
• It is found that there is a need for creation of awareness about CSR amongst the general public to make CSR initiatives more effective. This awareness generation can be taken up by various stakeholders including the media to highlight the good work done by corporate houses in this area. This will bring about effective changes in the approach and attitude of the public towards CSR initiatives undertaken by corporate houses. This effort will also motivate other corporate houses to join the league and play an effective role in addressing issues such as access to education, health care and livelihood opportunities for a large number of people in India through their innovative CSR practices. Thus, the social justice agenda of the day would be fulfilled more meaningfully.
• It is noted that partnerships between all stakeholders including the private sector, employees, local communities, the Government and society in general are either not effective or not effectively operational at the grassroots level in the CSR domain. This scenario often creates barriers in implementing CSR initiatives. Appropriate steps be undertaken to address the issue of building effective bridges amongst all important stakeholders for the successful implementation of CSR initiatives. As a result, a long term and sustainable perspective on CSR activities should be built into the existing and future strategies.
• There is requirement of monitoring agency in an advisory capacity, so that CSR reach out to other locations and cover a large number of communities and help companies play a valuable role in addressing various social and development issues. This approach will help CSR get ingrained into the DNA of core business activities of companies.
• In place of individual approach, corporate houses and non-governmental organizations should actively consider pooling their resources and building synergies to implement best CSR practices to scale up projects and innovate approaches to reach out to more beneficiaries. This will increase the impact of their initiatives on the lives of the common people. After all, both corporate houses and non-governmental organizations stand to serve the people through their respective projects and initiatives.

• CSR initiatives and programs should go to rural area more from urban areas and localities to cater the need of needy and the poor in the rural areas. It does not mean that there are no poor and needy in urban India but after all, more than 70 per cent people still reside in rural India.

• Government should continue rewarding and recognizing corporate houses and their partner non-governmental organizations implementing projects that effectively cover the poor and the underprivileged as easy grant of 12A, 80G and Foreign Contribution Regulation Act (FCRA) license and other fiscal incentives including matching project grants and tax breaks for social and development projects.

• CSR as a subject or discipline should be made compulsory at business schools and in colleges and universities to sensitize students about social and development issues and the role of CSR in helping corporate houses strike a judicious balance between their business and societal concerns. Such an approach will encourage and motivate young minds, prepare them face future development challenges and help them work towards finding more innovative solutions to the concerns of the needy and the poor.

• Using CSR to implement projects in the areas of health, education, environment, livelihood, disaster management and women empowerment, to mention a few. In many such contexts, it’s noticed that companies end up duplicating each others’ efforts on similar projects in the same geographical locations.

• Partnerships between the Government and other interest groups have been well defined in policy documents at all levels, needs to be practiced at ground level.

Conclusion

CSR is now compulsory challenge that needs to be implemented and put into the DNA of corporate business culture, each initiative for everyone should not be free of cost, corporate being the most expert entity of management needs to innovate some system which fulfills the stakeholder’s expectation, regulatory compliances as well keep their initiatives free from notion of charity & all its earning must be re invested in the CSR projects.

Align CSR Strategies with Organizational Objectives

In our discussions and study and also visualizing the National & International scenario, today CSR has became the game changer for business as well demand of the time. Aligning CSR strategies with organizational objectives are essential for sustainable business & stakeholders expectations (community, consumers, employees, suppliers, partners, retailers, investors & regulators).

A large number of companies are doing lots of things for their CSR, even you are doing so many things for CSR but my question is; is it effective, efficient, cost saving, impacting positivity, giving dividend to company or to society ? If your reply is not much positive then think why? The answer is simple that your efforts might be haphazard, disorganized, unaligned with your corporate objective, social needs & market demand.

Therefore it is the right time to align your CSR strategy with corporate objective and concentrate your effort on well thought, well designed sustainable programs.

Always remember CSR creates “HOPE” for good business & good society.

Many corporate are fixing their objectives, strategies for growth, productivity, supply, market, capital, efficiency & human resource and accordingly their work force endeavor to achieve the objective by giving best effort through defined strategies.

Unfortunately, in many company CSR strategies are not so clear as compared to the other corporate strategies, CSR efforts are random, unfocused, unlinked with business and overall corporate goals.

It is pertinent to draw your attention towards recent Indian Companies Act 2013, the act is no doubt a well thought & propounded for Indian pretext based on Business sustainability. To give more focused CSR, board of Directors are made responsible and disclosure of expenditure are made mandatory.

No doubt that CSR expenditure is mandatory for certain companies under The Companies Act, 2013, but it could be said that the real intention of the government behind these provisions was to provide an opportunity to corporate to bridge the gap between society and business.

The time has come when every business unit must have a clear vision of CSR embedded in corporate culture and reflected by the core value of the company – recognizing that it creates social, environmental and business value. CSR should be treated and managed as core business function i.e. other functions production, sales, finance, supply & HR instead of ad hoc CSR.

Method of Integrating CSR in Business Strategy

• Identify which forces at work challenges the business process. (Challenges & Opportunities)
• How these challenges influences business & stakeholders concerns. (Dimensions of CSR)
• How to integrate CSR into business strategies and practices. (Implementation)

Integrating CSR into Business Strategies and Practice

Following steps are essential and helps in integrating CSR in to business strategies and practices :

Step 1: Define vision, mission, objective and commitment.

Step 2: Assess your capacity & affordability.

Step 3: Assessment of external environment and relate it to your business.

Step 4: Review your internal structure, strategy & plan of action.

Step 5: Develop implementation methodology.

Step 6: Measure impact & report.

Step 7: Get feedback from stakeholders, Govt. and civil societies.

Forces at Work Affect Business

Globalization – Today the business has crossed the national boundaries, corporations, organizations, business and governments are dealing with others in the global market for finance, raw materials, sales etc. Environmentalist lamented globalization for its destructive impact, social activist & indigenous peoples blaming it for disappearance of local culture.

Increasing Competition - Global competition has created the business turbulence & instability which will probably never stop. Increasing intensity of competition, force companies to consider CSR as tool for competitive advantages.

Technological development - Technological development influences sustainability of business. Information systems have become an integral part of how organizations work and compete. In order to be used effectively, technology needs to be understood. It can transform markets, alleviating burdensome tasks, enabling greater customization of production, and contributing to high labor displacement. Incorporating CSR into technology i.e. making safe and ecology friendly products leads to a better competitive advantage.

Human capital - Human capital is the value that an employee provides to an employer. This value is related to skills, knowledge, and experience, which employees use in any type of business. Like any investment in other factors of production, businesses should also invest in human capital and link employee work objectives to business goals. What is missing is CSR. Integrating CSR into employee work objectives can foster competitive advantages & retention.

Legislation - In India, the concept of CSR is governed by section 135 of the Companies Act, 2013. The CSR provisions & rules are the mandatory, thus it is necessary to include CSR in the business strategy as well as to their priorities.

The forces and trends, elaborated above, bring us to stakeholders concerns in terms of integrating the interests and needs of customers, employees, business partners, the environment, communities and investors into business strategies and practice.

"No doubt when CSR is aligned to business strategy, Company will succeed in creating value, increased production, increased sales, easy entrance in new market, create brand differentiation over competitors, attracts investor and collaborators and reach the sectoral bench marks". - Abinash Chandra Jha.

Know Your Society or The Target Group

(Socio - Economic Survey)

Socio - Economic survey is an important part of any business organization to know about their core stakeholder the “community”, where they operate or intend to operate & sell their product or services.

The sole aim of the Socio Economic study is to plan your business for sustainability along with the transformation of the society living around your business.

Only then, you make your plan & strategy for growth and development. Thus SES is a modest attempt to develop an insight of the various social, cultural and economic aspects of the targeted society.

While conducting the survey we study the Socio-Economic and cultural aspects, living conditions, health and hygiene, educational status, transport & communication facilities, water supply and the problems faced by the people of the area. The information obtained its analysis and interpretation can be used for decision making for business initiatives as well social initiatives.

Aims and Objectives

The development of area depends on Geo-Socioeconomic setting of the area.

To know about the local area, it’s past, present and various problems relating to its Socio-Economic condition.

To get acquainted with the past and present geographic environment.

To get acquainted with the past and present social environment.

To be able to appreciate the rich cultural heritage.

To know about the educational status of the particular village and reasons of their educational backwardness, if any.

To know about the economic background of the village and the families.

To know about the living standards of the villagers.

To know about the transportation & communication facilities of the village.

To know about the population growth and their views and consciousness regarding this.

To know about the health and hygiene of the villagers and the medical facilities of the area.

To know about the domestic production of the villagers.

To know about the games, sports and cultural activities.

To know about the water supply, electricity etc.

To know about how much the villagers get benefit from informed education.

To know the attitude of the parents towards the education of their children.

So the “Socio-Economic Survey” plays a pivot role for successful business. 

Social Impact Assessment

Introduction

The impacts of development projects occur in different forms. While significant benefits result for the society, the project area people may often bear the brunt of adverse impacts. This has given rise to the need to understand beforehand the implications of adverse project impacts so that mitigation plans could be put in place, well in advance. 

An assessment of social impact prior to the commencement of a new project or expansion of an existing is now obligatory under the new national R&R policy. In short, it aims to provide practical guidance on carrying out Social Impact Assessment.

Social Impacts and Social Impact Assessment

For better understanding of the social consequences of policies, plans, programs and projects (PPPPs). Social Impact Assessment helps in understanding such impacts.

Social Impact Assessment guides the planners about benefits and costs of a proposed project, which may be social and/or economic. The knowledge of these likely impacts in advance can help decision-makers in deciding whether the project should proceed, or proceed with some changes, or dropped completely. The most useful outcome of a SIA is to develop mitigation plans to overcome the potential negative impacts on individuals and communities.

SIA is now part of the formal planning processes in most development organizations. SIA is a legal requirement. SIA is a way to assess the impacts of development projects before they go ahead.

What are Social Impacts?

We can define social impacts as “the consequences to human populations of any public or private actions that alter the ways in which people live, work, play, relate to one another, organize to meet their needs, and generally cope as members of society. The term also includes cultural impacts involving changes to the norms, values, and beliefs that guide and rationalize their cognition of themselves and their society”.

Changes may effect :

  Employment,

  Income,

  Production,

  Way of life,

  Culture,

  Political systems,

  Environment,

  Health and well-being,

  Personal and property rights, 

  Fears and aspirations,

  Religious & sentimental feelings & many more.

These impacts can be positive or negative. In short, a social impact is a significant improvement or deterioration in people’s well-being.

Projects affect different groups differently. Some people tends to be benefited, others lose. Often, impacts are particularly severe for vulnerable groups: tribal people, women-headed households, elderly persons, landless persons, and the poor. 

Impact is not same for all projects

Impacts differ from urban to rural.

Impacts differ from projects to project.

Mining, steel, cement, beverage, fertilizer, washeries, IT, electronics, medicine, heavy chemical, war weapons etc has their own way of impacting society and environment.

Hydropower, big dams badly disturbs habitat and adverse changes in agro-production systems.

In urban projects people are affected by loss of jobs, not by loss of agricultural lands.

Social & Cultural

Break-up of community cohesion

Disintegration of social support systems

Disruption of women’s economic activities

Loss of time-honored sacred places of worship

Loss of archeological sites and other cultural property

Economic

Loss of agricultural lands, tress, wells

Loss of dwellings and other farm buildings

Loss of access to common property resources

Loss of shops, commercial buildings

Loss of businesses/jobs

Overall reduction in income due to above losses

Public Infrastructure and services

Government office buildings

School buildings

Hospitals

Roads

Street lighting

Identifying Impoverishment Risks

Identifying impoverishment risks which projects often create is part of the exercise to identify adverse project impacts. The impoverishment risks analysis model adds substantially to the tools used for explaining, diagnosing, predicting, and planning for development.

Most common impoverishment risks to the project area people are as follows: 

Landlessness: Expropriation of land removes the main foundation upon which peoples’ productive systems, commercial activities and livelihoods are constructed.

Joblessness: Loss of employment and wages occurs more in urban areas, but it also affects rural people, depriving landless laborers, service workers, artisans, and small business owners of their sources of income.

Homelessness: Loss of housing and shelter is temporary for the majority of displaces, but threatens to become chronic for the most vulnerable. Considered in a broader cultural sense, homelessness is also loss of a group’s cultural space and identity.

Marginalization: Marginalization occurs when families lose economic power and spiral downwards. It sets in when new investments in the area are prohibited, long before the actual displacement. Middle-income farm households become small landholders; small shopkeepers and craftsmen are downsized and slip below poverty thresholds. Economic marginalization is often accompanied by social and psychological marginalization and manifests itself in a downward mobility in social status, displaced persons’ loss of confidence in society and in themselves, a feeling of injustice and increased vulnerability.

Food Insecurity: Forced displacement increases the risk that people will undergo chronic food insecurity, defined as calorie-protein intake levels below the minimum necessary for normal growth and work. Sudden drops in food crops availability and income are endemic to physical relocation and hunger lingers as a long-term effect.

Increased Morbidity and Mortality: The health of affected persons tends to deteriorate rapidly due to malnutrition, increased stress and psychological traumas. Unsafe water supply and waste disposal tend to proliferate infectious disease, and mortality increases. The risk is highest for the weakest population segments – infants, children, and the elderly.

Loss of Access to Common Property: Loss of access to commonly owned assets (forestlands, water bodies, grazing lands, and so on) is often overlooked and uncompensated, particularly for the asset less.

Social Disarticulation: Community dispersal means dismantling of structures of social organization and loss of mutual help networks. Although this loss of social capital is harder to quantify, it impoverishes and dis-empowers affected persons.

What is Social Impact Assessment?

There is no generally agreed definition of Social Impact Assessment (SIA). It may be defined as a process that seeks to assess, in advance, the social repercussions that are likely to follow from projects undertaken to promote development, such as dams, mines, industries, highways, ports, airports, urban development and power projects. It is a tool that can help decision-makers to foresee the likely negative impacts of their actions so that steps necessary to prevent or at least to contain them could be taken in time. As an aid to the decision making process, SIA provides information on social and cultural factors that need to be taken into account in any decision that affects the lives of project area people.

Advantages of Doing Social Impact Assessment

The main advantages of doing a systematic Social Impact Assessment (SIA) include the following:

Identifying Affected Groups: SIA helps in identifying people and groups who affect or are affected by the project. 

Allying Fears and Winning Trust: SIA can help allay fears of affected groups and build a basis of trust and cooperation which is so essential for successful project implementation.

Avoiding Adverse Impacts: SIA provides the basis for preparing mitigation measures to avoid, reduce or manage adverse impacts.

Enhancing Positive Impacts: SIA preparation also helps identify measures to maximize/share project benefits.

Reducing Costs: Addressing social impacts at an early stage helps to avoid costly errors in future.

Getting Approval Faster: A well prepared SIA demonstrates that social impacts are taken seriously and helps in getting project clearance faster.

Thus Social impact assessment is prediction for decision makers to understand the consequences of their decisions before they act and that the people affected will not only be satisfied of the effects, but have the opportunity to participate in designing their sustainable future as well as that of business & society.

CSR & Inclusive Societal Growth

India is a developing country & we want to be in the line with the developed countries and if we want or need to match our self, we have to keep increasing pace of inclusive growth that is “Broad based growth, shared growth, and pro-poor growth”. We need to decrease the growth of poverty in the country and increase the involvement of people into the growth process of the country.

Only then, the gap of extreme poor and extreme rich can be bridged & a developed society of India can be created.

CSR as a Tool for Inclusive Growth

CSR not only includes the activities that a company undertakes in order to utilize their profit to enable social and environmental development, but also includes the methods that a company employs in order to earn these profits including socially responsible investments, and transparency to various stakeholders among others. Realizing the importance and the long-term benefit many companies has adopted socially responsible business practices.

Business & Industry sectors are the critical driver of Inclusive growth. It stimulates economic development and growth because of its transformative impact on production processes and wealth that it creates through value addition to primary resources.

Provides foundation for entrepreneurship.

Promotes business investment.

Fosters technological up gradation & innovations.

Improves human skills.

Creates direct & indirect job opportunities.

Enhance service sector business & employability.

Provide market for agro, agro based produce & other local produce.

Expand different other source of employment & income generation.

Elements of Inclusive Growth

In fact inclusive and sustainable Business/Industrial development is the only solution to meet the global objectives of eradicating poverty and reducing income disparities while minimizing environmental damage. Inclusive growth by its very definition implies an equitable allocation of resources with benefits incurred to every section of the society.

Inclusive growth can bring reduction in the incidence of poverty, significant improvement in health issues, and universal access for children to school, increased access to higher education and improved standards of education, including skill development. There should also be an improvement in employment opportunities, increase in wage rates, and betterment in livelihoods and improvement in provision of basic amenities like water, electricity, roads, sanitation and housing. Corporate can endeavor to overcome the social commitment of their CSR initiatives. CSR programs need to be explored to put positive impact on the economic, social and environmental sector which directly affects their relationship with investors, employees and customers.

Although the prime goal of a company is to generate profits, companies can at the same time contribute to social and environmental objectives by integrating CSR as a strategic investment into their business strategy.

Industrial growth with a firm commitment on social responsibility is an important component for inclusiveness of growth in India.

Triple Bottom Line Concept of CSR(PPP)

John Elkington in his book “Cannibals with Forks” in the year 1998 gave the concept of Triple bottom line. He said that a company's responsibility lies with stakeholders rather than shareholders.

 "Stakeholders" refers to anyone who influences or is influenced either directly or indirectly, by the actions of the Business. And according to this concept the basic stakeholders are:

• PEOPLE - (human capital) pertains to fair and beneficial business practices toward labor, employee, community, other stakeholder of interests and region in which a corporation conducts its business.
• PLANET - (natural capital) refers to sustainable environmental practices. Company endeavors to benefit from the natural resources as much as possible but it is fair to the extent that it do no harm or have an adverse  impact on environment.
• PROFIT - (wealth creation) is the economic value created by the organization after deducting the cost of all inputs, including the cost of the capital tied up.

Stakeholders
Corporate stakeholders are those who can affect or be affected by the actions of the business as a whole. Or "those groups without whose support the organization would cease to exist."

Now question arises that who are our Stakeholders and it must be clear that share holders are one of our important stake holders not the stakeholder as a whole.

• Primary Social Stakeholders - are those who are engaged in economic transactions with the business.
• Secondary Social Stakeholders - are those who - although they do not engage in direct economic exchange with the business - are affected by or can affect its actions.
• Primary Non-Social Stakeholders - are those who are affected but not in the economic transactions with the business.
• Secondary Non Social Stakeholders - are those who neither engaged in direct economic exchange with the business nor affected by but can affect business.

The Pivotal role that Businesses play for inclusive growth of any society or Nation is undoubtful. It is expected from them to create wealth, supply product,   generate employment, innovate and produce a sufficient surplus to sustain its activities and improve its competitiveness, while contributing the development of the community where it operates. Sustainable & successful business depends on relationships and trust they earn and this inspires their stakeholders to give their best to the company to achieve their objectives. Business and society are inter-dependent and business must take full account of the societal expectations.

The “Stakeholder” theory provides a theoretical framework of how one can best manage their stakeholders by meeting their expectations and maintain relationship with trust.

From the very of inception of any company or Business the role of Stakeholders or you can say their contribution of stakeholder even at the time of inception of any business facilitates and help to achieve corporate objective of wealth-creation,  that is Profit. So no one can be ignored or exploited.

Eminent CSR researcher Mallen Baker in 2004 defined that CSR is about how companies manage the business processes to produce an overall positive impact on society. Outside stakeholders are taking an increasing interest in the activities of the company.

The above illustration of Mr. Baker is sufficient to explain the relationship and role of stakeholders towards any of Corporate or Business.

This diagram can be considered in companies to symbolize effects on the economy, social affairs and the environment. CSR management integrates social and ecological goals into the corporate activities in such a way that the economic success can be combined with the benefit for the society and the environment.

Stakeholders Engagement & Management

Stakeholder’s engagement and continuous communication is essential for any business growth, sustainability and future planning for CSR strategy to tackle critical situations.

The first question in front of the CSR team is how to engage and manage your stake holders?

Stakeholder engagement differs from Stakeholder management, it implies a willingness to listen & discuss your issues of interest. While management is an art for long term benefits for the organization based on reconciling sometimes disparate stakeholders’ wants and needs (investors, employees, customers, suppliers etc.).

Effective stakeholder engagement starts in our own backyard first i.e the internal stakeholders, and then comes external stakeholder engagement. But be careful that your stakeholder’s universe is big enough so you have to prioritize among them. Stakeholder engagement is really an innovative process and well practiced with the help of modern communication tools, so it is you to find out the way, approach and best practice.             

 If CSR is to minimize negative and maximize positive environmental and social impacts, then with effective stakeholders’ engagement the issues of stakeholders are immediately identified and necessary actions are undertaken. Companies have no choice whether they want to engage with stakeholders or not; the only decision they need to take is when and how successfully to engage. Stakeholder engagement is necessary for any type of organization: business, public or civil society. It is particularly important in the context of running an organization responsibly for its sustainability.

Organizations who face hostile communities or unfavorable NGOs’, understand the importance of developing stakeholder relationships. This is important for senior executives, who shapes and lead their organization’s policy towards stakeholders. Earlier engagement and management is better than later.

C S R has to Improve Stakeholder Engagement.

Effective CSR requires the engagement of multiple stakeholders; and it is difficult to coordinate all its efforts effectively. A strategic planning that involves external interests requires a strong commitment to engagement.

When company’s reputation, common perception, understandings of reality, brand image or environmental sustainability, impressions, beliefs and feelings of stakeholders, success or failure in the marketplace, community cooperation are on the stake, the role of CSR becomes important. This is the driving force for corporate social responsibility

McKinsey recently published a report on why CSR has largely failed to live up to expectations. The reasons being:-

1. Corporate Social Responsibility – Easy to talk but difficult to execute, while most organizations willingly pay lip service to corporate social responsibility, most struggles with effective implementation. Till date the value & importance of CSR had not been recognized.
2. Stakeholder dissatisfaction - many people see any initiatives that attempt to reach out to the local community or adopt some responsible measure as merely propaganda to boost brand image.
3. When they hear of corporate social responsibility, they see half-hearted commitments, glossy reports, and unfulfilled promises.
4. While it is true that companies use CSR as an insurance mechanism, this does not prevent effective measures or authenticity.
5. Unfortunately, these cynical stereotypes can sometime bear some truth.
6. Some view CSR as a cover for mismanagement of resources elsewhere. This creates a culture of unaccountability by encouraging business compensation to appease the public.
7. Obviously this trade-offs run contrary to the spirit of responsibility. Thus, responsible companies have to overcome them in authenticity. 
8. Limited Planning - teams that are dedicated to corporate social responsibility initiatives often have a very narrow focus on certain external stakeholders.
9. Effective CSR engagement includes a variety of stakeholders beyond immediate requirement.
10. CSR initiatives fail to involve potential customers but also community leaders, activists, regulators, and legislators.  
11. Disconnected Strategy and CSR planning has failed to connect internal company expertise and largely developed unrealistic initiatives.
12. The result is ineffective planning on the part of those designing CSR initiatives. This exponentially increases the risk of failure because CSR becomes a distraction, not a vital component of the company’s valuation.
13. Additionally, the disconnection of strategic planning reduces organizational buy-in. Since there are fewer individuals involved in the process, corporate knowledge becomes concentrated and specific CSR project become tangential engagements at best. Consequently, investment is minimal and buy-in is meager.

Benefits of CSR

Benefits to Company:-

• Community harmony.
• Lower operating costs.
• Enhanced brand image and reputation.
• Greater productivity and quality.
• More ability to attract and retain employees.
• Reduced regulatory oversight.
• Access to capital.
• Workforce diversity.

Benefits to the Community and the General Public:-

• Increase employment & employability opportunities.
• Contribution in societal inclusive growth.
• Contributions for social cause.
• Create volunteerism among employee and other stakeholders.
• Corporate involvement in community education, employment skill development and poverty eradication programs.

Environmental Benefits:-

• Greater material recyclability.
• Better product durability and functionality.
• Optimum use of renewable resources.
• Integration of environmental management tools into business plans, including life-cycle assessment and costing, environmental management standards etc.

Prerequisites for effective CSR

Personnel

• Commitment.
• Integrity.
• Transparency.
• Punctuality.
• Humanitarian.
• Team work.
• Communication Skill.
• Good listener.
• Enthusiastic.
• Innovative.
• Analytical.
• Relation builder.
• Proactive.
• Understanding of CSR and its relevance with Business & Society.

PROGRAMS

• Strategic.
• Need based.
• User friendly.
• Completeness.
• Structured.
• Cost effective.
• Initiatives must have back up.
• Monitored.
• Time bound.
• Advance planned.
• Community based rather than individual.
• Less short term programs more Long term programs (sustainable).

Approach

• Friendly.
• The first appearance.
• Helping behavior.
• Unbiased of caste, creed, religion, gender etc.
• Community partnership.
• Creation rather than consumption.

Conclusion:-

1. You are the face of your company in community, your behavior, attitude, integrity, commitment will tell about your company’s culture, character & thinking.
2. Communicate corporate vision of CSR to all stakeholder, clear any doubts & suspicions, establish faith and trust.
3. Define & decide priorities of short range and long range programs, Calendaring them.
4. Identification & Earmarking of core & buffer villages (PAV & Peripheral).
5. Know the strength, weakness, culture and social bond of your community or target group.
6. Develop partnership with Community, Government, Civic bodies & NGO.
7. Continuous interaction with common people as well as community leaders, harnessing opportunities of involvement in every socio cultural activities.
8. Identification & recruitment of resource person on ad-hoc basis having special skills for CSR land negotiation.
9. Project formulation based on need identification, their analysis and effort for scaling up socio economic status of project affected villages under the aegis of CSR
10. Think, plan, innovate how to compensate unemployment due to

• loss of agriculture land,
• loss of forest based livelihood,
• loss of allied employment,
• loss of artisan work 

           Not by providing money but to provide them opportunity to get skilled and take alternate occupation for their livelihood, Company needs to  be supportive in shifting their occupation.

    11. Always keep detailed data, photo, and video of pre & post programs.

    12. Preparation of annual report of CSR for the purpose Top management & Board of director’s & global reporting to achieve recognition.

    13. Always keep coordination and communication with press, media and voluntary organization whether the program or initiatives are small or              big.