They say there is some rent we must pay to stay on this planet. Every second person in our country earns some amount of money using the resources available on our planet! Hence, the need to give something back to the society arises. Corporate Social Responsibility is primarily seen as how the profits are made and how they are used, keeping in mind the interests of all stakeholders. This is where the government stepped in by the CSR policy in the Companies Act, 2013.
The concept of CSR is not free of controversies and experts do not even agree on how to define it taking into consideration all its aspects. Once upon a time, Corporate Social Responsibility (CSR) was considered a luxury: a set of initiatives implemented by successful companies in good times; initiatives that were affordable, that made companies "feel good" and that were implemented for ethical, altruistic and branding purposes - but definitely not as part of a company's core strategy. But the implementation of CSR has only been done since it is challenging for any business to remain competitive in the long run and unless poor people have some equity in the growth of the economy, India can never be a “Super Economy”. Here comes the role of corporations. CSR is one such niche area of corporate governance that should be addressed aggressively & implemented in the organizations.
Two countries stand out in terms of CSR regulations. The first is Denmark, the first western country to mandate CSR information in companies' annual financial reports (imposes 31% social tax on all the people having Scandinavian Citizenships, in return getting future claims in the form of medical help and other facilities solely borne by the government). The second is Indonesia that has taken a global lead by passing a law requiring all public companies to issue CSR reports.
Recently, Mr. Arun Jaitley, our Finance Minister said, “I appeal to all the corporate house, industries and businessmen to spare 2 per cent of their profits for social work and help us in making India developed." His primary focus is on building toilets in schools and electrifying the villages by 2018. This being pressed by the Finance Minister was because CSR is being misinterpreted by business houses. Some Indian corporate companies believe that merely complying with laws & regulations fulfills their need for social responsibility and they fail to realize that these laws have only been mandated because there is lack of voluntary participation wherein a responsible corporate involves itself in activities which have wider impact on the society keeping in mind the interests of the stakeholders.
It seems that CSR today is still in the implementation phase and the true essence of this policy is lost but the endeavour to get everyone on the line by prescribing the 2 per cent-of-net-profit target is still being taken since SOMETHING IS ALWAYS BETTER THAN NOTHING. The mandate spend will at the least encourage the big Corporate houses to contribute to the society, which otherwise would not be an optimistic scenario if it was to be done voluntarily.