EVOLUTION OF CORPORATE SOCIAL RESPONSIBILITY IN INDIA


Abstract
India is the only nation who has created a mandate on the corporate to conduct some activities or to show its responsibility towards the society and it is known as Corporate Social Responsibility. Although the concept is not new, CSR has been introduced by the parliament in the amendment of 2013, Companies Act. In this paper, we will be discussing the evolution of CSR in India and it's the previous and current situation and applicability.
While discussing Corporate Social Responsibility, we will be discussing its history, principal legislation, rules and recent amendments relating to CSR. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.
The type of research done here is basic, explanatory, deductive using the qualitative, secondary, descriptive data. The reason behind conducting basic, explanatory, deductive research is that the topic of research is not new and people have a considerable idea about the topic but what is the exact situation of CSR, many people don’t know about the same. 
The data which has been used is reliable because it has been taken from government resources. Research data is secondary, qualitative and descriptive because it is not collected by the researcher and talks about the topic in a more detailed manner. The researcher aims to conduct analytical research on the topic by analyzing the law, policies and current trends related to corporate social responsibility in India.
Introduction
Business or corporate is a need of any country in order to grow its economy which will ultimately help the country to be a developed country. When we think of a business or corporation, their main aim is to earn profit and in order to earn a profit, they often practice some practices which may or may not be ethically correct. Hence in order to prevent the corporate from doing such activities government makes some laws as per the requirement of time and society. 
While earning a profit, businesses are required to follow the law and even to make their policies customer-friendly and not exploitive for the customers or for the society. Businesses are required to do some work without expecting any benefits in order to serve society. The logic behind making businesses serve the society without any benefit is that the businesses use the social as well as natural resources in order to gain optimum utilization of their money and to get higher returns on their investments, hence the businesses should be more obliged to give something in return to the society without expecting any profit or benefit. This obligation of corporate to do something in favor of society at large without any benefit in return is known as Corporate Social Responsibility.
Corporate Social Responsibility is practiced all over the globe as a voluntary activity in which the companies work for the society without expecting any profit in return. The acts are done for the benefit of society to help not only the society but also work in favor of the company’s goodwill hence the work is not solely done for welfare purposes.
Corporate Social Responsibility in the global perspective is nothing new but when we talk about Corporate Social Responsibility from the Indian perspective, it has roots in India much before from the entry of any other external factors in India. We find evidence of the existence of Corporate Social Responsibility in the Scriptures from ancient times.
India has the world’s richest tradition of Corporate Social Responsibility (CSR). The term CSR may be relatively new to India but the concept can be found in various documents of history and various religious books.
Evolution Of Corporate Social Responsibility: A Religious View
If we talk about the religions in India, then India is considered to be the most diverse country in the matters of religion and culture. Religion has a major role in the living styles of the people. Corporates working now or worked in any other time of history, have a sense of responsibility towards the society due to the religious interventions. 
Followings indicate the existence of Corporate Social Responsibility in India much before the entry of Britishers or any other external forces.
  • Vedas – There are four Vedas. Rig-Veda, Yajur-Veda, Sama-Veda, and Atharva -Veda. The prime component of these Vedas is the understanding of the concept of the universe. An attempt to help achieve one's goals and objective – i.e. union of self (atman) and the world (Brahma) 
  • Upanishads – Upanishads form the hardcore soul of the individual, laying a path to connect individual self to the supreme power, the God, and rise over and above the desire and liking from the materialistic pleasure. 
  • Bhagavad Gita – Krishna Gathas, the rhymes and preaching‘s Are the fundamental pillars establishing a sound base for spirituality and ethics, pronounced through a dialogue between Lord Krishna and the warrior Arjuna who is at a great crisis of his life? The karma yoga, Bhakti yoga and the notion of three Gunas (sattwa, Rajas, Tamas) have eminent implications in the context of ethical leadership, decision making, and management, the area of concern where the concepts of CSR Corporate Governance and ethics are expected to be practiced. 
  • Ramayana – It depicts the duties of relationships, portraying ideal characters like the ideal father, ideal servant, the ideal brother, the ideal wife and the ideal king. Apart from this, the Ramayana also teaches how the temptation for lust can bring a powerful and well-established man‘s doomsday. 
  • Buddhism – Lord Gautam Buddha gave the world with four fundamental noble truths. They are (i) Suffering exists; (ii) There is a cause of the suffering; (iii) Suffering can be eradicated; (iv) There is a means for the eradication of that suffering. His practice establishes the fact that everything on earth is non–permanent and everything on earth has an – “anatta”. Buddha also gave the world the eightfold path to liberation from all suffering.  
  • Islam had a law called Zakat, which rules that a portion of one’s earning must be shared with the poor in the form of donations.

Religion has been a very influential factor for encouraging people for conducting activities that are helpful for society but this factor has lost its tight grip on impact with the passage of time hence people started looking for other motivations for the encouragement of people engaged in corporate affairs for social activities.
Evolution Of Corporate Social Responsibility: Historical View
The history of CSR in India runs parallel to the historical development of India. CSR has evolved in phases like community engagement, socially responsible production, and socially responsible employee relations. Therefore, the history of Corporate Social responsibility in India can be broadly divided into four phases:
  • Phase One – The first phase of CSR was driven by the noble deeds of philanthropists and charity. It was influenced by family values, traditions, culture and religion along with industrialization. Till 1850, the wealthy businessmen shared their riches with the society by either setting up temples or religious institutions. In times of famines, they opened their granaries for the poor and hungry. The approach towards CSR changed with the arrival of colonial rule in 1850. In the Pre-independence era, the pioneers or propagators of industrialization also supported the concept of CSR. In the 1900s, the industrialist families like Tatas, Birlas, Modis, Godrej, Bajajs and Singhanias promoted this concept by setting up charitable foundations, educational and healthcare institutions, and trusts for community development. It may also be interesting to note that their efforts for social benefit were also driven by political motives.
  • Phase Two – The second phase was the period of independence struggle when the industrialists were pressurized to show their dedication towards the benefit of society. Mahatma Gandhi urged the powerful industrialists to share their wealth for the benefit of the underprivileged section of the society. He gave the concept of trusteeship. This concept of trusteeship helped in the socio-economic growth of India. Gandhi regarded the Indian companies and industries as “Temples of Modern India”. He influenced the industrialists and business houses to build trust for colleges, research, and training institutes. These trusts also worked to enhance social reforms like rural development, women empowerment and education. 
  • Phase Three – In the third phase from 1960-1980, CSR was influenced by the emergence of Public sector undertakings to ensure the proper distribution of wealth. The policy of industrial licensing, high taxes and restrictions on the private sector resulted in corporate malpractices. This led to the enactment of legislation regarding corporate governance, labor, and environmental issues. Still, the PSUs were not very successful. Therefore there was a natural shift of expectation from the public to the private sector and their active involvement in the socio-economic growth. In 1965, the academicians, politicians, and businessmen set up a national workshop on CSR, where great stress was laid on social accountability and transparency.
  • Phase Four – In the fourth phase from 1980 onwards, Indian companies integrated CSR into a sustainable business strategy. With globalization and economic liberalization in the 1990s, and partial withdrawal of controls and licensing systems there was a boom in the economic growth of the country. This led to the increased momentum in industrial growth, making it possible for the companies to contribute more towards social responsibility. What started as charity is now understood and accepted as a responsibility.  
Corporate Social Responsibility was not recognized in the act of 1956 and it was not even mandatory for the corporation to conduct activities beneficial for the society at large.
Current Status Of CSR In India
CSR activities performed by the corporate giants lacked specific guidelines about their measuring yardstick, investment parameters, areas to be covered for CSR activities, etc. With the span of time India became an opened economy from a closed economy, all due to the LPG movement launched in India in the year 1991. Since time immemorial CSR as a term lacked a precise definition, structure, criteria‘s and transparency. All Central Public Sector Enterprises (CPSE) were following the CSR guidelines issued by the Director of the Ministry of Heavy Industries and Public Enterprises since 2010. However the Companies Act, 2013 brought an end to the long wait by inserting Sec. 135 under the Companies Act 2013. The provisions under the Companies Act 2013 are as follows. 
  1. Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. 
  2. The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee. 
  3. The Corporate Social Responsibility Committee shall,— (a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII; (b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a), and (c) monitor the Corporate Social Responsibility Policy of the company from time to time. 
  4. The Board of every company referred to in subsection (1) shall,— (a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the Stakeholder Companies respond to the needs of stakeholders, customers, employees, communities, etc and 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; and (b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company. 
  5. The Board of every company referred to in subsection (1), shall ensure that the company spends, in every financial year, at least two percent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy: Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities: Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount. Explanation – For the purposes of this section – “average net profit” shall be calculated in accordance with the provisions of section 198. 
However, there still exist various issues and challenges in making the CSR activities to be performed successfully and due to which some amendments have been done in recent years as discussed below: 
Corporate Social Responsibility (CSR): Under the Act, if companies that have to provide for CSR, do not fully spend the funds, they must disclose the reasons for non-spending in their annual report.  Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year. 
However, if the CSR funds are committed to certain ongoing projects, then the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year and spent within three years. Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act.  Any violation may attract a fine between Rs 50,000 and Rs 25,00,000 and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25,00,000, or both.  
By keeping the implementation of Section 21 (amendments to the CSR provisions in Companies Act 2013) in abeyance, the government has restored status quo ante as regards CSR provisions, say company law experts. 
This would mean that CSR, for now, would only be voluntary for corporate India and not spending the 2 percent on CSR would not be treated as a criminal offense, attracting jail term for company officials.
However, this position will only hold true till the time the government takes a call on the recommendations of the high-level panel on CSR headed by MCA Secretary Injeti Srinivas, it is learned. It may be recalled that the Panel report was submitted to Finance Minister Nirmala Sitharaman after Parliament had passed the Companies (Amendment) Bill 2019. 

Environmental Protection And Corporate Social Responsibility 
The environmental aspect of corporate responsibility of business organizations has been widely debated over the past decades as stakeholder’s demands increase tremendously in organizations to be more socially responsible and environmentally conscious in their business operations. Porter & Kramer (2006) argued that social and environmental responsibility of organizations have become an inevitable priority for business leaders in every country, whereas Vogel (2006) maintained that neglecting environmental issues may be costly in the long run, and emphasized also on the impact that it can have on the legitimacy of the organization. Holtbrügge & Dögl (2012) wrote that there has been a significant change in global climate and environmental conditions, and argued that these changes have resulted in a growing public awareness of corporate environmental responsibilities (CER) as an important topic for both the business world and in academic literature. Other scholars have argued on the growing stakeholder’s awareness and pressure on organizations concerning the pursuit of CER within their various fields. 
The implementation of CSR initiatives usually differs for each company, or even sector, depending on a number of factors, such as size and culture. Manufacturing-based companies are confronted by a wide range of environmental challenges, while retail or service-sector companies face these to a lesser extent. Although some companies address environmental issues one facility or department at a time, companies are increasingly integrating the environment into all parts of their operations. Whatever the nature of the commitment, most companies follow a similar series of steps when addressing their impact on the environment: 
  1. Corporate Environmental Policy: Companies committed to reducing their environmental impact usually create a set of environmental principles and standards, often including formal goals. At minimum, most such statements express a company’s intentions to respect the environment in the design, production, and distribution of its products and services; to commit the company to be in full compliance with all laws and go beyond compliance whenever possible; and establish an open-book policy whereby employees, community members, and others can be informed of any potential adverse effects the company might have on the environment. 
  2. Environmental Audit: Before a company attempts to reduce its impact on the environment, it is essential that it first gains a full understanding of it. For most companies, this usually involves some kind of environmental audit. The goal of audits is to understand the type and amount of resources used by a company, product line or facility, and the types of waste and emissions generated. Some companies also try to quantify this data in monetary terms to understand the bottom-line impact. This also helps to set priorities as to how a company can get the greatest return on its efforts. 
  3. Employee Involvement: Leadership companies recognize that to be effective, environmental policy needs to be embraced by employees throughout the organization, not just those whose work is related to the environment. To do that, companies engage in a variety of activities, especially education, to help employees understand the environmental impact of their jobs and to support their efforts to make positive changes. Some companies go further, helping employees become more environmentally responsible throughout their daily lives, helping them build a true environmental ethic. Besides education, many companies create incentives, rewards and recognition programs for employees who demonstrate their environmental commitment. 
  4. Green Procurement: To help ensure that their products and processes are environmentally responsible, many companies seek to buy greener products and materials from their suppliers. Some companies participate in buyers’ groups in which they leverage their collective buying clout to push suppliers to consider alternative products or processes. 
  5. Green Products: Products themselves may be made more environmentally friendly, with regard to, for example, the control of emissions, noise, reduced health and safety risks, and reduced energy requirements. Additionally, as more and more companies and their stakeholders are attracted to CSR initiatives, but are often uncertain as to what steps may create an adequate environment for putting the concept into operation. Three such steps could assist in facilitating the process: 
(i) Promote dialogue among stakeholders; 
(ii) Create the actual partnerships necessary for bringing voluntary initiatives to fruition; and 
(iii) Agree on a systematic and monitorable program for establishing and financing voluntary initiative. 
Companies adopt various responsibilities to fulfill their CSR obligation but in order to show the sensitivity towards the matter of environment, they adopt this as corporate responsibility or as a marketing strategy in order to attract the customers and to fulfill the legal obligations to protect the environment imposed by the government.
It is extremely important for companies to develop legitimate and effective green product and marketing strategies, which can eliminate the need for greenwashing and lead to greater profits and consumer patronage. A company that is honest and genuinely committed to sustainability can earn the respect and loyalty of consumers.
  1. Green Design: Oftentimes, companies resort to greenwashing because their products and services are not green, to begin with. A take-out bag with a big recycle symbol on the front may actually be made from virgin, and not recycled, paper. A fuel-efficient car that experts are raving about on social media may contain conflict materials. The most important green marketing strategy is to design products and services that are green, to begin with. If a product or service is environmentally-friendly from the ground up, there is no need for greenwashing.
  2. Green Positioning: A company should explicitly promote its sustainability performance—and those of its products and services—as a key component of its business activities. Everything a company does should reflect its sustainability values. They cannot claim to be sustainable while engaging in unsustainable business practices such as making employees work under sweatshop conditions. Doing so will ruin the company’s credibility with consumers.
  3. Green Pricing: A company should highlight how a green product or service can help consumers save key resources. A car company, for instance, can promote its latest vehicle by emphasizing how it is more fuel-efficient compared with other leading car brands. This allows consumers to actively participate in sustainability. They become aware that their choice is about investing in something that will allow them to save money and resources in the future, rather than making a short-term purchase.
  4. Green Logistics: In addition to a product or service being green, its packaging must also be green. The packaging is the first thing that consumers see. Unsustainable packaging has the potential to dissuade consumers from purchasing sustainable products. 
  5. Green Disposal: An effective green marketing strategy takes into consideration every aspect of a product’s life cycle. From production to disposal, everything must be sustainable. Unsustainable disposal practices can be hazardous to both the environment and human health.
Businesses should take the high road by employing effective and truthful green marketing strategies. In the long term, green companies enjoy more profits and continued patronage when they are able to establish a reputation for being trustworthy and truly dedicated to sustainability. 
Hence, not only as a Corporate Social Responsibility but also as a business marketing strategy, corporate houses are concerned with the environment. 
Conclusion
The concept of Corporate Social Responsibility is a very old concept as it has been discussed in all the historical documents and for a very long time, religion was the sole driver of encouraging people to carry on the activities for the welfare of society.
The history of Corporate Social Responsibility shows that the evolution of CSR in Indian history was done with subsequent development in the Indian Political and economic history. Further, it shows that the concept of Corporate Social Responsibility was a concept even when there was a codified law for governing the companies and to regulate various aspects of the management, the concept of Corporate Social Responsibility was not identified for many years and finally in 2013 law Corporate Social Responsibility was identified as law and under Section 135 of Companies Act, 2013 CSR was made obligatory on the corporate houses/ Companies.
In the amendment of 2019, it has been converted as a mandatory provision from an obligatory provision. The amendment has made non-usage of the CSR fund a Criminally punishable offense hence it is no longer an option of the companies but it is an obligation on the companies.
Corporate Social Responsibility has a part as Environmental Corporate Social Responsibility which contains the steps taken for the preservation of the environment by Corporate bodies and governments. Many corporate houses don’t use Environmental concerns as Corporate responsibilities but they use it as a business marketing strategy in order to attract customers and to fulfill the obligations to save the environment and to meet with the criteria settled by the government to preserve the environment.

References
[1] International Journal of Research and Scientific Innovation (IJRSI) | Volume IV, Issue V, May 2017 | ISSN 2321–2705
[2] Soulace, available here
[3] PRS India, available here
[4] Hindu Business Line, available here
[5] Diva Portal, available here
[6] World Bank, available here
[7] First Carbon Solution, available here

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