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Corporate social responsibility and its impact on society

July 25, 2020

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This article is written by Chandana, from The Tamil Nadu Dr Ambedkar Law University (SOEL). This is an article which deals with CSR and its impact on health, education and other sectors.

Introduction

The concept of Corporate Social Responsibility is a western concept. The idea of CSR stemmed from the voluntary actions initiated by the American Companies at the end of the 19th century. However, the term CSR was first used by Bowen in 1953 in his book called Social Responsibilities of Businessmen. In India, CSR was introduced by the Companies Act, 2013 and it came into effect on April 1, 2014. It is mentioned in Section 135 of Companies Act, 2013. The Companies Act, 2013 makes it compulsory for certain companies which fall under threshold limits to take up CSR activities.

Responsibility

Michel Hopkins defines Corporate Social Responsibility is concerned with stakeholders of a company or institution ethically or in a responsible manner.

Corporate social responsibility

According to Section 135 of Companies Act, 2013;

Every company having:

Net Worth of 500 crores; or
Turnover of 100 crores; or
Net Profit of 5 crores or more;

during the preceding, the financial year shall constitute a CSR committee.

The committee shall consist of not more than three directors of which one shall be the independent director.
The board’s report shall disclose the composition of the CSR committee.
The CSR committee shall have the responsibility to:

formulate and recommend to board a CSR policy which shall indicate the activities to be undertaken by the board.
recommend the expenditures to be incurred by that specified activity.
monitor the CSR policy from time to time.

The board shall disclose the contents of such policy in its report and place it on the company’s website and ensure that activities are included in the CSR policy of the company.
The board shall ensure that the company shall spend 2% of its net profit made during three financial years or where the company has not completed it the period of three financial years since its incorporation.
In case the company does not spend the money on the project undertaken by the company shall within thirty days transfer the amount by opening a special account in the bank called Unspent CSR account and it shall be spent within three years from the date of such transfer.
In case company contravenes with the provision the company shall be punished with a fine which may extend to twenty-five thousand but may extend to twenty-five lakhs and every officer in default shall be punishable with imprisonment which may extend to three years and with a fine which shall not be less than fifty thousand but may extend to five lakhs.

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Impact of CSR on health

There is a common saying that is “Health is wealth”, though it is a simple phrase it has profound meaning. The CSR policies and strategies can be framed within the social determinants of health which is put forward by the World Health Organization in Ottawa Charter. The businessmen have a corporate obligation to comply with CSR policies.

Few significant impacts of CSR on Health are:

The health care in India is ailing at an alarming rate.
The primary aim of businessmen who are taking up CSR activities has to primarily focus on improving the health of those people who are living below the poverty line.
The society believes that businessmen have a high social responsibility towards the stakeholders and future generations.
One way of creating a huge impact on society is by providing life-saving drugs at cheaper prices to the people who cannot afford them because of higher prices.
According to enlightenment value maximization theory, there is a direct relationship between the firm’s profitability, survival and growth and the management of the employees on the one side (internal) and health of the society on the other side. (external)
The employers of the company as a part of CSR have to consider the health and safety of the workers, including the work-related stress, rigid working hours, work-life balance, poor human relations and general employee’s well being.
Employers assert that effective health and safety policies can be implemented so that there can be a reduction of absenteeism among the employees.
CSR should try to achieve the following objectives if their main goal is achieving the maximum health of the population:

It should try to eradicate extreme poverty and hunger.
Reduce child mortality.
Improve maternal health.
Combat HIV, AIDS, malaria and other dreadful diseases.

Indian Companies have to focus on the following points to enhance health care services.

In India, the top 200 companies spend around INR 1369 crores in a year on healthcare and wellness.

Improving primary health care services.

Companies should focus on improving primary health care rather than tertiary care.

Getting doctors to rural areas.

Availability of doctors in rural areas benefits the rural people in a tremendous way.

By providing frequent health checks-up like eye check-up, blood pressures, pulse check-up and sugar tests help them to stay in good health conditions.

Increase the number of doctors.

India has 8,40,130 medical practitioners registered as per present-day statistics.

There are very few doctors who are well-trained practitioners out of a given number of medical practitioners.

CSR can reduce this issue by upgrading the teaching methodologies, importing the advanced medical equipment.

Reducing the treatment cost.

Companies can promote health insurance policies.

They can also have an arrangement with the pharmaceutical companies to provide to the people the medicines at cheaper prices.

CSR top five healthcare projects in India in 2018-2019

Nowadays corporate sectors spend their huge amount of money next to education in improving the lives of rural people by providing them with adequate health care facilities.

Below are the top five healthcare projects established in India:

1. Tata Consultancy Services

The project budget covers over INR 296 crores.
Tata Consultancy Services provided Integrated Hospital Management System and IT infrastructure.
It established two institutes namely: Cancer Institute at Chennai and Tata Medical Centre at Kolkata.

Impact of this project

The patients inside the OPD’s are streamlined.
Fast Track Management service enhanced and an automated daycare appointment system was rolled out.
Digital Nerve Centre platform was initiated which connects to the leading research centres and specialists within the National Cancer Grid.
It established cancer institute at Chennai, Kolkata and Thiruvananthapuram

2. Tata Steel Limited

The project budget covers over INR 168.94 crores.
The company has carried out following projects in Odisha, Jharkhand, Kolkata, West Bengal and Mumbai for promotion of Healthcare:

Maternal and New Born Survival Initiative(MANSI)

This initiative is achieved through partnership with the government, national and international NGO and it focuses its work with pregnant women, mothers and children on the issue relating to infant mortality rate.

Impact of this project

There was a 44% reduction in death rate achieved.
In Odisha and Jharkhand, infant mortality was reduced in 12 blocks.
1855 cases of high-risk child and mother cases were identified.

Regional Initiative for Safe Sexual Health by Today’s Adolescent (RISHTA)

This project mainly focuses on working with the adolescent and explaining them the significance of nutrition and teaching them life skills training.
The android application was introduced to monitor adolescent health.

Impact of this project

This project reached out to 15,000 adolescent students.

3. ITC limited

The project budget covers over INR 123.16 crores.
This project aim is to provide public health and hygiene.
To rescue the water-borne diseases and prevent the open defecation the company constructed 4,443 Individual household toilets in 26 districts of 15 states.
And 32 toilets were renovated in the states of Bihar, West Bengal and New Delhi.
Portable water was made available in three districts of Andhra Pradesh and purification plans were set up in places where there was the poor quality of water and the purification plan provided safe drinking water to nearly 1,50,000 rural people.
Village Health Champions which mainly focused on sanitation, personal hygiene, family planning, prevention of diarrhoea and nutrition was initiated in seven districts of Uttar Pradesh and four districts of Madhya Pradesh were set up to bring awareness among various health-related issues and it covered 3.22 lakh women, adolescent girls and school children.
Mother and Child initiative was set up which covered nearly 77,000 beneficiaries to improve the health nutrition of women, adolescents and children.

4. National Mineral Development Corporation Limited

The project budget covers over INR 83.92 crores.
It creates awareness and helps in conducting reconstructive surgery to the 100 people who are with disabilities and residing in Chhattisgarh.
It provides sanitary napkins dispensers to the state of Haryana.
Provides drinking water facilities at Gadaji.

5. Power Grid Corporation of India Limited

The project budget covers over INR 78.19 crores.
The main objective of the company is to undertake various activities which help in promoting sanitation.
It provides sanitary napkin machines at various girls schools and girls hostels in Itarsi.
It supplies and installs 13,000 twin bin dustbins.
It has installed 100 toilets at Ghazipur.

Impact of CSR on education

Education is considered as one of the core factors for economic development.
As per UNICEF report out of 100 students, 29% of girls and boys drop out of school before completing the elementary education and often they are the most marginalised children.
Problems like poverty, forced labour, early marriage, lack of awareness among the people are a few reasons as to why children drop out of school.
Article 21A of Constitution of India guarantees the states to provide free and compulsory education for all children who fall under the age group of six to fourteen years.
The real question is how far the government has achieved this goal?
Though there are a lot of initiatives which are taken by the government in providing quality education, CSR can also play a major role in improving the quality of education.
Companies which meet specified thresholds have to contribute 2% of net profit to CSR.
In the financial year, 2016-2017 CSR spent a total of 38% for education alone.
In spending the CSR money for education Maharashtra is given a top priority which is followed by Gujarat, Karnataka and TamilNadu.
CSR takes the following initiative in constructing schools.

Providing the students with learning material.

Apart from constructing schools and providing students with learning materials, there are other activities like promoting sports, construction of libraries which are not gaining significant attention under CSR.
Investment on education and skill development through CSR is innovative at the policy level.

Top five CSR education projects in India

Below are five education projects which are undertaken by CSR:

1. Reliance Industries Limited

The project budget covers over INR 476.90 crore.
The project undertaken by the Reliance Industries is setting up the Jio institute under the Institution of Eminence Deemed to be Universities Regulation 2017.
It provides a platform for research and learning experience.
It is currently working in planning the academic programme, curriculum, research agenda, research centre, institutional collaboration and campus development.

2. National Thermal Power Corporation Limited

The project budget covers over INR 132.03 crores.
The company has constructed schools and hostels for the tribal children near NTPC Rihand in UP.
It also constructed schools in Uttar Pradesh, Madhya Pradesh and Odisha.
It also set up smart tab labs in Government schools.

3. Wipro Limited

The project budget covers over INR 107.58 crores.
Wipro Academy of Software Excellence was initiated in 1995, the purpose of this initiative is to allow the postgraduates in science and technology to help them in preparing for their master degree in software engineering.
This initiative runs with the partnership of the Birla Institute of Science and Technology.
With keeping the Cloud Computing as core theme Wipro Infrastructure Management school was started to nurture the exclusive talent in the IT sector.
Since 1995 it has helped more than 30,000 students to pursue their higher career in the field of engineering.
In the last two decades, over 18,200 students completed their M.Tech degrees in various IT disciplines.

4. Infosys Limited

The project budget covers over INR 103.32 crore.
It helps in contributing its money towards the library project and educational initiatives through various organisations.

5. Indian Oil Corporation Limited

The project budget covers over INR 81.84 crore.
The project called Skilled Developed Institute was established May 9, 2016, with the aim of providing opportunities to unemployed and underprivileged people of Odisha and skilled manpower to the industry.
From two trade courses, it increased to 16 trade courses, the course which is mainly related to hydrocarbon sectors and local industries.

Impact of CSR on the other sectors

Impact of CSR on NGO

India is a home for 31 lakh NGO and in which one NGO consists of about 400 Indians.

Save the children

Save the Children is one of the recognised NGO for CSR initiatives. This NGO helps the children from child labour and educates the children, empower them with other skills. It mainly works to provide healthcare, education, life-saving aid during emergencies to the children.

Conclusion

CSR is considered as an instrument for integrating social, environmental, and human developments concerns in the entire value chain of corporate business. India is one of the view countries in the world that has a mandatory provision on Corporate Social Responsibility.