Corporate Social Responsibility

Brief history of corporate social Responsibility

Before the concept of corporate social responsibility was even introduced, local communities, NGO’S, consumers and civil society in general were demanding that business to be carried out in an ethical and socially responsible manner.

Progress was made by companies in developed countries by acting responsibly to the needs of not just consumers but also society but there remained challenges in less developed countries where corporate social responsibility by companies was utmost necessary.

Several factors have contributed to the evolution of corporate social responsibility. The changing societal values and changing consumer perception and demand to be on the right of the social justice issues have forced companies to look for something beyond just expanding business and making profits.   Accounting scandals at WorldCom and Enron a decade ago as well as the recent financial meltdown has put new demands on transparency and accountability for the corporate.  

However some of the sources say that the roots of corporate social responsibility can be found in the early 18th century through the business practices of successful companies. Best example being the Cadbury in 1870’s where it set up factory in UK and by 1890’s Cadbury had more than 2600 employees which welfare and other facilities to employees like medical department, pension fund department, training to employees, committee’s to resolve conflicts etc, and by 1900 Cadbury established Brownville village to promote housing reforms and green environment to demonstrate the message of corporate social responsibility i.e., successful business in successful communities.

Another best example being the Johnson & Johnson which for the first time said that its stakeholders are its customers, employees and the community that it operates in.  There are many companies across the globe which has adopted corporate social responsibility to their business for centuries. Examples of corporate social responsibility began to emerge, and the civil rights movement, consumerism and environmentalism changed the way society expected the corporate to behave.  In 1960, the organization for economic and development (OECD) was created to promote highly sustainable growth and employment and high standard of living in all member countries.

Evolution of Corporate social responsibility in India

The fundamentals of CSR rest on the fact that not only public policy but even corporate should be responsible enough to address social issues. The fact to be known is that social responsibility for corporate is the oldest tradition among Indian companies though they are not practiced on regular basis in India. Many initiatives have been taken from government side and much have done to make Indian companies aware of the corporate social responsibility being the important segment of their business activity but CSR in India has yet to receive much recognition.

Though corporate social responsibility is much wider concept than charity and philanthropy, the later was the main drivers for CSR in India. Tradition, family values, culture and of course the industrialization in Nehru’s period 1950’s had influence on social responsibilities of companies. Wealthy merchants shared part of their wealth with society by way of setting up temples for religious cause. Later Mahatma Gandhi introduces the notion of trusteeship, according to which the industry leaders had to manage their wealth so as to benefit common man. Gandhi’s influence had indeed put pressure on industrialists to act towards nation building and working for the socio economic condition of the country.