What Is Social Responsibility?

Social responsibility is an ethical framework which suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Hence, social responsibility is a duty every individual/agency has to perform so as to maintain a balance between the economy and the ecosystem.

In fact, one has to understand that generally a trade-off exists between economic development and the welfare of the society or environmental conservation. Social responsibility means sustaining the equilibrium between the two, so that the society, at large, becomes a better place to live. It pertains not only to business organizations but also to anyone's action that impacts the social welfare or environment.

Social Responsibility can be passive (by avoiding engagement in socially harmful acts), or active (by performing activities that directly advance social goals). Corporates can use ethical decision-making to secure their businesses. A properly implemented CSR concept can bring along a variety of competitive advantages, such as: enhanced access to capital and markets; increased sales and profits; operational cost savings; improved productivity and quality; efficient human resource base; improved brand image and reputation; enhanced customer loyalty; better decision-making; and improved risk management processes.

Modern India business community has also quickly recognized the strategic value of being more responsible and is beginning to align products and business relationships, in particular, through their supply chains, accordingly. Ensuring that CSR supports the development of small and medium-sized enterprises (SMEs) in developing countries is crucial to meeting the goal of improving the impact of business on society.

In India, following activities have been included by companies in their CSR Policies:
                                 In India, under Corporate Social Responsibility (CSR) , as per the GUIDELINES provided by Sec. 135 of the Companies Act, 2013 , every company having net worth of Rs. 500 crore or more ,  or turnover  of

Rs. 1000 crore or more, or a net profit of Rs. 5 crore or more during any FY shall constitute a Corporate Social Responsibility Committee (CSRC). The CSRC shall recommend to the Board a CSR Policy and the amount to be incurred on the activities provided in the policy.

The Board shall approve the CSR Policy and disclose it in the Board's Report and on its website. The Board shall ensure that the activities included in the CSR Policy are undertaken by the company. The Board has to ensure that the company spends, in every FY, at least 2% of average net profits of the company made during 3 immediately preceding FYs. In case of failure to spend the amount, necessary reasons shall be disclosed in Director's Report. The company shall give preference to the local areas where it operates while spending the amount.

Today, for leading companies, business houses and corporate sectors, CSR is not only a matter of public relations or random philanthropic sentiments but also a strategic initiative that is carefully integrated into business functions. A good CSR means good business. It is important to build your market credibility and enhance your reputation as a socially responsible company. For businesses to prosper and sustain in the long run, CSR has to be integrated, internalized and institutionalized. A CSR review helps a company in integrating the social and environmental initiatives with the business strategies. It identifies the business risks and control gaps to assess social and environmental impact and assists the company in reporting the CSR initiatives, investments and way forward action plan to the stakeholders. For this, a Corporate/Company/ Business House requires: building an organization culture that internalizes CSR; rolling out social and environmental programs and benefiting from them without being and looking superficial; making strategic community investments; integrating products and services with CSR commitments; improving operational and management performance of the organization vis-à-vis CSR; building confidence of the stakeholders; creating business value from innovative partnerships; tracking and monitoring social and environmental initiatives and achievements; focusing on employee ownership and volunteering; etc.

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