Mandatory CSR in India Is it a Win Win?

Effective
approach and methodology in implementation of CSR
activity vis-vis the Company Act 2013

-Samruddhi Borkar
-Pratik Joshte
-Karan Ved

 Why do businesses exist?

What is the purpose of a business, or in the
bigger picture, any economic system?
- The derivation of the word Company comes
from two Latin words cum and panis which
means breaking bread together.
How does this translate in todays Business
Environment?
What are or should be the goals of the modern
corporation?
- Opinions differ and cover a wide spectrum

 People assume wrongly that a company exists

simply to make money.
While this is an important result of a companies
existence, we have to go deeper and find the
real reason of our being.
CSR represents an attempt to answer these
questions.
In broader terms CSR covers the responsibilities
corporations or (other for-profit organizations)
have for the societies in which they are based
and operate.

Definition
The sense of belongingness and oneness
inculcated within the corporations to
serve the deserving is CSR.
The business, other than business which
serves the society for growth &
development is CSR.
So, what is the business of business? Is it
profit maximization or else contribution
to the society i.e. the CSR community?

 What CSR is not

CSR is not about pursuing the CEOs pet interest and
saving the whales.
CSR should be distinguished from the concepts such as
strategic philosophy & cause related marketing
which are valid businesses strategies and form an
element of an organizations CSR policy, but not a
central component of CSR.
CSR is a much more holistic approach to business, which
is designed to enhance corporate success because of its
relevance, rather than represent something
unconnected to an organizations core business.

 The origins of CSR

The history of CSR is almost as long
as that of companies.
East India Company
Tradition of benevolent capitalism in
UK
Barclays and Cadbury
Engels and Morris

 The answer to this was given by Mohandas

Karamchand Gandhi Father of the Nation
who gave the concept of Trusteeship.
Gandhiji gave importance to two quotations
through the concept of Trusteeship
"Enjoy the wealth by renouncing it."
"Excel in your work, produce wealth, take the minimum
which you need, leave the rest to the welfare of the
community."

Emergence of CSR & its Prevailing

Justifications
Strategically, CSR can become a source of
tremendous social progress as the business
applies its considerable resources, expertise
and insights.
The 4 prevailing justifications:
Moral Obligations
Sustainability
License to Operate
Reputation

The Mandatory
w.e.f 1stApril,2014, every company
private ltd or public ltd which either
has he foll
Or New worth of Rs.500 crores
Or Turnover of Rs.1000 crores
Or net profit of Rs.5 crores
Needs to spend atleast 2% of its
average net profit for the
immediately preceeding 3 financial
years on CSR activities

PRKASA (Methodology)

What
?
External
influences
Caux Round Table
Stephen Young
Global Executive
Director (CRT)
Intangile assets

Why
?
External
influences
The Reputation
Institute
3 dimension
(focusing on CSR)

How?
External
influences
3 Theatre given
by HBR
Philanthropic
giving

How? (Approach)

Philanthropi
c giving

ReTransformin
engineering
g
Value Chain ecosystem

SEE dimensions vis vis

Companies Act

Sanitation

Education

Employment

Combating HIV
aids, malaria and
other diseases
Reducing child
mortality and
improving
maternal health

Gender equity
Promotion of
education

Enhancing
vocational skills
Women
empowerment

Integrating Business & Society

The mutual dependence of corporations and society
implies that both business decisions and social policies
must follow the principles of shared value i.e. the choices
must benefit both sides.
To put these broad principles into practice a company must
investigate a social perspective into core frameworks:
a. Identifying the points of intersection
a.
b.

Inside-Out
Outside-in

b. Choosing which Social Issues to address

a.
b.
c.

Generic Social Issues

Value Chain Social Impacts
Social Dimensions of Competitive Context

c. Creating a corporate social agenda

a.
b.

Responsive CSR
Strategic CSR

Conclusion
The answer is YES mandatory CSR in India is a
win-win situation.
One of the key reasons is by following the
competitive advantage approach. (company
perspective)
Allocation of resources in terms of monetary
aspect, human capital and intellectual form.
(government perspective)
Customers are the ONLY contributors to the 3
financial criteria embarked upon by the Companies
Act 2013 on corporations. (customer perspective)

 CSR is an important business strategy because,

Consumers want to buy products from companies they trust
Suppliers want to form business partnerships with
companies they can rely on
Employees want to work for companies they respect
And NGOs increasingly want to work together with
companies seeking feasible solutions and innovations in
areas of common concern
Satisfying each of these stakeholders allows companies to
maximize their commitment to another important
stakeholder group their investors, who benefit most when
the needs of these other stakeholders groups are met.

CSR as in important business

strategy
Consum
ers

Investors

NGOs

Supplier
s

Employe
es

Recommendation
The sacred concept of CSR should not be restricted
to the large corporations.
MSMEs should be given an equal opportunity based
on their capacity to contribute, since they are the
backbone of the economy.
Why restrict to a 2% mandate given by Companies
Act, 2013?
If individuals, corporates believe in the concept of
sustainability, then we do not need a CSR mandate.
Willingness and belief of the individual towards
society is important and is the only thing which
matters.