Social Responsibilty by businesses is a commitment to improve community's well being through discretionary business practices and contribution of corporate resources.
It is said that firms only exist because of it's invaluable services to the society.Since the firms use the resources and inputs of the society,they must give back to the society.This leads to increase in goodwill,customer loyalty and avoid government intervention.
It is a multi layered concept that can be differentiated into economic,legal,ethical and philanthropic responsibilities and such expectations that the society has from the organisation at a point of time.This suggests that the business does not only have to fulfill it's basic responsibilities like economic and legal but also has to be ethical and philanthropic voluntarily in the long run.
1.Economic Responsibility includes earning profits,using resources effectively,generating funds,fairly paid jobs and increasing market value of the firm.
2.Legal Responsibility includes paying taxes,license fees,abiding by labor laws,company laws,etc
3.Ethical Responsibility includes fair trade practices,not getting involved in corporate frauds and scandals and using environment friendly methods for service.
4. Philanthrophic Responsibility includes contributing to healthy environment,generating employment and helping the weaker section of the society.
But after the Companies Act 1956, it was made compulsory for the companies whose turnover exceeds ₹200 crore or have a net profit of more than ₹5 crore. There are some other provisions as well regarding what companies have to compulsorily indulge in social activities. Some amendments are also made in the Companies Act 2013 and concept of Corporate Social Responsibilty was broadened.
The Act specifies the kind of activities which the companies may indulge into to bring social development and improve the social conditions of an economy. The companies may undertake to improve the living conditions of a certain village, to help people get the basic amenities like clean drinking water, shelter, etc.
The companies may also indulge into activities relating to protecting the environment like cleaning rivers, lakes, ponds and installing water treament plants where they dump poisonous water. Protecting the flora and fauna of the areas where their plants are established. Indulging into activities such as afforestation which improves the surrounding environment as well as the lives of the people.
The companies earn millions and billions of revenue by using the society's resources and thus are obliged to spend some portion on the betterment of the society. Thus companies investing in technology to improve the life conditions of the people is also a part of CSR. Many companies like ITC undertake the projects relating to the education of children living in tribal areas or coming out of poor families to support them.
These four pillars help each individual company stand strong above the rest. By finding out one’s impact on the environment and through that, finding new ways to limit them, most companies working in the FMCG sector have come up with many innovative solutions for many of the problems faced by India in today’s world. This is a great way to find solutions to the problems at the source itself. Sustainable development in India is a broad topic, with myriad initiatives being carried out under it. When a company is sensitive to the land, air and water pollution that is caused due to its intervention and does its best to reverse these effects, we start seeing change in the world around us.