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In today's interconnected world, businesses are no longer evaluated solely on their financial performance. Stakeholders increasingly assess companies based on their contributions to societal well-being and environmental sustainability. This shift underscores the importance of social responsibility in the corporate realm.
Social responsibility means the ethical obligation of individuals and companies to act in ways that benefit society. In the business context, it means operating in a manner that positively impacts communities, the environment, and stakeholders, beyond just seeking profits.
The social responsibility of a business means that companies should not only focus on profits but also consider their impact on society and the environment. It involves adopting ethical practices that contribute to social welfare while maintaining economic growth.
Businesses today face a growing expectation to balance profitability with social good. Many advocate for a broader purpose for a company beyond maximising profits. This encourages companies to embed Corporate Social Responsibility (CSR) into their core strategies, ensuring sustainable development and ethical conduct.
On 1st April 2014, India became the world’s first country to make corporate social responsibility a legal mandate. As per Section 135 of the Companies Act of 2013, certain companies must spend a minimum of 2% of their average net profits from the preceding three years on CSR activities.
Businesses can engage in various types of social responsibility that address different stakeholder needs and societal issues:
Economic Responsibility: Ensuring that the business readily ventures beyond profitability. Companies need to ensure that their economic decisions positively impact society by creating employment opportunities and supporting local economies.
Environmental Responsibility: Adopting sustainable practices to reduce their ecological footprint. Organisations should take active steps to minimise waste, conserve energy, and promote biodiversity.
Legal Responsibility: Complying with laws and regulations that govern business conduct. This includes an increased focus on labour laws, environmental regulations, and consumer protection.
Ethical Responsibility: Going beyond legal requirements to act fairly, transparently, and with integrity in their dealings. Businesses should follow ethical practices with employees, customers, and communities.
To effectively implement social responsibility, businesses should prioritise key areas that align with societal expectations and sustainable growth:
Environmental Sustainability: Reduce carbon footprint, conserve resources like water and energy, and minimise waste to protect the planet.
Community Engagement and Development: Support local communities through initiatives in education, healthcare, infrastructure, and social welfare.
Ethical Business Practices: Maintain transparency, fighting corruption, and ensure responsible marketing and fair competition.
Labour Practices and Human Rights: Uphold fair wages, safe working conditions, diversity, equity, and inclusion in the workplace.
Consumer Protection: Guarantee product safety, quality, data privacy, and ethical advertising.
Corporate Governance: Strengthen accountability and ethical decision-making at all organisational levels.
Several Indian corporations have set benchmarks in social responsibility through their impactful initiatives. Some of these are mentioned below:
Infosys Foundation, established in 1996, supports programmes in education, healthcare, women’s empowerment and environmental sustainability across all 28 states and five union territories in India. It has implemented the ‘Computers@Classrooms’ initiative—donating over 2,567 computers since 1999—and runs rural mentorship and fellowship schemes for underprivileged communities.
The Tata Trusts hold 66% of Tata Sons’ equity, channeling dividends into philanthropic work spanning education, healthcare, water conservation and rural livelihoods. Its Tata Water Mission, launched in 2015, provides safe drinking Water, Sanitation and Hygiene (WaSH) services to 6,000 villages.
Reliance Foundation’s Rural Transformation programme reaches 20 states and over 350 districts, empowering 14.6 million people through agriculture, skill building, fisheries and water security initiatives. In response to COVID-19, it had set up testing facilities, PPE production, special hospital wards and emergency food distribution.
Anand Mahindra launched ‘Project Nanhi Kali’ in 1996 via the K.C. Mahindra Education Trust and Naandi Foundation. This project has supported over 5,90,000 underprivileged girls across 15 states with academic, material and social mentoring to complete ten years of schooling.
Since CSR rules came into force in 2014, companies under the Bajaj Group have contributed more than ₹1,300 Crores to skilling, education, health, livelihoods and water conservation projects. In 2024, its ‘Bajaj Beyond’ initiative has pledged ₹5,000 Crores over five years to expand youth skilling and community development programmes nationwide.
The social responsibility of business is an evolving concept that balances profit-making with ethical and sustainable practices. Companies are becoming responsible corporate citizens by addressing environmental, social, and governance issues while fostering economic growth. This holistic approach also enhances brand loyalty, employee morale, and long-term profitability.
By focusing on areas like environmental sustainability, community development, ethical conduct, and consumer protection, businesses can create shared value for all stakeholders. As the global business landscape shifts, embracing social responsibility is no longer optional but a strategic imperative for sustainable success.
Yes, social responsibility towards business can enhance profits by improving brand reputation, customer loyalty, employee satisfaction, and operational efficiencies. This can translate into higher sales and cost savings.
Milton Friedman famously argued in 1970 that the primary social responsibility of business is to increase its profits, as long as it operates within legal and ethical boundaries.
Social responsibility of business usually begins with the company’s management, particularly the CEO or owners, who set the tone and ensure CSR principles are embedded throughout the organisation.
While some aspects of social responsibility, like compliance with laws, are legal obligations, broader CSR activities are generally voluntary and go beyond legal requirements.
In India, CSR is mandatory only for certain companies meeting specified financial thresholds under the Companies Act, 2013. Others may voluntarily adopt CSR practices as part of their social responsibility towards business.
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