The United Nations Industrial Development Organisation defines Corporate Social Responsibility as a management concept whereby companies integrate three major areas of concern- people, profit and planet, the triple bottom line approach. According to the Ministry of Corporate Affairs, GOI, Corporate Social Responsibility “is a collective responsibility to build a society which supplements Government’s efforts to achieve inclusive growth which includes broad-based benefits and ensures equality of opportunity for all.”
Large corporations and industrial activities are often thought to be at odds with the cause of environmental protection. Since the industrial revolution, the activities of corporations have been linked to increased air, soil and water pollution, introduction of harmful toxins into the environment, increased waste production, deforestation, habitat destruction, accelerated climate change etc. A Carbon Majors Report (2017, CDP) shows that just 100 active fossil fuel producers are linked to 71% of industrial greenhouse gas emissions since 1988, and 50% of global industrial emissions can be traced back to just 25 corporate and state producers. As a more specific example, according to a WHO report “Every year the tobacco industry costs the world more than 8 million human lives, 600 million trees, 200,000 hectares of land, 22 billion tonnes of water and 84 million tonnes of CO2.” Earlier, in 2010, a study conducted by Trucost, reported on by the media, estimated that 2.2 trillion USD worth of environmental damage was done by the world’s top firms.
Given this context, there is a growing sentiment that corporations have a responsibility to make a more positive impact on their communities and offset some of the negative effects of their actions. Corporations, on the other hand, juggle a myriad of different responsibilities. Perhaps the most emphasized of these is the economic responsibility they have towards their shareholders to remain profitable enterprises.
Then, they have legal obligations, relating to consumer rights, transparency, accountability, environmental standards, regulations, etc. that must be fulfilled. Lastly, they may engage in philanthropic activities based on their own discretion. Corporate social responsibility, however, goes beyond charity on a whim.
It also involves an analysis of the ethical responsibilities of a corporation. India enacted a mandatory CSR law in 2014, namely the Companies Act, 2013. Trends also show that CSR may be helpful for a company’s image and business. A study by Cone Communications (A Porter Novelli Company) finds that 87% of Americans said that they will purchase products from a company that advocated for an issue they cared about.
Thus, CSR policies present an opportunity for companies to either distribute funds to organisations working for environmental causes or to conduct their own activities. They may also choose to fund research into technological and innovative solutions to ecological problems.
According to data by the Ministry of Corporate Affairs, GOI, in 2020-2021, around Rs.26189.8 Cr was spent on CSR by about 20789 companies. Of this amount, Rs.1335.72 Cr was spent on causes related to environment, animal welfare and conservation of resources; Rs.160.85 Cr was spent on the Swachh Bharat Kosh; and Rs.13.39 Cr was given towards the Clean Ganga Fund.
CSR initiatives may have the potential to make steady and significant positive changes. However, there are also legitimate concerns of greenwashing where companies could make claims of being eco-friendly, as a marketing tactic without it translating into ground reality. The UN Secretary-General, António Guterres, said at COP27, that net-zero commitments can have loopholes wide enough to “drive a diesel truck through.” This could be challenged with vigilance from consumers and authorities. This will go towards ensuring that CSR activities are meaningful and are not used to deflect from a company’s negative effects on the planet, if any.
The concept of corporate social responsibility must also be looked at in a broader context of political, social, and economic organisation; utilisation of resources; and governance issues. Who has the right to say what corporations are responsible for and how do we measure their impact on society?
When it comes to environmental issues, it is essential to act upon the existing research and evidence. There is also a need for further research into quantifying the direct impact of corporations which would aid in making a solid case for holding them accountable. This would help us go beyond corporate social responsibility and enable the public and, even companies, to ask the government for fair policies.