APP Users: If unable to download, please re-install our APP.
Only logged in User can create notes
Only logged in User can create notes
General Studies 2 >> Governance
audio may take few seconds to load
CORPORATE SOCIAL RESPONSIBILITY (CSR)
CORPORATE SOCIAL RESPONSIBILITY (CSR)
1. Context
A decade ago, India became the first country to legally mandate Corporate Social Responsibility (CSR). Section 135 of the Companies Act 2013 outlines the rules and regulations governing CSR. According to the National CSR Portal, from 2014 to 2023, ₹1.84 lakh crore of CSR funds were disbursed. With the extent of contributions increasing, a question arises: how can CSR help agriculture?
2. Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) refers to the practice where businesses voluntarily take actions to contribute positively to society and the environment. CSR involves going beyond profit-making to address social, ethical, and environmental concerns, creating a balance between economic, social, and environmental goals.
Environmental Responsibility: Companies engage in sustainable practices, such as reducing carbon emissions, managing waste, and conserving natural resources.
Ethical Business Practices: CSR encourages ethical operations, including transparency, fair trade, and responsible sourcing.
Community Engagement: Many companies invest in community welfare by supporting local education, healthcare, and infrastructure development.
Employee Well-being: CSR also includes providing safe working conditions, fair wages, and professional growth opportunities
3. CSR's Contribution to agriculture
Around 47% of India’s population relies on agriculture for employment, a share far above the global average of 25%. Agriculture contributes about 16.73% to India’s GDP. With food production now relatively stable, current concerns focus on issues like the degradation of natural resources, stagnating farmer incomes, and the impacts of climate change.
Recently, corporations have shown increased interest in supporting climate action and sustainability in India’s agricultural sector through their CSR budgets.
A CSR outlook report from last year indicated that 23% of surveyed companies prioritized “environment and sustainability” in their CSR initiatives. Indian agriculture today faces urgent needs for capital investment and infrastructure development, areas where CSR efforts have already made an impact and are expected to continue.
Examples include establishing grain banks, farmer training centers, agriculture-based livelihood projects, water conservation programs, and energy-efficient irrigation systems.
The recent shift towards sustainable and modern agriculture further underscores the role CSR funding from the private sector can play in supporting these efforts
4. Challenges
A significant challenge limiting CSR's impact on agriculture is the lack of a comprehensive system to consistently track and categorize funds directed specifically toward agriculture-related projects.
Current reporting methods do not emphasize agricultural CSR initiatives distinctly. According to Schedule VII of the Companies Act, CSR activities that support agricultural sustainability may fall within 11 of the 29 categories for CSR spending.
These categories include areas like gender equality, agroforestry, hunger and poverty eradication, technology incubation, animal welfare, environmental sustainability, livelihood enhancement, resource conservation, rural development, reducing socio-economic inequalities, and women’s empowerment.
However, these broad categories cover diverse activities, many unrelated to agricultural sustainability, making it difficult to isolate and assess funding specifically for agriculture.
Given agriculture’s critical role in India’s economy and its alignment with national goals for sustainable growth and a just transition, defining agriculture as a standalone CSR sector is essential.
Shifting the reporting framework to focus on specific sectors receiving funds could enhance fund targeting, improve accountability, and ensure meaningful contributions.
Identifying key sustainability challenges in agriculture and directing resources accordingly would also support measurable progress in this vital sector
5. Advantages of Corporate Social Responsibility
Business Benefits
CSR enhances both a company's brand reputation and its financial performance. Initiatives like improving energy efficiency can cut operational expenses, often resulting in long-term savings.
Consumers increasingly prefer brands that align with their own values, and CSR policies allow companies to visibly uphold these values, fostering customer trust and loyalty that strengthens competitive advantage.
CSR can also attract skilled talent and boost employee satisfaction, as more people seek employers with values that mirror their own. Furthermore, addressing ethical and social responsibilities proactively can help avoid legal issues, fines, and potential damage to reputation.
Consumer Benefits
CSR efforts promote responsible consumption by providing consumers with products and services aligned with ethical values and educating them on sustainability and ethical choices. These initiatives encourage companies to prioritize rigorous testing, quality control, and safety measures, thereby reducing the risk of defective or harmful products reaching the market.
Environmental Benefits
CSR positively impacts environmental health by encouraging sustainable practices and accountability for environmental impacts. Through CSR, companies can reduce greenhouse gas emissions, work toward net-zero goals, conserve natural resources, lower pollution, and minimize ecosystem disruption. Additionally, CSR often promotes investment in research and development for eco-friendly products and practices.
Societal Benefits
CSR supports local communities and addresses key societal issues like poverty, inequality, and environmental challenges. By creating jobs and fueling economic growth, CSR initiatives benefit society as a whole.
Companies that lead in ethical practices inspire others, generating a positive ripple effect, and a commitment to ethical behavior at the corporate level strengthens ethical standards across society.
6. Way Forward
Corporate Social Responsibility (CSR) offers a wide array of benefits not only for businesses but also for consumers, the environment, and society at large. For businesses, CSR enhances brand reputation, fosters customer loyalty, and attracts top talent, while also mitigating potential legal risks. Consumers benefit by having access to ethically produced products that align with their values, while CSR-driven practices help ensure safety and quality. Environmentally, CSR encourages sustainable practices that contribute to a healthier planet, and socially, it supports community development and tackles pressing societal issues. As companies increasingly recognize the importance of responsible and ethical behavior, CSR becomes an essential driver for positive change, benefiting all stakeholders and creating a ripple effect of goodwill that shapes a more sustainable and equitable future
For Prelims: Corporate Social Responsibility (CSR), Companies Act, 2013
For Mains: Detailed analysis, critical evaluation, and real-world applications of CSR
