Context: Reimagining CSR is necessary to present a better society for future generations. The current trend creates the hope that the change is coming.
Significance of Corporate Social Responsibility:
In the best interest of all stakeholders: Section 166 of the Indian Companies Act 2013 stipulates:
“A director of a company shall act in good faith to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community, and for the protection of the environment.”
Responsibilities of the Directors:
Evaluate the impact: of strategies on employees, neighbourhood communities, and social culture:
For E.g. Public pressure on Facebook to stop political advertisements before the presidential election in the US.
Ensure minimum negative externalities and minimum negative impact on the environment.
Support to local neighbouring communities:
This is reflected in Section 135 of the Indian Companies Act 2013 which mandates 2% of their average net profit in the past 3 years to be used for CSR activities.
The company should give preference to the local area and areas around it where it operates.
Improves ‘Meaningfulness’ of jobs:
Recent research shows that the “meaningfulness” quotient of jobs increases when employees see top management’s sincerity in fulfilling CSR and adopting ethical practices.
The emergence of Corporate Irresponsibility:
Unethical Practices: Companies that fail to fulfill CSR and adopt unethical practices in dealing with customers, vendors, and other stakeholders are labeled as irresponsible companies.
Failure to retain talent and image of the company:
Empty rhetoric: Unless the company demonstrates sincerity in eradicating social evils, the company remains in suspicion in the eyes of employees and other stakeholders.