This article is written by Ankita Wani of, A.K.K. New Law Academy, Pune, an intern under Legal Vidhiya
The concept of Corporate Social Responsibility has gained widespread recognition as an effective means for achieving sustainable development within organizations. In today’s society, CSR plays a crucial role in a company’s growth, especially when it comes to taking care of the communities they operate in, particularly in rural areas, not only does it benefit the community, but CSR also. It has a significant environmental impact that businesses must consider based on their operations.
The motivations for implementing CSR differ, with some driven by a sincere concern for their environment and society, which ultimately serves as their source of human capital and essential raw materials. In contrast, others view it as a critical factor in garnering societal acceptance for their operations. This is particularly true for companies operating in remote areas, such as the mining and oil and gas industry.
This article covers the concept of corporate social responsibility and sustainable development, the revolution of CSR and sustainable development, and the relation between sustainable development and CSR, Challenges and best practices of CSR in India also have been covered.
Corporate social responsibility, sustainable development, Rio Earth Summit, Interlink between CSR and sustainable goals, Challenges with today’s era.
An important aspect of corporate social responsibility is Sustainable Development. It is broadly defined as the advancement of economic development while maintaining the quality of environmental and social systems. Incorporating Environmental & Social (E&S) issues into development is important because environmental resources provide a basis for social and economic development. The principles of sustainable development are important in all industrial and commercial sectors, as all activities have the potential to influence social and environmental welfare quality.
The financial sector is of particular importance, as this sector can affect many projects and the development trends that result from them. There is much that the financial sector can do to assist efforts to achieve sustainability. Internal efforts to make day-to-day operations cleaner, extra efficient, and supportive of societal structures can help. Integrating various issues into strategic operations is also important. In this way, financial organisations not only safeguard that domestic activity is sustainable, but they can also help finance itself to have more sustainable development.
Most companies believe in being and becoming good corporate citizens. They view the value of handling back to the community which contributed to their success. CSR is no longer mere philanthropy. Though still largely voluntary, it is seen as imperative for sustainable business.
There is emerging evidence that socially responsible investment by ethical companies brings in higher returns on a long-standing basis. Large public sector companies are investing up to five percent of their profits towards social uplift and community development. Most successful enterprises, whether public or private, believe in giving back something to the community that contributed to their prosperity. Today, India can be legally pleased to have had the second largest number of companies from any country subscribing to Global Company. Several public sector companies have joined together to form the Global Compact Society of India.
The goal of this article is to know: –
- About the concept and evolution of CSR and Sustainable development.
- about the concept of CSR and it’s interlinkage with Sustainable development.
- To know about the evolution of CSR and Sustainable development.
- This article focuses on the development of CSR and Sustainable Development.
- The purpose of this article also to learn about the challenges and limitations faced by the Sustainable development goals.
WHAT IS CSR?
Corporate Social Responsibility (CSR) is viewed as a wide-ranging set of policies, practices and programs that are combined into business operations, supply chains, and decision – making practices throughout the organization, wherever the organization does business and consist of liability for current and past actions as well as future influences. CSR comprises addressing the legal, ethical, commercial and other expectations society has for business, and making decisions that fairly balance the claims of all key stakeholders.
Effective CSR aims at “attaining commercial success in techniques that honour ethical values and respect people, communities, and the natural environment.” Simply put it means “what you do, how you do it, and when and what you say.”
Corporate social responsibility (CSR) is a system of corporate self-regulation combined into a business model. Several terms have been exercised interchangeably with CSR. CSR policy purposes as a built-in, self-regulating instrument whereby business monitors and ensures its active acquiescence with the spirit of the law, ethical standards, and international norms.
The aim of CSR is to hold responsibility for the company’s actions and inspire a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public domain. Furthermore, CSR absorbed businesses would proactively indorse the public interest by encouraging community growth and development, and voluntarily eradicating practices that harm the public sphere, regardless of legality.
CSR is the thoughtful inclusion of public concern into corporate decision-making that is the essential business of the company or firm, and the respecting of a triple bottom line: people, planet, profit.
Nature of Corporate Social Responsibility
The field of corporate social responsibility (CSR) comprises a wide array of diverse issue areas, standards, initiatives, and both hard and soft law mechanisms, all of which seek to define the nature of corporate responsibility and accountability for human rights, labour rights, and environmental issues.
Though both business and non-business organizations should be responsible towards society, the focus is more on business firms to look after social interests. Companies have specific policies and programme to look after interests of their employees and other stakeholders. These programmes are advised from the need to do what is right and just for the society as a whole. Social goals are discharged by organizations which are economically sound. A financially impracticable enterprise cannot look after interests of the society. In fact, costs of social responsibility are forwarded to consumers in the form of increased prices of goods and service.
Corporate social responsibility is not just the obligation of the top-level managers. Managers at all levels are involved in discharging of corporate social responsibilities. Corporate social responsibility is not catering to the interests of society once or twice. It is important for organizations to continuously engage in social issues if they want to survive and grow in the long-run. The economic and the social issues go hand in hand.
Sustainable Development begins with a company’s value system and a principled approach to doing business. This intends operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. Responsible businesses endorse the same values and principles wherever they have a presence, and know that good practices in one area do not compensate harm in another.
By integrating the Global Compact principles into strategies, policies and procedures, and establishing a culture of integrity, companies are not only upholding their basic responsibilities to people and planet, but also placing the stage for long-term success. Sustainable Development is the discipline by which companies align decision-making about the allocation of capital, product development, brand and sourcing with the principles of sustainable development, in a resource-constrained world.
The growth of sustainable development came about because of the understanding that businesses, as well as governments and NGOs, need to adapt their operations to meet the global environmental and social challenges that we are facing with increasing urgency. Businesses that occupy in sustainable development strategies are thinking about the long term and how global realities will touch the need for, or relevance of, their product or service.
A new sustainable development paradigm would challenge both the viability and desirability of conservative values, economic structures and social arrangements. It would offer a positive farsightedness of a civilized structure of globalization for the whole human family.
DEFINING A NEW PARADIGM
When the World Commission on Environment and Development displayed their 1987 report, Our Common Future, they pursued to address the problem of conflicts between environment and development goals by framing a definition of sustainable development: Sustainable development is development which confronts the needs of the present without co-operating the ability of future generations to meet their own needs.
‘Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs’
THE RIO EARTH SUMMIT AND AGENDA 21
In June, 1992, in Rio de Janeiro, councils from 179 countries came together for the United Nations Conference on Environment and Development, widely known as the Rio Earth Summit. One of the major agreements signed during this conference was a programme of action called Agenda 21.
The 900-page document defines first steps towards originating Sustainable Development across local, national and international levels as the world moved into the 21st century. Signatories promised to pursue action in four domains:
• Social and Economic Dimension, such as battling poverty and promoting sustainable urban planning;
• Conservation and Management of Resources, such as preservation the oceans fisheries and combating deforestation;
• Strengthening the Role of Major Groups, such as women, local governments and NGO’s; and
• Means of Application, such as transfer of environmentally-sound technology.
Local authorities’ schemes in support of Agenda 21, calls for the contribution of local and regional governments and civil society in the development of Local Agenda 21. Co-ordination in the sustainable development effort from the international level down to local municipalities will ideally make every action more efficient.
EVOLUTION OF SUSTAINABLE DEVELOPMENT
The origin of the term Sustainable Development lies in the 18th century and was actually used in forestry. On the other world the term sustainable development began to gain wide acceptance in the late 1980s, after its appearance in Our Common Future, also known as The Brundtland Report.
The result of a UN convened commission created to propose “a global agenda for change” in the concept and practices of development, the Brundtland report signalled the urgency of rethinking our ways of living and governing. To “responsibly meet humanity’s goals and aspirations” would require new ways of considering old problems as well as international co-operation and co-ordination.
The World Commission on Environment and Development, as it was formally called, sought to draw the world’s attention to “the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development.”
In establishing the commission, the UN General Assembly explicitly called attention to two important ideas:
- The well-being of the environment, of economies and of people is intricately linked.
- Sustainable development involves co-operation on a global scale.
At the fundamental of sustainable development is the need to consider “three pillars” together:
- The economy and
- The environment
Sustainable Development as Basis for Corporate Social Responsibility
The World Business Council for Sustainable Development defines CSR as “the enduring assurance by business to behave ethically and contribute to economic development while cultivating the quality of life of the workforce and their families as well as of the local community and society at large.”
According to this definition, business societies have obligations to support to the development of their employees, their families, the local community and wider society to advance their quality of life and thus to try to ensure sustainable economic development.
So, all over the world, corporate social responsibility (CSR) has become more and more prevalent in the business community. In many developed countries, CSR has taken on the character of deliberately organized actions that benefit all levels of society, and it has grown from entrepreneurial initiatives to state policy.
In many developed countries, CSR now provides assistances for stakeholders’ communities as well as for the government. CSR permits a business to respond quickly to the developing needs of a society, whether they are economic, environmental, or social problems. The government is a secondary beneficiary, as successful corporate responsibility practices reduce the government’s burden for responding to a wide range of matters.
CSR & SUSTAINABLE DEVELOPMENT: INTERLINKAGE
An interesting feature of the more recent statements on CSR is the extension of concepts originated from International environmental law to the corporate framework. Under the OECD Guidelines, for example, multinationals are compulsory to have respect for the ‘wider goal of sustainable development’ and to ‘assess, and address’ the environmental impacts of processes and products finalized their ‘full life cycle.
As noted above, rules on warnings, information-sharing and consultation are already part of customary international law obligations of states. Of course, it does not automatically follow from this that these obligations can or should be extended to apply to multinationals directly.
However, the fact that these principles have been repeatedly endorsed in a series of instruments relating to multinationals, plus their relative lack of ambiguity, makes it quite possible that they will emerge as part of the customary law of CSR. At the very least, it is likely that these kinds of provisions will play an important part in any future treaty-based solutions.
The ‘precautionary principle’, already a vital principle in international environmental law,75 is also becoming persuasive as a way of defining the scope of multinationals’ obligations in relation to health, safety and environmental issues, as evidenced by its adoption by the Global Compact as one of the ten essential ‘principles’ to be observed by companies.
The OECD (Organisation for Economic Co-Operation and Development) Guidelines for Multinational Enterprises are government expectations for good corporate practice, primarily addressed to enterprises based in the countries that adhere to them. But the Guidelines apply to worldwide operations of companies based in adhering countries. And more countries are now in the practice of adhering to them. The Guidelines are comprehensive, with chapters shielding general policies, disclosure of information, employment and industrial relations, environment, combating bribery, consumer interests, science and technology, competition and taxation.
Corporate Environment Reporting
Environmental reporting is used to deliver information to present and potential stakeholders in making logical decisions. The information should be comprehensible to those who have a reasonable thoughtful of business and economic activities as well as of environmental impacts caused through these activities and who are willing to study the information with fair diligence.
Corporate environmental recording is the process by which a corporation communicates information regarding the range of its environmental activities to variability of stakeholders including employees, local communities, shareholders, customers and government and environment groups.
A corporate Environmental report is an instrument to communicate a company’s environmental performance. The speedy spread of published environmental reports has to be considered as a part of the general change in company attitudes regarding disclosure of information on environmental issues.
The increasing importance of a strategic approach to the environment permits companies to define strategies and investment programmes with a large time scale and to increasingly involve stakeholders in environmental management the decision to report on environmental issues usually coincides with inventions in management systems involving all the business units.
The environmental report is therefore the slope of the iceberg, the rest of which is constituted by the system of controlling and planning the most noteworthy strategic issues of environmental management.
Corporate environment reporting assists many different purposes for different stakeholders: –
I. It authorises the people and information they need to hold corporation accountable, and encourage stakeholders more fully into the process of corporate goal setting.
II. It permits the investor to control the power of capital market to promote and assure environmentally superior business practices.
III. It allows companies and stakeholders to compute company’s adherence to the standard set forth in their statement of environmental principle, and their various goals and objectives.
IV. Environmental risk in the internal part of the risk realising every organization.
Reporting can help to recognize such risk, and where they could arise, and thus prevent damage to reputation from negative publicity on an environmental issue.
The main motive for incorporation of environmental information within the annual reports is to increase stakeholders ‘awareness of the company’s activities, performance, and interactions with the environment. Annual report has been the fundamental means of corporate reporting and it is the fundamental source of environmental reporting. The usage of annual reports has developed over the years; environmental information was reported in one of the sections in the report and later as separate section.
In this article have tried to portray the historic development of CSR and Sustainable Development, notions of progress, growth, development and sustainability in different social, economic and philosophical contexts from antiquity to post modernity. In the second half of the 20th century, because of the disappointment of economic growth to evenly distribute wealth across the globe and because of the emergent ecological crisis, it became clear that earlier notions of progress, growth and development had become unachievable.
Sustainable development has an ancient history in human society. Nevertheless, in this era of modernity it continues to be misunderstood and interpreted somewhat arbitrarily amongst individuals, organizations and governments, often in favour of one’s own agenda and interests. This is arguably one of the objects that little progress has been made in the practical implementation of its original meaning, and why in many cases social and environmental situations have deteriorated.
- https://onlinelibrary.wiley.com/doi/abs/10.1002/csr.1336 https://www.princeedwardisland.ca/sites/default/files/publications/principles_of_sustainable_development.pdf
 Sarah Altschuller, Dan Feldman and Lara Blecher, Corporate Social Responsibility, American Bar Association, The International Lawyer, Vol. 42, No. 2, International Legal Developments In Review: 2007 (SUMMER 2008) p- 489. Also available at www.jstor.org.
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