Day 56 – Q 1.Is it ethical to have compulsory corporate social responsibility (CSR) law? Critically comment.

1. Is it ethical to have compulsory corporate social responsibility (CSR) law? Critically comment. 

क्या अनिवार्य कॉर्पोरेट सामाजिक जिम्मेदारी (CSR) कानून नैतिक है? समालोचनात्मक टिप्पणी करें।

Introduction:

Corporate Social Responsibility (CSR) is referred as a corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare and to promote positive social and environmental change.

Body

The CSR law mandates an expenditure of 2% of net profits by the corporates. However, recent estimates have shown that corporates spent only 30-40% of the amount that was expected to flow in.

Is CSR unethical

• Many times, CSR benefits have been directed in a way to achieve certain financial motives. Brand and image building and buying customer’s faith to increase its market share are commonly used tactics.
• CSR has been used to cover one’s unethical and illegal deeds like engaging in rampant exploitation of natural resources like forest, land and water and in return providing meagre benefits for the community to buy their loyalty.
  Corporates pay their gains through various taxes including corporate tax. surcharges etc. CSR may seem to be an additional forced burden on them and hence unethical.
• CSR has also been seen in areas where there is maximum visibility. This explains why the eastern India lags behind in CSR contribution and sectors like extreme hunger, MMR, IMR, etc receive minimum to no contribution.
• In the name of CSR, a number of NGOs have been established to evade taxes.
• Moreover, the aim is on spending rather than quality of spending, eg building schools rather than quality education. Some companies even give the amount to an NGO who return the amount back after deducting a commission. 
• Social responsibilities should come from within and not forced compliance.

Is CSR ethical?

• However, corporates use/exploit excess of natural resources, labour for their personal gains. They owe certain responsibility towards nature and its people. Thus, the ethical aspect of CSR would involve a sense of dedication and responsibility towards the welfare of the locality. It would entail a sense of compassion, empathy and synergy of what the community desires from the company and what the company is capable of doing for them. Cities like Jamshedpur are a true reflection of what CSR truly desires.
• It gives the corporates an opportunity to think else then their own personal gains.
• It helps to fulfil the gaps/spaces in government spending. ex-many companies are doing amazing work by building toilets under Swachh Bharat Abhiyaan and supplementing govt efforts.
• It helps bring innovative ideas to solve social problems.

Conclusion

So, For CSR to truly succeed, corporates have to assume a more ethical role rather than mere profit motive. After all, money may belong to some but resources belong to all and must serve all. CSR helps in realization of this principle and helps achieving the utilitarian philosophy of maximum good to maximum people.