Corporate Social Responsibility (CSR) has become an important component of contemporary business ethics, making sure that corporations are run in a sustainable manner while keeping in mind their environmental and social footprint. Multinational corporations (MNCs) incorporate CSR into their operational systems nowadays to tackle international issues, such as climate change, human rights, and ethical management. This article discusses the history, intent, legal framework, and use of CSR in multinational companies while emphasizing firms that implement CSR initiatives actively. The idea of CSR traces its roots to the early 20th century when industrialists such as Andrew Carnegie and John D. Rockefeller focused on philanthropy and ethical business. The institutionalization of CSR, however, started in the 1950s with Howard Bowen’s book, Social Responsibilities of the Businessman, which introduced the concept that corporations have more than profit-making responsibilities. The 1970s and 1980s then witnessed more advances with the emergence of stakeholder theory, which highlighted that companies must have in mind the interests of employees, customers, suppliers, and communities. In the 1990s and 2000s, CSR became a mainstream corporate strategy, and organizations like the United Nations encouraged sustainability through tools such as the UN Global Compact.
WHY WAS CSR INTRODUCED
Corporate Social Responsibility serves as the bridge of unification between profit and social responsibility, whereby it ensures that Multinational Corporations (MNCs) and Companies pay back to the society while pursuing financial growth. Implementing moral business conduct in addition to openness promotes shareholder trust, and as a result, lowers the risk of unethical practices. Activities to promote environmental sustainability, like cutting carbon prints, and utilizing green energy can help to abate change. In addition, worker welfare programs such as reasonable compensation and employers-oriented schemes and mental health regimes, enhance productivity and ethics in the workplace. CSR also contributes to social development through emphasis on education, healthcare and skill development programs. That is, effective CSR policies build corporate reputation and customer trust, which leads to long-term success.
CSR AND ITS RELATION TO ENVIRONMENT LAW AND CORPORATE LAW
Corporate Social Responsibility (CSR) in India is governed by a well-established legal framework, such as corporate governance and environmental sustainability. The Companies Act, 2013 transformed India into the first nation in the world to make CSR expenditure obligatory, with the companies having a net worth of ₹500 crore, a turnover of ₹1000 crore, or a net profit of ₹5 crore being obligated to spend a minimum of 2% of their three-year average net profits on CSR initiatives The legislation fosters corporate responsibility and guarantees business for social good. Also, the Securities and Exchange Board of India (SEBI) requires the top 1000 listed entities to disclose Business Responsibility and Sustainability Reports (BRSR), promoting transparency and sustainable business practices.
CSR in India also overlaps with environmental law, with the corporate initiatives set side by side with sustainability objectives. India’s CSR policies are designed with a view to enabling the United Nations’ Sustainable Development Goals (SDGs) with special focus on environmental conservation, sustainable consumption, and action against climate change. The nation’s involvement at Conference of Parties (COP) meetings under the ‘United Nations Framework Convention on Climate Change’ (UNFCCC) reflects its dedication to international climate action. During ‘COP21’ (Paris Agreement, 2015), India committed to curtailing its carbon footprint by 33-35% based on 2005 levels and enhanced use of clean energy. At COP26 (Glasgow, 2021), India committed to net-zero emissions by 2070 and vowed to raise its non-fossil fuel capacity to 500 GW by 2030. At more recent ‘COP28’ (UAE, 2023), India prioritized the role of corporates in climate finance, calling for green technology and sustainable investments6. CSR activities are also shaped by major environmental acts, such as the Environmental Protection Act, 1986, that requires pollution control and conservation of biodiversity and the Energy Conservation Act, 2001, that motivates firms to pursue energy-efficient strategies and minimize greenhouse gas emissions.
CURRENT APPLICATION OF CSR IN INDIA
CSR is also changing with companies coming under more pressure from consumers, investors, and government agencies. The biggest trend in CSR is the growth of Environmental, Social, and Governance (ESG) investments, with investors opting for companies with solid sustainability processes and ethical leadership. Further, most corporations are embracing carbon neutrality targets; for example, Microsoft has committed to becoming carbon negative by 2030, and Google wants to be completely run on carbon-free power by 2030. Diversity and inclusion is also another key function of CSR now with firms instituting policies to enhance gender equality, workplace equity, and respond to social justice issues. In addition, companies are employing technological integration to increase CSR impact, applying AI and blockchain technologies for transparent supply chain management, ethical labour practices, and carbon footprint tracking. These advancements reflect the growing influence of CSR in defining responsible business practice while ensuring long-term sustainability.
EXAMPLES OF MNCs AND CORPORATIONS THAT HAVE IMPLEMENTED CSR IN INDIA
Tata Trusts and Tata Steel Development Society (TSRDS)
Tata Group spends 500 crores annually, with their focus mainly on education, health, sustainable development and skill development. The “Tata Power’s Club Energy” promotes energy conversion among students, while “Tata Steel’s Green School Project” educates children on climate change. Moreover, through the “Swachh Bharat Abhiyan”, Tata Companies, amongst others, have contributed towards the construction of toilets and hygiene awareness campaigns.
Infoys Limited
Infosys spends 400 crores annually towards CSR. The “Infosys Science Foundation” supports scientific research and innovation. Further, the company funds the “Mid-day Meal Program” in partnership with ‘Akshay Patra.’ Infosys has also committed to use of 100% renewable energy and has reduced carbon footprint by 60%, which aligns with the Sustainable Development Goal (SDG) of reducing global carbon dioxide emissions by 45% by 2030, and subsequently, achieving net-zero emissions by 2050.
Hindustan Unilever Limited (HUL)
This company had launched “Project Shakti” which is an initiative t train rural women as micro-entrepreneurs, so that they can earn a livelihood by selling Unilever products. Further, HUL promotes plastic recycling, sustainable packaging and water conservation projects.
Microsoft India
“Project Shiksha” has provided IT education to over 7 lakh students all over India. Further, the company contributed around 100 crores worth of technology to hospitals and education centres during the covid 19 pandemic.
Google India
“Internet Saathi”, an initiative in partnership with Tata Trusts has been successful in training 30 million rural women in digital literacy.
Mahindra & Mahindra
“Project Nanhi Kali” supports education of bout 500,000 underprivileged girls in rural India. “Mahindra Hariyali Initiative” has planted over 18 million trees across India. Lastly, the “Rise for Good Program” has provided vocational training to underprivileged youth.
Corporate Social Responsibility is no longer an optional business practice but a necessity for sustainable growth. The implementation of CSR in India is in harmony with environmental law and corporate governance rules so that companies make their contribution towards sustainable development while remaining profitable. With changing legal rules and growing awareness among consumers, CSR will further change the face of responsible corporate governance.
Author: Ananya Nair, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.
REFERENCES
- Howard R. Bowen, Social Responsibilities of the Businessman (Harper & Row 1953).
- Archie B. Carroll, The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, 34 Bus. Horizons 39 (1991).
- John Elkington, Cannibals with Forks: The Triple Bottom Line of 21st Century Business (Capstone 1997).
- United Nations Global Compact, https://www.unglobalcompact.org/
- European Commission – Corporate Social Responsibility, https://ec.europa.eu/growth/industry/sustainability/corporate-social-responsibility_en
- Companies Act, 2013, § 135 (India), available at https://www.mca.gov.in/.
- Securities and Exchange Board of India (SEBI), Business Responsibility and Sustainability Report (BRSR) (2021).
- United Nations Development Programme (UNDP), Sustainable Development Goals (SDGs) (2015).
- United Nations Framework Convention on Climate Change (UNFCCC), Paris Agreement – India’s Climate Commitments (2015).
- United Nations Framework Convention on Climate Change (UNFCCC), COP26 Glasgow Climate Pact (2021).
- United Nations Framework Convention on Climate Change (UNFCCC), COP28 UAE – India’s Climate Finance Initiatives (2023).
- The Environmental Protection Act, 1986 (India), https://moef.gov.in/
- The Energy Conservation Act, 2001 (India), https://beeindia.gov.in/
- Morgan Stanley, Sustainable Investing and ESG Trends (2022).
- Microsoft, Microsoft’s Carbon Negative Goal by 2030 (2020).