Social Responsibility of Business

"With great profit comes great responsibility!" Let's understand why businesses owe society more than just products.

What is Social Responsibility?

Definition: The obligation of business to contribute to the welfare of society beyond profit-making.

Modern View: Business is a social organ – it exists because society allows it to exist.

Why Should Business Be Socially Responsible?

1. Business Uses Society's Resources

• Land, water, air, human capital
• Example: Coal India extracts coal → Must restore mined land

2. Long-term Survival

• Goodwill → Customer loyalty → Sustained profits
• Example: Patagonia's environmental activism → Cult following

3. Avoid Government Intervention

• Self-regulation prevents strict laws
• Example: Voluntary plastic reduction by companies

4. Prevention Better Than Cure

• Proactive responsibility prevents crises
• Example: Nestle's water conservation (avoids future scarcity)

Areas of Social Responsibility

1. Towards Shareholders/Owners

• Fair returns on investment
• Transparency in operations
• Example: Reliance's regular dividends + AGM transparency

2. Towards Employees

• Fair wages & job security
• Safe working conditions
• Training & career growth
• Example: Google India's employee-friendly policies

3. Towards Consumers

• Quality products at fair prices
• Honest advertising (no misleading claims)
• After-sales service
• Example: Samsung's widespread service centers in India

4. Towards Government

• Pay taxes honestly
• Follow laws & regulations
• Cooperate in national development
• Example: TCS paying ₹30,000+ crore in taxes annually

5. Towards Community/Society

• Employment generation (especially in rural areas)
• Support education, healthcare
• Environmental protection
• Example: ITC's e-Choupal (empowering farmers)

6. Towards Environment

• Reduce pollution
• Sustainable practices
• Example: Mahindra's carbon-neutral operations

Corporate Social Responsibility (CSR) in India

Companies Act, 2013 - Section 135

Mandatory for companies with:

• Net worth ≥ ₹500 crore OR
• Turnover ≥ ₹1,000 crore OR
• Net profit ≥ ₹5 crore

Requirement: Spend 2% of average net profit (of preceding 3 years) on CSR activities.

CSR Focus Areas (Schedule VII)

1. Eradicating hunger, poverty
2. Promoting education
3. Gender equality, women empowerment
4. Healthcare (including COVID relief)
5. Environmental sustainability
6. Rural development
7. Promoting sports
8. Swachh Bharat, Clean Ganga

Real-Life CSR Examples (Indian Companies)

1. Tata Group

• Tata Cancer Hospital: Affordable cancer treatment
• Tata Institute of Social Sciences (TISS)
• Built Jamshedpur city with schools, hospitals

2. Reliance Foundation

• Education: Digital classrooms in rural schools
• Healthcare: Mobile medical units
• disaster Relief: COVID-19 hospitals

3. Infosys Foundation

• Libraries in rural areas
• Teacher training programs
• Flood & earthquake relief

4. ITC

• e-Choupal: Connecting 4 million farmers
• Water-positive for 20+ years
• Carbon-positive operations

5. Mahindra Rise

• Nanhi Kali: Education for underprivileged girls
• Lifeline Express: Hospital train for rural areas

Arguments AGAINST Social Responsibility

1. Primary Duty is Profit

• Milton Friedman: "Social responsibility of business is to increase its profits"
• Counter: Profit & social good can coexist!

2. Cost Burden

• CSR costs reduce competitiveness
• Counter: Long-term goodwill > Short-term costs

3. Lack of Expertise

• Businesses lack skills for social work
• Counter: Partner with NGOs!

Quiz

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💡 Final Wisdom: "The best businesses don't just earn from society – they earn FOR society. When profit meets purpose, magic happens!"