General Studies Paper 4 (Ethics): Corporate Social Responsibility

corporate social responsibility

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Syllabus: General Studies Paper 4 (Ethics)

Is Corporate Social Responsibility (CSR) ethical? Discuss the ethical issues involved in CSR. (150 Words)

 

Introduction:

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. India has a long tradition of paternalistic philanthropy. The process, though acclaimed recently, has been followed since ancient times albeit informally. Philosophers such as Kautilya from India preached and promoted ethical principles while doing business.

In India, there is a growing realization that business cannot succeed in isolation and social  progress is necessary for sustainable growth. An ideal CSR practice has both ethical and philosophical dimensions, particularly in India.

Corporate Social Responsibility: –

 Companies engage in corporate social responsibility (CSR) when they confer benefits on the communities located in or near where they work which are neither required by law nor an integral part of their primary, profit-oriented operations. At one end of the spectrum, CSR can be viewed simply as a collection of good citizenship activities being engaged by various organizations. At the other end, it is a way of doing business resulting in the significant impact on community and long-term sustainability. It is also important to shape responsible and supportable relationships with the community at large. Education, health and environment are prominently tackled by CSR initiatives in India

Ex: Project Hariyali and Project Nanhi Kali by Mahindra, Tata’s Act for Mahseer’ etc are some of the important initiatives by Indian companies.

SITUATIONS WHEN CSR BECOMES UNETHICAL.

There is the danger that CSR erodes government’s responsibility to provide public services.

  • When corporations use serious world problems as advertising campaigns, it proves CSR unethical. Maybe a few companies actually care about the issues in their advertisements. But with so many businesses partaking in Corporate Social Responsibility, the majority do not.
  • Management and advertising executives sit around a table and pick a social or environmental issue with a good Return on Investment.
  • Not only using serious world problems to sell products unethical, it desensitizes people to these problems.
  • Some will believe that purchasing products packaged with CSR imagery actually helps to solve the problems.
  • The fact that CSR in India is done based on laws companies otherwise is not very keen to participate in voluntary activities or they don’t want to spend profit on social causes.
  • Most companies see CSR as public relations and marketing. As a result, social issues are used as advertising campaigns. Companies make vague claims about ’empowering workers’, ‘a better world together’ and ‘helping local communities’ without evidence or meaning.

 

Developing and implementing CSR strategy helps leaders create a moral image of themselves   and their firm, which ultimately provides a sense of accumulated moral credits. These moral   credits mean they feel justified in engaging in less ethical behaviour and being less vigilant in managing the needs of their stakeholders. This bank of moral credits allows leaders to think that they can behave in a socially undesirable way without fear of discrediting their image.

  • For instance The Volkswagen case represents above all an absolute failure in terms of Corporate Social Responsibility (CSR). The company deliberately set out to design a means to circumvent emissions control.
  • Recent example of ICICI bank scandal : ICICI Bank’s troubles are rooted in a 2016 complaint by an investor alleging a quid pro quo deal between Bank CEO’s immediate family members and the Videocon group which got a Rs. 3,250-crore loan from it.

 

Way forward:

  • So to make CSR truly benefitting the society there is a need for regulatory mechanisms making people more aware so that they can demand the services rather than just be a passive recipient.
  • Organizations can manage ethics in their workplaces by establishing ethics management programs that convey their corporate values, codes and policies to guide decisions and behaviour. However, the mere presence of a code of ethics does not necessarily guarantee causation of ethical behaviour within a company, unless it is integrated into all aspects of an organization .
  • There is need for training on the ethical code which may include the values, codes, and standards of the organization.
  • Transparent activities are needed. Every employee wants to be part of an organization where they are recognized and made aware of the truth and what is going on, particularly in crisis situations.
  • There should be a policy to address the the issues like Nepotism, favouritism, conflict-of-interest, quid pro quo, transparency, Lack of accountability.

 

CONCLUSION

Corporate money doesn’t solve problems, commitment does.  CSR should be a part of the DNA of any organization because successful ventures have to also give back to society and not just always take from it. This way businesses can have an overall positive impact on the communities, cultures, societies and environments in which they operate.

 

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