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This 4 page Class Notes was uploaded by Varsha Mandiga on Tuesday June 14, 2016. The Class Notes belongs to BUSA 2106 at Georgia State University taught by Grelecki in Spring 2016. Since its upload, it has received 13 views.
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Date Created: 06/14/16
Mandiga 1 Varsha Mandiga Professor Grelecki BUSA 2106 April 15, 2016 CORPORATE SOCIAL RESPONSIBILITY ARTICLE 1 REVIEW My article was from ‘theguardian’ regarding “India's new CSR law sparks debate among NGOs and businesses.” India is the first country in the world to preserve corporate social responsibility, giving into law. On April 6th, 2014, there was a change in the national company law. It was written that all the business with annual revenue over ten billion rupees must give away two percent of their net profit to charity or for charitable causes. Some examples and areas where they are allowed to invest in are poverty, hunger, education, and gender equality. After this law was passed, India’s policy makers stated that “the law would release muchneeded funds for social development while critics warned of a tickbox mentality and efforts at evasion.” This new corporate social responsibility law sparked loads of debate among the nongovernmental organizations and other private businesses. They argued against the law stating that it would cause many problems their business. Many companies have found ways of avoiding the new law and shelled out for the good cause. The debate has been going on for two years, and the arguments have remained unresolved. The unambiguous idea is that overall charitable spending rate by many companies has increased over the past few years. According to the article and independent reports, it was written that the private sectors have combined for a charitable spend. The charitable spend jumped from an estimate of 33.67 billion rupees ($510.87m) in 2013 to nearly 250 billion rupees ($2.8bn) after the law’s enactment took place in 2014. Bimal Arora, Mandiga 2 chair of the Delhibased Centre for Responsible Business argued “The socalled 2% law has brought CSR [corporate social responsibility] from the fringes to the boardroom,” and “Companies now have to think seriously about the resources, timelines, and strategies needed to meet their legal obligations.” She and much more stated that the change in India’s new corporate social responsibility law is waking up India to a wider involvement in social responsibilities. There was a survey conducted by a professional service firm called KPMG. The results of KPMG's survey showed that out of India’s largest hundred companies, fiftytwo of them failed to spend the required two percent on charitable goods last year. According to an ‘Economic Times Investigation’, a smaller proportion of the hundred companies, other than the fiftytwo that did not pay, had allegedly cheated the Indian system by giving donations to charitable foundations, but then return the monies minus the commission. A sustainability director from one of top hundred firms in India stated: “Charitable giving used to be a reputation big builder for us; now it’s just about legal compliance.” He even added that the companies that used to give more than two percent have scaled back their charitable donations after the new law had been passed. Many of the country’s citizens who supported corporate social responsibility argued that the companies must go further. One of Unicef’s corporate engagement specialist; Ruchira Gujral said that “The focus is now on how much money you give to what cause and the whole question of how you make that money is totally ignored.” Vikas Goswami, head of Godrej Industries’ sustainability program argued that “For most organizations, the discussion at board level is now not about what we do, but does it count as CSR and does it meet the legal requirements.” Mandiga 3 All the charity leaders, and also, KPMG’s report, point out the geographic bias under the new two percent law, due to the companies funding projects being closer to what they were based on previously. At the same time, plenty of industrialized states and cities are winning over the poorer and remote regions of India, where the development aid is extremely needed. During this time, politics can mess around with the priorities too, because some companies may look to gain goodwill by acting as a corporate social responsible business. Lastly, the ‘Centre for Responsible Business’ is working on similar sectorspecific standards to improve the development of India. An example that was given in this article was a roadside pump in Kolkata, India, where more than seventyfive million Indians do not get access to clean or hygienic water water. Many citizens of India hope that the new corporate social responsibility law will force companies/businesses to make a real contribution to India’s challenges. Mandiga 4 SOURCE: http://www.theguardian.com/sustainablebusiness/indiacsrlawdebatebusinessngo