LEGAL AND INSTITUTIONAL FRAMEWORK OF CSR IN INDIA – Aditya Mahendra & Dr. Meenu Sharma

Evolution of CSR: Global and Indian Perspectives

Corporate Social Responsibility (CSR) is a developing theory that has grown across decades as a result of economic change all over the world, changing social expectations, and regimes of governance shifting. It encompasses the concept that companies have duties beyond profit maximization and must add value to sustainable development and social well-being. CSR’s development can be traced through some phases in the world as well as in India in the context of some changes in policy and ideology.

Global Evolution of CSR

CSR as a term evolved in the West as a consequence of the industrial revolution and its negative impacts on labour, environment, and economic disparity. CSR initially was rooted in corporate charity and discretionary philanthropic giving. CSR, though, later evolved from discretionary philanthropy to an integrated and complete model of ethical and sustainable business.^[1]

a) Early Roots and Philanthropic Phase

Early in the 20th century, business leaders such as Andrew Carnegie and John D. Rockefeller pioneered philanthropic action in favor of education, health, and culture. Individual conscience was the predominant driver of this movement at the time, not institutional obligation. Business was carried out in an environment that demarcated economics from ethics, and there were hardly any open commitments in favor of society’s welfare.

b) Theoretical Development and Evolution of CSR Models

Academic acknowledgement of CSR occurred in the 1950s and 1960s. Howard R. Bowen’s “Social Responsibilities of the Businessman” (1953) is most frequently cited as the earliest work on CSR. Bowen underscored the fact that business choices must conform to societal expectations and public welfare. In the 1970s, authors such as Archie B. Carroll developed CSR into multi-dimensional frameworks, most importantly Carroll’s Pyramid of CSR, which suggested four levels of responsibility: economic, legal, ethical, and philanthropic.^[2]

c) CSR and Stakeholder Theory

During the 1980s and 1990s, stakeholder theory was established, led by R. Edward Freeman in particular. The theory proposed that companies consider the interest of all the stakeholders—employees, customers, suppliers, and communities—in addition to shareholders, which had been common practice. This was a shift from shareholder value to stakeholder governance, which prompted businesses to be environmentally and socially responsible.

d) Global Standardization and Institutionalization

With liberalization and globalization in the 1990s and early 2000s, CSR was institutionalized by global conventions. Their most influential global actions were:

The United Nations Global Compact (2000), which encouraged companies to take up principles on human rights, labour standards, environment, and anti-corruption.

• The OECD Guidelines for Multinational Enterprises.
• The Global Reporting Initiative (GRI) for reporting sustainability.
• The introduction of ESG metrics and Sustainable Development Goals once again rooted CSR in international corporate governance standards.
• Off-center fixation no more, CSR is today an in-grained imperative, well entrenched in international regulatory, financial, and consumer platforms.

^[1] Howard R. Bowen, Social Responsibilities of the Businessman, (Harper & Row, New York, 1953) p. 6.

^[2] Archie B. Carroll, “A Three-Dimensional Conceptual Model of Corporate Performance,” 4 Academy of Management Review 4 (1979) p. 497.