With the introduction of the 2013 Companies Act, Corporate Social Responsibility (CSR) became the buzzword of business in India. For the first time in the history of the country, the Act made donation of private corporations to social welfare mandatory. As per it, all companies with net worth above Rs 500 crore, turnover over Rs 1,000 crore, or net profit over Rs 5 crore are required to spend at least 2 per cent of their annual profits (averaged over 3 years). Section 135 of the Act which mandates the CSR donation also asks companies to establish a CSR committee to oversee the spending. But have you ever thought over how the term CSR came into existence?
Though, stories of corporate donating for social causes are centuries old. Many corporates cum philanthropists have left their mark on society by their efforts. They believed that they had special responsibility towards society because they earned from it, but it was not like ‘CSR’ as it looks now.
The term was coined first in 1953. In his publication named Social Responsibilities of the Businessman, American economist Howard Bowen coined the term and he is often referred as the father of CSR.
In India, there are sufficient anecdotal facts available giving us sense about how corporate groups were engaged in building universities, hospitals etc. During the freedom struggle, they have played a crucial role in funding the freedom movement. Mahatma Gandhi, father of the nation was closely associated with several businessmen cum philanthropists. But, most of the donations were going through religious institutions with the purpose of helping the dispossessed.
THE TERM WAS COINED FIRST IN 1953. IN HIS PUBLICATION NAMED SOCIAL RESPONSIBILITIES OF THE BUSINESSMAN, AMERICAN ECONOMIST HOWARD BOWEN COINED THE TERM AND HE IS OFTEN REFERRED AS THE FATHER OF CSR.
On the international front, philanthropic activities by industrialists can be traced back to the Industrial Revolution. By the mid-to-late 1800s, there were growing concerns regarding workers’ wellbeing. Many reformers were raising the issues of the emerging factory system, working conditions and condition of labourers. Whether connected or not but this was the time when the rise of philanthropy can also be traced. One industrialist named Andrew Carnegie donated large portions of his wealth to causes related to education and scientific research. He had made most of his fortune in the steel industry. Many other industrialists followed his footsteps. Like John D. Rockefeller, who is widely considered the wealthiest American of all time, and the richest person in modern history, donated more than half a billion dollars to religious, educational, and scientific purposes. He had made his fortune in the oil industry.
But it was all informal. It was American economist Howard Bowen who gave it a clear identity.
However, a question remains unanswered: how does the term get accepted in the whole world? After the effort of Howard Bowen, there was a sort of lull period for the next few decades. But in1990s, many other economists focused on it. In 1991, University of Pittsburgh professor Donna J. Wood published Corporate Social Performance Revisited. He expanded and improved on early CSR models by providing a framework for assessing the impacts and outcomes of CSR programs.
In the same year, another professor at the University of Georgia Archie B. Carroll published an article named ‘The Pyramid of Corporate Social Responsibility’. Since then, the term ‘CSR’ has become an essential strategy for many organizations. India moved ahead and brought a legal framework to ensure big corporates don’t forget their social responsibilities.
