CORPORATE SOCIAL RESPONSIBILITY THROUGH THE LENS OF NEW TECHNOLOGICAL SOCIETY BY - MS. HONEY SHARMA & MR. ABHINAV SINGH
CORPORATE SOCIAL RESPONSIBILITY
THROUGH THE LENS OF NEW TECHNOLOGICAL SOCIETY*
AUTHORED BY
- MS. HONEY SHARMA,
Assistant Professor,
Vivekananda School of law and legal studies,
VIPS, Delhi
CO-AUHTOR -
MR. ABHINAV SINGH,
Assistant
Professor,
Vivekananda School of law and legal studies,
VIPS, Delhi
Abstract
We are in an era of positive change
in all areas of human existence: business, education, government and politics, philanthropy,
faith, society, and more. It is essential to revamp many of the instruments we
use in business and the social environment to meet the needs of citizens of the
modern world. It has always been said that business is for profit. But
Businesses are not just designed to maximize profits but they also have human
rights responsibilities. Given this responsibility, the concept of Corporate
Social Responsibility (CSR) was introduced which was adopted by India through the
Companies Act, 2013. In addition to other resources of business houses,
technology is another commercial resource.
Corporate Social Responsibility has
the potential to become one of the bridges between business and society. In
this, the role of technology in enhancing the effectiveness of Corporate Social
Responsibility is very important. This will ensure not only a sustainable
business model but one which will increasingly prove to be the way forward as
the best business model. Corporate Social Responsibility itself can be
harnessed to develop appropriate technological paradigms which will become the
technologies for the future. This may
take the form of investments into smart technologies, startups, environmental
projects, etc. which can be increasingly utilized to provide the business
entities competitive advantage in the future. Utilizing this model will not
only provide superior value to the shareholders but also provide solutions to
the existing problems bedeviling the society.
There is a thin line today between CSR towards societal problems and thinking
for the future incubators which will become the bluechip companies of tomorrow.
In this paper, Researcher will try to throw some light on How the present
technologies can be used as a future business prospect if used as CSR today.
Introduction
We are in an era of positive change
in all areas of human existence: business, education, government and politics,
philanthropy, faith, society, and more. It is essential to revamp many of the
instruments we use in business and the social environment to meet the needs of
citizens of the modern world. It has always been said that business is for
profit. The sole purpose of participating in a business event is to enter the
business, sell and buy goods and make money from it. It was always believed
that the more the profit more successful is the business.
A business needs a large number of
resources to run efficiently, be it human resources, land resources, finance,
or anything else. But Businesses are not just designed to maximize profits but
they also have human rights responsibilities. Given this responsibility, the
concept of Corporate Social Responsibility (CSR) was introduced which was
adopted by India through the Companies Act, 2013. In addition to other
resources of business houses, technology is another commercial resource. In the
modern age of technology, companies rely heavily on them. Technology is thought
to be a harbinger of the industrial revolution and the transformation of a Pre-industrial
society to a Post-industrial one. The new technologies and processes have
bought tremendous changes in the industrial and manufacturing processes,
communications, and societal development. It led to the emergence of a
technological society-led development model with far-reaching social,
political, economic, and cultural changes. It changed the notions of how
business, society, and state interacted and made it more dynamic and far-reaching.
Origin of
Corporations
Before
talking about Corporate social responsibility it is important to know when and
how corporations came into existence. The corporation is like a family, people
of the corporation unit work together for an end. Industrialization started, back
in 1712 when an English man named Thomas Newcomen invaded a steam-driven pump
and so, on industrial age developed. Initially, it was taken to be a gift for
the people to earn public good. But after the civil war and with the industrial
revolution immense growth was created in corporations like there was a rise in
railways, subsidies of land, banking, manufacturing, etc. With this, corporate
lawyers realize they needed more power to remove certain constraints that have
been historically built on the corporate forum.
So,
the company was given a separate legal identity. Giving reference to one of the
leading cases Salomon
v. Salomon & Co., Ltd[1] which conferred separate legal identity to
companies for the first time in 1897, Lord Macnaghten said:
“The company is at law a different person altogether from the
subscribers to the memorandum; and, though it may be that after incorporation
the business is precisely the same as it was before, and the same persons are
managers, and the same hands receive the profits, the company is not in law the
agent of the subscribers or trustee for them. Nor are the subscribers as
members liable, in any shape or form, except to the extent and in the manner
provided by the Act.”
This
case made it very clear that for the acts of companies its stakeholders like
directors, and members cannot be made liable. A company is a juristic person
who can sue or can be sued in its name. It was said that a company is a special
kind of people who are immortal and unlike human beings, they just have one
motive i.e. to earn maximum profits. As industrialization grew the fervor for
profit and success also grew with it to such an extent that wthe orld health
organization declared that a corporation is a psychopath as it satisfies all
the conditions of this mental disorder.
Further, when trading became more demanding in international sphere with
the onset of the concept of Free trade via GATT and WTO, the need for profit
increased and the business organization gained the height and with the height
in business the harm also increased.
The
business enterprises ignored completely the need for good environment and
rights of human beings for its avidity for profit maximization. It was then the
need for social responsibility arose when environmentalist and socialists stood
against corporations and asked them to respect environment and people along
with their profit earning.
Corporate
Social Responsibility (CSR)
CSR is a concept where the company
commingles social and environmental concerns in their business operations and
can be said to be based on an approach famously known as “Triple-Bottom-Line-
Approach”. As per this approach the business
should not concenter one bottom line i.e. profit, rather it should be three:
Profit, People and Planet. There is no specific Definition of CSR. Every
company as per its own interpretations decides whether the activity it is taking
up falls under the purview if Section 135, companies Act,2013 or not. UNIDO
defines CSR as
“Corporate
social responsibility is a management concept whereby companies integrate
social and environmental concerns in their business operations and interactions
with their stakeholders. CSR is generally understood as being the way through
which a company achieves a balance of economic, environmental and social
imperatives (Triple-Bottom-Line Approach), while at the same time addressing
the expectations of shareholders and stakeholders. In this sense it is
important to draw a distinction between CSR, which can be a strategic business
management concept, and charity, sponsorships or philanthropy. Even though the
latter can also make a valuable contribution to poverty reduction, will
directly enhance the reputation of a company and strengthen its brand, the
concept of CSR clearly goes beyond that.”[2]
It is believed that
a business organization should synchronously work on these three bottom lines:
Profit: Making
monetary gains is the primary reason behind doing any business. The real trade
advantages, i.e. profit and loss, are said to be the ultimate goal of all
companies.
People: The
significance given to the people, the labours involved, the association's
employees, the society in which it works and the consideration must be given to
the needs of society.
Planet: A company's
environmental liability in the process of doing its business. How they can help
to mitigate the growing serious environmental problems and what they can do to
maintain the same.
A corporate
association when considers and incorporates this triple bottom line approach it
is said that this can help a company to reach its sustainable goals. CSR is increasingly integrated as a business
strategy and has maintained a proper place in the policies and practices around
the globe. The organizations are adopting CSR as a part of their policy matters
to increase the demands and interest of different stakeholders and to enhance
the competition to access the global market and satisfying the needs of
society. Adding to this strategy the use of technology is playing
a great and vital role in making and adopting CSR Policies.
Corporate social responsibility falls
within the second category and to some extend third when we are talking in
Indian context. Companies Act,2013 had introduced this concept of CSR in India
via Section(Sec.) 135 which says,
“Corporate Social
Responsibility: (1) — Every company having net worth of rupees five hundred
crore or more, or turnover of rupees one thousand crore or more or a net profit
of rupees five crore or more during 1[the immediately preceding financial year]
shall constitute a Corporate Social Responsibility Committee of the Board
consisting of three or more directors, out of which at least one director shall
be an independent director”
“(5) The Board of
every company referred to in sub-section (1), shall ensure that the company
spends, in every financial year, at least two per cent. of the average net
profits of the company made during the three immediately preceding financial
years or where the company has not completed the period of three financial
years since its incorporation, during such immediately preceding financial
years, in pursuance of its Corporate Social Responsibility Policy”
With insertion of this provision[3] in
Companies Act, 2013, India became the first country to make CSR a mandatory
provision. But merely making a provision how far state has fulfilled its
responsibility towards society??
Societal
expectations that organizations use their resources in a socially responsible
manner have grown significantly over the past three decades and technology
plays a vital role in the present trend of information access to stake holders.
The rapid development and integration of all technologies gives managers the
means and tools to effectively manage their organizational responses. The
technology has been used by organizations since the beginning of the
“information age” to increase revenue and reduce costs. In addition, company
executives are able to use technology to create mechanisms to report, measure,
monitor and disseminate important information to various stakeholders. The
impact of technology on social responsibility activities is reflected in the
model of using public performance management and relationships with
stakeholders.
Recent
amendments
Even after making CSR a mandatory
provision many companies were not adopting it effectively and considering the
failure of sec. 135 government of India came up with major amendment in 2019
for same. States must ensure that corporations respect Human rights. In order
to achieve the same section 135 of Companies Act ,2013 had been made more
stringent by the Companies (Amendment)Act,2019 by penalizing non-compliance
of the section which says if the company fails to fulfil the requirements of
sec. 135 (1) then the amount which was meant to spend on CSR and remains
unspent for the term of three financial years as mentioned will be transferred
to a fund specified under schedule 7 of Companies Act 2013 and if they further
contravene these provisions, they will be punished for the same under sec. 135
(7) of the Act. But this was again amended by Companies (Amendment) Act,2020
further decriminalizing section 135 again. It says:
“(7) If a company is
in default in complying with the provisions of sub-section (5) or sub-section
(6), the company shall be liable to a penalty of twice the amount required to
be transferred by the company to the Fund specified in Schedule VII or the
Unspent Corporate Social Responsibility Account, as the case may be, or one
crore rupees, whichever is less, and every officer of the company who is in
default shall be liable to a penalty of one-tenth of the amount required to be
transferred by the company to such Fund specified in Schedule VII, or the
Unspent Corporate Social Responsibility Account, as the case may be, or two
lakh rupees, whichever is less.”
CSR is gaining more and more
importance the growth and change of time. With the present need and
technological society CSR has changed meaning and new prospects.
Technological
society and CSR
A Technological society represents a
paradigm shift in utilization of means and methods to achieve absolute
efficiency in human activities. It aims to achieve the outcomes with a scientific
calculation of inputs and outputs for given stage of development whereas human
relations themselves become one of the dependent variables in the development
matrix. This is where Corporate Social Responsibility has the potential to
become one of the bridges between business and society. In this the role of
technology for enhancing the effectiveness of Corporate Social Responsibility
is very important. It may prove to be not only being positive sum for
corporates but also fulfilling the primary focus of Corporate Social
Responsibility. This will ensure not only a sustainable business model but one
which will increasingly prove to be the way forward as the best business model.
Corporate Social Responsibility itself can be harnessed to develop appropriate
technological paradigms which will become the technologies for the future. This may take the form of investments into
smart technologies, startups, environmental projects etc. which can be
increasingly utilized to provide the business entities competitive advantage in
the future. In fact utilizing this model will not only provide superior value
to the shareholders but also provide solutions to the existing problems
bedeviling the society. There is a thin
line today between CSR towards societal problems and thinking for the future
incubators which will become the bluechip companies of tomorrow.
Some of the future elements of the technological
society which may be identified today are ICT and E-Commerce
Post World War world has seen
tremendous development in information and Communication Technologies. These
technologies pertain to communication technologies such as Internet, mobiles,
Satellite and other modes of digital communications. They have provided
tremendous capabilities for the societal development and removed the bridges
between State, society and business providing novel methods of interaction. It
is the functional application of Informational technology and integration of
information, communication and application. This information storage, transmission
and retrieval capability provides an important domain for business entities to
utilize and leverage their CSR to improve governance. An important step in the
recognition of the global potential was the
World Summit on the Information Society (WSIS) of United Nations which
discussed the challenges and issues posed by ICT. UN General Assembly
Resolution A/70/125 2015 recognized the importance of the WSIS process for
Sustainable Development Goals.
Environment technology and Green technologies
These are those technologies or
processes which are utilized to create environmentally sustainable products or
processes. They have emerged as one of the key areas of interface between
businesses and society with huge potential for improving operational efficiency
by reducing input costs. Examples include clean fuel technology, renewable
energy, waste recycling, waste reduction, low emission technology, clean air,
water etc. Investment and research in these technologies has emerged as one of
the key focus areas for business entities. This has been given added impetus by
appropriate regulatory practices and polices both national and international
with measures such as carbon foot printing, carbon credits, tax breaks etc. The
current focus has been to make such technologies more adoptable, adaptable and
affordable. Another important aspect of this technology is to monitor, model,
preserve, conserve, sustain and utilize nature biodiversity and environment for
current and future generations. This has to be targeted and achieved both at
the macro and micro level.
Intellectual Property and Traditional Knowledge
Intellectual
property are the intangible creations of the intellect, such as literary,
musical, dramatic, artistic works inventions, designs, marks used in the course
of trade etc. They are provided protection by law through mechanisms such as
copyright, trademarks, patents etc.
Traditional
knowledge is the holistic, cumulative, empirical culture, belief, practices,
knowledge systems developed, nurtured and preserved over a period of time by
local and indigenous communities in interaction with natural environment with
community ownership. These pertain to agricultural, medical, ritualistic, and
food practices amongst various other knowledge systems.
Biotechnology and Genetic Resources
Is the harnessing, replication and
application of biological processes, systems or products for development of
better therapeutic medicines, crops, organisms, food products, chemicals and
developing various other technologies. It includes research into genomics,
bioengineering, embryology, recombinant gene techniques, bioinformatics,
harnessing molecular and sub molecular methods, biochemistry etc. Intellectual
property may be developed as an important tool for access, benefit sharing and
development of these knowledge systems for benefit of whole of the mankind.
Medical Technology
It is application of techniques,
scientific methods to develop medical solutions, products and therapies for the
society for preventive and symptomatic treatment of diseases and illnesses. It
utilizes biotechnology, information technology, pharmaceuticals,
nanotechnology, medical equipment manufacturing etc. for development. This
field has assumed added importance especially in the post-covid scenario
especially in medical research, innovative equipment and vaccine development.
Emerging technology- IOT, block chain and artificial
intelligence
It is a database, information
management system which records secures and communicates information in a secure, open, decentralized, immutable,
programmable, anonymous, time stamped and difficult to cheat process and
maintains integrity of the data. It is managed by multiple participants as a
Distributed Ledger Technology (DLT) system. It has varied applications such as
currency, financial transactions, smart contracts, financial services and
anti-counterfeiting etc.
Internet of things is the
communication process by which physical entities and objects communicate and
exchange data with focus on real time analytics, machine learning, and
artificial intelligence and embedded systems. The functions are humungous in
case of smart homes, medical care, transportation, home automation,
infrastructure management, energy management, manufacturing, agricultural
systems, environment monitoring, security systems.
Artificial Intelligence
It is programmed software which is
designed to behave like human intelligence including taking cognizance of the
data, environment metrics, and training and further modifies and optimizes its
architecture and functioning. It uses mathematical simulation and optimization,
artificial neural networks and database training and several other scientific
techniques to achieve it functions. It is becoming an increasingly integral
part of business development, product and process development and management
systems.
The government may well need to
expand the scope and domains of CSR itself in order to weather headwinds for
future development. It may well prove to one of the most effective ways of gaining
competitive advantage for India. These approaches will drive further business
value and help to differentiate them from their peers and competitors. Though
the intellectual discourse is increasingly turning to this view of Corporate
Social Responsibility but it is yet to see the practical application and
implementation of such strategies on the ground. This underlies the need to
examine various domains which may be explored by business entities for
extending the scope of Corporate Social Responsibility. In this context we need
to develop a homogenized model which synthesizes these technological parameters
with a combination of profit, value, development and sustainability. The
corporate entities need to undertake a cost benefit analysis and adopt those
domains and strategies which provide the best outcomes in context of means and
ends model or the cost benefit model in relation to preferences, requirements,
value and sustainability as a business model.
There is a need to focus on the
multidimensional and multifunctional nature of Corporate Social Responsibility
with need to drive synergies by harnessing different technologies in the
business development model with focus on organization, system, values and goals
and social relations and societal relations. There is a need to derive and
weigh the social cost benefit analysis with the business cost benefit value and
derive a situation which best synergizes them and avoiding the potential
pitfalls. The approach derived hence has to be in a tangible relation to
stakeholder goals, business goals and societal goals with appropriate regulatory
compliance. There is need to assess the technical and logical parameters based
on the above matrix. Not all dimensions will prove to be relevant or effective
for different corporates and different strategies will be needed to be evolved
in keeping with the relevant sector which the corporate in engaged in business
in. It is therefore imperative to discard the one size fits all approach and
analyse the best techno Corporate Social Responsibility matrix relevant for a
sector for designing appropriate Corporate Social Responsibility strategies and
mechanism relevant for different sectors. There is also a need to examine the
technology development potential, technology assimilation potential of each
sector in order to design the best Corporate Social Responsibility strategies
for each sector. In all the development of the technological society provides a
paradigm shift in the ways companies do business and develop their core
competencies.
A look at the top companies in the
world in 1990s shows a domination of auto mobile, oil, and consumer industries
such as Ford Motor, Exxon Mobil, General Electric, Chrysler, DuPont. If we
compare it with the top companies of today, we find that all the companies
dominating the business landscape today are technology or adopted new
techniques of doing business or modified their business models appropriately.
Infact it may be safely stated that the business techniques or areas which are
so relevant today or are considered to be sound business practices maybe easily
considered to be in the domain of Corporate Social Responsibility practices in
the decades gone by.
An interesting example maybe that of
Tesla Inc. an American Clean energy and electric/hybrid vehicle manufacturing
company. The business domain in which
Tesla operates that is clean and green energy which makes it one of the best
known battery operated vehicle manufactures with an increasing market share in
passenger vehicles and battery storage solutions. Tesla Inc. has become the most valuable automaker ever and
its market capitalization exceeds many of the haloed automobile manufacturers
such as BMW, Daimler, Volkswagen, Toyota and General Motors etc. The
business domains in which the company operates and every classic automobile
company wants to develop could have easily belonged to the domain of CSR in the
earlier decades. It provides a classic example of how synergies may be
identified and developed further in the technological society in the future
too. In this context technology provides an important tool which may be used. This
requires all the stakeholders that is government, corporate entities,
shareholders, customers and society to develop appropriate adoption and
assimilation practices and processes and utilize effectively. The review of the
same at appropriate intervals will give appropriate mid policy directions and
changes. The parameters of technology itself may require to be modified to
corporate entity specific attributes and the quality and quantum of changes
brought about by it. This depends on the endowment attributes of a particular
corporate, the firm’s management strategy, competition level and management
ethos at the top of the pyramid. The dynamics of the technological society may
face challenges both extrinsic and intrinsic nature.
Governance model through Corporate
Social Responsibility harnesses the efficiency of the private with the equity
of public and may be the preferred reform tool of policy makers as a New Public
Management model. It provides a primary tool for convergence and integration of
business and society. The transformation of the industrial society to a
technological society and further to an information society will be determined
by the regulatory and policy formulations which are developed to deliver
solutions to societal problems. The innovations happening in the scientific
intellectual domains are being increasingly utilized and deployed in the real
world for practical solutions increasingly effective optimal and efficient
solutions which with appropriate policy directions maybe equitable too. It
requires effective societal participation in business process development and
making it more accountable, open and dynamic. It transforms and reallocates
resources, business delivery through the business to citizen model changing
organization deployment and structure process and functions. It has become a
reality as a governance model to foster growth and stimulating development.
Conclusion
Technology is bringing about a
metamorphosis in the society. The development dynamics and governance models
need not only be dependent on a centralized public driven model but needs a
decentralized public private partnership driven model with adequate
participation of the civil society and this has emerged as the primary mode of
governance in the 21st century. Technology led paradigm evolution has been
already being the prime driver in business processes right from the post-world
war world with the positive disruptions bought bout by Computers. What has
changed is the increasing speed which these changes are being bought about and
integration of hitherto technology island and cross deployment and development
of technologies with the advent of the ICT. Increasingly it is being utilized
to provide solutions to the diffused societal problems and business
deployments. It may be said that the pace of transformation and continuity has
provided it with the breadth and depth stimulating business development. It
promotes economic development, efficient solutions, productivity gains,
effective outcomes and promotes global competitiveness through disruption and
diffusion.
The technological society is not
without its challenges which by its very nature it focuses on efficiency. It
has not included ethical moral or equitable considerations as a basic parameter
and evaluates all the parameters on the notions of outcomes based on efficiency
alone. In this it is divorced from the societal notions which are designed and
based on these very values. So it must be harnessed in such a way that specific
social goals and changes are achieved.
CSR and technology may foster
economic and information globalization, employment generation expands access to
government welfare schemes and services and improves accessibility
accountability and governance, access to markets and businesses. It is a tool
for social economic political transformation. It may provide a complementary
superstructure for transmission and implementation of policies and governance
goals. There is need for a perceptible move towards adopting this governance
model and organization structure for collaborative and networked development
with a symbiotic governance paradigm for improving responsiveness and effectiveness
from the traditional bureaucratic model towards a technological dynamic open
innovative entrepreneurship model.
*
The present paper was presented at 44th Indian Social Science Congress, March
15-19, 2021 held at Samrat Ashok Technological Institute, Vidisha, M.P.
[1] Salomon v. Salomon & Co., Ltd.
[1897] AC 22 (HL)
[2] Nagaraj M S & Shalini G , Innovation
in Indian CSR-a Conceptual Model, IJIR Vol-2, Issue-13, 2016 (Special Issue)