[Model Answer QP2022 GS4 Ethics] In the contemporary world, the corporate sector’s contribution in generating wealth and employment is increasing. In doing so, they are bringing in unprecedented onslaught on the climate, environmental sustainability and living conditions of human beings. In this background, do you find that Corporate Social Responsibility (CSR) is efficient and sufficient enough to fulfill the social roles and responsibilities needed in the corporate world for which the CSR is mandated? Critically examine.

The ways in which humans interact with the land and its natural resources are determined by ethical attitudes and behaviors.
Corporate Social Responsibility: a business philosophy which stresses the need for firms to behave as good corporate citizens, not merely obeying the law but conducting their production and marketing activities in a manner which avoids causing environmental pollution or exhausting finite world resources.
Trusteeship theory of Mahatma Gandhi: Trusteeship is a socio-economic philosophy that was propounded by Mahatma Gandhi. It provides a means by which the wealthy people would be the trustees of trusts that looked after the welfare of the people in general.

Frontier Ethics: A frontier ethic assumes that the earth has an unlimited supply of resources. If resources run out in one area, more can be found elsewhere or alternatively human ingenuity will find substitutes. This attitude sees humans as masters who manage the planet. The frontier ethic is completely anthropocentric (human-centered), for only the needs of humans are considered.
Sustainable Ethic: A sustainable ethic is an environmental ethic by which people treat the earth as if its resources are limited. This ethic assumes that the earth’s resources are not unlimited and that humans must use and conserve resources in a manner that allows their continued use in the future.

What is the importance of CSR?

  1. Brand Value: Tata Group is India’s most valuable brand at $19.5 billion dollars. People appreciate the company not only for its high-quality products but also for the activities that they do for the greater good of the people. The company has exceptional goodwill and the name exudes trust.
  2. Increased Sales – Customer Matters: Companies that lead with a purpose are perceived positively by the customers. According to a study, 88% of the people surveyed would buy products from a responsible company.
  3. Employee Retention and Engagement: There was a time when people looked at their jobs from the bread and butter perspective alone. Today, employees look for a higher purpose other than their monthly salary.
  4. Poverty Alleviation: Mahindra and Mahindra’s Nanhi Kali is one of the pioneers when it comes to CSR projects in India. The World Bank’s 2018 report states that limited educational opportunities for girls and barriers to complete 12 years of education, cost countries between $15 trillion and $30 trillion in lost lifetime productivity and earnings. Project Nanhi Kali educates girls which not only empowers them but also helps their families come out of poverty.
  5. Risk Management: It is no longer a debate that social and environmental risk affect businesses in a big way. Depleting mangrove cover is one of the biggest reasons for flooding in Mumbai. Bajaj Electricals’ CSR arm planted 10,000 mangroves by partnering with NGO, United Way Mumbai (UWM) to create awareness on the importance of mangroves among the youth.

What are the disadvantages of CSR?

  1. Subject to greater scrutiny: CSR if done quietly does not reap many benefits. But when a company conducts it in a public space, it subjects itself to greater scrutiny. Thus, a mistake or irresponsible behaviour on a company’s part will be criticized much more than the appreciation it will receive for its CSR activity. 
  2. Competitive Disadvantage: CSR, when integrated with a company’s operations, might increase the cost of production of the product or service a business offers.
  3. Greenwashing: Greenwashing is a term used to describe corporate practices that appear to be environmentally responsible without actually representing a change in how a company conducts its business. For example, a product may be labelled as “All Natural”, even though it is being manufactured just as it always has.
In the contemporary world, the corporate sector should move away from frontier ethics and inculcate development ethics not only in its outcomes but also in its process i.e. operations. This along with implementing corporate social responsibility in its truest spirit will help realize Mahatma Gandhi’s dream of a trusteeship model to economic development.

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