India has witnessed a rich history of close involvement of businesses in social causes for national development. The tradition of corporate philanthropy had been practiced since late 1800s. In 1900s, socially responsible business practices took different forms –
- Philanthropic donations or charity
- Servicing the community
- Enhancing employee welfare
- Promoting religious conduct
The CSR ideology in the 1950s was primarily seen as an obligation of business towards the society. To a growing degree it was realized that the companies which had genuinely paid attention to behaving in a socially responsible manner were also favored by the general public and preferred in terms of their goods and services, thus, giving rise to the concept of CSR.
By the last decade of the twentieth century, India witnessed a swing which differed from charity and traditional corporate philanthropy and was more towards direct business
engagement in mainstream development and concern for disadvantaged societal groups. The driving force behind this has been both internal, or the corporate will, and external, or increased governmental and public expectations. Today, the companies and stakeholders are moving towards adaptation of some aspects of the mainstream agenda, like integration of CSR into their business practices and processes as well as engagement in multi-stakeholder dialogues.
India’s political and economic history must be taken into account while comprehending the current state and future prospects of CSR as well as the role of the UNGC in India. With this background, according to Sundar (2000), the CSR development in India can be divided into four primary phases. These phases run parallel to India’s historical development and resulted in varied CSR practices. However, the phases are not static, and features of one phase can overlap with that of the others, as evident from the last phase.
A. First phase:CSR motivated by charity and philanthropy
The first phase of CSR was predominantly determined by culture, family tradition, religion and industrialization. Operations and CSR engagement for corporations were mainly based on corporate self-regulation. This being the oldest form of CSR, charity and philanthropy still continue to influence CSR practices, especially in terms of community development.
In the 1850s, merchants had committed themselves to the society for religious purposes, sharing their wealth by building temples, etc.
In the 19th century in India, the pioneers of industrialization were a few families such as the Tatas, Birlas, Godrej, Shriram, Singhania, Lalbhai, Sarabhai, Mahindra, Modi, Bajaj and Annamali. These business houses were strongly devoted to philanthropically motivated CSR. Nevertheless, they also had business considerations influenced by caste groups along with political objectives.
In this phase, the underlying pattern of charity and philanthropy indicated that entrepreneurs sporadically donated money (e.g. to schools or hospitals) without any concrete long-term engagement in mind. CSR focused on such external stakeholders as communities and general social welfare bodies.