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)
[3] Companies Act,2013; Section 135