Analysis of Corporate Social Responsibility Challenges: Asian Paints

This report provides an analysis of Corporate Social Responsibility (CSR) with a specific focus on Asian Paints. The introduction defines CSR and highlights the Companies Act of 2012. The main body of the report discusses five key challenges faced by Asian Paints when drafting its CSR policies, including issues like incorrect estimation of investment amounts, adapting to a changing business environment, transparency concerns, the availability of well-organized NGOs, and effective communication. The report then proposes solutions to two of these challenges, focusing on improving communication strategies and enhancing transparency. The conclusion emphasizes the importance of CSR for businesses and the necessity of addressing these challenges through thorough analysis and strategic planning. The report references various academic journals and online resources to support its findings.

Corporate Social
Responsibility

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Introduction to Companies Act, 2012.........................................................................................1
Five Challenges Faced by Asian Paints While Drafting CSR Policy.........................................1
Providing Solutions for Two Challenges....................................................................................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4
.........................................................................................................................................................4

INTRODUCTION
Corporate Social Responsibility can be defined as the management of business processes
in order to create positive impact on the society as a whole (Definitions of corporate social
responsibility - What is CSR?, 2019). The following assignment is based on Asian Paints
Company which was founded in the year 1942 and is headquartered in Mumbai. The following
assignment will focus on Act specifying the amount to be spent by companies on CSR and the
challenges which are faced by companies while drafting their CSR Policies. Further the
assignment will also present solutions to two of challenges which are faced while drafting CSR
Policy.
MAIN BODY
Introduction to Companies Act, 2012
The following Act has been replaced with the Companies Act, 1956. Under this Act, it is
mentioned that companies has to register themselves under this Act and has to follow the
guidelines, rules and regulations provided under this Act for their processes, establishment or
winding up (Aguinis and Glavas, 2012). Further this Act also makes compulsory to invest 2% of
the net profits earned by the company in the betterment of society.
Five Challenges Faced by Asian Paints While Drafting CSR Policy
Companies like Asian Paints comes across with many challenges while drafting the CSR
Policy which are discussed as under:
Wrong Estimation of Amount Investment in Projects or Incentives: The biggest challenge
faced by companies is the wrong estimation of amount which has to be invested in the project or
initiative it is carrying over in order to complete its CSR Responsibility. It also leads to
incompletion of the project or the company has to incur losses as they are investing more amount
to which they have to. It can also cause bad effect on the financial condition of the company so
these decisions are very crucial to make for every company and has to do with proper analysis so
that further discrepancies in work can be avoided (Kim Park and Wier, 2012).
Changing Environment and Business Practises: Asian Paints had developed its policies
related to CSR but as the business environment is not stable so it this is also considered as a
challenge to the company to implement these strategies in the changing environment. It is not
possible to get the accurate results as the policies drafted were based on a particular environment
1

and the stability of that environment is not confirmed (Asian Paints Spends Rs. 34.44 Cr towards
CSR, Focus on Skill Development, 2018).
Issue of Transparency: Lack of Transparency is also one of the key issue which are faced by
companies like Asian Paints while drafting their CSR Policies. There is lack of transparency on
the local implementing agencies as they do no make adequate efforts to disclose the information
in their programs, audit issues, utilisation of funds. Due to this, lack of transparency negatively
impacts on the process of trust building in between the companies and local communities
(Cheng, Ioannou and Serafeim, 2014).
Non Availability of Well Organised Non Governmental Organisations: In remote and rural
areas, the organisations are not well organised and do not contains at least some of the relevant
data which provides the real needs of the community so that Asian Paints can make their policies
with the help of those information so that they can be successfully implemented.
Lack of Proper Communication: The most essential factor which lies within the organisation
but not found in most of the organisations performing their CSR initiatives or projects. It is the
most important element which must comply with the company so as to make the project
successful.
Providing Solutions for Two Challenges
Various measures and precautions can be taken by Asian Paints in order to minimise or
eradicate the impact of these challenges over the company. The company can make
improvements in their communication process. It can be done by properly guiding the employees
about the project, their tasks that they have to accomplish and providing them sufficient training
and knowledge about the tasks that they have to do. Further for making the improvement their
performance should be checked on regular basis and needed rectifications should be made in
them.
For creating transparency, the company should not depend on other companies in order to
get the required information for the completion of the project This will help in getting the
company right information about the real needs of the community and will be able to provide
them with those needs that they want to be fulfilled (Crowther and Seifi, 2018).
2

CONCLUSION
From the above assignment it is concluded that Corporate Social Responsibility is very
important part of every business. Companies should also work for the society in which it is
established Further it is also concluded that there are many challenges which are faced by the
companies in fulfilling their CSR but by doing proper analysis these challenges can be
eradicated.
3

REFERENCES
Books and Journals
Aguinis, H. and Glavas, A., 2012. What we know and don’t know about corporate social
responsibility: A review and research agenda. Journal of management. 38(4). pp.932-
968.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic management journal. 35(1). pp.1-23.
Crowther, D. and Seifi, S. eds., 2018. Redefining Corporate Social Responsibility. Emerald
Group Publishing.
Kim, Y., Park, M. S. and Wier, B., 2012. Is earnings quality associated with corporate social
responsibility?. The accounting review. 87(3). pp.761-796.
Online
Asian Paints Spends Rs. 34.44 Cr towards CSR, Focus on Skill Development. 2018. [Online].
Available Through: <http://indiacsr.in/asian-paints-spends-rs-34-44-cr-towards-csr-
focus-on-skill-development/>
Definitions of corporate social responsibility - What is CSR?. 2019. [Online]. Available
Through: <http://mallenbaker.net/article/clear-reflection/definitions-of-corporate-social-
responsibility-what-is-csr>
4