CSR: Catalysing Change through India Inc

14 Jul 2019

Social engagement of Indian business is as old as the history of business itself. Ever since businessmen first started investing, they have sought to give back to society in different ways. In India, the concept of business philanthropy is deeply embedded in our classical texts.

Corporate Social Responsibility (CSR) has undergone significant changes in recent times. Today, it is seen as an intrinsic part of general business practice, as the brand value of an excellent company derives greatly from its commitment to the community. Equally, its standing in the global marketplace is enhanced substantially by following ethical and responsible management practices, which include social development engagement.

The passing of the Companies Act (2013) has given a much-needed fillip to CSR in India. With specific expenditure on clearly defined CSR fields, India Inc. has been scaling up its activities substantially. According to the CII CSR Tracker 2017, 1522 BSE listed companies spent Rs 8,897 crore or 92 per cent of the two per cent requirement in FY17. This is an increase of about nine per cent in CSR spends in FY17 as compared to FY16. The CSR Tracker 2017 consolidated CSR disclosures of 1,522 companies listed on BSE and analysed the legislative obligation of these companies to comply with Section 135 of the Companies Act, 2013.

In the last few years of the legislation, corporates have streamlined organizational structure; while CSR processes have been designed tested and put in place; CSR strategies and plans have been rolled out and implementation partners identified. Companies are now moving beyond compliance to focus on creating a long-term and sustainable impact for the beneficiaries. While the CSR legislation has been a game changer to garner industry engagement, it is time to go beyond the tried and tested approaches in development space. Companies need to leverage CSR to re-imagine interventions and explore innovative CSR models, develop disruptive approaches and build new modes of engagements.

Likewise, in JK Organisation the CSR programs extend well beyond compliance and incorporate some benchmark practices. Sustainability and stakeholder engagement are the Group’s key components of responsible business practices. A number of its manufacturing plants are located in remote and economically backward areas and therefore the selected CSR programs are very endemic in nature which have emerged out of stark ground realities & with deep stakeholder engagement. The organisation strongly believes that understanding and responding to stakeholders needs & expectations drive the organization towards business sustainability.

Focus also needs to shift from outputs to impact measurement and analysis of the socio-economic value on investment. Companies are increasingly sharing impact data in their annual disclosures. According to the CII CSR Tracker, in FY17 there has been an increase of about 14 per cent in companies, against FY16, that have disclosed impact data. The CSR Tracker also highlighted the fact that over FY 15-17, the states of Maharashtra, Gujarat and Tamil Nadu remained favoured destinations for CSR investment. It appears that, over a span of three years, about 40 per cent of the companies preferred investing in one state/UT and about four per cent in more than 10 States/UTs. These findings underline that corporates’ need to expand their social development outreach beyond the industrialised states and shift focus to aspirational districts, which have shown relatively lesser progress in key social areas and have emerged as pockets of underdevelopment.

We are witnessing that the government is proactively inviting the industry to partner with them in their efforts for speedy and effective action through CSR. The Government has launched a host of programmes, plans and schemes to address social development challenges like the Swachh Bharat Mission, Beti Bachao Beti Padhao Scheme, Namami Gange program and many more. Many such programmes have been added to Schedule VII of the CSR legislation. This has opened a host of opportunities for companies, not only to meet the CSR mandate but also to partner with the government in nation building.

There is also immense scope for the scaling up of successful CSR ventures through collaborating with likeminded corporates though, so far, there is comparatively lesser acceptance of such partnerships by corporates. The feasibility of such collaborations needs to be deliberated further and corporates should come forward so that the impact of their innovative and sustainable projects may reach out to larger masses and eventually transform their lives.

Further, increasing the role that the employees play in CSR efforts will ingrain the value of social accountability in the company rather than it being treated as an isolated unit. It will also allow for an exchange of skills between corporates and implementing agencies, predominantly NGOs. Working with each other’s strengths and nurturing a sense of shared responsibility can shift the focus to outcome rather than output.

Mirroring the social orientation of industry, the Confederation of Indian Industry (CII), since its earliest days, has enabled and facilitated industry engagement with society. In its centenary year in 1995, CII set up the Social Development and Community Affairs Council, and CSR emerged as the strong fourth pillar of its agenda, along with policy advocacy, business & competitiveness development and international engagement. CII has been actively engaging, both with the Government and corporates, on policy issues to make CSR an actionable business agenda for inclusive and sustainable growth. A key objective has been to encourage effective CSR initiatives by channelizing the capacities of change makers; individuals and organisations to catalyse social change and synergize their work in the social sector with the resources of the corporate world. Besides the mission of placing CSR and social objectives on every boardroom, the CII Foundation and CII-ITC Centre of Excellence for Sustainable Development are the two institutions of its kind established as extended arms of CII engaged with issues concerning business and society.

CII has played an important role in developing the CSR rules under the Companies Act 2013 and subsequently shared its recommendations with the High-Level Committee to improve the monitoring of implementation of CSR policies. CII has also worked closely with the Government in developing the National Voluntary Guidelines. Views were shared with the Parliamentary Standing Committee on corporate governance, including review of the CSR compliance. More recently, the recommendations were given on the CSR Regulatory framework, implementation of CSR monitoring and evaluating & analysing of CSR outcomes. The mandatory requirement to disclose CSR governance as well as activities and spends, is intended to improve transparency about CSR. It cannot, however, mandate effectiveness and efficiency of CSR activities. That is largely left to the nature of engagement of the company and the vision it has for social change. Neither should regulators and legislators attempt to modify Section 135 to mandate effectiveness, efficiency and spends. Importantly, it will stifle innovation and creativity in development activities. The CSR legal framework is expected to provide an enabling framework, rather than a narrow and prescriptive one.

Actioning one of the recommendations made by the industry, the Government recently made amendment in CSR Legislation to include disaster management, including relief, rehabilitation & reconstruction activities under CSR activities. Given the increase in frequency of natural disasters that the country is facing and will face, this step will encourage prompt response and action by companies. This will especially strengthen and expand the relief efforts provided by companies during disasters.

In view of some path-breaking initiatives undertaken by corporates across the spectrum – in rural development, in agriculture, in rehabilitation of post-natural calamities, for poverty alleviation, skilling, education, etc. – we urge the Government to allow legroom to corporates to comply with the provision in a manner best suited to each one of them. This will help industry develop pioneering strategies and undertake meaningful CSR initiatives in a responsible manner.

Contributed by:

Dr. Raghupati Singhania

Chairman, CII National Committee on CSR,

Chairman & MD, JK Tyres & Industries Ltd.

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