Dr. JAI PRAKASH SHARMA
Dr JAI PRAKASH SHARMA is a Professor of Law & Corporate Governance, and the immediate past Head and Dean, Faculty of Commerce & Business at the Delhi School of Economics, University of Delhi. He has authored 20 books and over 100 research papers/articles published in several national and international journals of repute. His book titled ‘Corporate Governance, Business Ethics & CSR’ has its review written by Sir Adrian Cadbury, who in 1992 gave the world its first code on corporate governance. He is/has been Visitor’s (President of India)/Central Government Nominee on number of Central Universities. He is a Fellow Member of the ICSI and Member of several other professional bodies. He is member of Association of North America Higher Education International (ANAHEI)’s Educational Council. He is the Fellow Member of the Australian Academy of Business Leadership (AABL). He has been the Member/Chairman of the Governing Body of Shri Ram College of Commerce (SRCC), St. Stephens College, IP College for Women, PGDAV College, and Guru Nanak Dev College under Delhi University. He agreed to answer some of the queries made by HARISH CHANDRA on the status of CSR in our country.
What is the status of CSR movement in our country today with reference to initiatives of Narendra Modi Government?
There are three approaches to business that is ‘Shareholder Approach’, ‘Stakeholder Approach’ and ‘CSR Approach’. According to ‘Shareholder Approach’, which was practiced largely upto late 60s, the only responsibility of business is towards shareholders. Supporting the approach “The business of business is to do business, Noble Prize winner Milton Friedman(in 1976) pleaded that CSR is an unproductive activity and hence should not be promoted at the cost of shareholders. However, this approach has become outdated now.
In the late 60’s and early 70’s few multinational corporate bodies in USA coined the term ‘Stakeholders’ over and above the term ‘Shareholders’. According to ‘Stakeholder Approach’ primary responsibility of business is towards a long list of Stakeholders that in addition to shareholders, employees, suppliers, customers, government departments, includes even public at large. This Stakeholder theory and CSR complement each other. According to ‘CSR Approach’, because business is created by the society, so it has obligations towards the society and that is why CSR has now come at the centre stage across the globe.
Further, manufacturing activities are important because those give products, employment, revenueto government in the form of taxes. But, manufacturing activities have some ill effects too. In the process of manufacturing, a company consumes certain natural resources belonging to the society, though it pays for it. Additionally, every manufacturing process causes damage to the nature by the exploitation of natural resources (extraction of minerals), and results in pollution and damage to the environment in many ways (release of effluents, and pollution of water, soil, air, etc).But, it is not possible to close the industry as many interests are developed in the process like employment, dependent subsidiaries, and revenue in the form of taxes to the Govt. The polluter must pay for the damage to the nature and to repair the damage done, while damage done to the nature can’t be repaired. Therefore, those pleading for CSR are trying to find out a monetary equivalence to the damage done to the nature in the form of CSR contribution towards society.
India is perhaps the first country to provide CSR in its Statute. Countries like Indonesia, Mauritius, and France have CSR Legislations but in a very loose format.In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013. The Act lists out a set of activities eligible under CSR. As per the said section, the companies having Networth of INR 500 crore or more; or Turnover of INR 1000 crore or more; or Net Profit of INR 5 crore or more during any financial year shall be required to constitute a CSR Committee of the Board with effect from 1st April, 2014.
How can corporate sector contribute more effectively in the area of CSR?
Big corporate houses in the country have now come forward to support Modi government’s flagship projects Swachh Bharat Abhiyan. Major corporate houses such as L&T, Vedanta, TCS, Bharti, Ambuja Cements, Maruti, Tata Motors, Coca Cola, Dabur, DLF, Aditya Birla, Adani, Infosys, TVS, and many others have laid budget for Swachh Bharat Abhiyan. The projects vary from building toilets in schools and distant villages; waste management, cleanliness and sanitation. TCS and Bharti Foundation have both committed `100 crore each as part of CSR initiative to construct toilets in schools. While TCS has planned to finance hygienic sanitation facilities for girl students across 10000 schools in the country, Bharti has adopted Ludhiana and is working with Government to make the district open defecation free. DLF has launched a flagship waste management programme in villages surrounding Gurgaon. Apart from private firms, PSU Companies like Coal India, ONGC, OIL, IOC, have also invested in these projects.Following instructions from Petroleum Ministry in June 2017, PSUs will fund atleast `200 Cr for the 182 meter tall Statue of Sardar Vallabbhai Patel (Statue of Unity) which is being installed at the Sadhu Bet Island 3.5 South of Sardar Sarovar Dam in Gujarat. While ONGC and IOC will contribute `50 Cr each out of CSR funds, other profit making PSUs have been directed to pay 25 Cr each. Building Statue of Unity is the pet project of PM awarded to L&T and to be completed by 2018, costing `2989 Cr.
What is the future of CSR as an area of academics?
Since independence, the education sector in India has grown in rapidly and there have been significant improvements in this area. Major initiatives of the Government include offering education for all under the “Sarva Shiksha Abhiyan”. While school infrastructure and scholarships are receiving maximum support, issues such as pedagogy, early education, community awareness, etc. have remained unexplored. Most of listed companies in India prefer CSR in Education. A study by Samhita Social Ventures, based on publicly available information from the top 100 listed companies, shows that more than threequarters of them implemented at least one programme in education over the last three years. With Section 135 of the Companies Act 2013 making spending on CSR mandatory for qualifying companies, there is ample potential for the corporate sector to address the missing gaps in the education ecosystem.