India is at the cusp of emerging as a global economic superpower, with government policies and programs redefining this dynamic nation’s growth. It has set global benchmarks in Corporate Social Responsibility (CSR), that will determine businesses globally would redefine their work and contribution to National Building.
A national interest and debate on the potential role of Corporate Social Responsibility (CSR) in nation-building and the corporate sector’s responsibility in achieving Sustainable Development Goals (SDGs) is the way to go forward for a country like India.
We have witnessed that over the years, the implementation of CSR has gathered critical mass and is now poised to consolidate and grow further. In India, CSR awareness and CSR consciousness have increased exponentially among large and medium-sized companies.
The companies now look at CSR to build a strategic fit with the community and environment in which they operate. Most importantly, industries and businesses have ensured that the CSR mandate is aligned with national priorities such as public health, education, livelihood, water conservation, natural resource management, etc.
Enactment of the Companies Act, 2013 by the Ministry of Corporate Affairs, Government of India was one of the world’s largest experiments in introducing CSR as a mandatory provision by imposing a statutory obligation on Companies to take up CSR projects towards social welfare activities. This has made India the only country that has regulated and mandated CSR for some select categories of companies registered under the Act. This CSR Initiative will push the nation towards achieving sustainable development goals and public-private partnerships in transforming India.
datavyam iti yad danam diyate ‘nupakarine
deshe kale cha patre cha tad danam sattvikam smritam
{Chapter 17, verse 20}
It means:
“Charity, given as a matter of duty, without expectation of any return, at the right place and time, and to the right person, is said to be sattvika.”
The Corporate Social Responsibility concept in India is governed by Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014, wherein the criteria have been provided for assessing the CSR eligibility of a company, Implementation and Reporting of their CSR Policies. India’s most elaborated CSR mechanism and implementation strategy has started its journey to set a benchmark in attaining sustainability goals and stakeholder activism in nation-building.
The CSR ambit is getting bigger, and in upcoming years, it will become a unique knowledge base for analyzing and achieving sustainability goals among various large economies. India is a country that has assured by mandating CSR through its legislative action.
Inclusive growth is widely recognized as an essential part of India’s quest for development. It reiterates our firm commitment to include those sections of society in the growth process that had hitherto remained excluded from the mainstream of development. In line with this national endeavor, Corporate Social Responsibility (CSR) was conceived as an instrument for integrating social, environmental, and human development concerns in the entire value chain of corporate business.
Former President of India, Shri Ram Nath Kovind, recently observed CSR is a true manifestation of the trusteeship philosophy of the Father of the Nation, Mahatma Gandhi. He stated that CSR has now become an integral part of business philosophy. Companies also carry out activities that benefit the poor and needy, including women, people with special abilities, rural areas, slums, etc.
CSR is no longer an act of philanthropy. Rather it now flows out of business responsibility towards society and the environment. The government has a tie and reiterated that it does not view CSR as a resource gap funding. Instead, it is expected to provide technology and innovation to address long-pending challenges in the country. Disseminating information about the work done by companies is necessary to create a positive sentiment about CSR. Equally important is to sustain the work that a company has initiated in this area.
CSR cannot be a one-size-fits-all approach, especially since India is such a vast country with diversity and varying levels of development in different parts of India. CSR experts opine that while developing programs, industry leaders must look at issues relevant to other regions. At the same time, they must ensure that companies look across India and not concentrate on a few pockets.
CSR experts have stressed that the industry must work closely with non-governmental organizations to get better results. NGOs have the pulse of development needs at the grassroots and can provide immense local knowledge and tailor the last-mile connectivity in the delivery of programs.
Union Finance Minister Smt Nirmala Sitharaman has stated in public forums that CSR is not merely a contribution of funds. It is the corporate contribution towards inclusive societies that matters. She has emphasized that companies should strive for the development of the North Eastern region of the country. She assured the industry that while administering the law, the core spirit of CSR shall be protected, and the MCA would encourage, and not force, companies to come forward and embrace CSR.
The last few decades have seen significant economic growth and integration into the global economy, resulting in several changes in the business landscape. The role of businesses within the larger society has come under intense scrutiny by several stakeholders. Governments across the world have been using different forms of regulation to shape corporate behavior, with calls for increased accountability, disclosures, and actions from them.
Every stakeholder should remember that CSR’s primary objective was not to mobilize resources for government to bridge the resource gap in meeting Sustainable Development Goals (SDGs). The primary aim is to promote responsible and sustainable business philosophy at a broad level and encourage companies to come up with innovative ideas and robust management systems to address social and environmental concerns of the local area and other needy areas in the country.
Promoting the uptake of CSR amongst SMEs requires approaches that fit the individual needs and capacities of these businesses and do not adversely affect their economic viability. UNIDO based its CSR program on the Triple Bottom Line (TBL) approach, which has proven to be a successful tool for SMEs in developing countries like India to assist them in meeting social and environmental standards without compromising their competitiveness.
The TBL approach measures and reports corporate performance against economic, social, and environmental performance. It is an attempt to align private enterprises to the goal of sustainable global development by providing them with a more comprehensive set of working objectives than just profit alone. The perspective taken is that for an organization to be sustainable, it must be financially secure, minimize (or ideally eliminate) its negative environmental impacts, and act in conformity with societal expectations.
“While CSR activities are generally viewed as an onerous task or an imposed regulation, approaching this as a ‘tick-in-the-box’ process may expose an organization to fraud risks arising from ineffective due diligence and poor monitoring. Reach out to us to know where your exposure to the risks of fraud may lie and how we can help mitigate those risks,” states a Deloitte Report.
CSR experts and industry observers point out that a properly implemented CSR concept can bring various competitive advantages to businesses. They can look at enhanced access to capital and markets, increased sales and profits, operational cost savings, improved productivity and quality, efficient human resource base, improved brand image and reputation, enhanced customer loyalty, and better decision-making and risk management processes.
Over the past 30 years, there has been an unprecedented upsurge in interest in corporate social responsibility and sustainable development functions impacting the workplace. CSR and SD across managerial and political spheres at local, national, and transnational levels have seen a major transformation in many businesses in India. Both concepts have to do with organizations’ relationships with their key stakeholders and point to “context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance.”
A recent International Labour Organisation Working paper highlights that CSR/SD functions cover many emerging social and environmental issues: for example, loss of biodiversity and climate change, or, more recently, socio-economic issues related to the COVID-19 pandemic.
Confederation of Indian Industries (CII), in its blog, sums up the emerging trend in CSR, “While CSR today has become a business imperative in the community engagement aspect of CSR, the focus overwhelmingly lies on communities and their betterment. This, in turn, brings enormous benefits to businesses and results in happier employees and loyal customers. Thus, community engagement has become important to achieving business growth and excellence.” It further highlights that giving back as a part of the business plan can take several forms, from investing in the local community to supporting local charities to organizing and volunteering in community projects. Businesses, by way of greater community engagement, can support and contribute across diverse sectors, including education, healthcare, job creation, skilling and training, and women empowerment, to name a few.
The apex industry blog also points out that organizations must align their business practices with community engagement goals. It reiterates that socially conscious investors screen potential investments with the help of the ESG (Environmental, social, and governance) criteria. They set their priorities in line with these concerns instead of just considering the potential profitability and the risk of the investment. ESG-minded businesses also gain more traction and have more chances of becoming more valuable and viable in the long run.
The role of businesses in supporting social developments cannot be underscored as a report of the high-level committee on Corporate Social Responsibility 2018 stated the committee has endeavored to view businesses as partners in the process of achieving social outcomes. It recognizes that mandatory CSR requirements have no precedence anywhere else in the world, and there are no best practices or benchmarks to draw upon.
Further, with the world facing tremendous uncertainties in the face of several major global events and developments, there is a growing consensus, as well as a realization of the role of businesses as responsible stakeholders of society.
Their contribution through CSR will help address inclusive development and growth, climate change, gender gaps, and poverty and income inequality challenges. The contribution of CSR to nation-building is more important today than ever.
