Madhavi Rajadhyaksha in Times of India
Volunteering, philanthropy and adopting causes are passé. Corporate Social Responsibility (CSR) seems to be the latest buzzword in the development sector, as was evident at the NGO India 2013 conference which brought together social sector professionals, corporate chiefs and social entrepreneurs in Mumbai, last week.
The buzz is not unfounded, given that an upcoming legislation, the Companies Bill, 2012 mandates CSR for companies above a certain threshold. The proposed legislation requires that companies with a net worth of Rs 500 crore or more, a turnover of Rs 1,000 or more or a net profit of five crores or more during a financial year must set up a CSR committee and come up with a CSR policy of their own. The bill which has been passed by the Lok Sabha and awaits the Rajya Sabha nod also mandates that companies spend at least two per cent of their average net profits made during the three preceding years towards CSR.
There is no denying the scope for corporate involvement in India’s social development. But there are many concerns about the government-mandated CSR that may be worth deliberating upon, even if we leave aside the core argument about whether making CSR compulsory for companies is justified or not.
There is concern in many quarters about how the practice of CSR is being conceived in the first place. Why is CSR something that is to be practised by a company after it reaches a certain level of profits rather than something every company incorporates in its practice? Why is it conceptualised as an external activity alone? Prerana Langa, CEO of YES Foundation validly pointed out that you can’t be doing CSR if you aren’t treating your employees’ right. Isn’t ethical procurement, equal opportunity employment, bridging pay gaps or environmental sustainability also part of the CSR agenda? Shouldn’t we be talking about how these practices too be measured, monitored and their impact assessed?
The bill leaves much flexibility as to activities that could be included in CSR. It cites some areas ranging from eradicating hunger and poverty, promotion of education, reducing child mortality and improving maternal health. It requires companies to “give preference to the local area and areas around where it operates” for spending its CSR budgets. Nisha Agrawal, CEO of Oxfam India voiced fear that this could make corporates veer only towards service delivery (usually popular health and education services) which were primarily the government’s responsibility.
There was a striking consensus among the experts gathered that there is a shortage of skilled workers to meet the needs of a sector that would be flush with funds, if the bill were to go through. Nikhil Pant, chief programme officer, National Foundation for CSR, ministry of corporate affairs assured that they were in the process of rolling out nine-month courses to train a cadre of CSR professionals. Praveen Agarwal, chief operating officer of Swades Foundation wondered if the government could encourage people to join the sector by offering some kind of tax incentives. It is worth questioning whether an able cadre would be ready, if the reporting was introduced from next year?
Whether CSR would help leverage true development in the country in the years to come, or merely become another audit book for companies to tick off, only time will tell.