Spotlight
New Delhi, 19 December 2020
Enhanced CSR
DOING GOOD IN BAD
TIMES
By Moin Qazi
In
a free enterprise, the community is not just another stakeholder, but is in
fact the very purpose of its existence. — Jamshedji Tata
Corporate altruism in India has found a new
purpose since the advent of the Covid-19 pandemic. With the nationwide lockdown
hard-braking economic activity on the one hand and disrupting lives, especially
of the poor, on the other, companies have not only opened purse-strings but
also rolled up sleeves to respond proactively to the pandemic. Over the past
few months, corporates have been using all or most of their Corporate Social
Responsibility (CSR) kitty to combat the pandemic, be it through contribution
to the PM CARES Fund, other relief funds, distribution of food, masks, personal
protective equipment (PPE) kits or relief material to the needy.
The CSR agenda got a wider role in pandemic
management with the government expanding the
scope of CSR spending to include companies engaged in research and development
(R&D) of new vaccines, drugs and medical devices. These amendments to the
CSR rules permit such companies to categorise as CSR activity any Covid-related
R&D activity even if undertaken as part of its normal course of business.
CSR is a concept whereby firms integrate social and environmental concerns into
their business operations and is generally understood to be a tool for
achieving a balance between economic, environmental and social imperatives,
while addressing expectations of shareholders and stakeholders.
In the global economy, stakeholders include
customers, suppliers, employees, communities, and financiers — shareholders,
bondholders plus banks and other sources of capital — and they are all
intertwined.
In fact, when we flip through the world’s
business history, we find that all large mercantile communities were great
patrons of the art of philanthropy. They regarded it a divine tradition. The
world today is witnessing a growing realisation in enterprises of the
importance of altruism. Hence, a great deal of money has been flowing into the
social sector. Like individual citizens who have moral and social
responsibilities, businesses are being perceived as corporate citizens who need
to commit time, talent and resources for welfare of society as they draw their
sustenance from it.
CSR aims at managing a business in a way that
it contributes towards sustainable development by delivering social, economic
and environmental benefits to all stakeholders. It addresses issues like human
rights, corporate governance, health and safety, environmental effects, working
conditions and contribution to economic development. Whatever the definition
is, the purpose of CSR is to drive change towards sustainability.
We are seeing the emergence of a new crop of
mega donors who are upending long-established norms in philanthropy. Not only
are they increasingly willing to take on hot-button social and political
issues, they also have a problem-solving and impact-making mindset. CSR is now
being recognised as a critical component to an organisation’s values, its
operating ethos, its business strategies and its purpose. Businesses are being
measured on financial and social metrics.
Over the years there have been many voices
within the business community who believe that companies must break out of
conventional preoccupation with profit and do more to address the world’s
pressing social needs. The chorus has been joined by leaders from civil
society, governments, policy think tanks and world bodies on education, health
and rehabilitation. Business leadership has acknowledged the demand for
enlarged corporate responsibility in ways which can reflect a profound
attitudinal change individually and collectively.
Beyond profits and share prices, companies
are now standing up for their beliefs, their customers, and employees. They are
integrating social missions into their business operations. In this new model
of social and public impact, companies are using the power of their brands to
speak out on major public policy issues.
CSR is rooted in the knowledge that
businesses have a duty to enable all living beings to get a fair share of the
planet’s resources. Businesses are powerful constituents of society and the
most respected businesses feel oriented to do much more than making money; they
exist to use the power of business to solve social and environmental problems.
They are involved in a wide variety of community development projects related
to education, health, skills training, entrepreneurship, women empowerment,
food security, livelihoods and supporting services for the differently-abled.
India has a unique law—the Companies Act,
2013, and the Corporate Social Responsibility (CSR) Rules—which came into
effect on April 1, 2014. India is the first country to require companies to
expend resources on CSR programmes. The approved activities under Schedule VII
of CSR include eradicating extreme hunger, poverty, and promotion of education,
promoting gender equality and women’s empowerment as well as reducing the child
mortality, improving maternal health and combating diseases. Ensuring
environmental sustainability and prompting employment enhancing vocational
skills are other activities approved under CSR.
The push for legislation came because
voluntary CSR encouraged practices such as free-riding (companies taking
advantage of benefits without actually spending), greenwashing posing
as CSR, and false disclosures. However, CSR could be more socially
relevant when it is a voluntary exercise driven by altruistic motives rather
than a mandated policy that prods businesses to use creative means to
camouflage business promotion activities as socially driven programmes. It is
very difficult to legislate moral obligations. Laws only set minimum standards,
but do not create an impetus for charitable action.
There are marked aberrations in the CSR
agenda and they need a course correction. Many businesses are using these
opportunities for enhancing their social profile and in the process expanding
their business markets. These CSR projects are now the fulcrum of aggressive
brand building exercises and are being leveraged to their fullest mileage.
Charity leaders have a geographic bias with corporations funding projects
closer to their headquarters. Consequently, more remote regions where
development aid is acutely needed are being bypassed and deprived of this new
social revolution. Politics can skew priorities, with some companies looking to
gain goodwill by backing government-led projects rather than initiating
independent initiatives. A popular CSR activity is contributing to natural
disaster relief funds, which is probably directed at scoring favourable points
with the political party in power.
There can be a subtle use of CSR to brush off
bad reputation as well as camouflaging of the dark acts in marketing. CSR
has been peripheral in most organisations and is not woven into the fabric
of the business. Even as annual CSR spend is on the rise, the impact on the
ground and effective deployment of the funds remain a matter of debate. It is
not necessarily always transparent and mission-oriented and there may be
strings attached-terms that dictate exactly where and how it must be used.
CSR could be a moral counterbalance for
practices that have had direct negative impacts on the poor. It often masks and
smokescreens corporate irresponsibility aid conditionality and treaty
commitments have significantly constrained policy making. Reporting requirements
are onerous and often impose huge administrative burdens for organisations
which must devote the scarce skills of educated, English-speaking personnel for
writing reports for donors rather than running programmes.
It is wise to remind ourselves again of the
advice of Henry Ford: “A business absolutely devoted to service will have only
one worry about profits. They will be embarrassingly large.”---INFA
(Copyright, India
News & Feature Alliance)
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