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Transcript: Part III - Corporate Social Responsibility in India

Author: ENN
Year: 2017
Resource type: Other


Sonali Patnaik, Director of Arupa Mission Research Foundation

SP: I am Sonali Patnaik, I’m an anthropologist, and I’ve been working with an organisation called Arupa Mission Research Foundation. We work with the government as well as the civil society and we have had the opportunity of working with a large number of donors as well as corporates on both CSR and prevention of sexual harassment at the workplace.

Q1. Tell us about the CSR (Corporate Social Responsibility) law which requires companies to donate 2% of profits to social causes? 0’37

SP: India is not new to CSR as such; I mean, if you talk about philanthropy, it’s there, in the Indian blood, we do talk about doing things for others, anything in excess is generally supposed to be shared. So they clearly set out rules and regulations, and they have Schedule VII also included in it, which talk of areas where you can, as a company, put in your money for people, and how you should be reporting, and also how much of the money you should be spending; they are not talking of spending all the profit, but 2% of the previous three years. And, in fact, when they started working out on the categories of companies, it was large, medium, or small enterprises, and they developed categories saying that a company with an annual (turnover) ³1,000 crores, or a company with a net worth of ³500 crores, or small enterprises with ³5 crores profit in the past 2-3 years would qualify for it. So giving this kind of criteria, based on the structure, size, and the profit that the companies are making, one could clearly see that a large number of companies would come under it. If you look at the GDP of the country as such, we’re just touching the trillion now, and India is going to be the tenth largest economy in the world, then in 2013, when the (Companies) Act came up, they were expecting about 8,000 companies to fall into the CSR process. And it was expected that 3-4 billion Rupees in terms of INR would be actually part of that GDP and would add onto achieving the sustainable development goals for the country. So, that’s how this whole thing started, has been continuing, and is taking shape. It’s a very naïve Act, as every few months, we do have new notifications given the new changing scenario in the economic and social sector. So things are shaping up quite a bit.

Q2. How is CSR spending allocated to different issues? Is there convergence with government priorities? 3’08

SP: In India, now, I think, there is a transformation. Since the transformation has been from philanthropy to outcomes, there is a little bit of convergence that has happened between the government and the corporates. This convergence, I think, the Act is responsible for it, because the Act clearly says that you should be working on health and nutrition, as one of your initiatives. To that extent, there is convergence, but then, it depends entirely on what the policy of the corporate is. One cannot force a corporate to take up a certain agenda but one can bring them to a platform and try to convince them that ‘okay, there is an issue of importance, and we would like you to be part of it and to help us resolve it’.

Q3. Which ministry is in charge of the CSR initiative and how is it monitored? 4’07

SP: So, the Ministry of Corporate Affairs has the mandate to take the CSR initiative forward. It has established an institution called Indian Institute of Corporate Affairs, where they have a whole set of professionals working on just CSR. They are training people from companies on the legal aspects of CSR, (as well as) how their money should be spent, as well as training people from the civil society on how they should be working on CSR, and how they should be reporting to the government, dealing with the corporate, and about what areas they can work on. So it’s like an area of convergence, they play the role of a convergence unit for the government, for the civil society, and for corporates, giving a lot of advisory and inputs also. But they do not have any proper monitoring mechanisms as such, because we do not have reports coming from the Ministry of Corporate Affairs, saying that ‘out of 8,000 (corporates) that we have listed, this is the status of CSR spending’. It is other private organisations, like CRISIL, KPMG, or E&Y,  or even Deloitte who come up with reports, or even the NGOBox which regularly comes up with reports. They all take samples, and these samples vary, every 6 months you would have a new report, and the samples would vary, the companies would vary, so there would be varying data on CSR spending and how effective it is. So that’s one area which needs to be worked upon: how it is going to be monitored.

Q4. What are the perceptions of CSR amongst companies in India? 6’05

SP: So, the perception of CSR, I would say, varies from company to company. We can break that up into 2 categories. One is, of course, the public sector and units that are there, and the private sector. But again in the private sector, you have those that are run by a board and those which are owner-driven. So, there is a lot of difference between an owner-driven company and a company that is run by professionals from different areas of work and (who) are part of the board. For example, an owner-driven company looks at it as a family business and they still work in that philanthropy mode; so, they think that whatever we do is an act of charity, is an act of kindness, and it can be done randomly, anywhere, and as per their will. So, it could be something like an annual (function) for a school, or giving money to buy shoes or clothes, or something like that. But it doesn’t add up to anything related to indicators of the Sustainable Development Goals or to any outcomes, meaningful outcomes rather. And these are very short-term, maybe 2 days, 3 days, or whatever. But then, there are companies who take CSR very seriously also, and I think taking CSR seriously becomes important for them, one because of the leadership – it is very important to have a leader who actually feels that ‘Yes, business should be responsible and (you) should be giving back to the community’ – and otherwise, because they are forced to do CSR because the Act says ‘You have to do it’. And therefore, they have some professionals engaged in the sector, and these professionals take it forward. Now, when it comes to professionals working in the sector, they are of 2 types: one would be maybe giving an additional charge of taking CSR forward and he or she may not have the experience of actually implementing a CSR project, and that’s where it makes a lot of difference; but then, (if) you have hired someone who is already a professional with a lot of experience in doing social development work and has worked on baseline and indicators, then yes, of course, it takes a very good shape. So, the companies who believe in it, and when they start believing in it, it becomes part of the culture and they absorb it, and every employees engage in it in some way or another, so they feel it is just part of their everyday thing. So there are a lot of examples of such companies also.

Q5. What causes do most companies support through their CSR? 9’00

SP: It is in some way or another connected with what they are doing. If it is a global company, they would have a global CSR policy; so the company registered in India would have to match its CSR policy with the law of the land as well as the global policy. Then, of course, the Prime specific on WASH - Swachh Bharat - so that’s also taken an interest, and they would rather donate money to the Prime Minister’s Fund for WASH and be part of this campaign.

Q6. Which Indian States have most successfully taken on CSR, and why do you think that is? 9’48

SP: So, there was a report published by NGOBox in April 2017, and I think this is the latest report that we have, so based on that, one could say that Maharashtra, Gujarat, Tamil Nadu, Karnataka, are the first top states as far as CSR is concerned and a lot of money has gone into these states. The others would be West Bengal and Rajasthan. That’s where the states are. But then again, if you take a look at the way the states function, why some states are lagging while others are moving ahead on CSR, it has a lot to do with the leadership in the state actually and whether the state has an enabling environment for CSR to take place and what the CSR thought process is in the state.

Q7. How can we make nutrition more appealing for companies to take on through their CSR work and spending? 10’54

SP: So, nutrition is not considered stand-alone in CSR. And I don’t think it has been given its due importance. Although, in Schedule VII of the Companies Act, (in) the clause that describes what activities one can take up, the government has mentioned hunger and malnutrition as one of the important areas of intervention; but nutrition is not very much on anyone’s agenda unless the company is into food production or something to do with fortification of food directly or indirectly, it doesn’t feature or unless the policy says that it has to have nutrition in it. It also depends of the global policy of the company because the company’s global policy if it has to do with health and nutrition, then yes, they would have it as part of their policy; and then in the country itself, wherever they are registered, they would include that in their agenda. But it is a very conflicting issue and there is a lot of politics always around nutrition, and there are very few companies who actually support nutrition directly. So nutrition needs to be brought onto the table of CSR.

Q8. What changes would you like to see in the coming years to improve the implementation and impact of CSR activities in the country? 12’35

SP: At the national level, yes, there is an enabling environment; we have given scope to companies to come forward and spend money on development issues. But at the level of the states, it’s not there, not across all the states in fact. So we need policies, standard policies at the state level also, and an enabling environment at the state level, that’s where advising the government becomes very important. And then, also, there is this issue around monitoring. Now the only thing that the government asks them for is one or two pages on ‘how much money have you spent?’. And then of course there is compliance on your sustainability report. But then there are no impacts, no monitoring of actually whether any differences have been made and all that. So, from that perspective, I think having some processes in place would have been good from the government’s end. And that would be something that we would advise for all the states, not just at the national level. And also, the engagement with the civil society has to be enabling because it is finally the civil society that the corporates are going to be working with; they are not directly working with the government. Sometimes, they do support the government on certain issues, but then when it comes to implementation, that’s where civil society plays a very important role. Right now, the way things are going, (for) the civil society, there is a trust deficit between the government and the civil society as such. So, in fact, advisory will be around that: how to remove that trust deficit because we need to reach out to more and more people, and by building more barriers it’s not going to be possible to reach out. And who’s going to monitor the activities of the government? We need social audit also. It can’t be just the government saying that ‘okay, this is what has to be done’; there has to be a checking balance and that’s why the 3 partners need to work together. So the strategy for that, for the working of these 3 partners together is very important, and that should be part of the advisory that we would be interested in actually.

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