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Delhi, 6 July 2022
Corporate Social
Responsibility
CATCHPHRASE OR REALISTIC?
By Dhurjati Mukherjee
Recently, Adani Group Chairman, Gautam Adani
hit the headlines after he committed Rs 60,000 crore ($7.7 billion) to social
causes on his 60th birthday. It is understood that the Adani’s
corpus will be administered by Adani Foundation, making it one of the biggest
transfers to a philanthropic trust in India. However, in fiscal 2021, Adani
donated Rs 122 crore towards disaster relief, mainly for Covid-related work,
ranking him eighth in the EdelGive Hurun India philanthropy list. Adani’s
contribution in the past three years has been just Rs 302 crore, much
below that of Azim Premji’s Rs 18,070 crore or that of Mukesh Ambani (Rs 1437
crore) or even K.M. Birla (Rs 732 crore).
But though some of the figures may appear
impressive, the question arises whether the funds are going in the positive direction,
i.e. to the right projects and the right people? Though India is globally the first
country to make corporate social responsibility (CSR) mandatory, following an
amendment to the Companies Act 2013 in April 2014, businesses can invest their
profits in areas such as education, poverty, gender equality, and hunger as
part of any CSR compliance. However, it is necessary to know whether the funds
are not manipulated by the corporate houses and projects are funded after
judicious and transparent decisions.
The United Nations Industrial Development
Organisation (UNIDO) describes CSR as a management concept, whereby companies
integrate social and environmental concerns in their business operations and
interactions with their stakeholders. CSR is generally understood as being the
way through which a company achieves a balance of economic, environmental and
social imperatives, while at the same time addressing expectations of
shareholders and stakeholders. It is important to draw a distinction between
CSR, which can be a strategic business management concept, and charity,
sponsorships or philanthropy.
However, let us focus on how business and
commercial establishments look into interests of society, specially donating to
make available goods and services for the marginalised and impoverished
sections through CSR. According to Jeremy Moon, Professor of CSR at Nottingham
University: “Business social responsibility . . . . refers to the voluntary
contribution of finance, goods or services to community or government causes.
It excludes activities directly related to firms’ production and commerce”.
The concept of CSR has emerged as a major
buzzword for the last several years, the world over, with members of the
business community, academicians, politicians and prominently activist groups.
In the western world, CSR was quite popular even a decade or two back but in
countries such as India, the business community has been rather reluctant to
contribute till only after the government came forward with the legislation.
The practice of CSR is subject to much debate
and controversy. It is argued by the protagonists of CSR that there is a strong
business case for this responsibility, in that corporations benefit in multiple
ways by operating with a perspective broader and longer than their own
immediate, short term profits. On the other hand, the critics argue that CSR
distracts from the fundamental economic role of business, while others argue
that it is nothing more than superficial window dressing.
The question that arises at this juncture is
whether the crores spent by corporates are in the right direction and benefit
the section of population which has to struggle for a dignified existence. It
has been found that most funds of corporate houses are channelised through
trusts that are directly or indirectly known to them or to their associates.
Thus, major funding is not necessarily geared for the appropriate projects that
would have enhanced the process of development.
Reports indicate that if CSR funds provided
during Covid-19 pandemic are not taken into account, funds in healthcare funds
and sanitation during the last few years, are meagre. There are also reports
that many companies show manipulated figures for CSR by window-dressing
reports. Furthermore, many of the companies are not engaging in CSR activities
even though it is mandated in law. Such companies use various excuses and
loopholes to justify non-utilisation of funds in CSR activities. There are also
companies that do not report on CSR activities altogether.
Furthermore, companies undertake such
activities blindly which may not produce long-term benefits for the society.
For example, they have no plan to enable the unemployed to earn a living. There
have been suggestions that if the companies provide training for skilled work
and identify areas where there is a need, they might be better off in the long
run. It also needs to be mentioned here that in the fast-changing world,
capacity building of the CSR workforce and re-skilling them are always relevant
and key to CSR performance.
One of the reasons for the unsuccessfulness
of the CSR legislation in terms of impact is the lack of knowledge of the
officials of the company regarding social, economic and environmental issues.
This leads to the company utilising CSR funds in an unsuccessful manner by
typing up with non-professional NGOs or just throwing away the money at widely
publicised social causes in an unregulated manner.
If the effective impact of the CSR
legislation is examined, there may be many loopholes in the legislation due to
which it is not producing the desired impact. For example, Section VII which
states the activities in which CSR funds may be utilised is very broad. This
allows the companies to only engage in such CSR activities that are directly or
indirectly beneficial to the organisation. This leaves out many activities that
are not beneficial to the impoverished sections, as a result of which CSR funds
go to specific sectors.
Concerted action needs to be taken to ensure
better utilisation of CSR policies. These include: One, there should be greater
awareness amongst directors, who work for companies which have to comply with
Section 135 regarding CSR activities. This can be done by ensuring that these
activities are widely publicised as being helpful to society. Two, companies
can tie-up with non-governmental organisations (NGOs) which align with the
vision of the company or even otherwise. For example, there are many organisations
raising funds through the CSR activities of the companies to help the
environment and the underprivileged.
Three, companies should engage in such activities
which they are familiar with. For example, a company which is dealing with
online education can provide such education packages to underprivileged
children for free or give scholarships. Organizations which are in the business
of energy, can install power houses in rural areas where electricity is still
not available and so on. Four, there is a need for active participation from
the company to focus on not just immediate results but long term
commitment towards social causes.
It is critical for corporations to create a
fine balance between earning profits and providing value to society. This not
only helps in making the society a better place, but also ensures a better
brand image and provides competitive advantage to the company. While the CSR
legislation was introduced with a positive motive of helping the society, it is
a long road ahead to successfully implement the provisions pertaining to CSR,
so that the impoverished sections of society can benefit. At the same time, it
is necessary that corporates lend a helping hand with a larger kitty of funds. Given
the population more can never be enough, but an honest endeavour must be the
aim.---INFA
(Copyright, India
News & Feature Alliance)
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