In the words of William Clay Ford Jr. Chairman of the board and CEO of Ford Motor Company, “There is difference between a good company and great company. A good company offers excellent products and services. A great company also offers excellent product and services but also strives to make the world a better place.”
Corporate Social responsibility is a Ubiquitous term in the 21st century, as CSR not only deals with the economic growth and sustainability of business on global level, but it’s all about how to achieve its goal of sustainable development through CSR activities. In India, the ministry of corporate affairs in the year 2009 issued Corporate Social Responsibility Voluntary Guidelines, with an attempt to formalize firms responsibility towards its citizens and society and to establish a concrete pillar for CSR. The government in a progressive step attempt to mandate CSR activities for companies by enacting section 135 of the Companies Act, 2013. Now, for the very first time in India, it was mandatory for the companies to contribute certain amount towards CSR activities as well as report the same. This very enactment brought the CSR activities of the Indian corporate under the purview of Corporate Law.
Section 135 of Companies Act, 2013, mandated companies with either net worth of INR 500 crore or more, or turnover of INR 1000 crore or more, or Net profit of INR 5 Crore or more to:
- CSR committee of at least 3 directors, there should be at least one independent director, should be constituted and;
- Under the guidance of the CSR committee, at least 2 percent of the average net profits of the company made during the three immediately preceding financial year, to be spend by companies in every financial year under the new Corporate Social Responsibility policy.
The committee must also ensure that the CSR activities given under schedule VII of the act, is performed by the companies. The companies must give preference to local community and area around it where it functions. The list of activities companies needs to invest are given under Table 1.
Table 1. schedule VII, list of government proposed Corporate Social Responsibility, as amended on 30 May 9, 2021
|(i)||Slum and rural development projects;|
|(ii)||Disaster management, including rehabilitation, reconstruction and relief activities;|
|(iii)||Training to promote, Paralympics sports, nationally recognized sports, Olympic sports and rural sports;|
|(iv)||Promoting health care including contribution to Swach Bharat Kosh initiative of Central Government to make available safe drinking water and promote sanitization. And to eradicate poverty, malnutrition and hunger;|
|(v)||Promoting education and employment enhancing vocational skills among women, children, differently abled, elders;|
|(vi)||Promoting gender equality, women empowerment, setting up homes, day care centers and measures to reduce inequality faced by socially and economically backward groups;|
|(vii)||Measures for benefit of armed forces veterans their dependents and war widows; and|
|(viii)||Protection of art, culture and national heritage.|
In 2018, the government of India stated its strategy of achieving sustainable development through a document called New India@75. The document circles around development goals of India, which is built on the UNSDG framework, the agenda not only aims of India becoming a 4 trillion-dollar economy by the end of 2022 but also achieving its sustainable goals by 2030. This vision is greatly supported by the new CSR policy, by infusing more in the social sector. According to the Dasra’s report, social sector has seen 11% increase in fund.
A report by KPMG in 2020 suggested that almost 80-90% of the companies are interested in investing in primary education and health care leaving behind areas like livelihood, human rights, food etc. with dearth or no funding. This information highlights two things, first company are willing to fund and take initiatives in SDGs but, second, they have restricted themselves to contribute towards only certain specific areas.
In the year 2018-19, Infosys Limited, a digital services and consulting has spent Rs342 crore towards various schemes of corporate Social Responsibility. The company distributed its fund on various schemes like introduction of Aarohan Social Innovation Award, in collaboration with Bangalore Metro Rail Corporation Limited supporting the construction of metro station, conservation and restoration of water bodies in Karnataka, providing relief in the state of Tamil Nadu, Kerala and Karnataka and ensuring sports excellence through Go Sports Foundation.
Mahindra & Mahindra, Indian automobile manufacturer promoted and focused on education for the socially and economically backward groups. Its CSR scheme is design in such a manner to focus, promote and invest in livelihood training, healthcare for remote areas, scholarships, disaster management and water conservation. It even runs a program Nanhi Kali which focuses on education for Girls. It also provided Industrial training through Mahindra Pride Schools, and healthcare in remote areas through lifelines Express.
India’s biggest cement company, UltraTech Cement provides social work in 407 villages to establish sustainability and self- Reliance. It CSR activities focus on education, healthcare, social welfare, family welfare and sustainable livelihood. The company also organizes plantation drives, industrial training, organic farming, medical camps, sanitization, school enrollment and immunization programs.
Under the CSR program, Marutik Suzuki Indian Limited, automobile company, on the completion of its 10 years, has achieved an important milestone by successfully training 15000 tribal youth in driving training, making them employable. 70% of the candidates have started their own business or have secured employment.
On the similar lines with UNSDG, Tata Power has achieved economic and societal development. Tata power focuses on working closely with and for the benefit of local and remote communities. Some UNSDGs supported by Tata Power
|a)||Act of Mahseer: four-decade long initiatives that creates livelihood for the local communities as well as protect and conserve fresh water fish.|
|b)||Under the Mamta and Sammaan Initiatives it has built approx. 13,500 household Toilets.|
|c)||Around 1050 employment given to women across 13 states under the Dhaaga Initiative.|
|d)||Scheme Vidyasagar has benefitted around 16 lacs children.|
In collaboration with Lupin Human Welfare & Research Foundation and Rajputana Society of Natural History, Coca Cola has set up watershed in areas that were facing server water crisis.
An analysis can be drawn that, A lot of firms are actually working and providing funds to achieve sustainable development goals and because of their CSR activities India is evolving and is few steps closure in attaining global goals. CSR activities have surely created a path and is helping India to achieve Global Goals.
Table 2. CSR and Sustainability top 10 Indian companies:
|1. Tata Chemicals||Tata Chemicals|
|2. Ambuja Cement||Infosys Ltd.|
|3. Infosys Ltd||Bharat Petroleum Corporation|
|4. Mahindra & Mahindra||Mahindra & Mahindra|
|5. Tata Motors Ltd.||ITC Ltd.|
|6. Tata Power Company Ltd.||Ambuja Cement|
|7. Bharat Petroleum Corporation||Tata Motors Ltd.|
|8. ITC Ltd.||Vedanta Ltd|
|9. Hindustan Zine Ltd.||Hindalco Industries Ltd|
|10. Indian Oil Corporation||Toyota Kirloskar Motor India.|
It can be concluded, India currently contributes 20% towards sustainable development in 10 out of 17 goals, thus it is very crucial for India to develop more stringent practices in moving towards a more sustainable future. It can be further stated, with the implementation of new CSR policy under the Companies Act, 2013 a guided path has been created towards achieving a more sustainable future. Niti Aayog revolutionized India performance towards achieving the SDGs by ranking Union Territories and State and even conducted extensive work on how to achieve the SDGs at local level.
Thus, India has not fully achieved Global Goals, but because of the new CSR policy many large corporations and business houses are voluntarily taking initiatives for the protection of environment and society. Organizations in India are taking steps towards creating a better society. The new CSR policy is not only making firms accountable but also realizing them to value and work towards society’s development. CSR is helping India to achieve sustainable development.
However, the current CSR policy is working but it is lacking in various way, like there are no proper mechanism for its effective implementation, lack of community participation, issue of transparency and no availability of well-organized non-governmental organization etc. and it can be concluded from the above that most of the firms are only contributing in certain sectors and some sectors remain with zero funding. The author has attempted to highlight few recommendations and thus are mentioned below.
- A) Need for design thinking and participatory approach.
Indian companies generates sufficient amount of funds for CSR activities to carry out sustainable development, but funds are not used in an effective and efficient manner leading to non-availability of funds in the remote and rural areas of the country as well as wastage of funds. As per KPMG’s report it was estimated that 15% of the CSR fund went unspent in the year 2018. There is a serious need to redesign the thinking and approach of the government, if the government wants to attain all of its 17 SDGs by 2030. A report by Dasra in 2019 suggests that India needs additional Rs. 4.2 Lakh Crore ($ 60 Billion) annually towards social sector initiatives in order to achieve 5 of the total 17 SDGs by 2030. It can be concluded that India is not only wasting the CSR funds, but it also needs additional funds to achieve its path towards sustainable development. The government should constitute a committee which will not only look after the efficient and effective allocation of CSR funds but also ensure that there is no wastage of funds. This scheme will need a participatory approach from both the government and the stakeholder. The local areas and community should also be made aware of their rights so that if there is a breach i.e., if there are no developmental activities initiated by the government in their area, they can approach the necessary authorities for implementations of the same. From the above pie chart attention can be brought that there should be a proper allocation of funds through all the sectors rather than restricting funds only to a few sectors and leaving other sectors with no funds, even sectors like food, environment, gender equality etc. should also be given funds in proportion to healthcare and education, so that global goals can be achieved in totality and not in proportions.
- B) Developing Structured Indicators.
A dynamic environment has been created in the 21st century, where people are changing as per the needs of society, society is changing as pe the need of environment and environment is changing as per the needs of people, for organization’s survival it needs to adapt to these changes. There is a need to develop indicators. These indicators will not only help to identify and address the changes in people’s lives but it will also help to allocate the CSR funds, as per the societies changing needs. For example. A company is operating in a local area X, which needs hospital because citizens living there are getting sick due to water contamination. With the help of indicators, the government as well as the companies operating in a particular area will be notified and the CSR funds can be used to create hospital for X under schedule VII. These indicators will not only help the government to allocate CSR funds but will also have participatory value from the stakeholders as to where the CSR funds to be used, what proportion should be allocated for different needs.
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