Perspectives from ISB


The CSR mandate makes India the only country in the world to undertake social activities for the not-so-privileged in geographic areas of their operation or choice. All the activities are carried out under the direct supervision of a board committee, which approves the implementation plan for the year.

From being mere philanthropic activities, the corporates were given charge of planning the social and economic benefits of communities surrounding their area of operation. The broader goal of a company was mandated, which meant that the company’s role was not only to make profit but also to get a social license to operate, through the implementation of a series of projects and programmes to benefit the larger community. It also stressed the importance of the external stakeholders, who became as important as the internal stakeholders. These external stakeholders, including the communities, civil society, and leaders, became important to the existence of the company, where they had to ensure that the social commitments were also in sync with their business commitments.

Implications of the CSR Mandate

Since the Indian government made CSR compulsory, it is also important to understand how companies seized the opportunity. Over the years, corporates have also begun to realise that CSR seems more than like an opportunity to improve the reputation of the organisation and goes a long way in contributing towards nation-building. They can showcase their work, beyond the achievement of business and get brownie points for having met their social commitments to society and the compliance requirement towards the government.

Undertaking CSR activities also helps companies improve their social image and attract local talent as a socially conscious entity. Another positive impact of CSR has also been that the mandate has ensured that the business of improving lives by corporates goes on, irrespective of government change or the political influence in the country. The issue of development remains paramount, and companies address the same in their ways.

Transitioning into Responsibility

After the initial challenges of initiating activities as per the compliance requirements of the CSR Act, companies began the process of aligning the CSR policy with the corporate strategy and the goals of the organisation. Some corporates also considered it as an opportunity to collaborate with other like-minded organisations, undertake public-private partnerships in implementation, and use innovative means to achieve their intended outcomes. A major outcome of this timeframe was also the presence of strategic perspectives and partnerships that cut across sectors and withstood disruptions, as was witnessed during COVID-19.

Thus, a new era of corporate social responsibility was ushered in, one which was not merely bound by compliance requirements or the mandate of the Companies Act but also by a collective social conscience to act upon the felt needs and deliver projects in response to people’s requirements. Some of the ways in which this was taken up:

Focus on underrepresented areas and issues – The government has identified aspirational districts that require attention through the implementation of specific programmes on issues pertinent to the area and require immediate action. These areas, if developed, help improve the socio-economic conditions of the country and India’s performance in attainment of the SDGs in addition to achieving balanced development.

Promoting innovation and research – Corporates have also moved to work on long-term projects which have an impact on improving the country’s social conditions.

Indigenous solutions – Over the years, corporate houses have adopted multi-dimensional localized approaches to solve social problems. These prevent ensuring that the local population is also consulted and that the solutions would be fit for seeking solutions.

Sustainable approach – From CSR, corporates have started looking at the wider picture of sustainable development, including the environment, society, and governance. There has been a transition in the activities undertaken and the maturity in selecting the projects. The projects are also long-term now, instead of short-term ones -off projects with visibly low impact.

Data analysis – The Act stresses the implementation of the projects and the impact they create. Organisations have to report on the impact their initiatives are creating, which feeds into the larger database of the country and is captured and published by the Ministry of Corporate Affairs. The access to such data has also made it easier for organisations to get an overall picture of the CSR landscape.

Collaborative approach – One major learning has also been that a collaborative approach is far better than reinventing the wheel. Over a period of time, there has been greater alignment with the government machinery, civil society organisations, and partnerships with academic and research institutions.

Advancing CSR Mandates: Assessing Impact and Future Imperatives in India –The CSR mandate in India has worked to improve the social construct of the country. We have also seen similar mandates from other parts of the world, including South Africa (in 2015) and the recent European legislation.

Schedule VII of the Companies Act provides a list of activities that can be undertaken as CSR under section 135 of the Act. About 60% of the funds have been spent on Education and Health upto 2022-23. The positive side is that the CSR investments have increased over the years, and most companies have become compliant in their spending. Though the critical areas of education and healthcare have been the key priority areas for spending, there has been a gradual move to other areas, including livelihoods.

However, the states of Maharashtra, Karnataka and Delhi received nearly 1/4th of India’s total CSR funds, and the contribution to the northeastern states has been low at almost 2%. The government policy of giving precedence to work in aspirational districts has also not taken off in a big way yet, as the contribution to the aspirational district was also less than 5%.

Though we have completed a decade of CSR implementation and have come a long way in working towards a more equitable society, there is still a long way to go regarding the equitable disbursement of funds. The disbursement of funds must be addressed more to the deserving areas, and not only where the organisations exist. The aspirational districts need further attention.

It is time that India rises to the challenge of ensuring that all companies report on their environment, social, and governance framework. With global warming becoming a harsh reality, it is time for concerted action. The recent budget also highlighted the importance given by the government to strengthen green technology and India’s efforts to achieve net zero by 2070 through solar energy and clean energy. It is time for Corporate India to Rise to the challenge, yet again.

Author’s Bio: Amrita is a development professional with more than 14 years of experience in CSR and Sustainability and is currently part of the Advanced Management Programme in Public Policy, at the Bharti Institute of Public Policy, Indian School of Business. She is responsible for the strategy, performance, and delivery of sustainability along with advocacy and thought leadership on ESG. She has also worked with one of the leading fertiliser producers in the country and has been instrumental in strategising community relations around all the manufacturing plants and implementing projects for the holistic well-being of the communities. With her experience, she strives to create a world that is circular and empathetic.

DISCLAIMER : The views expressed in this blog/article are author’s personal.

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