Corporate social responsibility (CSR) and environmental protection (EP) are two contentious issues with major implications for corporate India, the government and civil society at large. Economic and industrial growth can have a hazardous impact on environment. It is also true that if profit becomes the only motive for the corporate sector, both industry as well as society have to suffer from that sooner or later.
In a country where there is such a development disparity and a large part of the population living in villages are below the poverty line, the corporate social responsibility supersedes everything.
Fortunately, on the aspect of environmental protection, policymakers have made good regulations. The Supreme Court has also given suitable direction/order for bringing clean environment as seen in the case of use of gaseous fuel (CNG) in the transport sector. CSR for corporate India needs to be made mandatory under a similar regulation.
Corporates have an unwritten contract with society where the obligation is that they will rather not pursue their immediate profit objective at the cost of long-term interest of society. Globally, corporates have started considering the social goals on a par with commercial objectives. It appears that only those corporates will survive who believe that CSR is a long-term investment. Those who don?t, will become extinct with time.
Under the situation, a level-playing field for the entire corporate sector, (public or private) is the need of hour with respect to the mandatory 2% (of PAT) CSR component. In case, such a policy is not announced, we expect that like direction given in the case of environment protection, an order of the Supreme Court may not be far away.
While public sector enterprises (PSEs) have expressed strong support for the mandatory CSR component, private companies have reservations on this issue. PSEs have already adopted the CSR component, allocating a certain percentage of their profit after tax for different areas like health, sanitation, education, drinking water supply, skilled development, adoption of villages etc. The system of memorandum of understanding (MOU), signed by PSEs with their respective administrative ministry, has such a mandatory provision for CSR covering five marks. It is expected that at the end of the year, PSEs will have social audit to judge the impact of their CSR investment and it is also being considered to bring an accreditation certification to PSEs based on their investment and performance in CSR.
A common refrain of corporates is about the operational difficulties of CSR. This doesn’t seem genuine. Corporates, which handle large projects and budgets, can easily handle the CSR fund. Only that CSR must be handled by specialised and committed personnel, with full integrity in a transparent manner. Execution is the vital of CSR. Merely writing cheques will not serve the purpose as CSR is not philanthropy. CSR is rather sine-qua-non with human development and uplift of the society at large. Probably CSR by corporate India is the most important means for poverty alleviation and social uplift of the deprived classes. Mandatory CSR can also boost GDP growth by 2-3%. CSR has to be mandatory at least till the time the last person is brought above the poverty line.
The writer is director general, Scope