PSEs Lead the CSR Way

PSEs Lead the CSR Way

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Dr. U.D. Choubey, Director General, SCOPE

Corporate Social Responsibility (CSR) is increasingly being recognized as a strategic driver of business which not only enhances brand image of an enterprise but also ensures the balanced growth of the society. It has been progressively realised that business of doing business is not business alone but it is beyond that. Jamsetji Nusserwanji Tata once famously said, "In a free enterprise, the community is not just another stakeholder in business, but is, in fact, the very purpose of existence". The basic concept of CSR is to serve the interest of society in just an equitable manner and take the responsibility for the impact of business activities on various stakeholders in all aspects of their operations. Accordingly, many organizations have integrated their business strategy with CSR as it improves their corporate accountability and community relations through initiatives like education, employment, health care, etc.

Mahatma Gandhi urged to the powerful industrialists to share their wealth for the benefit of underprivileged section of the society. He gave the concept of (trusteeship). This concept of trusteeship helped in the socio-economic growth of India. He influenced the industrialists and business houses to build trusts for colleges, research and training institutes.

India is the first and the only country in the world to have statutorily mandated Corporate Social Responsibility for business entities. But CSR in India goes back in history much before modern India. The concept of CSR can be traced to many religious scriptures- Ramayana, Bhagavad Gita and the Puranas that exhort people to share their fortunes with those of less privileged. It has been incorporated in various religious laws where a part of one’s earnings are set aside for the benefit of the poor and community welfare the Hindus call it "Dharmmada", the Muslims "Zakatah", the Sikhs "Dashaant", call it by whatever name, the concept has been imbibed in the society from the very beginning.

India has around 1.3 billion of heterogeneous population. The country faces the problem of meeting the aspirations and need of its ever growing high population on one hand and maintain growth momentum to emerge as leading economic power on the other. However, economic development without proper human welfare cannot bring inclusive growth. It is therefore, necessary that benefits of development reach all societal groups and in this context CSR has acquired added significance.

There is no doubt that growth in industry, manufacturing sector and agriculture, have substantial positive contribution on GDP but if mandatory CSR component is followed in true spirit, there is likelihood of further growth of GDP.

The Companies Act 2013 is a game changer and has opened the door to a significant investment in development issues. Schedule VII of the Companies Act 2013 lists the activities which among others includes preventive healthcare, sanitation, drinking water, promoting education and vocation skills, promoting gender equality, empowering women; ensuring environmental sustainability, ecological balance, conservation of natural resources and participation on "Swachh Bharat" and "Clean Ganga" initiatives.

PSEs have been undertaking CSR activities since inception much before the Act was enacted. The public sector came into existence with the primary objective of accelerating industrial and economic development by establishing "Modern Temples" with dominating focus on creation of employment, balanced regional development and justice to weaker sections of the community. Thus, since inception Corporate Social Responsibility was embedded in the philosophy of public sector enterprises. Set up with the twin objectives of economic development with social justice, these enterprises have assigned a high priority to the ideals of CSR.

After liberalization of Indian economy, PSEs were made to face global competition, enhance profitability and become vibrant dynamic organizations. However, their emphasis on CSR continued and in fact has now increased. This is in spite of variations in CPSEs vision, mission, objectives, nature of business, geography, market structure and financial status.

They have made massive investments in industrial and social infrastructure of the country. They have wide range of activities which are spread across a wide geographical area. Their CSR strategies are aligned to national priorities to meet the basic needs of citizens like literacy enhancement, educational aids, providing drinking water, community development and infrastructure, environment protection, health care and family welfare etc.
CPSEs have attained sufficient maturity and have structured mechanism in place which interalia include board approved policy on CSR. budget allocation in the beginning of the year based on their past performance and requirements of the current year, base line survey / need assessment survey in consultation with stakeholder, innovative practices and effective steps towards generating awareness among employees.

CPSEs achievements in CSR has been immense. It is next to none. According to India CSR Outlook 2016, prescribed CSR spent by 250 companies which were surveyed was INR 7143 crores out of which actual spent by all companies was INR 6578 crores. PSEs formed 9 percent of the sample size (22 out of 250 companies) but spent 33 percent of the actual.

With advent of the New Act and mandatory spending on CSR provision in place the approach towards CSR planning needs to be redefined. CSR has become an integral part of corporate function and information disclosure needs to become inescapable. With the mandatory CSR, social impact assessment has assumed major significance where CSR spending become a mandatory. Through social audit, a balance can be achieved between the need of community and CSR contribution of corporate to fulfill those needs. Moreover, social audit of the expenses incurred on CSR activities would introduce checks and balances and confirm that CSR expenses do not become a subject of criticism.The auditing process may be conducted by an independent outside consultant who will bring credibility to the evaluation.

To conclude, all enterprises should form a parallel vision along with business vision that is social vision as CSR has been given recognition from a notion to a lawful conformation. India has about 6 lakh villages with over 80 crore people. There is need to develop adequate infrastructure roads, water, health and sanitation, electricity, educational skill development centres etc. The task is enormous and requires tremendous planning and huge amount of resources. Corporate India should come forward for the cause.

About the author

CSR VISION is India's (probably World's) first monthly magazine in print devoted to CSR and Sustainable Development for bringing together all stakeholders of SUSTAINABLE DEVELOPMENT at a global and local levels and act as a platform for promoting strategic CSR and sustainable development practices through dissemination of information and knowledge.