MANDATORY CSR IN INDIA - is it really MAKING A DIFFERENCE?

When the new Indian Companies Act 2013 came into force from 1st April 2014, many within the sector hailed Section 135 as a "game changer". After completion of two fiscal years, in this issue we debate whether "mandatory CSR" has made a difference to either corporate India or the voluntary sector! 

Debabrata Guha
Chief Executive
Tata Power Community Development Trust

Making CSR disclosure mandatory under law is a step towards making CSR a priority in conducting business and helps in nudging the corporate towards ‘inclusive growth’. This is a good starting point.

At the House of TATAs CSR has been a part of our DNA. Today the trust that the TATA brand evokes is not only due to the quality of our product and services but also for the goodwill that we earned through our CSR work. 

Growth through industrialization comes at a cost. It impacts societies that get displaced, it impacts environment. It is therefore morally necessary for business houses to minimize these impacts. We owe it to our future generation.

To have significant impact the Companies/NGOs should carefully select the field of work, which would benefit the target beneficiaries most. For this, one needs to do a careful need assessment rather than adopting a general approach. Emphasis should be given to make an initiative self-sustaining, wherever possible, within a definite period of time and move on.

We must acknowledge that there are good and bad species in every field. The same applies for NGOs. While for the good ones, it will be a boost to intensify their efforts. At the same time we need to guard against the unscrupulous ones who would take this opportunity in furthering their vested interest.

Tatapower Community Development Trust (TPCDT) is the CSR implementing arm of Tatapower and its subsidiaries in India. They operate mainly in the vicinity of Tatapower business units, focusing in the field of Education, Health and Livelihood

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Pearl Tiwari

President (CSR & Sustainability)
Ambuja Cements Limited

Mandating CSR law has opened up vast opportunities for India Inc. to actively participate in fulfilling their social responsibilities. It is true that companies’ operations do impact their neighbouring communities both positively and negatively. While an industrial setup provides better job prospects and improves socio-economic status of people, there is also a struggle to share common resources between the company and the community. The CSR law is thus an attempt to bring in a strategic focus on societal development and creating a streamlined process for corporates.  

Unquestionably, any company is primarily responsible to do its business right and serve the interest of its shareholders. However, its liability also extends to other stakeholders, of which its neighbouring community is an important part. Interestingly, even before the mandate, corporates had been sensitive to community needs and were implementing related projects. For instance, Ambuja Cement has been spending much more than 2% on its CSR since many years and has achieved complete compliance and beyond with reference to section 135 of The Companies Act.
Now, as more and more companies are partnering with NGOs, there is an increased demand for documentation and adherence to compliance norms. This is also creating better prospects for NGOs to transition from an informal setup to a stronger and robust system of documentation.
Also, while talking about partnerships, I feel there is still a lot of scope for different companies to collaborate and build on each other’s’ strength. The CSR mandate is indeed a promising move for corporates to create synergies and bring a large scale, lasting impact on the ground.

CSR has been an integral part of Ambuja Cement since its inception. Ambuja Cement Foundation (ACF) was established in the year 1993 as the CSR arm of the Company. With its presence in 21 locations in 11 states, ACF has been working with a vision to create a sustainable, prosperous society, built on long-term partnerships. Currently, ACF has an outreach of over 1.8 million rural population and is yearning to do more.

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Delnaz Paliwalla

CEO

Bombay Community Public Trust

 ‘Social Responsibility’ and ‘Statutory Giving’ were merged together through this one of a kind legislation. While the intrinsic nature of CSR is voluntary how does forced philanthropy create any change?

Business houses have undertaken voluntary charity for decades hence practicing CSR without calling it so. But this legislation has made CSR the ‘buzz word’ in every boardroom. After all, CSR has become target focused and numbers driven. This, in my opinion, has led to a shift from philanthropy to community investing. Today the agenda is not just about doing ‘good’ but forming partnerships that can yield returns that encourage economic and social growth. The focus is on impact and the vision is long-term.

This has worked for established NGOs that are able to engage at a much larger scale with CSR departments. Such partnerships are seeing effective projects with long-lasting impact. Sadly, the benefits of this trickle-down effect have yet to be seen on the smaller, grass-root level NGOs. Most of these remain under funded and this large pool of CSR money seems out of their reach.

This legislation could easily have ended up becoming tick-box for companies. But this has not been the case, the CSR story may not have grown in leaps and bounds but concerted efforts by both NGOs and corporates make the coming years very exciting for this sector.

The Bombay Community Public Trust (BCPT) was set up as a People’s Foundation to address the various development problems affecting the citizens of Mumbai. The Trust works in partnership with individual donors and companies to support NGOs and causes in the areas of education, child-welfare, health, livelihood support and elderly care. 

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I certainly think the new CSR Act is making difference and will be

Niraj K Lal
Head – CSR
Arvind Foundation

stronger in years to come. Following is why I am saying so:I consider mandatory CSR Act as a landmark act. It is most certainly making real difference. To me the Act has done four unprecedented things for CSR fabric of the country.

First, it has steered companies to create a CSR structure leading to better governance. A CSR Committee, declared CSR policy, Board’s approval to CSR initiatives, defined yet flexible schedule VII initiatives are all steps which are directionally correct.

Second, it has given CSR a continuous rather than ad hoc approach. The growing 2% CSR funds will be available year after year and that is when the projects will start becoming programs.

Third, getting talent into CSR that has the contextual and applied knowledge and putting in strong monitoring and evaluation mechanisms through the technology based data solutions has already started. I can visualise that this will lead to setting up of new CSR benchmarks.

Last but not the least, though in a little long term, it will start making CSR more strategic to businesses, bringing in innovations to make it win-win for company and the community and take it beyond 2% and will create such CSR models for social renewal that pave way for new kind of Private-Private Partnerships (PPP) – something that I am very positive about.
Arvind’s CSR philosophy is based on the notion that society and the corporation are inextricably linked, and that a company can improve its own functioning by influencing the environment in which it operates. It is this philosophy that transcends through all of Arvind’s CSR initiatives. 

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