The last few
decades have made it clearly evident that economic development can no longer be
viewed in isolation from environmental protection and social progress. The
nature of issues confronting us along with an increasing interdependence among
nations necessitates that countries act collectively, in the spirit of
multilateralism to chart a sustainable course of development. As a large
complex democracy, committed to enhancing the quality of life of its people,
and actively involved with the international coalition for sustainable
development, the path that India has taken will be of interest to those who
believe that a better world is not just essential, but possible. (http://moef.nic.in/downloads/public-information/Sust_Dev_Stocktaking.pdf)
The framework of sustainability is
generally talked about in global political forums and remains a topic of global
debate. But over the years, it has now been accepted that Sustainability is the
responsibility of one and all. Consequentially, the need to integrate sustainability into business practices has now
become widely recognized. Many Indian businesses have realized the importance
of sustainability and there is much appreciation that sustainability offers
returns on multiple levels: be it an opportunity to better understand the
businesses’ underlying risks, or an opportunity to develop innovative solution
and reach new markets.
India is experiencing an all time high
on CSR now. Government of India has shown a rather proactive interest in
framing CSR guidelines. Suddenly we have lost the view of which Ministry is
exactly responsible for the domain of Corporate Social Responsibility! With
Ministry of Corporate Affairs coming out with the National Voluntary
Guidelines on Social, Environmental and Economic Responsibility of Businesses in
2011, it was apparent that the government was thinking seriously about CSR and
sustainability reporting. Now the Ministry is also revising these guidelines to
remove any discrepancies and clarifying certain clauses within it. The Ministry
of Environment and Forests also came out with guidelines of Corporate
Environmental Responsibilities for businesses and institutionalized these as
part of the Terms of Reference for all clearance projects in 2012. The biggest
uproar was created when the Companies
Bill 2012 carried a clause that made CSR mandatory for all registered
companies. After the
passing of the Companies Bill 2012, it has become mandatory for corporates to
adopt Corporate Social Responsibility (CSR). What was once voluntary has now
become a law. The new legislation makes it mandatory for companies to spend every year at least 2 per cent of their
average net profits made during the three immediately preceding financial years
on corporate social responsibility (CSR) projects. The Department of Public Enterprises
under the Ministry of Heavy Industries and Public Enterprises has also come out
with Guidelines on Corporate Social Responsibility and
Sustainability for Central Public Sector Enterprises that have
come into effect from 1st April 2013.
With so many guidelines to conform to, the entire framework of CSR
has become rather confusing. Now companies are finding ways to include their
existing activities into the CSR realm. For instance, a company already doing
some work on water management and recycling for the long term benefit of the
aquifer and for sustainability of water supply for the company, might like to
include the activity under CSR and use the 2% part for their already existing
work. Now this will not help them to increase their contribution towards CSR,
rather it will make their approach skewed. Now their energies will go in
deciding how to best wiggle their existing work under the CSR provision. To an
extent, this seems right too, as there are corporate giants that are spending
much beyond the 2% of profit portion for sustainability/CSR activities. But for
the companies who haven’t yet started on CSR will look at this as an
obligation, and not as a long term responsibility.
An interesting insight here: as the regulatory landscape for CSR
within India is evolving, we can see a similar evolution of sustainability
reporting trends amongst the corporate too. Around 80
Indian companies have reported their sustainability initiatives according to
GRI guidelines in 2012, as against 42 companies in 2010. This trend
demonstrates the rising commitment of Indian Corporates towards sustainability.
Therefore,
yes, we do have a strong base to say that we are ready for CSR. We have the
requisite regulatory support, we have the corporate commitment towards it, we
have the capabilities and we know how to generate finances for it. What we are
still working on is clearing the confusion surrounding all this. Let the
various Ministries take a coordinated approach towards CSR in general and give
the country one single framework to answer all their queries. Let the
government give them a clear guidance of what can and cannot be constituted as
CSR. The least we would want is Corporate Social Responsibility to turn into a Confused
State of Redistribution of the CSR money in the existing profit-making
activities for companies.
