CB BureauWith the introduction of Section 135 in the Companies Act and corporate
social responsibility (CSR) taking centre stage in the Indian business
environment, many corporate groups are expected to initiate social programmes
starting next financial year. Will all these CSR programmes be aligned with
sustainability and how should the impact of such programmes be measured?
In order to address such questions and find a way forward, Institute of
Rural Management Anand (IRMA) is organizing ‘Round Table on CSR – The Road
Ahead and Exhibition of CSR Initiatives’, a two-day event at the IRMA campus on
24″25 March 2014. The event will engage various stakeholders including
corporate bodies, ministries and representatives from civil society and other
relevant organizations. Concurrent with the Round Table will be an exhibition showcasing
CSR initiatives of companies.
Answering CauseBecause’s query on how IRMA sees the mandatory CSR spending clause, Dr Girish K Agrawal, convener of CSR Round Table, said, ‘One of the critical CSR activities covered under
Schedule VII specifically talks about ensuring environmental sustainability,
ecological balance… maintaining quality of soil, air and water.
This is the most positive feature among other scheduled activities and was
not covered earlier. While other activities mentioned in the Schedule have been
the focus of most companies engaged in CSR, this clause goes a long
way in meeting the crucial need of the hour because negative externalities
arising from depletion of common property resources are becoming alarming in
view of environmental changes impacting India. China is already asphyxiating under
air pollution.’
When askedwhat
will be the ‘take away’ from the event and why should corporate as well as
development and social sector organizations participate, Dr Agrawal, who is
also the coordinator of Center for
Social Entrepreneurship and Enterprises and associate at Center for Rural
Infrastructure and Corporate Social Responsibility, IRMA, said, ‘The background for this round table debate is when a
company depletes common property resources and engages in CSR activities
(as per the new law), does it serve the spirit and purpose of the Act
while fulfilling development goals of the Government? Are these
activities aligned with sustainability? In the event, the way forward will
be underlined. We expect that some directions will emerge about policy
changes that are required to redress any deficiency, if any, and
how should Schedule VII activities be executed to so that they are sustainable.’
Commenting on exclusion of ‘guiding principle’ in the new rules, Dr
Agrawal said, ‘It is a disheartening change. It was in consonance with Part II
operating provisions but has been
deleted entirely. Now all activities that are undertaken in pursuance of its
normal course of business are explicitly excluded. The result of
such change may be that cola companies or junk food retailers whose main
products give heavy doses of calories to consumers and create enormous
healthcare costs on society have no further incentive to improve their business
processes except those arising from consumer awareness, which take a long time
to effect.’
The guiding principles in the earlier rules read: CSR is a way of conducting
business, by which corporate entities visibly contribute to the social good.
Socially responsible companies do not limit themselves to using resources to
engage in activities that increase only their profits. They use CSR to integrate
economic, environmental and social objectives with the company’s operations and
growth.
When questioned about the ‘business angle’ in
CSR, Dr Agrawal stated, ‘The value addition to Indian
businesses now appears to be remote and lies in the hope that customers will
value companies’ products more because they are spending money in scheduled or
socially beneficial activities – a link that is at best tenuous in Indian
consumers’ context since they are probably more price-conscious.’