As you may know, the new Companies Act of India mandates that companies of a certain size and
profitability must spend at least 2% of their net profits on Social Responsibility
activities (See Section 135 on Page 80 of the Act)
I was a panelist at the 'CII National Summit on CSR' in
Delhi held on 30th September 2013. These were my opening remarks in response to
the question posed to my panel, "Will the new CSR mandate be a game
changer?"
The 2% CSR spend is estimated at about Rs 20,000 Crores. This money is less than what Government spends in five days, considering the annual
expenditure budget of Government is some Rs 17 Lakh Crores. Subsidies alone,
out of this total amount, exceed Rs 250,000 Crores! Therefore the 2% CSR spend is not going to bring in
the game-changing resources...
However, if Corporate India harnesses its 'innovation capacity' and leverages the 'power of partnerships' to solve
India's social and environmental problems, I am sure it can change the game!
Instead of looking at the 2% amount as 'a philanthropy budget',
if companies can innovatively embed CSR
into their business strategies, larger problems can be solved.
This could be in the form of 'socially inclusive business models'
where the capacities of low income suppliers and distributors can be
strengthened to improve their productivity, market access, and bargaining power,
while enhancing the competitiveness of the whole value chain in which the
company is a part. Eg. ITC eChoupal.
On the environmental front, investing
in renewable energy is a low hanging fruit, given our unreliable grid power,
and the high cost of diesel-generated power. Innovation of higher order is
required to build 'green supply chains'
that regenerate the natural resources consumed in a business. Eg. ITC FarmForestry.
Embedding CSR into business strategies would also ensure
that the CSR spends do not get impacted in times of slowdown. Of course, this whole
argument is not to rule out the need for philanthropic spends in cases of extreme
distress.
Now I come to my second idea. I believe four types of partnerships could contribute to game-changing
outcomes:
Partnerships with other
Corporates operating in the same geography or working in the same
domain can create joint projects and / or knowledge platforms for experience
sharing.
Partnerships with CSOs / NfPs
for social mobilisation and impact audits.
Partnerships with Communities
themselves for gaining deeper insights while designing and executing projects.
Also, Users Groups for democratising common property management.
Partnerships with Governments
to create markets for trading "social credits" ala "carbon
credits", and for aligning social subsidies to develop inclusive markets
rather than distorting markets. This is besides the PPPs for building
infrastructure that are already gaining traction.
While no one stopped Corporates from innovating and
partnering to solve societal problems - indeed several companies have done so,
successfully - the new CSR mandate hopefully inspires many companies to look at
this as a game changing opportunity.
Never believe that a few caring people can't change the world. Indeed
it is the only thing that ever has ~ Margaret Mead
