The Companies Act, 2013, has a unique clause that provides for companies to spend on corporate social responsibility (CSR). In recent times, no other clause has caught the attention of the state, business and civil society as much. Businesses are giving the utmost attention to CSR, with some reviving their own charitable foundations, which existed only on paper a few years ago. Civil society actors see CSR as an opportunity in a scenario where development sector funds are shrinking otherwise. And the government has created a dashboard on CSR funds spent, while also issuing notices to hundreds of companies for not following the letter of the law. The ministry of corporate affairs (MCA) in February this year estimated total CSR spending from 2014 to 2017 at a little over Rs 28,000 crore. There is no doubt that CSR has to some extent helped mainstream social responsibility as a factor for businesses. One can see that corporate policies now speak about CSR in a big way, and terms such as deprived communities, caste and human rights have started appearing in business policies.
In all this, what is getting lost is the spirit of the law. The purpose of the clause is clearly to reach out to deprived communities. But is this happening? The MCA has listed Maharashtra, Andhra Pradesh, Karnataka, Tamil Nadu, Odisha, Gujarat and Delhi as states receiving maximum funds for CSR programmes. However, only one among the top 100 poorest districts is in the top 10 CSR-invested districts. Similarly, companies focus their implementation on ‘local areas’, complying with legislative orders. However, with ‘local area’ defined as regions near the company’s operations, most of the funding is concentrated in areas which draw investment, or have a corporate headquarters. Businesses should be encouraged to define their ‘local areas’ after mapping their entire supply chain, which surely would extend to some of these backward states, districts and regions, and to those most in need. The India Responsible Business Index, 2017, reveals that of the top 100 listed companies, 86 have identified vulnerable communities, and 80 have provided numbers of beneficiaries belonging to different identities. However, only 15 had organised participatory needs assessments with communities, and none had organised consultations with communities while framing CSR policies. Businesses are losing a great opportunity to integrate communities in CSR efforts as agents, rather than beneficiaries, of change.
The most important challenge is to curb the use of CSR by businesses to curry favour. A common grievance from companies is how ministers, MPs, MLAs and even local politicians bombard them with letters for CSR funds in their regions. While some companies see this as a problem, others use it as an opportunity to build a legitimate nexus. Further, companies have been spending a lot on a few flagship programmes, which are already funded heavily by the government. In an era of crony capitalism, CSR is an apt instrument to legitimise quid pro quo. Thoothukudi is a case in point. There are doctors nearby who call skin patches ‘Sterlite patches’. In contrast, the Sterlite website’s CSR boast includes “a bus with a team of professional doctors travels through the villages of Thoothukudi to provide free primary and secondary healthcare access benefitting 50,000 population covering 28 villages”. It has even received the 2017 BT-CSR excellence award. On the day 13 anti-Sterlite protestors were killed, the four senior-most district officials were absent and a low-ranked official allegedly ordered the firing. What could better exemplify nexus?
More worrisome is the growing nexus between business and civil society—a supportive relationship, but one that prevents NGOs from performing their watchdog role against corrupt and disruptive practices. Civil society organisations can ignore their misgivings as they get into vendor relationships with companies, and are inclined to owe their accountability to them.
Globally, debates on social and environmental responsibility of businesses are moving towards a human rights-based framework. 21 countries have formulated national action plans based on the UN guiding principles on business and human rights, while work is in progress in 21 others. India is not one of them. Our country has some of the most progressive voluntary guidelines on economic, social and environmental responsibility, based on which the top 500 listed companies submit mandatory reports. The government’s recent revamping and reviving of the national guidelines give hope to the human rights movement in business, but this is just another step. A lot more needs to be done.
(The writer is director (research & capacity building), Praxis Institute of Participatory Practices)