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Where Nexus Is Legitimate

CSR must focus on deprived groups, and not be used to curry favour

Where Nexus Is Legitimate Where Nexus Is Legitimate

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.

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