Speakers at Governance Now conference throw light on possibilities and pitfalls of country’s new frontier of corporate social responsibility
GN Bureau | October 1, 2015
According to a conservative estimate, every year $ 4.5 billion or Rs 25,000 crore is available from the corporate social responsibility (CSR) kitty and its proper utilization is going to change India. This was the sense arrived at the ‘CSR for inclusive growth’ conference anchored by the Governance Now magazine on Wednesday.
One speaker said that the CSR funds should be spent in a strategic and focussed manner to make things work.
Mukesh Jain, joint secretary, ministry of social justice and empowerment, highlighted ministry’s Accessible India Campaign (Sugamya Bharat Abhiyan) wherein the government is undertaking a slew of measures to make urban infrastructure, transportation and internet equally accessible for all.
India has 2.68 crore disabled population. “Unfortunately most of them don’t have equal access to buildings, places, lifts, transport and services.”
They are excluded from the socio-cultural mainstream of this country,” Jain said. Here comes the role of CSR, he said, urging participation of corporates and NGOs for making it easy for the disabled to function.
Ashish Chauhan, managing director and CEO, BSE Limited, said that the Indian corporate are changing from not interested in doing social responsibility activities to CSR involvement.
The modern India demands corporates to not only be responsible towards its shareholders but also towards customers, employees and to the country. That’s what the new legislation reflects, he said.
Chauhan noted that the NGOs would have to be good in marketing themselves to grab CSR projects.
He said that BSE is working on a proposal for setting up a CSR exhchange – Sammaan. The exchange will list NGOs, corporate and projects. “Sammaan will help corporates to access implementation agencies whose credentials have been verified and the agneices to generate funds and enhance their transparency and visibility,” he said.
Delivering the keynote address, Vinay Sahasrabuddhe, national vice president of Bharatiya Janata Party and someone who has been closely associated with voluntary social work, said, “we are sitting on a volcano of expectations. The expectation of the younger generation is quite high. They are ambitious.” To meet these expectations is a shared responsibility of the government and the corporate, he said.
The 2 percent CSR fund is a new provision, but India has a glorious history of philanthropy, he said. “At present the society is falling short of sensitivity, ownership and responsibility. This has created an environment of mistrust. To address the apathy towards disabled, we will have to address these issues,” he said.
It is also high time that we move from inclusive development to participatory development, Sahasrabuddhe, who is part of think tank in Mumbai, said.
SK Panda, secretary, ministry of textile, said that the corporates should focus on resolving environment degradation and social exclusion. “When we talk about sustainability or sustainable development, we have to focus on environmental degradation, keeping a tab on pollution, carbon emission, global warming,” Panda said. “Corporates can’t proposer while the society is moving towards failure,” he said. India has one sixth of the world’s population; but it has only one sixteenth of the world’s resources, he said, highlighting the importance of CSR spending.
Kailashnath Adhikari, director, Governance Now, recalled what Warren Buffet once said, “If one percent of the wealthiest of mankind contributes towards rest of the 99 percent then the world would be a better place to live.” Adhikari said that though under the companies Act 2013 corporates have to spend 2 percent of annual net profit on corporate social responsibility (CSR), most of them have failed to fulfill their obligation in the first year of enactment of the law.
Parul Soni , global managing partner of TTC (Think Through Consulting), said that companies have created CSR committees and the focus now should be on operationalising them. Talking about the outcomes of CSR funding, he said, “It is estimated that one lakh jobs will be created through CSR funding; the NGO sector alone would require 70,000 to 75,000 people.”
The first panel discussion was on CSR and governance: Concerns and solutions moderated by Ashok Pavadia, adviser and additional secretary, ISC secretariat. The session dealt with governance issues related to the CSR Act and deliberated on the participation, impact and response of stakeholders. Pavadia said compliance with laws and spending wisely on the right projects are equally important. In order for that to happen, is important to have a good infrastructure within the company to oversee the implementation; adding that feedback has to be integrated back into the process for better CSR implementation.
Sanjeev Kaushik, deputy managing director, IIFCL, said that access is one of the biggest challenges. “For access and participation, basic infrastructure has to be functional,” he said.
IIFCL has a board led the committee for CSR which follows a diligent process. Kaushik said that the selection of projects needs to be streamlined, which is somewhat random at present. “Many a times, an MP or a government functionary wants something to be done in their constituency. To overcome such challenges, setting up a CSR foundation would be a good idea where a panel would approve projects based on the need (backward regions),” he said.
Ramesh Kumar Sahijwani, vice president, marketing and CSR, IIFCO-TOKIO general insurance and Vivek Prakash, general manager- CSR, jubilant life sciences reiterated that pressure from local bureaucrats and politicians are a major challenge.
Another major challenge, he added, was till now companies are not adequately resourced to find out if funds are reaching the targeted pockets.
Ranjit Singh, general manager (CSR and sustainability), Maruti Suzuki India limited, said that last year when the company was in the process of finalizing the CSR policy, they hired KPMG as consultant. “We found out that many of our CSR objectives were qualifying for CSR whereas some business activities were qualifying for CSR. Last year could not spend two percent as could not institutionalize the system, but are poised to this time,” he said.
Sutanu Sinha, chief executive and officiating secretary, Institute of company secretaries of India pointed out that family owned or small companies do not know how to spend the money. “They often inquire whether it would be enough to write a cheque or they have to set up a separate wing for the same,” he said.
He said that it is important to know how the board of a company view CSR and have a list of NGO’s and section 88 companies which will make selecting projects for CSR easier.
The valedictory session of the conference saw panelists speaking on the Companies Act 2013, and the role of CSR in the development of the country. The session was addressed by Shitanshu Prasad, executive director and head CSR of Steel Authority of India Ltd (SAIL). He said that CSR has been known now in the last few years, but SAIL, having a pan India presence has been carrying out CSR initiatives since the 1960’s. “Years ago, in the town administration of our steel plants, we had a section called periphery development which was doing nothing but CSR activities. We were making roads and bridges and giving support to the people in and around the plant by running health centres and dispensaries”, he said.
According to Prasad, one major drawback that has been happening with CSR is that in reality it has not been implemented properly. The financial results of 2014-2015 are announced in June or July. Once the results are published, July is over, and the remaining months are the rainy season where no work can be done. As a result around six months are gone without any CSR activities. The money kept for CSR is hence not fully utilised.
As a concluding remark, Atul Hasmukhrai, president of Institute of Company Secretaries of India, spoke generally about the new Companies Act 2013 and how it has brought about important changes to the previous Companies Act of 1956. According to him, the new concepts introduced have taken corporate governance to the next level. He said “Life has totally changed after the new Companies Act, from the company’s director’s point of you and from the compliance point of view. With the formation of so many committees like stakeholder relationship committee, CSR, and sexual harassment committee, changes are definitely being seen”. He stated that the act has been a good move as directors of the company make sure that all the compliances have been dealt with, which has increased total transparency in the functioning of the company.
India has now become the world’s few countries to have started CSR, and that CSR will develop and evolve in time.
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