MCA weighs NVGs over CSR

National voluntary guidelines will mould 'responsible businesses' for the Indian context

sweta-ranjan

Sweta Ranjan | May 10, 2011



If the ministry of corporate affairs (MCA) has its way corporate social responsibility (CSR) could soon become obsolete - in theory, at least. The MCA is mulling over a change in guard for the social responsibilities of companies.The upgraded form of business responsibility towards community, as conceptualised by the MCA think tank Indian Institute of Corporate Affairs (IICA), has more prominent guidelines on the environmental and economic responsibilities of the business, besides social responsibility. The new concept has been named National voluntary guidelines on social, environmental and economic responsibilities of business (NVGs).

The guidelines emphasise that businesses have to endeavour to become responsible actors in society, so that their every action leads to sustainable growth and economic development. Accordingly, the guidelines use the term ‘Responsible Business’ instead of ‘Corporate Social Responsibility’ to highlight NVGs' ability to go beyond the limitations of a more traditional CSR.

The guidelines, seen as a refinement of MCA's CSR 2009 guidlines, have been drafted after considering inputs from various stakeholders across the country. The NVGs embody the consolidated viewpoint of vital stakeholders in India. The draft also considers the basic requirements for businesses to function responsibly, ensuring wholesome and comprehensive economic growth.

A member of the drafting committee says, “It was decided that the guidelines must provide a specifically ‘Indian’ approach, which will facilitate businesses to balance and work through the many unique requirements of India.”

The guidelines say, “For business leaders and managers entrusted with the task of deploying the principle of responsible business, it is worthwhile to understand that business boundaries today extend well beyond the traditional walls of a factory or an operating plant all the way across the value chain. Businesses are therefore encouraged to ensure that not only do they follow the guidelines for areas directly within their immediate control or within their sphere of influence, but encourage and support their vendors, distributors, partners and other collaborators across their value chain to follow the guidelines as well”.

The guidelines will be applicable to all entities - irrespective of size, sector or location. The new guidelines will goad all businesses in India, including multi-national companies, to consciously make effort towards adopting and following the guidelines.

The guidelines consist of nine principles and highlights that all the principles are uniformly essential and non-divisible - this means that if a business endeavors to function responsibly, it would have to adopt all the 9 principle in their entirety rather than selecting and choosing what might go well with them.

The aim behind implementing the new guidelines is also to improve the skill of businesses to improve their competitive potency, improve their repute, their ability to attract and hold on to talent and manage their associations with investors, as well as the society at large.

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