CSR should be voluntary and seen as good work
Bushra Ahmed/OneWorld South Asia
Dr. R.R Upadhyay, CSR Head at FICCI, tells OneWorld South Asia that CSR should be voluntary and seen as 'good work' rather than a mandatory initiative the companies are forced to undertake.
OSA: The Companies Bill 2011 is going to go in for the monsoon session and they plan to make the 2 per cent mandatory. So what are your thoughts about the whole aspect of making CSR / philanthropy voluntary for companies?
Dr Upadhyay: As a chamber of commerce, we don’t consider philanthropy as a part of CSR. Secondly, we don’t support the 2 per cent mandatory figure, the government has supported it. We think it should be voluntary. Only thing that should be made mandatory is the reporting and that too on their website. So they have a person dedicated to CSR, who will be an independent director who looks after this.
OSA: So taking on from this, the key word in question seems to be ‘voluntary’. Voluntary is not binding a company to plug its profits into an initiative in any way, so what sort of checks and measures can be put in place to ensure that the voluntary term is put into action?
Dr Upadhyay: Two things stand here. First, the way people perceive CSR is wrong. CSR is not only working with communities. Secondly, for CSR to be effective, it has to be integrated with business. Then every company is interested in actively doing CSR activities. Currently, around 72 per cent of companies spend actively on CSR. But more successful are the ones whose employees, board members are involved because they look after their public image and ensure good work is done as a consequence. Also, because companies want to work with the government, such activities are mutually beneficial. So the key thing is that it has to be voluntary and not a dictatorship.
OSA: So would it be correct to say that companies (in India) are realising the importance of CSR as an activity in the long run, especially in terms of sustainable development?
Dr Upadhyay: We are doing a project with the Holland government, in which where we are looking at a couple of companies. Now for them, they have a lot of mandatory things which the buyer wants, like child labour norms etc, which they have to follow. In such a sense, these act as automatic norms as companies and whole supply chains need to comply with these. So such systems are not only showing the importance of CSR but also the requirements.
OSA: 15 out of 27 European countries have a rigorous national policy framework in place. In that sense, the absence of a strict national policy framework seems to leave a lot of holes which the companies can slip through. So do you think it is imperative for us to follow such an example of having a rigorous national policy framework in place?
Dr Upadhyay: We do have a policy now- National Policy guidelines (NPG) to which we are a party. Now since we have this NPG, we do have a framework in place. Secondly, when it comes to individual companies we do give them examples like the ISO 26000, which is a set of international voluntary guidelines. Second thing is, a lot of companies also want to work with the government, so they link to most of the government programs. There is openness between the government and corporates about CSR. And we are the facilitators in the process. Now how do you go ahead with this? That’s where the challenge is.
OSA: So you think this current emphasis on reporting, will serve as an effective check perhaps?
Dr Upadhyay: See reporting is good, and that’s what we are advocating. Question is what type of reporting. Because now, its not only CSR, other things are also changing. If you see the Company Law, it not only about CSR, its also about governance, its about types of financial reporting you do. So two things have to be done. The whole emphasis has to shift from philanthropy to inclusive growth, where you involve communities. So that has to be the first thing. Second thing, is the question about what type of reporting, because the way civil society sees business now is with a kind of mistrust. Companies have to build trust.
OSA: What do you think is the state of CSR in India as compared to countries outside, and what are the challenges that India faces in terms of taking CSR beyond?
Dr Upadhyay: If you call CSR simply that it doesn’t justify. But, if you take it as ‘good work’; then you find examples from way back like TATAs and ’Birla’s who have been doing it for more than a century now. CSR has always been a part of India, it has now been termed as social responsibility, corporate citizenship etc. Also, companies also want a reputation of goodwill. Only thing is when you come to India and compare it with Europe, issues are different, because here one talks more about community development. Whereas there, there are also other issues like environment, the governance, involvement of employees, concepts of work like balance in the agenda.
OSA: In many ways CSR in India calls for a bigger debate. Corporates themselves face a classic development vs profits conundrum where they work for profit, but also the need to do good, perhaps?
Dr Upadhyay: Actually if you see Rio 20+ also, I think the most positive reaction has been from the corporates. Its also because corporates themselves understand that participating in such activities contributes to their own sustainability. The complexity of the problem can be solved by making it very simple.
To do this, we as a chambers of commerce, will endeavour to connect with the government, business and the civil society, because what we personally feel is that individually they cannot do it. Let us all work together to achieve inclusive growth. That would really be the answer.
OSA: In terms of climate change, where do you think Indian corporates are in terms of stitching climate change-friendly practices into their day-to-day workings?
Dr Upadhyay: There are plenty of good examples here in India. In the long term, effective climate change initiatives make businesses effective. Companies like Suzlon are making such initiatives a success by organising the communities around their work land by giving them land, teaching them to grow vegetables, to get a good profit out of their livelihoods. So there is no question of 2 per cent since despite making losses, a lot of the companies are finding it profitable to do CSR this way.
OSA: Since social entrepreneurship has been heralded as one of the ways towards good work in CSR, connecting how social entrepreneurs can go on and create a very good system of good practice and profit etc, do you think India has a conducive environment for entrepreneurs?
Dr Upadhyay: My reaction to it would be very mixed. There are a lot of states in India where the environment is very good whereas there are others where it is not. Couple of things dictate this. Government systems in various states decide this and this differs individually. Systems like micro finance have worked in South India but not so much in North India. So that explains everything. Like in Gujarat, almost everything works right from SHGs to banks to milk corporatives but when the same thing is done in UP it doesn’t work. So conducive environment has to be there. Also there has to be a first rate of total transparency coupled with the involvement of people which is not there at many places. So, I think that with the new generation coming, entrepreneurship will only increase.
OSA: Coming back to where we started, you don’t think that 2 per cent is such a good idea after all?
Dr Upadhyay: No. See, it is our belief that if CSR has to be there, why should it be 2 per cent? Why not 5 per cent? We are not saying that it should not be 2 per cent, we are just saying that it should not be mandatory. That’s all. But at this point of time, if you make it a law, then more time will be spent in by-passing that law.
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