Indian Institute of Corporate Affairs, the think-tank of Ministry of Corporate Affairs, Government of India is the Chief Architect of the CSR in the Companies Act 2013 Companies (CSR Policy) Rules, 2014. It’s been 5 Years since this CSR Act came into force and the first High Level Committee to review the provisions and implementation of the newly formed CSR Act, 2014 was set up on Feb 3, 2015 under the Chairmanship of Anil Bajaj. This committee submitted its report on Sept 22, 2015 and one of its recommendations was to have a review after first 3 years of this legislation being in force. CSPM – Centralized Scrutiny and Prosecution Mechanism was set up for effective implementation of CSR and 12 member panel headed by Regional Director (Western Region) Manmohan Juneja was set up on April 4, 2018 to take care of CSPM and deal with the violations of CSR.
In it’s another initiative IICA has invited Public Comments for High Level Committee on Corporate Social Responsibility – 2018 constituted to review the existing framework of CSR Act. Although this absolutely democratic move in its nature is highly commendable, it also implies the fact that the statutory compliance expected by the Corporate Companies for their CSR undertakings didn’t turn out as expected by the legislation. If we are to accept this as the fact that there are gaps between the Idea - Concept - Formulation - Implementation of CSR regulation by and large, we must rethink it from a complete different perspective altogether – strategic, to be precise, rather than regulatory.
Trying to practice as a sincere CSR Consultant or Professional (not agent!) by following the Rule-book of CSR for over 5 years now, I live and practice at Pune (MH) India and apart from being the Topper of the First Academic Course of PG Diploma in CSR by Karve Institute of Social Service, Pune affiliated to Savitribai Phule Pune University, I also try and educate the stakeholders of CSR about it through my writings, counseling and workshops under Be[a]Cause. Although I am not sure whether these qualify as Comments/Suggestions or not, I have certain observations that I would like to share in this context that might draw few new strides in the CSR space for some fundamental reform, I would like to believe.
It is neither a secret nor some sensitive information anymore that the Schedule VII – the governing document detailing the Focus Areas for CSR is based on the SDGs that have evolved from the MDGs. Also there is no need to make an issue of Corporate World’s reluctance towards following it religiously or take it to the boardroom for deliberation as it’s been looked at like just another tick-box Compliance activity HR should take care of, if not as 2% additional Tax Burden, that could be used as camouflaged PR, if possible, to gain some mileage for the Rupee spent in its name. There’s the first fundamental catch and the revision here should be about the perspective and not the consequence, I believe. Otherwise any comment on the existing regulation like adjusting its scope and reach or reinforcing the monitoring and prosecution mechanism to make it more effective would only resize and rescale the dynamics of CSR but would not help bring in any Structural Change in the Framework itself that is much needed.
Previously 'Millennium' that evolved to become 'Sustainable Development Goals' for the World are drawn from two basic principles of Social Equality by Inclusion and off course Sustainable Development by Resolution. Social Equality is an age-old concept that expects the well-to-do class of the society to lend a helping hand to the less fortunate masses and lift them up for leading a socially respectable decent life. There are many theories and narratives over this concept across the history of civilization and though many of them have debatable and differing principles, it is not only a proven fact but almost an experienced phenomenon around the globe that the Classes cannot survive without the Masses and Masses could prove disruptive to the society if their exploitation crosses the threshold of tolerance. This analogy of societal difference yet coherence gives way to the First Principle that no Corporate (representing Class) can survive, let alone thrive, without the Consumers (represented by Masses).
Secondly, Sustainable Development has many definitions in various parts of the world but in spirit its meaning is very simple – using the finite natural resources conscientiously so that the balance of our ecosystem is maintained and the power wars that could erupt for owning the scarce resources that are left, starting from water – the primary source of ‘Life’, are avoided. Basically living the 4R principles of Reduce, Reuse, Recycle and Recover (or Recreate) by consuming less, producing less waste, reusing the used resource as far as possible and stop all losses and wastage of resources by recovering them.
However this minimalist approach of living is generally seen as conservative, regressive and promoting Enoughism juxtaposed to Consumerism. Corporate world literally feeds on Consumerism and in the wake of global marketing, mass production and faster logistics, is forced to the cut-throat competition of increased production with profit maximization. ‘Numbers’ is the only attribute that drives the Corporate Culture and if they are burdened with additional ‘Taxes’ – Corporate perspective of CSR – they would try and increase the profit even further causing more externalities, eventually defeating the very purpose of Sustainable Development – the core of CSR!
Now this is a real Catch-22 situation that cannot be handled by a mechanism of legislation – regulation – prosecution – penalty alone. A little creative thinking is needed to find a way that will lead to a win-win situation. The only real long-term (if not sustainable!) solution to this situation is to educate the entire humanity about the implications of using the finite resources for their infinite wants and running out of basic essential resources to survive that we can neither produce nor recover, only conserve. This seemingly impossible task, apart from being a very long-term strategy that very few would be ready to embrace, is intrinsically philosophical for the world that is changing every second with AI, Bullet Trains and Hyper loops. Thus the most simple and sustainable solution proving to be redundant for a Modern Man brings us to the first principle of communication – the answer should be in the same language in which the question is asked!
The ultimate aim is to transform CSR – Corporate Social Responsibility into CSV – Creating Shared Value, for very simple reason – responsibility is a burden, creating is fun. However it cannot be a Quantum Leap or a Leap of Faith as this is not any fantasy with cinematic liberty but a real life situation with all its realistic constraints. The transition has to be smooth and should not create any critical outcome that would be more difficult to handle than the situation at hand. The starting point of this long-laid process would start with changing the perspective from statutory to strategic. No smoker has quit smoking even with the statutory warning on Cigarette packs changing from ‘Injurious to Health’ to ‘Smoking Kills’; it’s very human to ignore the warnings of long-term consequences for instant gratification.
Behavioral Change has remained the biggest challenge even for the most evolved clinical psychology and it takes time, indeed. Therefore changing the mentality of the Capitalist mind and divert it from profitability to social value is not a cakewalk for sure; it will take years, if not decades or centuries, even for a smallest shift in the direction. This would need a 3-phase approach of Awareness, Impetus and Policy. Following could be a very broad level road ahead with lots of intricacies that need to be allowed to evolve in due course based on the progressive elaboration principle of development –
- Awareness – Designing, Organizing and Delivering Awareness Programs at mass-level to sensitize the people for the concept of Sustainable Development and the Doughnut Theory.
- Impetus – Promoting all efforts of Sustainability by publicizing the Sustainability Reports of Companies with all statistics in the layman language and validated verifiable facts and figures.
- Policy – Framing a CSV Policy that would define, empower, promote and reward all attempts of Creating Shared Value with reasonable monetary compensations and special social status.
This might seem extremely ideological at the moment, just like Mahatma Gandhi’s words in 1946 –
“As for the present owners of wealth, they would have to make their choice between class war and voluntarily converting themselves into trustees of their wealth. They would be allowed to retain the stewardship of their possessions and to use their talent to increase the wealth, not for their own sakes, but for the sake of the nation and, therefore, without exploitation. The State would regulate the rate of commission which they would get commensurate with the service rendered and its value to society. Their children would inherit the stewardship only if they proved their fitness for it..."
“All the capitalists have an opportunity of becoming statutory trustees. But such a statute will not be imposed from above. It will have to come from below. When the people understand the implications of trusteeship and the atmosphere is ripe for it, the people themselves, beginning with Gram Panchayats, will begin to introduce such statutes. Such a thing coming from below is easy to swallow. Coming from above it is liable to prove a dead weight..."
"My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories. It has the sanction of philosophy and religion behind it..."
“As for the present owners of wealth, they would have to make their choice between class war and voluntarily converting themselves into trustees of their wealth. They would be allowed to retain the stewardship of their possessions and to use their talent to increase the wealth, not for their own sakes, but for the sake of the nation and, therefore, without exploitation. The State would regulate the rate of commission which they would get commensurate with the service rendered and its value to society. Their children would inherit the stewardship only if they proved their fitness for it..."
“All the capitalists have an opportunity of becoming statutory trustees. But such a statute will not be imposed from above. It will have to come from below. When the people understand the implications of trusteeship and the atmosphere is ripe for it, the people themselves, beginning with Gram Panchayats, will begin to introduce such statutes. Such a thing coming from below is easy to swallow. Coming from above it is liable to prove a dead weight..."
"My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories. It has the sanction of philosophy and religion behind it..."
