Introduction
Enactment of Companies Act, 2013 by the Government of India was one of the world’s largest experiments of introducing the CSR as a mandatory provision by imposing statutory obligation on Companies to take up CSR projects towards social welfare activities. This has made India the only country which has regulated and mandated CSR for some select categories of companies. This CSR Initiative will push the nation towards achievement of sustainable development goals and public-private partnership in transforming India. The world wars, global institutions, recessions, labour movement, has their influence over CSR. The recent COVID pandemic has also its effect on corporate social activities.
Historical Canvas
In ancient Roman laws the business houses were aware of the concept of CSR. We can find the existence of asylums, homes for the poor and old, hospitals and orphanages which were built by businesses then. In English laws also in the seventeenth century by virtue of coronation of Queens social development by businesses became the priority. The religions and their beliefs acted as a catalyst in CSR concept. In USA Macy’s in 1875 contributed funds to an orphan asylum.
The decade of 1990 is recognised as the decade of globalization. The whole world including India was a part of globalisation movement and CSR has automatically became its integral part. In this period some distinguished events occurred which has influenced CSR movement. The first was creation of European Environment Agency in 1990. In the year 1997, Kyoto protocol was adopted. These international bodies have created benchmark for environmental concern. The work of corporate world was scrutinized according to these benchmarks. With globalization every business is connected with all in the world. This means that any complaint in any part of the world will have its effect in other parts. On the other hand the noble services done by corporate sector towards social welfare has created its goodwill.
Policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates was recognised as preferred destination for investment. The most significant event took place in 2013, mandating CSR spend through legislation. India became the first country in the world to mandate social welfare through Business houses.
The COVID 2019 has changed scenario in business rules. The rules and regulations and lockdown thereafter has put restriction of CSR. There were many relief packages and services which were rendered by the government. The companies either donated funds to them or collaborated with such by giving their building for such noble cause. Many were found giving technical skills to them.
Legislative dictate-Recommendatory to Mandatory
India faces some of the world’s largest problems, and it seems difficult to depend on the government alone. With respect to education, it can be said that “nearly 400 million Indians do not receive the education that they deserve.” Money Control opines that the government’s investment in education is “woefully inadequate.” This situation exists despite the “numerous policies and advancements” in education and workforce development initiated by the country. When it comes to healthcare, millions of people across the developing country still suffer from disease and malnutrition.
The CSR provisions of the Companies Act, 2013, mandate CSR for a certain category of companies and not all the companies. However, it does not differentiate between public, private and listed companies, as is usually the trend with such legislations. It only creates a category on the basis of net profits, turnover or worth.
Two major global treaties will have a special focus on judging India over the next decade. The United Nations Climate Change Agreement (COP 21) “ties India to global climate change reduction goals.” American Bazaar also highlights India’s commitment to the United Nations Sustainable Development Goals (SDGs) to “target the elimination of global poverty and the advent of sustainability by 2030.”
Regulatory Regime-Discussion &Analysis
Along with Section 135 of the Act, the new CSR Rules create a stringent regulatory architecture for carrying out CSR activities in India. For ensuring compliance with the new legal framework, companies must preserve detailed records of CSR Committee meetings, CSR fund allocations, and projects undertaken through implementing partners.
The CSR mandate under Section 135 was originally founded on the ‘comply, or explain’ principle, where a company could either undertake CSR activities, or disclose reasons for failing to spend the CSR amount. Compliance with Section 135 was envisaged by Parliament to be voluntary, and not mandatory.
Within a short span of seven years, there has been a complete departure from this original intention. With the notification of the new CSR Rules, the departure from the ‘comply, or explain’ regime is now complete. Corporates desire more flexibility, in the first place, to implement their CSR programmes with the participation of frontline volunteers who have decades of experience.
It is important to note here that the Directive principles of State Policy enshrined in the Part IV of the Constitution of India acknowledging that YES, it is the responsibility of the “state” to take care of its residents and more particularly the citizens. The “state” desires to implement some responsibility through participation of corporates who have skills, acquired through business acumen and running activities in profit generation and carving out some profit for sharing responsibility of “state” as specified in Constitution. Going by the figures of the Financial year 2019-20, approx, Rs.25,000 crore was contributed by 17,000 companies for achieving laudable philanthropic projects mentioned in Schedule VII of the Companies Act, 2013, which is amended in May 2020 to include pandemic relief measures.
It is pertinent to note here that there is no external bench mark for India to check as reference. Since 9 years of mandatory regime no other country has followed foot-steps of India to make the CSR mandatory. The Researchers and analysts have to deal with internal data to gauge progress. Figures in the following table justify that incrementally stringent regulations have worked well.
Year : 2016-17 2017-18 2018-19 2019-20 2020-21
CSR (Rs. Crore) 14344.4 17097.66 20163.18 24863.84 20360.25
International Perspective: Pyramid of CSR
By and large the global yardsticks of CSR are converging to the following actions:
Investing in local communities
The social and economic disruption in 2020 and 2021 have brought a renewed focus to local communities. Companies are also recognising the value of local markets and supply chains, not just as a means to reduce carbon emissions and lower supply chain costs, but also to tap into local talent and solutions, as well as reduce the risk of supply chain disruption.
Green technology and solutions
As countries across the globe commit to net-zero emissions by 2050, the imperative to be environmentally sustainable is stronger than ever and businesses across the country are leading the way in this space. Green office practices and solutions have been shown to improve employee productivity, deliver cost-savings, improve business reputation, increase staff retention and attract new talent.
Global Giving
Global giving has been gaining more popularity these days. Increasingly more companies throughout the world are making charity contributions and are encouraging their employees to give in their own communities as well.
Virtual Volunteering
The advantages of working from home have become quite obvious in the past two years. Thus, more and more companies are thinking of arranging for a flexible work-from-home program even after the pandemic is over.
The accelerating expanse of thought, research, and practice on CSR has been mind-boggling, and it is easy to conclude that CSR has had a robust past and will have an upbeat and optimistic future. The year 2022 is a year of involvement. Corporate social responsibility is more important than ever, and more and more trends are emerging every day. By keeping up with them, you should also be able to maintain your brand relevant. Today consumers are looking for companies that are true to their word, so techniques such as external audits may be used to prove that. In a time when the consumer is doing increased research on the brand, proactive demonstration and transparency have become highly enforced.
References
- https://www.researchgate.net/publication/358283918_History_of_Corporate_Social_Responsibility
- https://nonprofitquarterly.org/mandatory-corporate-social-responsibility-india-working/
- https://www.theguardian.com/sustainable-business/india-csr-law-debate-business-ngo
- https://conventuslaw.com/report/india-new-csr-regime-is-it-too-prescriptive/
- https://doaj.org/article/17fe4a38d46d4bec923d260a2b2b5ccc
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