Excerpts from a piece in Hindu Business Line by Vinata Bali, a strategy advisor and independent director
Several years ago Charles Handy wrote: “Companies that survive longest are the ones that work out what they uniquely can give to the world — not just growth or money but their excellence, their respect for others, or their ability to make people happy. Some call those things a soul”. Over the last two decades at least, commercial enterprises have been challenged by academics, consultants and NGOs to go beyond the obvious parameters of financial and competitive metrics and build a more holistic frame-work of assessing business performance.
From time to time, chairmen of companies have talked about “doing well by doing good”, and sustainability updates are increasingly finding their place in annual reports. And yet, big issues affecting the well-being of the people and planet are not being addressed with the resolve and attention they deserve. This, despite the fact that we have enough knowledge to at least analyse, understand and address some of the more endemic social and environmental concerns of today.
The criticality of multiple players such as the government, civil society, development agencies, private sector, etc., aligning on a common platform, is further con-founded by a lack of trust among them and inadequate conviction that they all can — and must —work towards a shared goal. In India, the Companies Bill 2013 stipulated that all companies with a net worth of more than Rs. 500 Crore, or revenue more than Rs. 1,000 Crore, or net profit in excess of 5 Crore, must spend at least 2 per cent of the average net profit of the last three years on CSR, with a further definition of the broad categories in which this expenditure must occur.
Money, ideas and execution
We know companies are struggling to “spend” the stipulated CSR funds on programmes that fit the criteria and can be operationalised. This has led to two suboptimal realities: first, most companies are searching beyond their own competencies to create programmes in categories specified in Schedule VII of the Companies Act 2013, even though the categories are fairly broad; second, there is not enough capacity or capability in the existing NGOs to meet this incremental demand from companies. More fundamentally, the approach begs the question of enduring impact versus fleeting progress, apart from the scale and scope of coverage. It also omits a critical insight that social development programmes require endurance and long periods of investment in capability and delivery to make any meaningful difference.
Time to change
What if we were to simply think of CSR more comprehensively — and encourage companies to embed social issues in their business model itself? That would obviate the need for compartmentalising business responsibility and social responsibility, and we would end up with sustainable corporate practices. The idea of combining social and environmental issues as part of the business enables companies to work with their core competencies and, therefore, achieve enduring socio-economic out-come.
Mandatory CSR, on the other hand, has created parallel structures in most companies, separating business and CSR teams, with the latter struggling to either identify right development partners or NGOs to “manage” CSR programmes, or, worse still, running programmes on their own, in sectors where they neither have deep knowledge nor adequate experience. The basic flaw in separating CSR from what is (or, should be) corporate responsibility is that it ignores the core idea that business is a microcosm of society and must contribute to social progress even as it generates economic growth and employment.