India’s Companies Act of 2013 requires 2% of net profit of profitable firms to be spent on CSR but only 30-40% of the envisioned spending is currently being done.
Why do companies lack enthusiasm to do CSR in India?
Why is still there a section of corporate which feels that mandatory CSR is stifling and another annoying bureaucratic measure?
Let’s look at the state of affairs of CSR globally.
Globally, in just the last few years, CSR projects have grown from relatively rare undertakings to now almost essential business functions. A study (commissioned by Verizon but which analyzed “over 300 studies primarily from rigorous, peer reviewed research”) published on July 9 found that CSR programs can increase a firm’s revenue by as much as 20%, command price premiums up to 20%, and increase customer commitment by as much as 60%. Companies with effective CSR programs have on average increased shareholder value by $1.28 billion over a 15 year period, seen increases in employees’ productivity by as much as 13%, and experienced reductions in employee turnover by as much as 50%.
So it is no surprise that many companies have jumped on-board the CSR bandwagon. In 2011, just under 20% of S&P 500 companies published a sustainability or corporate responsibility report. But by last year, 75% did so. In absolute numbers, companies around the world published 7,838 CSR reports in 2014, 30% more than in 2010. And numerous high-profile international conferences are devoted to promoting CSR.
Given the global experience and that of some of the Indian companies, I believe it is only a matter of time before India Inc. becomes a ‘convert’.
As it is obvious, that regardless of the motives for CSR, real results on the ground are indisputable, and certainly for the better.
This article has been written by Chandni Jafri, Founder & ED, SLSV. To know more about her, click here.
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