Some companies in Maharashtra show the way in social and community engagement.
The concept of ‘corporate social responsibility’ (CSR) is arelatively new coinage. It got impetus because of the new Company Law passed by Parliament in 2013. The law requires companies with a minimum profit of Rs 5 crore, or turnover of Rs 1,000 crore to spend at least 2 per cent of their net profit on CSR activities and projects.
India is probably the only country in the world to have this social spending obligation on companies. It is a bit problematic, because profit after tax belongs to shareholders, and only they can decide what to do with it. Company management cannot. But this is a minor legal quibble.
The fact is that CSR spending is going up, thanks to the new law. One might say that even before CSR spending became legally mandatory, or even before the term CSR was coined, many companies were already engaged in social and community activities in India. Many business families promoted colleges, built hospitals or even temples in the past. Company sponsorship of community events and social causes was not unheard of. In fact many well-known business families also supported Gandhi ji and provided funds for the independence movement.
Hence CSR spending is not an extra burden. What some businessmen grumble about is why make it compulsory, and why not leave it to voluntary charity? In modern capitalist societies, companies have to increasingly earn acceptance, credibility and respect from the communities within which they operate. It is almost like seeking a “moral licence” to operate. Not only do companies have to comply with environmental and safety laws, but they also need to be seen as “giving back” to society out of the profits that they make. So if this moral pressure is going to increase, then why make it mandatory by law? Companies of the future will get more respect, and eventually more customers and investors, only if they are seen as socially responsible citizens as well. Be that as it may, the CSR law is upon us, and that spending is helping society and easing some burden from the government.
At a recent Industry Chamber Annual Day event, there was a panel discussion on what corporates are doing under CSR in Maharashtra. The sheer range of activities was quite impressive and inspiring. It set an example to others as well. For instance, one company making fashion apparel had decided to grow trees (since cotton comes from plants, and viscose comes from wood pulp). It refers to tree planting as building oxygen banks. It ensured that each of the ten thousand saplings it has planted has survived into adulthood. That’s a 100 per cent survival rate. It asked other corporates to take up building fully survived oxygen banks. It’s one thing to simply plant saplings, but quite another to ensure it survives for a few years.
Another refrigeration company decided that it would engage suppliers who were individual entrepreneurs, including some who were women. Thus, through their vendor development they are also helping nurture entrepreneurship. That’s exactly what the government’s Startup India and Standup India also aims to achieve.
A steel company has decided to promote sports, and also fund the training of the Olympics team. It is also into heritage preservation and development. Another corporate was engaged in water management. Notice that all these CSR activities are ostensibly not connected with the main business of the corporate. But any corporate which does meaningful CSR to society is bound to gain in respect and reputation.
Finally the most interesting presentation was about a model village community that has come up 100 km from Mumbai. Built with corporate support, this is a place which aims for harmony between economy, environment and emotion. There’s complete recycling, conservation, organic farming and dairy operations, growing of medicinal herbs and eco-tourism. If a thousand such communities come up India with corporate support, it would be a crowning glory for CSR.
This article was taken from here.