Aligning the CSR mandate

Corporations are careful to synchronise their social programmes with signals from the Union government

You could almost sense the dismay in C-suites across India following the news that the Union government was shelving its big-bang Gandhi Jayanti announcement of a blanket ban on six items that contain single use plastics (SUP). Judging from the hectic email traffic from corporate communications professionals and PR executives, it was clear that the impending SUP ban was about to become a major cause celebre in corporate India’s corporate social responsibility (CSR) agenda. 

There’s one thing to be said for Indian corporations. They may be short of innovation, strategic ideas or even governance standards, but on CSR they have been unerringly on point. Perhaps it’s something to do with India Inc’s DNA that they’ve honed the ability to pick up signals from Raisina Hill to a fine art. 

Narendra Modi’s enlightened announcement that the government would ban cups, plates, bottles, straws, bags and sachets using SUP on Gandhi’s birth anniversary has provoked robust support. Airports and other public places complied with lightning speed to declare their spaces no-SUP zones, and large manufacturers made sure the press propagated their efforts to recycle plastic and so on. That is certainly a heartening response to a problem that is reaching code red status rapidly. 

The no-SUP CSR programmes won’t go to waste, though. The blanket ban was rescinded because it would have thrown thousands of workers in small units that make SUP-based products out of work. Now, the Union environment ministry has said it would work towards curbing SUP, offering manufacturing units a sensible phase-out route that will keep the campaign relevant for some time to come. 

It is easy to predict that how far India Inc persists with its no-SUP projects will depend on how much emphasis Mr Modi’s government continues to place on the issue. The close alignment between CSR programmes and pet prime ministerial projects has been a pattern ever since the CSR law was passed by the preceding United Progressive Alliance government. 

The latest India CSR Outlook report, published annually by NGOBOX, shows that the bulk of the CSR spends by 368 large corporations — accounting for three-fourth of CSR spending — were devoted to education and skill development, followed by WASH (water, sanitation and hygiene). Together, these issues account for 61 per cent of CSR spends. The NGOBOX study shows that this has been the trend for the past four financial years. 

The first is partly the legacy of Manmohan Singh’s Right to Education legislative initiative that saw large corporations focus their CSR energies on primary schooling. Many companies narrowed it down to schooling for girls — a subset of “women’s empowerment,” the issue in vogue at the time.  Mr Modi’s “Beti bachao, Beti padhao”  and “Skill India” campaign offered opportunities for corporations to enlarge these programmes.  

The rising number of sanitation CSR projects is unmistakably an offshoot of Mr Modi’s Swachh Bharat programme, which imaginatively relabelled the UPA’s Bharat Nirman toilet-building project and infused it with greater energy to reduce if not eliminate (as is claimed) open defecation in India.

What’s not to like if corporations are focusing their CSR mandates on education, sanitation and related issues? Nothing at all, if the projects are viewed in isolation. But a closer look at spending patterns suggest that the programmes aren’t that aligned with the original intent of the mandate (introduced via an amendment to the Companies Act in 2014). 

The UPA government thought up this stipulation as a means of deflecting criticism for the inefficient and inadequate compensation to people impacted by large industrial projects in the backward regions of central and eastern India. But a closer examination of the spending shows that the bulk of it has gone to the relatively better developed western regions, mostly within the ambit of corporations’ operations (the lack of new projects anywhere in India may have something to do with this).

By ostensibly encouraging corporations to focus on societal development, the UPA adroitly avoided the “suit-boot ki sarkar” sneer that so enraged Mr Modi in his first term. This may explain why the NDA initially attempted to deepen this CSR legacy by transforming a voluntary “pay or explain” mandate into an obligation that would attract criminal charges for defaulting companies. Cooler heads have prevailed since and the proposal has been withdrawn but corporate India has understood the signals. This year, the big companies spent 63 per cent more than their prescribed CSR spending. Next year could see corporate India outdo itself on fulfilling its CSR mandate. Whether all of this really transforms India is, of course, another question.