Apropos Ashish K Bhattacharyya's column "Business Responsibility Reports can't enforce accountability" (Accountancy, July 8), the Securities and Exchange Board of India deserves to be applauded for requiring the top 100 listed companies to publish a Business Responsibility Report (BRR) in their annual reports to indicate the extent to which they have adopted the National Voluntary Guidelines (NVG) issued by the Ministry of Corporate Affairs. The NVG, which covers a wide range of subjects including stakeholder value, promotion of human rights, environmental protection and customer value, has the added advantage of being voluntary in nature. It has the potential of promoting a culture of socially responsible behaviour by corporations because non-compliance would reflect poorly in their BRRs.
This is preferable to the corporate social responsibility (CSR) provisions of the Companies Bill, 2012, that requires the formulation of a CSR policy and monitoring within a mandatory framework. CSR must never be made mandatory in nature because such provisions can actually prevent corporate entities from meeting their main objective, which in the words of Peter Drucker, the great management thinker, "is to make enough profits to cover the costs for the future". Drucker also believed that "the proper social responsibility of business is to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs and into wealth". There is clearly a strong case for socially responsible behaviour by the corporate sector and more so in a country like India that has widespread social and economic inequalities - as long as there is no trade-off with efficiency and profitability.
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This is preferable to the corporate social responsibility (CSR) provisions of the Companies Bill, 2012, that requires the formulation of a CSR policy and monitoring within a mandatory framework. CSR must never be made mandatory in nature because such provisions can actually prevent corporate entities from meeting their main objective, which in the words of Peter Drucker, the great management thinker, "is to make enough profits to cover the costs for the future". Drucker also believed that "the proper social responsibility of business is to turn a social problem into economic opportunity and economic benefit, into productive capacity, into human competence, into well-paid jobs and into wealth". There is clearly a strong case for socially responsible behaviour by the corporate sector and more so in a country like India that has widespread social and economic inequalities - as long as there is no trade-off with efficiency and profitability.
Srijit Basu Kolkata
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number