CSR initiatives lack direction

The claim that Corporate Social Responsibility (CSR) programme has already made a dent in the social  sector in india , should be taken with a bit of caution. In fact a trend is visible showing a growing  tendency to dress up CSR as a tool for enhancing the business activity only of the corporate houses, as most of it today appears to be limited to image building exercise.

The last year being the first year of mandatory CSR almost 70% of the top companies have not been able to meet their targets of CSR spending. Many of them are  finding it more convenient to discharge their  obligation by contributing to Central Government schemes such as Swatch Bharat or Cleaning Ganga etc. 

According to an estimate the contribution to these schemes amounts to as much as 50% 0f the total. 60 to 70% of the balance is attracted by the education sector, health sector is also claiming major share while the core problem areas of the social sector such as slum development, women empowerment, welfare of widows, elder care, issues of the ageing society, promoting gender equality etc.,  are not receiving the attention  they deserve.

 It appears that the issues of ageing society have been almost completely ignored. It is particularly disappointing when there even was a news that the Centre may make it mandatory that 10% of CSR funds are spent on the welfare of elderly (TNN, Nov22, 2013). We would not be surprised if this year also turns out to be same or worse in this regard as in the previous year  when according to the analysis published by Forbes India less than 1% of the total CSR spending during that year was meant to mitigate the sufferings of the elderly.

 Very little investment has gone into the brick & mortar projects probably because the companies are shy of entering into long term projects as there is a strong rumour that  under pressure from foreign investors CSR may again be made voluntary or  may be reduced to 1% from the present 2%. 

The correct situation regarding distribution of CSR contributions during 2014-15, will, however, be known when the declarations are analyzed. 

No one can challenge the need of support to education sector or the health sector but the investment in these sectors at the cost of support to other critical social causes may not be in the national interest. Moreover, there is a growing demand from the social sector to have at least an advisory role in prioritizing the social causes for CSR spending. The risk of duplication of CSR effort with Government initiatives in some welfare schemes can not be ruled out which will be obviously causing waste of effort and resource.

This situation may arise due to absence of direction to the donors and it was foreseen by Governments of some states notably Odidha and Chattisgarh

The  Odisha state industries minister Sri Debi Prasad has announced that his  government is in the process of formulating a new set of guidelines for corporate social responsibility (CSR) activities in the state. “The state government is preparing a status paper on the CSR activities. We are bringing out a CSR guideline as per the needs of the state” he has added.

In Chattisgarh also the state government has set up committees at the district level that are headed by the district collectors to monitor and guide the CSR activity in the state.

Chief Minister Raman Singh, who also holds the additional portfolio of industry department, said that the district administration had been inviting suggestions from the legislators and other stakeholders regarding proposals that can be implemented through the CSR funds.

The purpose of this intervention is to ensure that the CSR spending is directed according to the needs of the state and its social sector.

 In fact the freedom granted in the Companies Act  2013, to the corporates to choose themselves the activity which they would like to support and also the geographical area where they would like to operate, is virtually being superseded by these states.

The Maharashtra government is also moving in the same direction as notices have been issued to companies for not implementing corporate social responsibility (CSR), Maharashtra Environment Minister Ramdas Kadam  has observed..

“The minister has issued instructions in this regard to district collectors.” said a senior official. 

In Andhra Pradesh also guidelines are being prepared which will help in directing CSR spending on projects related to the development of their new Capital near Vijayawada.

This trend is likely to be picked up by other states also more so because the amount which is expected to be poured in every year is more than Rs. 20,000 crores which  by any measure is not a small amount. It is more than the total amount spent by the Central Government on all the welfare schemes. if we leave out their flag-ship schemes such as Food Security Bill, MGNREGA, Indira Gandhi National Old Age Pension (IGNOAP) scheme  etc.

 According to a survey organized by UN-FPA  only 18 per cent of the elderly belonging to poor households are beneficiaries of the IGNOAPS, while only 3.5 per cent utilize the Annapurna Scheme and only a quarter of the  widowed women are covered under IGNWPS. The survey also reveals high levels of morbidity across a spectrum of ailments and impairments, both chronic and life debilitating. This is further compounded by gender differentials in accessing healthcare and lack of awareness about health schemes and other social services generally to the disadvantage of women.

Ex-secretary of the Union Ministry of Social Justice & Empowerment, Sudhir Bhargava pointed out that the major challenge before all stakeholders is the quality of preparedness to cope not just with the rising numbers but also with the complex set of problems posed by the population aged above 80 years. “We estimate that we will need 10 million caregivers to address the needs of 80+ population and a massive training programme to create competent human resource is a vital area that we need to collectively address,” he emphasized.

The purpose of quoting above figures is to draw attention to the yawning gaps which exist in the implementation of the existing social welfare schemes. The CSR programme can be harnessed to address such gaps in the social sector by either supplementing these schemes or by creating an environment where the benefit reaches all eligibles. It is possible in a mass programme like CSR because both the corporate houses and the NGO’s implementing it are closer to the masses and they only need direction from an agency which is familiar with the needs of the social sector as defined in schedule VII of Section 135 of the amended Companies Act 2013.

 It will therefore, be in the national interest if  a central body is constituted to identify and prioritize issues in social sector which need to be addressed and also the geographical areas which need this support. This will also avoid the risk involved if all states were to  prepare their own guidelines which are different in approach. It may create a confusing situation and in some cases  may lead to  too much of official intervention which may  discourage the corporate houses. 

In view of the above it will be better for this programme if it is guided by a high level advisory body or an inter-ministerial committee  at the Centre consisting  of  representatives of ministries  dealing with various welfare activities such as ministries of Social Justice and Empowerment,  of Women and Children  Development, of Health, of Rural Development etc. The Ministry of Corporate Affairs,  National Foundation of CSR (IICA) and representatives of the industry and commerce should be part of it. 

This body can diagnose social issues jointly with the corporate houses, prioritize them and also indicate the geographical area for their implementation to suit the needs of the state. This can be done in an amicable manner with the government representatives playing an advisory role leaving the initiative in the hands of the corporate houses and giving  them liberty to present the solutions to public and their shareholders in a manner which they consider benefits their business.

The guidelines laid down by the above body can be translated into practice by similar committees at the district level consisting of the social welfare department and representatives of business along with the coordinating organizations and accredited NGO’s. For the success of this concept it is essential that the government plays only an advisory role.  

Most of the companies prefer to work through NGO’s directly or through intermediary facilitating  organizations   though many of them have their own trust or foundation for the purpose. They often find it difficult to find a legitimate NGO there being more than 30 lakh of them in our Country. In the above system district body can also help in finding a suitable NGO and/or a facilitating organization and can also monitor the sustainability of the project.

We understand that the Govt. of India has constituted a panel of experts under the Chairmanship of Sri Anil Baijal, IAS(retd) to evaluate the working of CSR. It is not clear if our above concerns are included in their terms of reference. It is our humble submission that either the above panel of experts or a new Inter-ministerial Committee should also look into the prioritization of social issues and the geographical area of application for uniform development of the Nation. Translating their CSR policies into practice at district level also requires consideration.

By RN Mital