‘A business that makes nothing but money is poor business -Henry Ford’
While there may be no single universally accepted definition of CSR, each definition that currently exists underpins the impact that businesses have on society at large and the societal expectations of them . Today the concept of CSR has evolved and now encompasses all related concepts such as triple bottom line, corporate citizenship, philanthropy, strategic philanthropy, shared value, corporate sustainability and business responsibility.
CSR in India has traditionally been seen as a philanthropic activity. And in keeping with the Indian tradition, it was an activity that was performed but not deliberated. As a result, there is limited documentation on specific activities related to this concept. The Companies Act, 2013 has introduced the idea of CSR to the forefront and through its disclose-or-explain mandate, is promoting greater transparency and disclosure.
The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more. The act encourages companies to spend at least 2% of their average net profit on CSR activities. Schedule VII under the act clearly spells out areas for intervention that corporate can take up. These range from promotion of education, health care, employment generation, etc.
In a bid to invite corporate funds for its flagship schemes like the Swachh Bharat Mission and Clean Ganga initiatives the present government has announced that corporate spending in these schemes will be now counted as CSR spend. It has gone ahead to include ‘Swachh Bharat Kosh’ and ‘Clean Ganga Fund’ in the schedule VII of the companies act.
The dismal state of India’s sanitation is well known; as per Census 2011 nearly 50% of India defecates in the open. However a lot has happened since Prime Minister Modi announced the Swacch Bharat Mission-Gramin (SBM-G) on 15th August 2014. Despite these announcements, sanitation continues to be a lagging issue in India. Irrespective of the massive investments over the last 2 years and targeted IEC campaigns the reality on ground reflects the same old story of a supply driven approach, poor quality infrastructure and lack of availability of water etc.
It is estimated that Rs 1.96 lakh crore will be required to make rural India Open Defecation Free (ODF). It is a fully subsidized project with zero beneficiary contribution. The government envisages a big role for CSR in the SBM (G). It recommends various ways in which the corporate can spend a part of their CSR funds such as creation of demonstration fields, undertaking IEC and BCC activities, providing technical assistance for septage management and school sanitation activities.
The defined areas of interventions leave ample scope for the corporate sector to innovate and undertake a range of activities under CSR. Yet the overall spending on SBM (G) is far from satisfactory.
Very recently the government has also made 30% of CSR funding to be directed towards SBM mandatory. However not too many big companies have come forward to support the program. Data prepared by the corporate affairs ministry has shown that among all projects of the government the SBM has got the least amount of funding from private companies in 2014-15. Altogether Swachh Bharat Mission and Namami Gange campaign have received less than 1% of the total spending of Rs 6337 crores.
However if one is serious about making India Open Defecation Free (ODF) it can be seen from past experience that simply increasing sources of funding is hardly the right solution. SBM should not become just about numbers and ticking a box. This is a lesson we should have learnt well from all our past sanitation projects. Over Rs 18,500 crore has been spent over the last two decades to build about 709 million toilets. Sadly the 2011 Census showed that more than 70% of rural households and 19% of urban households lack toilets and about 60% of the population continues to defecate in the open. Thus, it can be said that the real challenge is not building the toilet but what comes after that.
Sustainability is a core principle of CSR and primarily is derived from the concept of sustainable development which is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. CSR in India tends to focus on what is done with profits after they are realized. On the other hand, sustainability is about factoring the social and environmental impacts of conducting business, that is, how profits are really made.
Globally, the notion of CSR and sustainability seems to be converging, as is evident from the various definitions of CSR put forth by global organizations. The genesis of this convergence can be observed from the preamble to the recently released draft rules relating to the CSR clause within the Companies Act, 2013 which talks about stakeholders and integrating it with the social, environmental and economic objectives, all of which constitute the idea of a triple bottom line approach. It is also acknowledged in the Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises issued by the DPE in April 2013.
Thus, for sustainable sanitation what we need is not ad-hoc expenditure on infrastructure or large contributions to the SBM kosh accounts rather an integrated approach from the companies that want to be in this for the long haul. The problem of sanitation in India is too large, complex and diverse; however no one understands consumer behaviour as well as business houses and the corporate sector hence could significantly contribute to and add value by taking ownership and contribute, and not just financially.
Sukanya Bhaumik is a Program Officer at the Bangalore based not for profit think tank, Public Affairs Centre (PAC) and is working on the Bill and Melinda Gates Foundation (BMGF) funded project – ‘Improving Consumer Voices in Swachh Bharat Mission’