CSR in general has been very popular amongst companies and top corporations. At present when environmental concerns, human rights, labour rights, fair trade, health and many other concerns are becoming increasingly important to consumers, stakeholders and companies alike, ICR has attempted to take a close view of the initiative.
Cement has a heavy environmental footprint as the very process of production of cement releases CO2 and it consumes a lot of energy, both thermal and electrical, mostly through coal based captive power plants. At the same time, cement sector has been very proactive in reducing its environmental impacts through fly-ash blending, waste heat recovery, using waste from other processes as energy input, growing green cover, etc.
It is probably with this reason; CSR is aimed to win trust by showing that the corporation cares for the needs of the community. Every CSR project needs to be conceived, funded and supported for long term sustainability and where ownership transfer is envisaged at a later stage to other, possibly non-profit organisations.
The project however relevant it may be but the transfer of ownership is must for long lasting success. Companies should allocate specific amount in their budgets for CSR activities. This amount may be related to profits after tax, cost of planned CSR activities or any other suitable parameter as envisaged in the act. One will observe that that CSR funding has been ever increasing and will do so in the years to come.
The cement companies have a sizable allocation of funds for CSR and have been really doing a commendable job in undertaking number of projects that are relevant to the society and communities around. Some of the noteworthy projects are undertaken by ACC for drivers and Ambuja Cement for water conservation at Kodinar, which was once a water starved district of Gujarat.
In spite that being the case; we would like to quote some of the observations made by Down to Earth (published by The Centre for Science and Environment that tracks the CSR activities) "The big companies have spent much more on CSR than expected. But are they actually engaging in social responsibility with commitment, or just finding convenient ways to be on the right side of the law?"
Corporate India increased its prescribed amount for CSR expenditure from Rs 5,779.7 crore in 2014-15 to Rs 7,096.9 crore in 2017-18, states auditor KPMG's 2018-19 report which analysed the CSR work of 100 companies. It found that companies were spending more than what was prescribed. But the country's most backward districts that require maximum CSR support remain deprived.
According to the Ministry of Rural Development, 115 of the 718 districts in India are backward. NITI Aayog stipulates that corporate handholding can ensure the development of these districts. Jharkhand has 19 such districts, Bihar 13, Chhattisgarh 10 while Madhya Pradesh, Odisha and Uttar Pradesh have eight each. But only one per cent of all CSR programmes have been implemented in Jharkhand and Chhattisgarh each. Bihar has received just 2 per cent, Madhya Pradesh 3 per cent and Odisha 11 per cent. Maharashtra, Rajasthan, Gujarat, Karnataka and Andhra Pradesh, which account for only 15 per cent of the aspirational districts, have received 60 per cent of the CSR money. Twelve per cent of the districts in the Northeast require CSR attention, but just about 4 per cent received CSR money in 2017-18. (The numbers quoted are for the year 2019)
Companies say the Act is new and will take time to integrate CSR projects into their business models. However, they have found convenient ways to wriggle out of their responsibility. A large number of companies transfer CSR funds to government programmes such as Prime Minister's Relief Fund and consider their responsibility over.
In the year 2016-17, many public sector companies have contributed for the Statue of Unity built in the memory of Sardar Vallabhbhai Patel in Gujarat, initiative by Gujarat Government. Substantial contributions were made to CM fund of UP for cow shelter.
Non-compliance by firms
In July 2018, a good 272 companies were served notices by the Registrar of Companies for non-compliance with CSR expenditure. KPMG has identified three principal areas of non-complianceùdisclosure of direct and overhead expenditure on projects, details of overhead expenses, and keeping these overhead expenses below 5 per cent of total CSR spends.
Poor understanding of the social needs of communities is assessed as the main reason for poor CSR compliance. The problem is aggravated by inadequate infrastructure and implementation capability within organisations and lack of required expertise."There is no data to know if companies are undertaking need-based assessment studies, a must since it prioritises the requirements of the impacted communities," says Sujit Kumar Singh, Senior Programme Manager at Delhi's nonprofit Centre for Science and Environment (CSE). Such an assessment should be inclusive and participatory on the lines of gender, caste and religion. Often, professionals handling CSR are not trained to comprehend societal nuances. In most cases those heading the human resource department handle CSR activities. The need now is a policy which drives companies towards self-regulation, the key to CSR, Singh says.
Recognising that CSR is still nascent and a grey area, CSE has prepared reporting guidelines for companies. For this, it formed a committee representing media, civil society and industry. According to the guidelines, companies should self-regulate and be responsive to the disadvantaged, vulnerable and marginalised sections of society. They should respect and promote human rights, make efforts to protect and restore the environment, and support inclusive growth and equitable development. The guidelines show how to improve accountability and transparency in CSR spending, and make it an integral part of business.
There are many reasons for not supporting the CSR mandate by the Indian Corporates. Some of them are following:
Unnecessary focus on reporting
First, the mandatory spend immediately puts the focus on quantifying CSR activity and not qualitatively assessing what makes strategic sense for a business.
The article can be completed unless we touch up on the handling of CSR at Tata Group. It is regarded as a benchmark for the organisations that are serious about perusing CSR activities. The major points included in the corporate policy are following:
Demonstrate responsibility and sensitivity to biodiversity and the environment. Comply with rules and regulations relating to environment
Constantly upgrade technology and apply state-of-the-art processes and practices with institutional arrangements that will combat larger issues like climate change and global warming
Create sustainable livelihoods and build community through social program pertaining to health, education, empowerment of women and youth, employee volunteering,
Find ways to enhance economic human, social and natural capital for bringing and maintaining a balance among business, society and environment
As far as the Tata group is concerned, it has been very sincere and honest in fulfilling its duty and responsibility towards the social development. It has reached the masses to improve their life standard, to help their dreams come true and to exploit their employable skills. It can be said that, a statement on the Tata group's website www.tata.com, The Tata credo is that 'give back to the people what you have earned from them', is rightly being implemented through CSR by TATA Group.
Changes to come
Proposal to allow the trading of CSR credits. A SEBI constituted panel, in its report last month has among others things, proposed the allowing of CSR spends to be traded between companies with excess CSR spends and those with deficient CSR spends on the social stock exchange. The idea of such a bourse was first floated in the 2019 budget. The proposal, if adopted, can help companies with a poor track record of undertaking CSR practices to buy CSR credits to comply with the requirement of the act.
Tata Group is working on a proposal to extend 6 to 42 months sabbatical for employees to go out and engage with NGOs and institutions is also on the cards.
- VIKAS DAMLE