India and legally mandated CSR
8th June 2015 | By Grainne |
For years CSR researchers and commentators have debated whether it is practical or even desirable to impose CSR requirements on business. So I was interested in the first major implementation of this in India which legally mandated CSR last year. The law applies to companies with net worth of 5 billion Rs. (approximately $80 million); turnover of 10 billion Rs. at least (approximately $160 million); or net profit that exceeds 50 million Rs. (approximately $830,000).
This article reviewing first 13 months of India CSR companies act provides an interesting review of progress so far and makes the point that the change in the ruling party after last year’s election slowed things down as many believed that legislation would be delayed or softened to be more ‘business-friendly’.
There is no doubt that India has many social and infrastructure issues that big business is well placed to address. The delays following the election demonstrate that big business doesn’t see this as an opportunity but more of a necessary evil. And that I believe is the heart of the problem. This is far more likely to turn into a ‘tick the box’ exercise rather than a strategic exercise. Companies carrying out CSR without strategic focus and rigour risk a hit and miss implementation which won’t work as well as it could and won’t provide the value for the companies that a well thought out ‘win-win’ programme could. If companies don’t see value and don’t evaluate the social impact they are creating, they will likely change direction and funding according to the whims and passions of the few top decision-makers. Such changes in direction can be disastrous for the beneficiaries and may limit value for the business too.
This is a huge opportunity for India and for businesses, but only if businesses really embrace it.