Day 48 – Q 4.Do you think compulsory corporate social responsibility affects genuine philanthropy and charity work? Comment.
4. Do you think compulsory corporate social responsibility affects genuine philanthropy and charity work? Comment.
क्या आपको लगता है कि अनिवार्य कॉर्पोरेट सामाजिक जिम्मेदारी वास्तविक परोपकार और दान कार्य को प्रभावित करती है? टिप्पणी करें।
The progress of a society depends on the businesses that thrive in its environment, similarly the success of a business depends on the stability of that society. In this regard, Corporate Social Responsibility(CSR) plays such a role in the society where according to World Business Council for Sustainable Development, 2001, CSR is “the commitment of business to contribute to sustainable economic development, working with employees, their families, and the local communities.”
- 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 Act encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities.
- In the current scheme of things, business enterprises are no longer expected to play their traditional role of mere profit making enterprises. The ever-increasing role of civil society has started to put pressure on companies to act in an economically, socially and environmentally sustainable way.
- The emerging concept of Corporate Social Responsibility (CSR) goes beyond charity and requires the company to act beyond its legal obligations and to integrated social, environmental and ethical concerns into company‟s business process, which is also applicable to Indian companies who are part of a global boom.
- 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. Presently, the practice of CSR in India still remains within the philanthropic space, but has moved from institutional building (educational, research and cultural) to community development through various projects and also CSR is getting more strategic in nature (that is, getting linked with business) than philanthropic.
- Presently in India, there is a widespread feeling that the high GDP growth rate of the past few decades has remained confined to urban areas only and has not reached the rural India, particularly to the poor section of the society. Corporates have the know-how, strategic thinking, manpower, and financial strength to enable widespread social transformation. Operational partnerships between corporations, NGOs and the government will place India‟s economic growth and social development more inclusive.
- The government perspective on CSR has been that though India’s business sector has generated wealth for shareholders for decades, the country continues to grapple with problems of poverty, unemployment, illiteracy and malnutrition. Corporate growth is sometimes seen as widening the gap between India and Bharat (rural India) through its income-skewing capability.
- At the same time, it should be known that Philanthropy is a private matter and must be encouraged but the government has no business intervening in such decisions. Though companies have a social responsibility, but it is not to engage in philanthropy. Rather, their fundamental social responsibility is to generate wealth for their shareholders in a law-abiding, ethical and sustainable way. When they do that, they generate surpluses for society, provide consumers with goods and services that they need, create employment, purpose and dignity among workers, and strengthen the nation.
- Even the most fiscally responsible governments cannot cover all the gaps, which is where philanthropy comes in. But it is up to the individual to decide whether, how much and who to give to. The government can encourage this—through tax deductions, public acclamation and moral suasion—but has no business intervening in those decisions. In other words, shareholders and employees, as individuals, should be giving money to causes that they like.
- The only good reason to encourage CSR is to allocate funds into activities that a government of a low-income democracy cannot. Poverty is not merely about lack of income, it is also about a lack of dignity. We will remain poor if incomes improve, but dignities do not. That is where individual philanthropy and CSR can be useful — they can support causes that democratic politics won’t allow the government to.
- In independent philanthropy, a donor is free to decide – to whom, where and how he/she will give. While in true philanthropy there is no expectation of a quid pro quo, companies are motivated to be socially responsible mainly because of the possibility it offers of promoting their brand, and by the benefit it offers for better labour relations and a good corporate image.
- Corporate executives are often unable to decide on the best social use of CSR funds because they are not equipped to do so. Nor should one expect them to, for their job is to run companies and create wealth. However, it must be admitted that in the short run, the outreach of CSR is likely to be far broader than much individual philanthropy.
- To illustrate good practice, the case studies of corporate-NGO partnerships that have achieved scale in both coverage and impact, namely, the Akshara Foundation supported by the Omidyar Foundation, the Akshaya Patra Foundation and Infosys, the Public Health Foundation and multiple donors.
While philanthropy as a concept is essentially that of voluntary giving arising out of concern for one’s fellow beings rather than any benefit – even intangible – that can be derived from it, mandated CSR is really an attempt by the government to involve business in the nation’s sustainable development goals and to supplement government efforts in this regard.