Corporate Social Responsibility in the era of Sustainable Development Goals

Unlocking the collective business potential

By Pooran Chandra Pandey 

New Delhi, Sep 23, 2018: There is an emerging new lens of public-private partnership (PPP) that the corporate social responsibility (CSR) is now being gauged through, more so after the Indian government affected the changes in its Companies Act, 2013, (through Section 135), provisioning companies to spend a 2 per cent of its average net profit for immediately three preceding financial years on CSR activities and initiatives.

The 2 per cent legal provision of average net profit by way of CSR contributions by an estimated number of 16000 business entities-both public and private sector (based on parameters of turnover, profit and net worth) is expected to unlock anywhere between USD 5 to 7 billion leading to implementation of various social initiatives in a project mode. Largely being seen as an effective lever to help corporate sector quickly scale up its efforts in nation building process with its existing and latent expertise, there is already a new twist to the tale with schedule 7 of the Indian Companies Act encompassing a host of sector specific (health, education, sanitation et. al.) interventions of the corporate sector now qualifying as CSR initiative.

‘Impact of business in society’ is one of the key debates shaping the actions of the corporate responsibility the world over and is perhaps the most succinct expression (if not the definition) of what CSR eventually means in face of several definitions and open ended expressions depending on who looks at it and from what angle. It is though a common knowledge and acceptance of the fact that the CSR is more broadly defined as corporate citizenship and is not just limited to one of three pillars of the triple bottom-line (a measure of sustainability where social, economic and environmental performance parameters align) as it happens to be a more intrinsic and value based than a right away explanation. United Nations Global Compact’s (UNGC) Ten Universal Principles also commonly denote the same meaning and spirit, leaving no space for open-endedness approach or interpretation on this count. The new Indian law on CSR are (in this context)  well aligned with national development goals and priorities, UNGC principles and newly announced 17 sustainable development goals (SDGs) by the United Nations in parallel. CSR principles as a matter of universal principles continue to gain momentum and acceptance after United Nations’ 193 member states agreed and ratified SDGs at the General Assembly of the UN toward the end of 2015. 

Schedule 7 of the Act stipulating the areas of interventions, CSR provisions are a set of key issues that qualify as CSR activities and initiatives for companies eligible under the Companies Act. These provisions in its finality advocate for projects to be undertaken by companies and address national goals of eradicating poverty and ensure well being of the poor and the marginalized on the periphery. All provisions under the schedule are important as these are best attempts to align business goals with social aspirations while initiating a call to collective action for a large scale developmental push around some of the key national development goals. One of the key and more measurable goals among these is inclusive and sustainable housing goals that corporate sector can effectively consider as it can easily break the barriers of cycle of poverty, provide more opportunities in terms of employment availability and perhaps put more disposal income in hands of the poor who then can look after their well being through higher spend on health and education with resultant benefits leading to its direct and positive relationship to gross national product.

This key goal of providing housing to all by 2022 by the Indian government is currently being implemented on a fast pace, though resources needed for accomplishing the given task will involve approximately USD 50 billion until 2022, (keeping economic and political fundamentals at today’s levels), with an annual set target of building 30, 00000 housing units year on year basis in being able to transform the lives of people who otherwise can’t afford the one.

The government of India’s recent initiatives of building smart cities is a unique move with an ambitious plan of providing everyone a house by the year 2022. This move is intended at building adequate infrastructure for the people below the poverty line with provisions of sustainable housing. However, at the same time, the government should consider identifying adequate resources and expertise that is already available with corporate sector ranging from project implementation skills, trained manpower and financial resources in a manner that public-private partnership in the social sector can be implemented and demonstrated.

 In India, however, the housing issues have been structural and are retrievable. Housing sector in India is a part of the concurrent list of the Indian constitution which potentially evades the sector the grant of infrastructure status. Centre and state co-ordination which was seen to be taking place under Jawaharlal Urban Renewal Mission (2005), a massive urban infrastructure push by the Urban Development & Poverty Alleviation Ministry in India, somehow could not fructify. In a new thrust that is now being put on universal housing scheme by the Indian government now, is making good progress and if all goes well, the scheme will be fully function by the year 2022, much ahead of the implementation deadline of the SDGs by the year 2030.

Any development would have a better chance of success if there is an effective partnership between government, corporate sector and non-profits, with structural changes to aid the implementation of public policies to aid the scale and address enormity of the issue on hand. This seems possible via robust public partnership mechanisms leveraging the legislated CRS provisions which provides for enough space for value generation by multi-stakeholders working together to bring decisive changes in social infrastructure space.

 While efforts are on at Institutional levels, internationally, there is a need felt to evolve a trans-boundary consortium to be able to generate evidence-based research and bridge the gap between policy and practice while building a collective platform to undertake periodic review of progress for exchange of information, data sets and recommendations for stepping up the realization of the efforts to achieve Universal goals in a time bound period. An initiative – Oslo SDG Initiative- remains a key such platform, carrying out North-South dialogue in respect of periodically complementing its efforts to build evidence from the ground on the implementation of SDGs and report back for learning and action. 

 What is currently needed is a trust-based working partnership especially between the governments, academic institutions, businesses and civil society organizations  both from the North and the South to take forward the positive momentum for a more sustainable and inclusive economic growth at a time when states, the world over, is seen withdrawing from the welfare measures, a trend that is more visible now that any other time previously, due to unprecedented financial pressure on exchequers for implementation of people-centric developmental plans and welfare schemes.

(Author is currently Managing Project Director, DOC Research Institute, Germany)

Tags: Indian Companies Act, 2013; CSR; Sustainable Development Goals; Public-Private Partnership; Oslo SDG Initiative; Business; India; DOC;