The evolution of CSR in India from ad hoc, intermittent charity to a planned, strategic and impactful activity has been an incredibly exciting saga. The process actually began in the year 2009-10 when in the Department of Public Enterprises a think-tank was set up with the objective of instilling systems and processes for the public sector to conduct its CSR activities. The outcome was the first ever CSR guidelines which came into effect from April 1, 2010.
These landmark guidelines provided the platform on which was built the iconic Section 135 of the Companies Act 2013 passed by Parliament in December of that year. It came into effect on April 1, 2014 and was accompanied by a set of rules that provided the framework for a whole new regime of CSR implementation. Companies – both private and public – which were above a certain threshold of profits, net worth and turnover were now required to spend at least 2 per cent of their net profits on CSR activities.
This historic piece of legislation – which has remained unique to India even to this day – marked a tectonic shift in the way Corporate India was asked to conceive, plan, monitor and execute their CSR projects and activities. The new law envisaged the innovative concept as a triangle with Government at the apex – as regulator and facilitator. At one end of the base was the corporate entity with funding and oversight responsibilities and at the other end, the civil society organisation as an implementer. This triangular mode also elevated all decision-making on CSR to the Board of the company. Thus, CSR was brought from the “backroom to the boardroom”.
The new regulations recognised that the development of our nation was not the responsibility of the Government alone. It allowed India Inc. – the economic engines of our nation – to participate in the inclusive development of the country. It provided Corporate India with the opportunity to showcase its efforts at “giving back” to society and enhancing its own brand value.
As we move into the ninth year of implementation of the new CSR framework, we see how incredibly the nationwide effort has moved into high gear. A whole new breed of CSR professionals has emerged; CSR verticals now occupy pride of place in corporate houses, business leaders in India and across the planet now talk of how responsibly they are discharging their societal obligations much before they begin flaunting their business bottom lines.
In India today, more than 17,000 companies each year are together spending over Rs 24,000 crore annually contributing to the nation’s growth trajectory. New and innovative ideas have been unleashed, a whole slew of best practices have emerged and community concerns have begun to occupy the mind-space of corporate leaders like never before. With all this has also come a realignment of the way CSR is perceived and CSR projects are being implemented.
Outcomes now take precedence over outputs, processes and robust governance structures have been evolved, training and knowledge-sharing in the domain are the new reality and partnerships are driving many projects with a new energy and dynamism. Increasingly, the trust deficit between the corporate and civil society is narrowing. From responsive activities to sustainable initiatives, corporates have clearly showcased their ability to create a substantial difference within the society and enhance the quality of life.
Corporates have now built the required expertise, strategic thinking, manpower, and funds to facilitate extensive social change and transformation. Effective partnerships between corporates, NGOs, and the Government have placed India’s social development on a faster track.
Challenges though, still abound. There are many laggards who still see CSR as merely a compliance issue. There is a concentration of CSR efforts in particular geographies at the expense of under-developed regions. All in all, however, India’s experiment with CSR mandation has stood the test of time.