Section 135 of the Companies Act has endeavored to bring CSR from backroom to boardroom. -
Gayatri Subramaniam is the Convener and Chief Programme Executive
ofNational Foundation for Corporate Social Responsibility (NFCSR), Indian Institute of Corporate Affairs (IICA). She has an academic and industrial experience of over 30 years and has been associated with Indian Institute of Corporate Affairs since its inception.
Gayatri’smain area of work is to contribute towards policy advisory service and undertake capacity building and knowledge dissemination initiatives in Corporate Social Responsibility. She has been a part of the evolvement of the new legislation on CSR in India representing IICA at various national stakeholders’ consultations and has also represented IICA at various international forums.
She is the Convener for NFCSR – a unique platform created for Government, Corporates and NGOs for taking up development and sustainable initiatives at a national level. At present, she is heading the Implementation Agencies Hub of IICA and in her personal capacity, she is on various advisory committees of leading Corporates and NGOs.
GayatriSubramaniam shares with Marie Banu how corporates can identify implementing agencies to network with.
Do you perceive that CSR projects would contribute better to the socio-economic development of India than the 3.1 million NGOs working in India?
Yes of course, I definitely perceive that CSR projects would contribute better to the socio-economic development of India than the 3.1 million NGOs working in India. The reason being what most of the 3.3 million NGOs are doing at present are not projects, but sporadic and one off activities. There are of course very good NGOs who are doing projects but the numbers are really few.
What Section 135 of the Companies Act is looking forward is a combination of Corporates and NGOs working towards development initiatives.The combination of the project management skills, professional attitude and funds from corporates amalgamated with the passion, connection and communication of NGOs with the community will certainly be beneficial. Believe me, this combination is really going to do wonders and will hopefully change the scenario of social economic development of India for the better.
Corporates are not expected to do CSR by themselves. How can corporates identify NGO, Trust or Section 8 Company to network with?
True!Corporates are not expected to do CSR by themselves. They can either have their own foundation established as a Trust, Society or Section 8 Company or can use any such independent entity as their implementation partners provided it has an established track record of 3 years. But, the fact is that there is a huge trust deficit between the corporate and the NGOs. Therefore, corporates would definitely like to conduct a due diligence on the NGO partners before they engage them. Indian Institute of Corporate Affairs (IICA) established by Ministry of Corporate Affairs has an Implementation Agency Hubthat provides this service.
IICA is creating a database of efficient and effective Implementing Agencies. Toenroll in this database, NGOs would have to go through a thorough due diligence process. We get them verified through a statutory auditor and once their papers are found in order, they are sent to 7 Ministries and 4 departments for clearance. This entire process establishes the fact that these NGOs have a valid legallive status and are not blacklisted by any major body.
Do you think CSR will enable corporate employees to be sensitive to social needs and respond to it?
That is a very good question!Although the concept of CSR has been advocated for decades and is generally propagated by companies globally, argument on how CSR should be defined and implemented remains a contentious debate. This gap is problematic because corporates are generally being required to align with societal norms while generating financial returns and maintaining balance between the two becomes difficult at times. Therefore Section 135 of the Companies Act has endeavored to bring CSR from backroom to boardroom. By doing so, many of the corporates have started thinking about CSR and also on how to implement it. Once they get involved in the process, the comfort level between corporate employees and community will increase thereby resulting in the sensitivity to social needs and forcing them to respond to it.
What are the major social issues that you think that the CSR projects should focus upon?
In India, the gap between “have” and “have not” is tremendous. The need is huge. Schedule VII of the Companies Act (which the companies have to follow) has taken care of almost all the major social issues on which the CSR projects could be focused upon. Other than this, the Ministry of Corporate Affairs through a clarification (issued on 18th June, 2015) has allowed “liberal interpretation” of Schedule VII.
However, any CSR project should be need based and should focus on all the stakeholders. A good CSR project should have a baseline survey, in consonance with the need of the beneficiaries; a specific timeline; defined objectives; clear milestones; and specific output and outcomes to have a greater impact.
With making CSR mandatory, will India be able to achieve our Vision 2020 targets on social development?
The journey has started on a very positive note. We at IICA see a great potential in this endeavor. The companies and implementing agencies are going full steam ahead and we definitely see a bright future.
Will Social Audit of CSR programmes make reporting more effective?
CSR activities has become a critical part of the business strategy today and this is particularly important in India, since we are the first country to have legislated the need to undertake CSR spending and make CSR reporting mandatory under the Companies Act 2013.
As of now, the companies are required to constitute a CSR committee of the Board, make a CSR policy and undertake to spend 2 percent of their profits in pursuance of their policy. The companies are mandated to report in the prescribed manner on how they have spent and disclose reasons for not spending.
The Social Audit of CSR programmes would definitely make reporting more effective as social auditing would help to narrow down the gaps between vision/goal and reality, between efficiency and effectiveness. Social auditing would also be able to provide information for effective response to external claimants that make demands on the organization. The social audit would be able to bring out all the weaknesses and strengths of the organization’s endeavors to social initiatives, thus bringing in more transparency and give room for further improvement if required.