ISR - new dimension towards social upliftment

Philanthropy is embedded in the Indian culture since ancient times. But it wasn’t a conscious ‘Giving Action’, people are doing it as and when it was needed.  But in the era of industrialization and complex work environment where lot of inter-relationship is required, social responsibility become very important tool. So now, charity, philanthropy and donation have new name ‘Social Responsibility (SR)’ and steadily becoming part of life style in society with people who can afford this. Social Responsibility can be classified as responsibility lies with ‘Corporate Citizens’ and ‘Individual Citizens’.

Primarily, Corporate Social Responsibility (CSR)  which is now most spread ‘Buzz’ word, is being taken care by Corporate under their business mandate and very much integrated in the business process. CSR has shown its significance as important business tool to respond business challenges derived from various critical stakeholders and complex ecosystem.

But I am here talking about the larger point which is social responsibilities lies with individuals, may afford to be part of healthy society building through ‘Individual Social Responsibility Actions’ (ISR).

“Eventually, ISR has brought new dimension towards social upliftment”

Although there is no fundamental change in the nature of activities are being done under Corporate Social Responsibility (CSR) and Individual Social Responsibility (ISR), as upliftment of society is in the core of the both practices. However, in Indian context both are being practiced separately as CSR and ISR which is also known as part of Employee Engagement Activities. And this happen only because of CSR law, which is in effect from 2014. So, CSR is something which being practiced by the corporate citizen for improving the living condition of communities around its business locations. However, ISR is being developed as culture within organization to engage its workforce in various community projects as their individual responsibility towards society.

ISR is about an individual becoming responsible in his/her actions that have affects on communities outside his/her immediate circles. The immediate circle being friends or acquaintance from their surroundings.    ISR is not only about committing acts of charities or working for communities where you have material interest. These only form of ISR, which is a broader concept that can be manifested through actions as below;

•         Philanthropic behavior of individual
•        The campaigner, volunteer and activist instincts in the individual which picks up and support the issues which affects to the society.
•      The above two coupled with an individual being ethical (integrity, honesty) in his/her towards dealings.

An evolution of CSR in India

Evolution of CSR in India by Manish Kumar Singh on Scribd

Is CSR spent is indicator to measure the Impact?

In the fourth year since the Companies Act 2013, and the introduction of Section 135 notification, companies continue to measure their social and environmental performance along with their financial performance.

With India being one of the first countries to mandate Corporate Social Responsibility (CSR), there is a growing interest among various stakeholders to see how the scenario is progressing.

The Companies Act, 2013 and the CSR Rules (The Act) came into effect from 1 April 2014. The Ministry of Corporate Affairs is responsible for the enforcement of the Act and its regulation.

As per the Act, companies having a net worth of Rs 500 crore or more, or a turnover of Rs 1000 crore or more, or a net profit of Rs 5 crore or more in a given financial year are required to spend 2 per cent of their profits on CSR programmes. As CSR expenditure for 2017 is yet to be disclosed, we analyse the CSR trends from last year, in 2016.

In 2016, Reliance Industries Ltd continued to hold the top spot with respect to CSR expenditure, however decreasing its CSR expenditure from Rs 760.6 crore to Rs 652 crore.

NTPC Ltd rose up the ranking in terms of CSR expenditure, increasing it from Rs 205.2 crore to Rs 491.8 crore, holding the second spot in 2016 in terms of CSR expenditure.

The Oil and Natural Gas Corporation Ltd fell down one spot in CSR expenditure from 2015 to 2016, decreasing CSR expenditure from Rs 495.2 crore to Rs 421 crore. Tata Consultancy Services Ltd rose up one rank in CSR expenditure, increasing it from Rs 210.4 crore to Rs 294.2 crore.

Other companies in the top 10 CSR spenders in 2016 include South Eastern Coalfields Ltd (Rs 270.9 crore), ITC Ltd (Rs 247.5 crore), Central Coalfields Ltd (Rs 212.8 crore), NMDC Ltd (Rs 210.1 crore), Tata Steel Ltd (Rs 204.5 crore) and Infosys Ltd (Rs 202.3 crore).

As per the Act’s requirements and public disclosures of top 100 companies’ profits, they were required to spend Rs 7233 crore against which companies committed Rs 7355 crore (higher by Rs 122 crore) and had spent Rs 6518 crore (90 per cent) in 2016. This is higher as compared to 2015 wherein the companies had spent Rs 5115 crore (79 per cent) against the requirement of Rs 6490 crore. An increase of 11 per cent spends was observed during 2016 as compared to 2015. The average spending per company had also seen a nearly 15 per cent increase in 2016.

As per a report by KPMG, compliance to the requirements of the Act had improved in 2016. A positive trend in the availability of information can be seen as compared to 2015. Similarly, strengthening of governance mechanisms for CSR projects was also visible.

Overall CSR spending had increased and thematic areas of health, education and sanitation witnessed higher budget allocation from corporates and a few corporates had gone beyond the 2 per cent mandate and spent more on CSR.

However according to Sudhir Sinha, CEO of CSR Inc, “While it can be acknowledged that the cumulative CSR spend has seemingly increased with more numbers of companies joining the league under the laws, CSR in the current form of understanding and practice in India is unfortunately very 'transactional'. Approach to CSR is piecemeal and unstructured.”

“If these trends continue, CSR will fail to reach its purpose and objectives. There is, therefore, a need for the government, companies and civil societies to go for the meaningful and impactful CSR spend," added Sinha.

India Inc's CSR spend up 28% in FY 2015-16

A gradual uptick in corporate earnings has led to a 28 per cent surge in corporate social responsibilities (CSR) spending by listed entities in 2015-16. 

According to data compiled by Prime Database,   these companies spent Rs 8, 345 crore in various CSR activities in 2015-16, against Rs 6, 526 crore in 2014-15. Education was most preferred area of spending, attracting Rs 2, 042 crore or nearly fourth of total spending, followed by spending on preventive health of Rs 1, 637 crore. Contribution to PM national relief fund also saw a five fold jump to Rs 869 crore.

Prime Database official stated that the increase in CSR spending was seen across sectors and type of companies. CSR spending by Public Sector Units (PSUs) saw a rise of 41 per cent. Total 47 PSUs spent Rs 2, 396 crore in 2015-16.

In absolute spending, Reliance Industries spent Rs 651.6 crore on CSR, highest by any corporate group, while Govt. owned NTPC and ONGC spent Rs 491.8 and Rs 409 crore respectively and were on second and third position. 

  

CSR is loosing its importance in the lack of sensitiveness among corporate citizen. Most of companies look at CSR as philanthropic vertical instead considering it as strategic business tool. I think in current scenario where  SDGs are being promoted to adopt and deliver in stipulated time frame, CSR might play imperative role in achieving SDGs, eventually CSR is synonyms of sustainable development. 

I also strongly believe that we need not to develop professionals but to responsible professionals. Therefore building the socially conscious professionals/workforce are  imperative for larger benefit of society, responsible business and entire world. 

Ironically, our technical institutions lack this aspect of professional education. Most of these institutions are building workforce are mechanical in nature and lacks social and emotional consciousness.  

What is CSR...business responsibility? way to sustainable development? or philanthropy?

 Corporate Social Responsibility (CSR) is the buzz word amongst corporate, development organizations, government bodies and many civic organizations. Each and every concern stakeholder is defining CSR in their own way and preferred agenda. There are few suitably correct definitions of CSR are as follows;

“Corporate Social Responsibility (CSR) is defined as the voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner”.

“Corporate social responsibility (CSR), also called corporate conscience, corporate citizenship or sustainable responsible business/ Responsible Business) is a form of corporate self-regulation integrated into a business model”.

“CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line- Approach”), while at the same time addressing the expectations of shareholders and stakeholders”.

“A company’s sense of responsibility towards the community and environment (both ecological and social) in which, it operates”. 

These most suitable definitions are being used amongst the varied stakeholders with their preferred business objectives/agendas.

Eventually, CSR is being recognized as new tool for sustainable business. While in the Indian context, it is being practiced by corporate from quite long in the name of philanthropy or charity. Corporate citizens i.e. TATA, Birla etc have been doing this for community in form of temple, shrine, charitable hospitals construction etc.  At that point of time, it was also an endeavor to build credibility and image of company amongst the community to have good rapport. And, now this is come up in the form of CSR.

The new form of CSR is more structured, elaborative & defined business practice or tool, which create favorable environment to perform business. It is aim to have effective stakeholder & relationship management to diminish the scope of any micro or macro risk element for the business. All these conscience enhance the business productivity, profitability & relation with all the concern stakeholders.

The intent of this blog is to promote CSR as business process and effective tool for sustainable business amongst all the corporate citizen & development practitioners and share the various CSR practices and its impact across the globe. As responsible CSR professional, it is my duty to sensitize management alumina, professionals and leadership layer of various corporate and academic institutions to practice ethical, socially responsible and environmental friendly business process in their professional life cycle.