In 2013
the previous Indian Government modified the Companies Act adding
Section 135. It provides for mandatory spending of atleast 2% of the
average net profits made during the 3 preceding financial years on
CSR. Net profits are calculated as per Section 198 of this Act.
Schedule VII lists CSR activities which include eradicating extreme
hunger, enhancing vocational skill, contribution to Prime Minister's
Relief Fund or similar funds.
To clear
the air post the modification, the Government issued a circular (General Circular No. 21/2014 ) on the 18th of June 2014 with the
subject “Clarifications with regard to provisions of Corporate
Social Responsibility under section 135 of the Companies Act, 2013.”
Besides
clarifying specific points raised by companies and citizens the
Assistant Director (CSR)at the
Ministry categorically states “ The statutory provision and
provisions of CSR Rules, 2014, is to ensure that while activities
undertaken in pursuance of the CSR policy must be relatable to
Schedule VII of the Companies Act 2013, the entries in the said
Schedule VII must be interpreted
liberally
(emphasis in original) so as to capture the essence of the subjects
enumerated in the said
Schedule.
----”
Corporates
may not wish to spend over 2%. However there are non-expenditure
avenues. There are also opportunities to stretch the CSR budget
without reducing the impact. The unwillingness to spend money on CSR
should not inhibit the willingness to help society.
Top-Ups
Corporates
see CSR as an avenue for employee engagement/empowerment, brand
building, brand extension and market penetration and therefore the
following suggestion may not go down well even though it can save
money, time and create a deeper impact.
Two
corporates focusing on different CSR activities can work together on
one 'population'. This is the way forward. Here CSR activities though
different are synergised and feed off each other because the target
group is the same. For example, corporates focussing on women's
empowerment or enhancing vocational skills and wishing to enter rural
areas can team up with those working on rural education. The new
entrants would be able to build on the goodwill created by existing
activities and thereby reduce time and money to make an impact.
However,
it could also be that a non CSR activity becomes the foundation for
the CSR activity of that corporate.
A
business activity of a corporate can be extended into avenues that
include CSR activities. Take for example the Financial Inclusion
programme of banks, private banks in particular. These banks go deep
into rural India (or poorer parts of urban India) creating accounts
and disbursing money. The face of the bank is usually one person on
a motorcycle or a small room in the village carrying technology that
allows them to feed and generate data. Can this person and technology
be used to improve government programmes? Take for example the
Integrated Child Development Services (ICDS) scheme. This government
sponsored scheme was initiated in 1975 to tackle malnourishment among
children, pregnant and lactating women. Later primary non- formal
education, health checkups were added to the scheme to make it one of
the worlds largest integrated family and community welfare
schemes. The Anganwadi Worker (AWW), the lady in
charge of the village creche, also handles the scheme there. Her
activities include teaching young children and feeding them, visiting
families with children and lactating mothers and documentation.
Documentation is a time consuming process because the lady has to
fill information by hand and then has to deliver them to the
district/block office which could be many miles from her village for
further processing. This naturally eats into her time and reduces the
efficacy of the data as data would be feed into a computer by a
'third person' far removed from ground realities, this could lead to
incorrect data generation and inability to make decisions.
All this
data can be fed into the ICDS central system in real time at the
anganwadi. The technology being used in Financial Inclusion can be
expanded to incorporate feeding of such data. Data entry can be done
with the help of the concerned bank worker. This frees up time for
the AWW and insures data can be accessed and analysed within a short
period.
Cashless
CSR
Most
corporates have large office spaces in cities. Many hundreds, if not
thousands, of employees are concentrated in such places for a fixed
periods of time. Many marketers would call this a captive market and
would love to dip into them. The employees in a majority of instances
are part of households or run households. They need to buy groceries,
gifts etc at frequent intervals. Such purchases take time and effort.
This becomes an opportunity for CSR and a way to reduce the demands
on the employee.
Corporates
by giving opportunities to organic farmer groups to sell their
produce directly to employees are helping these farmers extend their
consumer base and get a better price. A similar initiative can be
undertaken during festivals when initiatives promoting weavers or
products of disabled groups are given floor space.
Infact one
doesn't even need floor space. The IT department along with the CSR
departments can create applications which could put the employees in
touch with producers on particular office days to create a virtual
market.
However,
the CSR that all corporate’s should head towards is bettering
existing business practices. This will improve their bottom line,
the environment and society. For example a soft drink manufacturer
could start using glass instead of plastic bottles to not only reduce
the amount of waste ending up in the landfill but to make consumption
sustainable. If such manufacturers wish to use plastic then they
could create a system employing ragpickers to collect the plastic for
reuse/recycling. Such a move would be trendsetting, compelling rivals
to follow suit and would provide opportunities for brand building.
The only thing limiting CSR is not money, but ideas.
Samir
Nazareth is the author of 1400 Bananas 76 Towns & 1 Million
People. The hard copy will be out on February 26th. He tweets at
@samirwrites
