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A Picture of CSR in India

Posted: Friday 4 June 10, 2.09pm GMT

Merchant charity and philanthropy was and is alive and well in pre- and post-independence India. Most religions speak of “giving back”, as did Mahatma Gandhi on “Trusteeship” during the freedom struggle, where “wealth was only to be held in trust by companies and owners were merely trustees”. Religious charity and giving exists across the country and is exemplified by the Sikh community who donate “dasvandh” (one tenth) to society, feed the poor and perform charitable action.

Post-independence India saw the growth of the public sector, many of whom had a “community development focus “ .The Tatas, through their various trusts in early nineteenth century, showed the way to the rest of the world in terms of working hours and social security measures, earning them goodwill for many future decades. However, corporate responsibility was rarely practiced by senior management teams in a strategic way across sectors. Post-1990, India adopted a policy of liberalization and many Multi and Trans National Corporations (MNCs/TNCs) made forays into the growing Indian market. Very few foreign companies had a robust CSR programme nor were they known for responsible practices – in fact the practice of double standards was rampant where companies took advantage of weak regularity environments to get away with shoddy goods and weak consumer services.

In 1984, the Union Carbide gas leak in Bhopal led to one of the most irresponsible industrial accidents and many lives were lost. This led to one of the longest litigations, resulting in the company paying inadequate compensation for the accident. India witnessed more examples of irresponsible business practices. Coke and Pepsi found communities & civil society up in arms due to depletion of the water table and “pesticides in colas”. Clothing group GAP was found with child labour in their outsourced supply chains leading to debates on the use of exploitative child labour in carpets, garments and sports goods.GE was embroiled in a controversy surrounding the use of ultrasound machines in female foeticide. McDonald’s gave universal access the go by in their outlets in India and their use of beef tallow led to public uproar. Vedanta was found violating environmental laws with far-reaching adverse impacts for tribal communities settled in Niyamgiri and other examples of failure in corporate governance continued.

The Prime Minister’s “Social Charter” called for inclusive growth & affirmative action from the corporate sector. In December 2009 voluntary CSR guidelines were issued by the Ministry of Corporate Affairs . Subsequently the Indian public sector was issued a set of policy guidelines by the Department of Public Enterprises which also linked to CSR and the Millennium Development Goals. One significant guideline in the public sector policy is that companies need to put at least 5 % of their Profit after Tax (PAT) into CSR.

Although India has over a million NGOs (non governmental organisations) and a vibrant civil society, very few are engaged in CSR per se and the trend has sometimes been an adversarial relationship fuelled by mutual suspicion. Many companies set up their own Foundations, often run by an employee of the company, and work with civil society was minimal coming within the realm of “project implementation” than partnership. Management focused education is gradually seeing the writing on the wall and many institutions which target ‘future managers’ at a young age are introducing compulsory credits for CSR. However, presently less than 50 Indian companies report on the Global Reporting Initiative (GRI) while a voluntary movement for accountability within the NGO sector called the “Credibility Alliance” has over 600 member organizations.

Mining Companies in India today are, in particular, at the eye of a storm with local communities up in arms against inequitable practices that lead to poor human rights, destruction of the environment, pollution of rivers, lack of mine closure standards, etc. Displacement from ancestral lands, uprooting of livelihoods, inadequate compensation and equity are some of the issues that increasingly take away the “social license” to operate.

India has 37.2% of its population as per the Planning Commission living below the poverty line, an agrarian and water crisis, income disparities and lack of access to basic necessities, therefore as country it requires calls for action from all stakeholders including the corporate sector which can respond with not just financial resources but also with strategies, tools & management techniques that can address development priorities in the country.

Photo of Amita Joseph Contributed by
Amita Joseph
Business and Community Foundation

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