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Is India Inc. Really Being Socially Responsible?

While following the growing trend of presenting Corporate Social Responsibility as a business discipline, CSR is being mandated by the Indian Companies Act, 2013, that came into effect on April 1, 2014. Companies having an annual turnover of more than 1,000 crore rupees or net worth of more than 500 crore rupees or net profit of more than five crore rupees are supposed to mandatorily spend two percent of their three-year average annual net profit on CSR. However, the real question is whether Indian firms are getting distracted from the real goal of CSR activities?

 

Getting Sidetracked?

 

India is the only country with legislated CSR, ordering big firms to contribute to the welfare and development of the community by mandating CSR activities. Many firms under India Inc. take this lawful mandate to be as a burden. They come up with a CSR business discipline for creating goodwill in the industry as well as enhancing their reputation in the society. This mindset adulterates the real intention of the Indian Companies Act, 2013. Many firms conduct the CSR activities to just follow a mandate and not to contribute to the social development of the society. The companies intend to showcase the expenditure on CSR activities to mark their contribution with no focus on the outcomes of the campaigns undertaken. Their prime focus seems to be in increasing the value for their stakeholders.

 

Time to Re-focus?

 

Though a number of studies have revealed that there is an increase in the engagement of the higher management of firms in the CSR, there have been revelations suggesting that CSR programs are time and again started in a clumsy way by various internal managers, often without any involvement of the CEO. Research shows that firms focus on CSR activities in metro areas more than the rural areas. Consequently, the rural population is unable to benefit from these programs. Hence, this is the high time for Indian Companies to re-focus their CSR activities. They should keep the elementary objective of social welfare in mind while planning any CSR scheme to bring consistency and regulation to strategies.

 

The Right Approach

 

The effective and meaningful approach for India Inc. to abide by the real goal of CSR is to work on well-coordinated programs focussing on particular CSR portfolios. Right CSR initiatives must create a vision of shared values for society’s welfare than for the company itself. These values must be aligned with the company values to bring effective outcomes in the society. Such CSR approaches help in bringing a big positive transformation in society and indirectly in the company culture as well. Once all the companies understand this, there would be no necessity of mandating CSR.