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Monday, March 14, 2016

CSR: the way you look at it

Raju burst out, ‘This rock is a sign from Lord Ganesha, I want to worship it.’
Chetan raised his voice even louder and said, ‘No no, this rock is going to be used for my next sculpture.’
The merchant shouted, ‘I have invited all my friends to rest on it! It is ours!’
Ajit was giving order to remove the stone to his soldiers.
Bholu now grinned and said, ‘But this rock has been there for years and years! Earlier half of it was submerged in the mud.  Now with the rains the mud has got washed off, and you are seeing more of it.  The washermen of Chitpur have been using this rock to do our washing for many, many years! There’s nothing miraculous about it.  Now off with all of you, I have work to do.’
So saying Bholu emptied his bundle of clothes and set to work.  What could the others do? They had to go away grumbling quietly to themselves.
This is the last part of the story titled ‘the way you look at it’, from the book Grandma’s bag of stories, penned by Sudha Murty, the chairperson of Infosys Foundation.  The perspectives of Raju, Chetan, the merchant, Ajit and Bholu are depending on their own thinking for the Big Black Rock which was submerged earlier and now fully visible after the rain.  I tend to feel that this BBR is called CSR and people have their own perspective to look at it.

Recently, Sudha Murty applauded the initiative of the government which has made spending for CSR activities compulsory for corporate houses falling in different brackets of profit earning.  On the other side, few weeks back Ratan N Tata, the chairperson of Sir Ratan Tata Trust had commented that this mandatory provision seems like a tax.  Further he went on to say that the sense of philanthropy has to come from within and does not need to be imposed. 

Both of them are right if we try to look at their intention.  The corporates that they belong have displayed strong sense of corporate citizenship when it comes to sharing the responsibilities of the state for social development is concerned.  Historically, Tatas are known for their philanthropy for the cause of education, health, and well-being of humanity. It is in their DNA to serve society and to create institutions of greater importance for general well-being of people.  Infosys though relatively a new corporate house, has also proved that profit earning and profit sharing has to go together and establishment of equitable society is the key to transform India into the country of Mahatma Gandhi’s dream.

One of the key inspiration for Sudha Murty to have conceived the idea of Infosys Foundation lies in her learning from working with TELCO (a TATA group company now Tata Motors).  The primary area identified by the foundation is education and provision of healthy food for children in schools.  With the mandatory provision (as to CSR expenditure) in place their allocation has jumped and it has given lot of space for her to expand the activities of the foundation across regions in the country and across other domains as well like provision of safe drinking water. 

If one looks at the list of companies that have disclosed their first quarter results, only 9 out of 72 companies (having profit before tax over Rs 1,000 crore) have spent more than 2% on CSR [BW 35(5), 76].  This might endorse Ratan Tata’s belief that 2% mandatory clause is like a tax as not many corporates have looked into it from within.  In the quarters to follow, remaining firms would have to put their energies to prioritize their spend so that they do not need to disclose the reasons of their failure to have complied with the provisions of law.

It is known that Tata group has strong commitment for the cause of developing general well-being through taking up many initiatives in the area of social development.  To name few it is involved in healthcare services, drinking water, environment protection, tribal development, women health and education, sports, cultural activities, awareness for the effects of drugs, alcohol and HIV/AIDS etc.  It is all done through allocating and spending more than 3 to 4 times of what mandatory clause requires. Yes it may seem really true for the firms that do not think of CSR as a concerned priority and for them 2% clause would seem like a tax.

Both whether it is Murty or Tata, have shown through their deeds that spending for CSR may not be considered as a strategy as preached by researchers and visualized by many corporate houses.  Murty does think that it is part of corporate branding and neither did Ratan Tata believe that Tata as a brand has ever pursued CSR spending to boost their brand.  It shall lose its sheen if it is viewed and practiced as corporate strategy. May be this is one of the reason why some business houses are of the view that CSR spending should be exempted from Income Tax under section 37 of the Act. 

Yes sense of sharing has to come from within.  There is no doubt about the fact that the sense of giving has to be borne out of one’s inner concern and feel about others so far as individuals are concerned.  As an organization and a larger group, if it has to sustain as corporate philosophy, it has to be made part of corporate culture through visioning exercise of enterprise promoters. 

Business and society have coexisted on the premise of interdependence.  More than within and beyond debate one has to look at the contribution of business houses towards empowering societies and thereby improving their well-being through the principle of sharing and this noble sense shall sustain good businesses with good intentions. 

So it all depends as to how one looks at that Big Black Rock or CSR, one may call it the way one likes.  What is there in the name but yes what is important is the honest intention to help build societies and nations.

(The author is a Professor at Delhi University and can be reached at vkshro@gmail.com)

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[published in CSR Vision, 2016, Vol 4, Issue 11, (March), p 48-49]