On September 13, 1970, Milton Friedman launched a no holds barred attack on corporate social responsibility in the New York Times, mocking the idea of business possessing a social conscience. Forty-three years later, the Government of India passed the Companies Act, 2013 and made it mandatory for businesses above a certain profit margin to engage with Corporate Social Responsibility (CSR). While Friedman writhed in his grave in agony, the policy was greeted with much ecstasy. Allocations for social welfare have been reducing with every successive budget. Hence a CSR policy bringing in an estimated US$2 billion worth of investment attempted to cover some of the government's retreating footsteps from the social sector.
Incidentally, CSR was not born on August 30, 2013 in India. Many international and national businesses had already set up their CSR operations much before our government decreed businesses to have a social conscience. More than Constitutional law, karma concerns had pushed some of India's rich to donate to the poor for centuries. However, now with the law necessitating certain businesses to grow a conscience for compliance, the philanthropic marketplace in India is suddenly thicker than hair on a dog's back.
"In a nutshell, surplus wealth will be reinvested in wealthy regions. Though every state has its own poverty pockets, it is unlikely that big businesses are either present or have interest there, unless it is a mineral-rich zone."
Demanding miracles from CSR units in such early years is unrealistic. However, fascinating insights and challenges are emerging in its infancy. Gathering some of them in this article may help set the compass.
Rethinking hyperlocalisation of CSR spends
Recently, feathers were ruffled at a gathering of organisations working on the public health aspects of arsenic-contaminated drinking water. A CSR representative of a multinational bank had also been invited. This bank was known for their CSR commitment to working on water quality issues. Surprisingly, when it came to committing support, our CSR representative apologetically wriggled out. After all, arsenic contamination of drinking water is at its worst in West Bengal, Bihar and Uttar Pradesh. But these poor agrarian states are not an investment priority for a multinational bank. So while Friedman whistled from his grave, the assembly was stunned into silence.
Since the Companies Act of 2013 nudges CSR towards local engagement, this keeps on repeating itself like a stuck gramophone pin record. A CSR unit of an IT giant only wants to work in schools in villages surrounding its expansive campus. Another CSR of a cement manufacturing company will build toilets only in the area near their production plants. Hyperlocalisation of CSR investments creates a Catch 22 in welfare spending. Big businesses in India mostly exist in states that have good infrastructure, governance and high GDP. And such states are few. Therefore Maharashtra, Gujarat, Andhra Pradesh and Karnataka et al become destinations by default. In a nutshell, surplus wealth will be reinvested in wealthy regions.
"Efforts to align with large government programmes to address their blind spots are laudable. But it is worrying when ingratiation emerges as a key driver to CSR strategy."
Though every state has its own poverty pockets, it is unlikely that big businesses are either present or have interest there, unless it is a mineral-rich zone. Mining companies targeting their resources to benefit communities around mines is understandable. One wouldn't wish otherwise. And many CSR units consciously try to reach out to poverty pockets even in "well off" states. For example, some corporates in Karnataka focus their energies on the much-deprived North Karnataka region. These efforts need to be acknowledged.
Need to focus on processes rather than products
The second concern is an emerging CSR fetish for investing in tangible products and assets. The need for good infrastructure and products is unquestionable. But it hardly makes sense donating classrooms, health centres, toilets, water filters, educational tablets, solar lanterns, improved cook stoves etc., without developing processes that can sustain their use and benefit. But processes are invisible while assets are not, and only the latter measures success. Bottom-line: efforts do not count unless you can put a logo on them. So research, policy analysis and advocacy take a backseat to construction and distribution. Again, there are exceptions to this rule, and it would work well if others would learn from that. Logos can get embarrassing after a few years when they are still shining on defunct assets.
Guarding against excessive alignment with the government's agenda
Thirdly, there is an unwritten rule that the CSR compass should always point to the magnetic North of government agenda. Efforts to align with large government programmes to address their blind spots are laudable. But it is worrying when ingratiation emerges as a key driver to CSR strategy.
"Beyond CSR-CSR and CSR-NGO partnerships is the larger and complex question on how CSR and government relationship will shape up. Will they be able to inject much-needed efficiency into managing large-scale programmes?"
With contributions above Rs 10 crore being personally acknowledged either by the Finance Minister or Prime Minister, corporate purse strings are being yanked towards Swachh Bharat Kosh. It is hardly surprising that a number of CSR units that were earlier working on education, health and skill development have overnight discovered their love for taps and toilets. Remaining true to their own agenda for change will lead to better CSR outcomes than knee jerk reactions to policy shifts.
Making partnerships with NGOs work
One key challenge that CSR units have faced over the last year has been to identify and work with NGOs in India. The converse is also true. But this is welcome opportunity to learn from each other. The tendency of NGOs in India to take a moral high ground in their engagement with "for profit" entities is being tested for good.
Similarly, corporate condescendence towards "idealist" and "irrational" NGOs is also undergoing a sea change. Instead of being an arranged marriage forced through policy, partnerships are evolving around mutual respect. It is indeed remarkable that all this has happened within a very short period of time. However, there has to be space for questioning each other. Is providing fortified biscuits a good way to tackle malnutrition? Is promoting commercial sanitary pads a panacea to menstrual health issues? NGO perspectives on such issues should be taken on board. It will be tragic if NGOs are forced to become unwilling sales agents for corporate interests. Similarly resistance to innovation that works should also be debated.
The need to set aside corporate rivalry
Finally, if CSR seeks to make a difference, egos and logos will have to take a backseat. There are enough anecdotes on how efforts to bring together different CSR units on a common cause often fall through, as branding dilutions are ill afforded. However, what is truly unaffordable is the cost of replication. Rural landscapes in India are littered with dysfunctional water filters, toilets, community market sheds, etc. It is not strange to find two dysfunctional assets funded by different donors right next to each other! Avoiding this requires CSR units to work together and also share experience and information and build consortia when needed.
Beyond CSR-CSR and CSR-NGO partnerships is the larger and complex question on how CSR and government relationship will shape up. Will they be able to inject much-needed efficiency into managing large-scale programmes? Some experiments around providing quality food for midday meals in schools look promising.
Friedman's contentious piece ended with him asserting that the only social responsibility of a business was to increase profits.
Will corporates in India prove him wrong?