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
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.
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.
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