India’s high economic growth in recent years, the resultant worsening of economic disparities and the struggle for scarce resources, such as land, forests, and water, have brought a new focus on corporate social responsibility (CSR).
Industrial capital is now increasingly moving into socially and environmentally sensitive geographies, causing conflicts between businesses and local communities. Common property resources are widely perceived to be in the danger of being bought over by businesses and turned into factors of production.
Even as disparities grow, the state is failing to play its role as the just arbiter, equaliser and provider of public services. The needy cannot count on efficient delivery of healthcare, education, water supply, sanitation, subsidised food, social security, agricultural extension and other public services.
Even as the state is struggling in its role, corporations are being called upon to aid in the effort to address poverty, social exclusion and environmental degradation.
CSR is being seen as not only conducting business in a legally compliant and socially responsible manner, but also helping in the larger effort to foster inclusive growth.
Recently, Salman Khurshid, the minister for corporate affairs, mooted the idea of CSR credits, that is some companies earning tradable credits for the activities that create social value; other companies that cannot or do not want to directly engage in CSR could buy those credits.
“If there is a business that is inherently destructive and unwholesome, a way has to be found to offset the negativity of that business,” the minister was quoted as saying.
Should CSR activities be seen as a way to absolve corporations of their sins or, as the minister puts it, to “offset their negativity”? Or, should our laws nudge corporations towards better governance, social and environmental responsibility? Is a market for CSR credits a way to do that? If yes, can the efficacy of CSR be quantified? And how?
A more fundamental question in creating a market for CSR credits is who gets to define ‘social good.’ In a democratic society, it can only be a duly elected and representative public authority that should have the right to define social good. However, given the corruption that plagues even the democratically elected governments, can they be trusted with defining social good?
If a market for CSR credits comes into being, how does it look from the point of view of marketing departments of the corporations, considering that endorsing a good cause is a smart way to building brand and increasing brand recall?
Discussing these questions at a roundtable hosted by Governance Now were Chanakya Chaudhari, chief resident executive, Delhi, Tata Steel, Dinesh Agrawal, general manager, CSR & NTPC Foundation, Anup Jain, marketing director-Pizza Hut, Yum! Restaurants (India) Pvt. Ltd, and Amita Pal, consultant, National Foundation for India.