In April 2014, India became the first country to mandate a minimum spend on corporate social responsibility initiatives. This received mixed reactions from corporates, civil society, and bureaucracy. I was lucky to be invited to a conclave organised by Genesis Burson Marsteller & White Kettle Consulting, titled ‘Corporate Responsibility: Turning Mandates into Opportunities’ where the three entities were represented and had a dialogue on the outlook of this mandate.
While there was a general consensus, lauding the government’s knack for innovative policy formation, some concerns were raised. A major one was whether this is an unnecessary bureaucratisation of philanthropy. Then there were concerns, as with most policies in India, about the effectiveness of its delivery to the beneficiary, and of its monitoring. Most important concern was over the attitudinal reaction of corporates towards the mandate.
Section 135 of the Companies Act, 2013 identified all companies having net worth of INR 500 crore or more; or Turnover of INR 1000 crore or more; or Net Profit of INR 5 crore or more as liable to constitute a CSR policy, and are expected to spend 2% of their net profits on CSR activities. This amounts to over INR 17,000 crore. Schedule VII of the act also lists several ends towards which CSR efforts should be directed, including healthcare, education, employability, environment etc., while complying with several means of meeting those ends. Several major corporations have been proactively creating CSR impacts, but almost all will have to rethink their strategies to align them with the mandate. Azim Premji has pointed out that there is a threat that it may begin to be treated as a Tax.
Whether an entity is creating or simply realigning their CSR efforts, should their attitude be purely of philanthropy or of maximizing business value? Should their efforts be as little as giving away money or of playing a greater role? Suddenly it has become important to clearly differentiate between the CSR activities that some have been voluntarily carrying out all this while, and those that they will be mandated to, now.
As a result, businesses today need another expertise; of how to effectively align the two. I believe this is brought by two kinds of professionals: those who understand this policy and therefore know how to navigate them, and those who can create and deliver social impact programmes that have a sustainable and true impact. Most PR firms bring the best of both policy and public relations expertise. There are four factors that make them so:
Needless to say their core strength also lies in ensuring that there is an ulterior enhancement of brand value.
Ultimately, PR firms can play an equally philanthropic role in creating a more socially responsible business environment. After all, it is much more than just writing a cheque.
