Social responsibility of companies should not stop at 2%

Social responsibility of companies should not stop at 2%

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Should top companies stop their social responsibility at 2% compliance? What do you think? Read more. http://bit.ly/1L6dzGN

Consumer are getting more aware and want companies to perform ethically. Want to know more? http://bit.ly/1L6dzGN

A recent news article stated that the top 75% companies spent Rs. 4,000 crores on corporate social responsibility (CSR) in 2015. It also stated that the Government expects the total spending to be Rs. 9,000 crores in this year. 

These numbers suggest that Indian companies are doing a great job of meeting the compliance. But perhaps it falls short to suggest that Indian companies are necessarily faring high on being responsible. 

I am sure Indian companies are becoming more responsible but I doubt if meeting an expenditure based compliance can suggest that. But then how does one measure and quantify an inherent value? 

Meeting a stipulated compliance on expenditure only indicates that funding for responsible intent exists. This is very crucial given that lack of funds is often the biggest hindrance for development work. However, there is a strong case for companies to go beyond compliance and emerge as responsible leaders in all aspects including workspace, supply chain, consumers and community. 

What seems to have been somewhat lost after the 2% law, is the larger vision for a responsible Indian business sector encompassing the above aspects. The National Voluntary Guidelines on Social, Environment and Economic Responsibilities of Business (NVGs) which were announced in 2011 is the best available framework in India which encompasses all aspects of business. It’s important that the narrative on CSR in India is seen in alignment with the NVGs.

Meeting the 2% compliance is a bare minimum and one would expect at least the top companies to do much beyond meeting just the minimum norms. This should ideally serve as a springboard for newer and smaller companies to start thinking about CSR, put systems in place and integrate responsibility in everything they do as they grow.

One such example is a company which is actually not among the top 100 companies listed in India. Jain Irrigation Systems, a leader in the drip irrigation systems has developed its competitive advantage around resolving issues that small farmers in India face. Their business model has integrated the company’s responsibility towards the small farmers. Jain Irrigation Systems was the only Indian company to feature on Fortune global list of companies changing the world.

Consumers are becoming more aware and are expecting companies to be fair and ethical; Companies committed to responsible sourcing are gaining a competitive edge over others; Investors have started to lay emphasis on responsibility as a potential indicator of higher returns; One could wait for another law to mandate responsible behaviour or start thinking beyond compliance and take the lead.

Written by: Namit Agrawal, Private Sector Advisor, Oxfam India