Corporate social responsibility and sustainable development are very closely related terms or concepts of the modern business which has laid a great emphasis on corporate governance of early 21st century. Sustainable development means usage of natural resources in effective and efficient manner which puts the least burden on environment leading to the environmental protection and which on the other hand benefits the business for its long term and healthy survival in the society. Corporate social responsibility or CSR means your responsibility of taking care of the society or giving back to the community and environment in which the business is operating.
Sustainability and CSR have attracted the attention of many stakeholders associated with businesses from early 21st century since big corporate scandals have come up which have shook the faith of people in companies. Also due to the unequal distribution of the resources in the country, consumers have started pressuring companies and companies themselves have understood that they cannot survive in a failing society.
“UNGC and Accenture made a study in 2016 on 1000 CEOs and 97% CEOs believed that sustainability is important for future success of their business.” This clearly means that corporates have known that if they want to operate for a long time they have to take care of their responsibilities towards society as a whole.
The fact has been proved by a recent report released by liAS, a proxy advisory firm that corporates have spent Rs. 70.5bn, an increase of 8% compared to the previous year i.e FY2016, on CSR initiatives. It amounts to CSR spend at 98% of the defined spend based on the Act. The S&P BSE 100 companies had to spend Rs 72bn on CSR initiatives.
(*Source: https://www.livemint.com/ )
Attention towards sustainable development is also important because companies are being surrounded by problems which directly or indirectly affect their performance. Environmental and social problems like water scarcity, natural calamities, poor working conditions, economic inequality etc. are intensifying everyday making the lives of the customers more miserable. All these have made corporates conscious that along with economic goals corporates will have to setup social goals and will have to fulfil them earnestly. According to the chairman of HUL, the winner of Economic Times Awards 2018 for Corporate Citizen It was purpose that drove them, to carry out sustainability development programs like Prabhat and Project Shakti, profits automatically followed, as the people believed in the good done by the company and the brand value of the product automatically increased. Continuing to integrate sustainability development goals, company is trying to integrate purpose into all of their brands so that they become a force for social good.
Here is an illustration of other companies who are contributing their bit towards sustainability development through CSR.
A report by liAS for FY17 says that of the total CSR spend 30% of it was made towards education projects while another 30% share was of rural development and healthcare. Hunger, malnutrition, poverty, hygiene and sanitation, women empowerment etc take the rest of the share.
A report by economic times has said that “The total corporate social responsibility (CSR) spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross Rs 50,000 crore by March 2019”
Also, according to a report by development sector platform CSRBOX and NGOBOX, the CSR compliance rate is going to improve to 97-98% by financial year 2019. Bhumik Shah, ceo of CSRBOX and NGOBOX has said that with the annual average expenditure of 12000cr. In CSR, a lot can be done in education, healthcare and rural development.
The report also says that top 20 corporations takes up 45% of the CSR share in the county. Education sector is expected to be the most focused one by corporates. Further it is said that it terms of state, Maharashtra gets the maximum part of the spend of CSR followed by Rajasthan, Karnataka and Gujarat. All these states put together take up one-third of the total CSR spend. Lowest CSR funding is given to the north-eastern states of Nagaland, Mizoram and Tripura.
India is a developing country where the situation is not all bright. According to Global Environment Performance Index (EPI), India stands at 177 out 180 countries in 2018. Level of pollution in India is so high that it has been given 5.75 out of 100 which is extremely low compared with countries like Switzerland and Japan who have scored 90 out of 100. Delhi is always been in news for its high levels of pollution. In summer 2018 (April-may), Delhi had 65 per cent days when poor and very poor air quality was recorded, in winters this percentage increased to 85.
Talking about water , in 18 states of India 82% of household, which is a national average, remain without tapped connection. Dependency on groundwater has also increased. 70,736 rural habitats with a combined population of 47.4 million live on contaminated groundwater.
More or less the situation is same with regards to production and conservation of energy, protection of forest and rate of environmental crimes which again bring despair to minds. A lot of efforts will be required by corporates at all levels, until and unless corporates do not integrate sustainability development goals into their functioning they will not be able to make a major social impact.
Key Recommendations to Align CSR with Sustainability Development Goals
Corporates should take a step forward in the field of sustainable development of resources by taking initiative for protection of environment and also in conservation of environment. Six key transformation strategies are required to achieve sustainability development goals by addressing major drivers of societal change. The CSR activities need to be diverted around these six issues:
1. Human Capacity & Demography: It focuses on improving education, healthcare, labor markets, gender inequalities etc.
2. Consumption & Production: It involves allowing to do more with fewer resources, adopting circular economy approach and reducing demand.
3. Decarbonisation & Energy: It requires giving clean and affordable energy to all, more renewables and electrification
4. Food, Biosphere and water: It involves increasing agricultural production, preserving biodiversity of forests and oceans.
5. Smart Cities: It involves building decent housing, sanitation and pollution control etc.
6. Digital revolution: Science, technology and innovation to assist sustainable development.
CSR was the first step, now the companies need to embed sustainability development goals into their DNAs to bring about a major social impact.
By Bhawana Munet and Shubhi Mehta