1. India's CSR law sparked a massive debate among NGOs and businesses-csr fair or unfair?
India is the first country to mandate a minimum spend on corporate social responsibility
initiatives. In a country facing multiple socio-economic challenges – can it work?
On 1 April 2014, the government of India implemented new CSR guidelines requiring companies
having atleast Rs 5 crore net profit or Rs 1,000 crore turnover, have to spend 2% of their avg net
profit of last 3 yrs on social development.
While this mandatory spend may seem like an excellent move for social development and a great
business opportunity, but on digging a little deeper, reveals this is simply not true. Let us analyze
in detail.
There’s a huge chance of corruption to increase, where companies could avoid shelling out for
CSR by giving donations to charitable foundations that, then return the money minus a
commission.Also it would lead to masking of data,keeping secret reserves to avoid falling in
the csr mandating bracket for evasion .
Making a voluntary action mandatory corrupts the very fundamentals of the concepts of
CSR of it being a philanthropic action.CSR motive for companies has now become
prominently a tick box mentality for just meeting legal requirements/compliance and no more
about creating goodwill and enhancing brand image after the mandating law.
First, the mandatory spend immediately puts the focus on quantifying CSR activity and not
qualitatively assessing which puts focus on reporting. This ultimately prevents those who want
to push CSR for its merits and not simply as something that requires additional paperwork.
According to the Bill, Areas where enterprises can invest for csr include education, poverty,
gender equality and hunger.
However, for CSR to be truly successful, it must act as a powerful lever to empower and engage
a company’s stakeholders and fit in with the strategic vision of a company. How will a
company, for example, decide what projects fit under its "CSR initiative" versus those
handled by the government?
According to India's Corporate Affairs Minister Sachin Pilot,
"CSR should be viewed as something that you are doing – to bring smiles to the people's faces
and not for your Profits.
CSR as a vehicle to promote philanthropy that has little or no alignment with their business
tends to fall off the radar after the initial run.Yet, this is exactly what it does. At the end of the
day, CSR must be used as a corporate tool that makes companies accountable for their
actions, not a governmental policy.
CSR need not be altruistic to be effective. Companies like PepsiCo and Coca-Cola invest in
projects like water treatment facilities and a zero waste footprint for their products because
it helps them reduce their resource use, which in turn helps them become sustainable and

2. achieve higher profits.General Motors recycles and saves itself millions of dollars.Hence csr
should have a shared value effect where it benefits both the society and the business entity.
CSR activity impressed some customers, but disappointed some who saw more cost than
benefit. These customers tend to assume that high CSR costs were funded by markups on the
company’s products and services, and thus concluded that the company’s prices were unfair.
This csr move lost companies price sensitive customers.
The first remedy is to assure customers that the CSR costs are not being covered by price
markups, but by other sources, such as advertising budgets or executive salaries.
The second remedy involves recognizing that customers expect companies to make a profit. If
companies explain that the CSR costs are cutting their profits, customers will forgive some
price markups.
Also the main purpose of mandating CSR is not being fulfilled. Corporate sector is finding it
challenging to find credible partners and good projects that they can support. While most
corporate cash is now swilling about, its not spread evenly across charities, So what’s happening
is that the bigger charities that are more well known are being flooded with money,getting
the lion’s share.
Reports point to a geographic bias under 2% law, with companies funding projects closer to
where they are based. Consequently more industrialized states are winning over poorer
regions where development aid is acutely required.
Conclusion: CSR has a massive role to play as long as it has guidelines to help in its progression.
My worry is the stipulation should not become a tax at a later stage ... Spending 2% on CSR
is a lot, especially for companies that are trying to scale up in these difficult times.
Besides, CSR should encourage cross-pollination of ideas, systems thinking and holistic problem
solving. It should support transparency, innovation, stakeholder engagement,consumer
empowerment and most importantly shared value effect -all in order to make businesses grow
by creating products and services that put human and environmental health at the forefront.
Confusing these goals with mere governmental policy will result in a stagnation of CSR. Sadly,
this is what the mandatory spend encourages.