Corporate Social Responsibility & S kill T raining for A dvancement of R ural S ocieties

1. Corporate Social Responsibility & Skill Trainingfor Advancement of Rural Societies Seemantinee Khot For STAR Forum, Dec 2013

2. Assumptions about CSR today “The 2%” : Rs 8000 – 16000 Crores available ! (They have a lot of money..) Its mandatory: all companies will support CSR (They follow all the regulations..) Corporate will collaborate with genuine NGOs (They know / accept / respect well meaning NGOs…) They will support effective development programs (Managements are open/ committed to inclusive growth..) Corporate and NGOs can work more effectively and efficiently together as we both mean business.. (there is mutuality and shared work cultures , intentions..)

3. Reality as it is unfolding.. The new ‘CSR’ clause in companies act has scope for different interpretations; Only reasons can be given for non spend Corporate with huge CSR spends are from ‘extractive’ industries – and in conflict with Civil Society Organizations Govt has started giving CSR mandates and has controls Many Corporate have their own trusts / implementing agencies and pet programs Corporate decisions are also person dependent / average employee loves charity

4. CSR Rules 2013; Sec 35 of Companies Act • Shall come into force on the date of their publication in the official gazette; and shall be applicable from the financial year 2014-15. • ‘Net Profit’ means profit before tax as per books of accounts; shall not include profits arising from branches outside India • 2% for CSR would be computed from the average net profits made by the company during every block of three years • CSR spend will be in accordance with the IT Act as may be notified by CBDT; but words and expressions in the CSR Rules are not defined in CBTD • CSR may generally be projects or programmes (either new or ongoing) excluding activities undertaken in pursuance of the normal course of business of a company/ events?.

5. CSR Committee ,policy , programs • Each Corporate shall Constitute a CSR Committee to prepare CSR Policy, include; • specific projects & progs that will be undertaken. • specific modalities of execution in the areas/sectors chosen and implementation schedules for the same. • focus on integrating business models with social & environmental priorities and processes to create shared value. • Ensure that the surplus arising out of the CSR activity will not be part of business profits of a company. • a transparent monitoring mechanism to ensuring implementation in accordance with the Rule

6. Programs & Implementation • Separate guidelines where a company has an organization regd as a Trust /Sec 8 /25A Company/ Society/ Foundation • Company may also conduct/implement its CSR thru independent organizations / NGOs/ academic inst or Govt; provided they have an established track record of at least three years in carrying on activities in related areas • Companies may collaborate or pool resources with other companies ; expenditure incurred on such collaborative efforts would qualify for computing the CSR spending • CSR only within India will be considered • Only those activities which are not exclusively for the benefit of employees of the company or their family members shall be considered as CSR activity.

7. So anybody eying on CSR must get better prepared..

8. In Corporate sector CSR is still…. • Brand building tool • Tax saving / subsidy devise • Regulatory pressure for licenses • Exchange of good will • Philanthropy / charity – feel good factor • “ giving back to society” • Cleaning up backyards • .. always with un-spelt purpose

9. Now paradigm is shifting .. • As consequences of • some corporate scandals – as they ignored civil society or environmental issues • Increasing exposure and demand for transparency • Larger middle class in Corporate • NGO’s /Community / Media activism • Brand image rather than quantum of production started giving stability • New risk reality =New business behavior • Profits / tangible assets – inadequate for measuring the health of business

10. New risk reality demands CSR…. • CSR that is not limited to • Charity / welfare • Public Relations • Brand building tool • Tax saving / subsidy devise • Dealing with Regulatory pressure for licenses • Exchange of good will -Cleaning up backyards But, • CSR that is designed asa focused response to social & environmental issues raised by a company’s operations

11. CSR : a response to new risk reality Triple bottom line Sustainable business

12. Definitions of Sustainability & CSR “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Brundtland Report ; World Commission on Environment & Development “CSR is defined as the integration of business operations and values, whereby the interests of all stakeholders including investors, customers, employees, the community and the environment are reflected in the companies policies and actions”CSRwire “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large“ World Business Council for Sustainable Development (WBCSD)

13. by flagging & reducing business risks Non cooperation /opposition of civil society Thefts / damage of assets / encroachment Poor local services and supplies by optimizing resources sharing idle land Recycling / reusing resources Extending tech & expertise for local development Communications with stakeholders Improving governance : Value based mgmt : transparency; diversity in workforce CSR can support business by

14. CSR is becoming an imperative Companies bill 2012 SEBI NVGs – voluntary guidelines Government Policy on Business Responsibility, Sustainability and CSR BRR disclosure framework & GRI Risk reality and impediments to business growth but that alone may not help ..

15. How NGOs can change themselves • Relook / constitute your Board– add with corporate , ex – bureaucrats • Increase awareness about corporate sector, standards and CSR • Ensure transparent and updated Accounting and records • Website – to upload social and financial audits • Scalable Business model out of your best initiatives • ENGLISH and technology- especially IT • Plant influential Committee members on Corporate CSR commitees / monitoring mechanisms

16. How NGOs can better prepare • Map all Corporate • Study business sector; size (websites) • Find which standards (ISO, SA) they follow • Analyze Foot print / risks –on five capital or on 3Ps – at least on community and environment • Grade them by CSR intentions • Identify Needs and problems of the Corporate that you can help with • Work out solutions that are win - win • Compliance needs • Local solutions for needs • Invest in Good will – social sanctions – to avert problems • Branding • At cost – not add on

17. How NGOs work better with CSR • Listing what “in kind” contribution is possible from corporate • Clarify your conditions – Corporate are used to contracts; clear – withdrawal clause • Credit sharing understanding / and defining nature of relationships • Keep engagement at multiple levels • Facilitate Employee engagement in development work • Link employee giving with philanthropic work • Succinct reports – financial value of outcome ; Reporting indicators inline business interests • Flagging issues in advance – proactive

18. How to influence CSR in NGO favor • Don’t go with a Begging bowl! • Separate Philanthropic opportunities from socially responsible activities • Suggest and manage good members on CSR committees of various corporate • Sensitization of locals CAs • Indentify NGOs – with vested interests – who are likely to highjack and preempt implications • Don’t Bad mouth corporate or NGOs behind them – go flag issues yourself • Do large workshops with local Chambers of commerce, CII branches – SF is willing to come as resource team • Don’t give half info

19. There is a tremendous scope for collaborating with corporate in Skill Development for Advancement of Rural Societies