An Idea To Channelise CSR Funds Towards SDGs For Better Results
January 12th, 2018 / 5:50 PM
India tells a unique story of its development and the gaps too. Being the first country in the world to legislate CSR in the Companies Act, 2013 mandating firms to spend at least 2% of average net profits on Corporate Social Responsibility (CSR) is revolutionary, yet a lot of policy decisions needs to be taken to effectively use this resource pool of CSR.
Though the government has prescribed activities that qualify as CSR including eradicating hunger, poverty, promoting education & skills, gender equality, ensuring environmental sustainability, protection of national heritage, and protection of armed forces veterans, rural sports, setting up technology institutions and also contribution to the Prime Minister Relief Fund. India Inc. is yet to align its developmental priorities with the global development agenda of the United Nations.
CSR Landscape And The Gap
It has been three years that companies have been mandated to spend for CSR activities. However, the pattern of spending of these funds has not changed as most of the companies splurge on education and healthcare. It is also found that out of the 100 NSE companies listed for CSR, the top 10 companies spend 50% of the total fund allocated.
In the very first year, it was found that 266 companies did not spend the prescribed amount on CSR that is almost Rs 2444 crore in unspent amount. A lot of companies tend to spend more on the promotional aspects than the sustainable implementation of the initiative and efforts.
The basic understanding of societal issues is required which can streamline the expenditure for CSR. A company cannot just throw money at a cause just because they are mandated by the government to do so. Considering the problems, the spending can be channelised towards achieving the Sustainable Development Goals by 2030.
What are SDGs and Why should India aim to achieve these goals?
The Sustainable Development Goals (SDGs) – a set of 17 universally applicable, indivisible goals with a 169 targets to be achieved by 2030.
India too ratified these goals in 2016 and thus has, today, about 12 years to achieve these tremendously ambitious goals.
Sustainable development in India’s context poses some unparalleled challenges – with 18 percent of the world’s population and a mere 4 percent of global natural resources; with nearly 30 percent of its over 1.2 billion population living in extreme poverty; with more than 50 percent of the population not having access to modern cooking energy and defecating in the open; a very poor performance on mitigating malnutrition, and so on – ranking it a lowly 110 on the sustainable development index despite impressive economic growth rates over the last decade and a half.
Channelising SDGs with CSR
As a signatory to the 2030 Agenda for Sustainable Development, India is committed to participate in the international review of progress of Sustainable development Goals (SDGs) on a regular basis.
The Niti Aayog chaired by the Prime Minister has been assigned the role to ‘coordinate’ the achievement of India’s sustainable development goals both in quantitative and qualitative terms.
However, considering the challenges India is facing and also acknowledging the resource limitation for development, the CSR investments through private sector should be channelized towards SDGs. There are already certain laps between the Schedule VII of the CSR activity and the SDGs.
For this, the Ministry of Corporate Affairs, Government of India and Indian Institute of Corporate Affairs (IICA) should integrate the SDGs and its associated targets into Schedule VII of Section 135 of the Companies Act, 2013 that governs CSR implementation in the country.
What can be done?
Akanksha Sharma, an internationally acclaimed CSR & Sustainability Expert, raised this matter with United Nations Global Compact (UNGC) and Indian Institute of Corporate Affairs. She is a leading voice in the CSR space and heads CSR and Sustainability for an MNC currently. She has also worked with UNICEF and other organizations in the past. She has raised this matter with the Ministry of Corporate Affairs, Niti Ayog and with continued efforts now a committee is being formed to brainstorm this.
“Businesses and the Government should work in coherence to help the country optimize impacts towards the Sustainable development Goals and this alignment is required at all levels,” says Akanksha.
She says, “We should build bridges and not walls. Here, I’m talking about approx. Rs. 15,000 Cr. of the CSR pool of funds, that can be resourceful in helping India inch towards the global development goals. I’ve raised a petition on this to align the United Nations Sustainable Development Goals (SDGs) with the CSR priorities laid down by the law. It may not solve the whole issue, but it will definitely contribute.”
If you think CSR fund should be channelized and utilized to help India achieve the SDGs by 2030, you can sign the petition started by Akanksha here.