Corporate Social Responsibility: beyond charity

CSR is different from philanthropy or charity – it reflects the way business pays back to society, because it receives inputs like raw materials and labour, and output such as after-sales profit from society. Over the last two decades, various stakeholders started demanding responsibility and accountability from firms. Businesses also felt the necessity to win people’s trust and confidence, and hence there has been greater sensitivity to sociopolitical issues, particularly in the context of rising inequalities, environmental degradation and forced displacement. As a result, many firms are paying specific attention to CSR. In the long run, they also reap benefits: by making small investments to sensitize employees on recycling waste, energy efficiency and managing water, firms are also able to cut their costs of production. Indeed, a company could save their own resources and may earn additional profits from the sale of its ‘waste’.¹ In addition, CSR enables firms to reach many new people through social activities, thus enhancing its potential customer-base (Agarwal, 2008). CSR is also a sound business strategy – the promulgation of a corporate code of conduct has been among global business’s preferred strategies for quelling popular discontent with corporate power. CSR discourse has accelerated the development of alternative business forms that prioritize sustainability and social justice over simply maximizing profit (Rowe, 2005). CSR activism in India has to be understood in this context.

When the Indian state became independent on 15 August 1947, it embarked on a path of massive social and economic restructuring: a democratic constitution was adopted, and many retrogressive social practices and privileges, such as the practice of untouchability and private landlordism, were abolished. A state-led planned economy was adopted to attain rapid all-round and inclusive growth and development, particularly in the fields of heavy engineering, infrastructure and emerging industries, against the backdrop of the limited participation and capacities of the private sector.² Within a quarter of a century, by the 1970s, the public sector had come to assume a dominant role in the economy. During the first few decades after independence, India’s economy performed sluggishly: derisively termed the ‘Hindu rate of growth’ (Rodrik and Subramanian, 2004), quite in contrast to the government’s mounting expenditure that had increased manifold by then. From the 1980s, in tune with the resurgent neoliberal ethos in many parts of the world, an influential section of Indian public opinion started advocating for privatizing and downsizing the public sector, to allow the market to flourish (Nigam, 2002) – this trend has been criticized as ‘Indian Thatcherism’ (Vanaik, 1990: 55–8). The public sector earned considerable criticism for being inefficient, corrupt and wasteful for the public exchequer. Many policymakers also favoured a gradual expansion of the private sector while curtailing the public sector.

Private business was allowed more space in the economy from the early 1980s, but since the early 1990s increasing dependence on external financing, particularly from the World Bank and International Monetary Fund (which insisted on pro-business structural reforms and curtailing governmental expenditures), led India to decisively adopt the path of a neoliberal economy. During the same period, the breakup of the Soviet Union had adversely affected both foreign exports and a steady source of defence materiel; the other supplier, the United States insisted on hard currency for defence equipment. Policymakers realized that a healthy reserve of foreign exchange could be earned by increasing exports. By 1994, when the World Trade Organization was established, it became clear that India could no longer escape the reality of being integrated into the global economy (Kohli, 2012: 32–41). During this period, several developing countries, including India, were projected as a brand: an attractive destination for investment due to their rich cultural heritage, a vast reserve of natural resources and a population capable of producing and consuming substantially (Kaur, 2020). Finally, from the mid-1980s, ambitious information and communication technology policies and programmes were initiated, resulting in India achieving global acclamation in this area. GDP overcame the ‘Hindu rate of growth’, predominantly by piggybacking on corporate performance. A combination of these factors had resulted in an increasing influence of the corporate sector at India’s policymaking levels. The subsequent decade witnessed a higher volume of economic activities, from a state-led welfare regime to the Indian developmental state embracing a decisively free-market economy, under the cumulative influence of liberalization, privatization and globalization. The enhanced influence of the corporate sector was palpable. Apart from generating direct employment, CSR activism also caught popular attention.

Corporate Social Responsibility: the Indian scenario

The globally acclaimed business-insights provider Dun & Bradstreet has classified the top 500 companies in India into 58 categories: ranging from automobile, software, pharmaceutical and metal sectors to hotel and media sectors (Dun & Bradstreet, 2021). Having accessed the websites of 116 companies – the first and the last ones listed in each category – we found that for 74 companies CSR has been clearly and explicitly mentioned, or at least indicated on the landing page of their website, whereas it is not that conspicuous for the remaining 42 companies. Traditionally, CSR in India has been seen as a philanthropic activity, but with the introduction of Section 135 in the Companies Act 2013, India became the first country to have statutorily mandated CSR for companies with a net worth of a minimum Rupees (Rs) 500 crore (1 crore = 10 million), or turnover of a minimum Rs 1,000 crore, or net profit of a minimum Rs 5 crore during the immediately preceding financial year, to spend 2 per cent of the average net profits of the immediately preceding three years on CSR activities. The statute also specifies the methods and scope for CSR projects or programmes and Schedule VII of the Companies Act, 2013 mandates that companies shall indicate, as part of their CSR policy, the activities in areas or subjects, their modalities of execution and monitoring, and treatment of surplus arising out of CSR. Companies must also disclose the content of CSR policies in their annual report and preferably publish it on their website (Ministry of Corporate Affairs, 2014). This legislation, it appears, has created a readily available legal infrastructure for meeting unforeseen crises such as COVID-19.

On 23 March 2020, the Indian government notified businesses that all expenditure incurred on activities related to COVID-19 would be added as permissible avenues for CSR expenditure. These activities related to the promotion of healthcare, including preventive healthcare, sanitation and disaster management (Ministry of Corporate Affairs, 2020). This mandate encouraged the corporate sector to participate in a substantial way in their socially responsible endeavours, showing solidarity with the nation in its war against the pandemic. About 80 per cent of the annual CSR budget of India Inc was allocated to address the pandemic, which is a testimony to the concern the corporate sector has shown during a time of unprecedented adversity. Surveys by global audit firms confirmed that, by and large, there is a general compliance by companies on this front, thus indicating the healthy impact of business entities on the social and economic spheres. CSR budgets are of huge significance in a context where the Indian state, as with governments elsewhere, is trying desperately to grapple with the sudden and continuing onslaught of COVID-19.

Since early 2020, the Indian government, like their counterparts in other countries, have faced extreme challenges stemming from the reach and devastating effects of the pandemic. At times, the Indian state appeared quite unprepared to meet the challenge. This has been manifested in recurring problems – such as the crisis of migrant workers, unstable incomes and livelihoods for much of the population – that became glaringly visible during the pandemic. The Prime Minister’s appeals and assurances from time to time appeared to be inadequate to address the magnitude of the problem. In addition, the strains in Indian democracy were exacerbated during the pandemic period – police violence increased, many democratic elements from the school syllabus were suspended and, overall, government activity was notably opaque (Harriss, 2020; Jha and Pankaj, 2020; Ghosh, 2021).

Corporate Social Responsibility and the pandemic

The pandemic has impacted certain sections of Indian society in disproportionately adverse ways, in many cases well beyond the loss of livelihood or income, up to and including mortality. A problem of such magnitude demanded that companies do more than the perfunctory CSR activities that they engage in during normal times. Social, economic, class, caste and gender inequities have been exacerbated throughout these trying times, and government initiatives such as food, communication and healthcare facilities have failed to bring about a quick remedy when each passing day might mean the difference between life and death for these vulnerable sections of society.

During the First World War, when India was affected by the Spanish flu, the then colonial government displayed inhuman apathy, resulting in millions of deaths. Thankfully, in contrast to the general apathy of the colonial masters and the business entities controlled by them, this time the state and India Inc were empathetic. The corporate entities in particular came forward on their own to help the most adversely affected populations. Several major global companies are also taking wide-scale measures to help respective governments tackle COVID-19. Just as several automakers famously shifted to make tanks and planes during the Second World War, today’s corporations are retooling their production lines to make everything from hand sanitizers (LVMH) to respirators (Ford, GE) and ventilators (Dyson). Even if they have been promised readily available markets, such measures nevertheless inspired confidence during these hard times. In India, business houses have unleashed a raft of measures, earning the trust and loyalty of their employees in a marked departure from the onset of the pandemic in 2020 when redundancy and furlough became the new normal. Two years on, many large and small companies are extending financial, medical and educational support to the bereaved family members of their employees who had fallen victim to the pandemic.

Decisions/rules often act as reminders on the applicable subjects – individuals, groups or corporate entity – on what has to be done. In the same vein, the legislation mandating CSR appears to have encouraged massive activism during the pandemic from companies of various scales, from multinational corporations, large national companies to small companies, including start-ups. CSR activism has taken place during various phases, when several crises have surfaced at the same time: one after another ‘wave’ indicating the pandemic having acquired ‘newer’ virulence; the migrant labourers’ crisis; the acute shortage of oxygen cylinders and other medical facilities; the shortage of vaccines; and above all, serious disruption to normal life, leading to the loss of livelihood and income for the vast majority of people and resulting in abject poverty for so many.

Major global players in business participated in CSR activism. For example, Walmart, Flipkart and the Walmart Foundation announced the provision of Rs 46 crore worth of help that would focus on personal protective equipment, including N95 masks, medical gowns for medical staff and other necessities for vulnerable communities. This process had started with Borosil Limited, the pioneer glassware company in India. It offered two years of salaries to the families of four employees who died of the virus. In addition, the education of the children of these employees would be paid through to graduation.

Reliance Industries Limited, a Fortune 500 listed conglomerate, ramped up production of medical-grade liquid oxygen from near-zero to 1,000 megatonnes per day, which would hopefully meet the needs of over 100,000 critically ill patients per day on average. Sir HN Reliance Foundation Hospital, in collaboration with the Municipal Corporation of Greater Mumbai, set up a dedicated 100-bed centre at Seven Hills Hospital in Mumbai, the nerve-centre of corporate India. Reliance Foundation provided free meals to people across various cities in partnership with nongovernmental organizations during the crisis. Reliance also announced free fuel for all emergency service vehicles in the country (Reliance Foundation, 2021).

Larsen &Toubro’s Corporate Technology and Engineering Academy at Mumbai has been converted into a quarantine facility for employees and their family members in Mumbai. The facility is supported by a visiting doctor, full-time nursing staff, ambulance facilities, oxygen concentrator, cylinders, relevant medical equipment, as well as basic medicines. The giant Indian conglomerate with a long history of contribution towards welfare programmes, Tata Steel, has announced social security schemes for the family members of employees affected by the pandemic. Deceased employee’s families were to get the last-drawn salary until the superannuation age of 60 years, as well as medical benefits and housing facilities. Their children were assured of financial support until graduation. India’s largest bicycle maker Hero Cycles allocated Rs 100 crore as a contingency fund to help the entire ecosystem around the organization to survive the crisis.

Mahindra Group started working on making ventilators for COVID-19 patients. Anand Mahindra, the chairman of the group, also announced that Mahindra Holidays resorts would be offered to the government as temporary care facilities. Besides announcing his decision to donate 100 per cent of his salary to the COVID-19 fund, the chairman also encouraged his colleagues to voluntarily contribute to the fund. Auto major Maruti Suzuki India and the Zydus Group, a prominent pharmaceutical company, started a multi-speciality hospital in Ahmedabad, built with total expenditure funded by the Maruti Suzuki Foundation and converted into a COVID-19 care centre. ITC airlifted 24 cryogenic ISO containers³ of 20 tonnes each from Asian countries in collaboration with Linde India. ITC also set up three facilities in three states with a total of 600 beds for the treatment of COVID-19 patients.

Even smaller companies and start-ups are offering masks, sanitizers and other essential supplies to prevent shortages in this large country of 1.35 billion people. From making masks and sanitizers to contributing funds, many smaller Indian companies have united to help citizens and the government fight the virus. Diageo India pledged to produce around 300,000 litres of bulk hand sanitizers across 15 of its manufacturing units in the country to help cope with the demand for the product. It also planned to donate 5,00,000 litres of extra neutral alcohol to the sanitizer manufacturing industry to enable the production of more than 2 million units of bottled sanitizers. Diageo India is also planning to support the hospitality sector with Rs 3 crore as health insurance cover for bartenders. As a final example, the Paytm founder, Vijay Shekhar Sharma, has committed Rs 5 crore for the development of medical solutions to fight COVID-19. Worldwide, CSR activism is usually voluntary by nature and the contributions of corporations are not legally enforceable. In India, however, the state’s mandate and the pandemic have encouraged the flourishing of CSR activism.

During the pandemic, the poor and destitute in India have had to face many forms of hardship: reports of non-payment and/or underpayment of wages as well as serious exploitation of labour have resurfaced from time to time. At this point, it is necessary to establish procedures of fair trade and fundamental human security. CSR cannot be expected to address issues deeply rooted deeply in economic and political structures, which is beyond its scope. Hence, it is the responsibility of the democratically constituted political authority to address issues that produce poverty, inequality and destitution. CSR activism is at best a second-order supporting factor. Social, economic, class, caste and gender inequities come to the fore in these trying times, and government initiatives have repeatedly failed to bring about a quick remedy when each passing day might mean the difference between life and death for many vulnerable sections of the population. The disheartening picture of the migrant families on their 1,000-kilometre trek from their meagre yet stable sources of daily bread to uncertain yet friendlier homes still haunts our conscience.

When announcing the first phase of lockdown, the Prime Minister sensed severe hardships for the working class, yet instead of clear policy directions, he appealed to the goodwill of people, which proved too little for the subsequent sequence of crises. At the same time, democratic spaces have been constrained significantly and, overall, the government failed to uphold its accountability. In addition, the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund, created on 27 March 2020, has been subject to severe criticism for its opacity and lack of accountability by disregarding the transparency-provisions from time to time (Ghosh, 2021). Furthermore, we find in Table 5.1 that many companies have pledged or committed sizeable amounts of money for relief.

However, it is not clear how much of that money will be used. At this point, it is necessary to have a democratically constituted authority, where the government and opposition have mutual respect and understanding for a proper direction and realistic use of available funds and resources, and to coordinate programmes in tune with the needs of people. This is possible in a country where the democratic polity is vibrant, marked by political competition and oversight as well as consensus on the core values of human well-being.

Liberal democracy envisages the state to be the ‘public actor’ that stands over and above various ‘private actors’, including business, and has the responsibility to promote the overall common good. Even in CSR, business can participate only as a supporting factor (Hussain and Moriarty, 2018: 522–31). In 2020 alone, the rate of unemployment doubled in India, the number of poor people increased by 75 million and the size of the middle class shrank from 99 million to 66 million – all alongside a sharp decline in overall living standards (Das, 2021; Kochhar, 2021). In this context, CSR activism has certainly offered much breathing space during the pandemic, but it has nevertheless proven inadequate compared to the manifold crisis. In fact, it would be unfair to expect CSR, with its limited agenda, to address the deep-rooted structural issues that reproduce poverty and inequality. Providing medical necessities, hospital beds or assisting distressed employees are certainly useful and humane gestures, but we cannot expect much more. For obvious reasons, business and the creation of wealth is the prime goal for the companies concerned; anything else – such as CSR activism – remains secondary. This is not any moral indictment – if business is neglected, the country’s economy will be in serious jeopardy.

The ongoing pandemic has led to serious questions being raised about neoliberalism from time to time, on its capacity and intention to generate prosperity with inclusion. Despite this, however, we do not find any practical alternatives to a neoliberal economy. The challenge before the developing world is therefore to negotiate achieving the maximum of common good from the corporate sector. From the Indian experience, several lessons can be learnt: first, firms need to be reminded that they are not above social obligations. As the standard of social responsibility varies from firm to firm, the proactive involvement of the state may help in achieving a common framework of action. Such pro-social engagements, in the long run, are also good for the image of the business. In addition, increased well-being is likely to strengthen their market, as people may like to spend more if their capacity increases. Secondly, when times are not very tough, enacting appropriate laws with the vision of the common good creates the legal infrastructure. Once such rules are formulated, concerned parties can negotiate on that basis and will find it difficult to abdicate them altogether. Finally, CSR is an example. It is not necessary that all developing countries must follow the Indian experiences on CSR legislation uncritically. Rather, it is advisable that the Indian legislation acts as a template – a guide for action. Each country can formulate CSR-like rules to elicit social responsibility from the business sector in accordance with their respective situation and circumstances. The overarching principle should be the state’s guidance for the business sector to be socially responsible and contribute to the common good.

CSR is a mechanism for corporate firms, large and small, to establish their credentials as responsible and conscientious entities. In India, CSR has to be understood in the context of widespread poverty and destitution: as an instrument for integrating social, environmental and human development concerns in the entire value chain of corporate business. After independence, India embarked on a path of state-led development. Over the course of time, however, private business was gradually able to expand its frontiers in India’s socioeconomic milieu, becoming decisive in 1991. Subsequently, the business sector gained a key position in influencing the policymaking process. In 2013, the Indian government made it mandatory for companies to earmark 2 per cent from their net profits for CSR activism. This proved to be quite timely during the COVID-19 pandemic. Many corporate entities of different sizes came forward in many ways and varieties of directions. This proved quite useful. However, CSR activism should not be treated as a panacea for deep-rooted structures that generate socioeconomic inequalities. It is, at best, a second-order supporting factor to the democratically constituted public authority committed to upholding the well-being and existential security of the entire population.