INDIA INC – STINGY WHEN IT COMES TO CSR

By Ruma Dubey

When Corporate Social Responsibility (CSR) was made mandatory, there was a big hue and cry. Why force companies to give? That was the moot question.

But a recent finding put out by Bloomberg is even more telling, making us wonder whether we really know the companies that we are investing in. It also makes us wonder whether we should consider a company’s CSR as a criteria for investing. We should invest looking at the credibility of the promoters so in these changing times, isn’t the spend on CSR, how far a company believes in giving back to the society, also a very important factor?

As per data compiled from annual reports of Nifty 50 companies, Bloomberg found, to the great surprise of us all, Coal India was the most generous in India Inc. It has spent a very good 19% of the average net profit it earned over three years on CSR, up from 2% it had spent in FY16.

The rule of CSR – a company with a minimum net worth of Rs.500 crore or a turnover of Rs.1,000 crore or a net profit of Rs.5 crore has to spend at least 2% of its average net profit made over last three years on CSR.

Other big contributors – Tata Steel, Wipro, Asian Paints and Reliance Industries.

And the least generous in India Inc? There were a total of 15 companies that failed to meet their CSR targets and the worst was Lupin – it was right at the bottom, spending just 0.6% for CSR in FY17. Bharti Airtel, Bharti Infratel, Aurobindo Pharma were also amongst the least CSR contributors in FY17.

Why this tight-fisted attitude of Indian industrialists? When we talk about giving away, there are only a handful which come at the top of the mind – Azim Premji, Anu Agha, Nandan Nilekani, Shiv Nadir and Narayanamurthy on an individual basis and corporate group as such – Tata’s, Birla. The latest to get inspired and give has been the GMR group. There is also the Sobha Developers promoter, PNC Menon who has pledged to give 50% of its fortune for charity. With over 4000 companies listed on the BSE, these are only few names which came up. At a time when India has some of the richest in the world, why this stinginess in giving? And in this context the mandatory Corporate Social Responsibility contribution of 2% of net profit by companies having turnover of over Rs.5 crore may sound like a tax for many. But when companies do not spend, what’s wrong in making them pay for it compulsorily?

A look around and what becomes apparent is that in India, philanthropy is dictated by caste, religion and community. Building temples and churches is probably high on the list. But with rising inequalities, can charity in current times be at the mercy of religion alone? And if it is religious principles which guide, then is it charity at all? Isn’t that more selfish than not giving?

We are ready to embrace the US business culture in India, but sadly their way of sustained individual giving is conspicuous by its absence in India. Building roads in their ancestral villages or building homes and schools for their employees is done by many industrialists but somehow, this comes forth more as an another self-elevating move.

A quick synopsis of probably reasons why Indian industrialists don’t give or give little:

1: Wary of showing wealth

2: Lack of community spirit

3:  Dearth of right channels to donate which instill trust and ensure transparency

4: Ingrained feeling of insecurity – if I give away, will I have enough?

5: Charity guided by religious compulsions

6: Giving away little itself makes them feel they have done enough, let the others do the rest.