Over the past few years, India has experienced an extraordinary rise with double digit GDP growth rate. The newly developed modern economy is underpinned by a skilled middle class, rapidly developing infrastructure and an ambitious and successful business territory. The environment and social cost of this growth and the potential to develop sustenance is a growing concern for all the stakeholders (government, business and citizens). To overcome the challenges of inequity, our government is looking to businesses for help. The focus is principally on two main areas: integrating sustainable development into business activities and promoting sustained economic development for the country.

In April 2014, India became the first country in the world to mandate corporate social responsibility (CSR) by law in an effort to share the cost of development with well-established companies. As per the new rules in Section 135 of the Indian Companies Act, every company with a net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or a net profit of Rs. 5 crore or more during any financial year earning profit is required to spend 2% of their net profit on social development.

The government has set out specific guidelines on how CSR activities should be handled. These stipulate that the CSR activities need to be implemented by a CSR committee that includes independent directors. This committee will be responsible for preparing a detailed plan on CSR activities, including the expenditure, type of activities, roles and responsibilities of various stakeholders and a monitoring mechanism for such activities. The company board is required to approve the CSR policy for the company and disclose its contents in their report as well as publish the details on the company's official website. The detailed guidelines set by the Indian Institute of Corporate Affairs is to ensure fair and transparent utilisation of CSR money and discourage any means of tax evasion or carry forward of profits.

The themes in which a company can implement its CSR activities include measures to eradicate hunger, promote education, environmental sustainability, protection of national heritage and rural sports and contributions to the prime minister's relief fund. The company can implement these CSR activities on its own, through its non-profit foundation or through independently registered non-profit organisations that have a record of at least three years in similar activities.

It is interesting to note the overlap between themes mentioned in the Indian CSR law and the sustainable development goals. The nine core areas that the CSR law allows companies to operate in are the reflection of goals relating to economic, social and environmental harmony stated in the proposed SDGs. With companies intervening in areas of education, health, livelihood and environment; there will be varied results from direct impact on the beneficiaries to creation of a sustained and inclusive ecosystem.

Activities undertaken by companies as a part of their CSR will not be a one-time affair. They will be the company’s long term deliverables in financial, social, environmental and ethical terms. For example, money invested in constructing toilets by a CSR project in year one will be complemented by increased awareness on sanitation and hygiene in year two and result in job creation for masons for similar projects in year three. Likewise, investment made in educating women in backward rural areas will significantly transform the community and social structure by addressing the issue of gender and empowerment at large. Problems of literacy, gender and unemployment can all be dealt with in the same project. Similar trickle-down effects will be seen from interventions in other areas.

For sustainability to be deeply integrated into a company’s strategy and operations, its prioritisation must be driven from the very top of the organisation. The CSR law gets it right by directly making the board of directors responsible and answerable for the projects. Corporate Social Responsibility is not a passing trend. It is a business imperative that many Indian companies are either beginning to think about or are engaging with in one way or another. The idea is to overcome developmental challenges with efforts from all the major stakeholders of the society. If undertaken in the right zest, there is all likelihood of corporate sustainability becoming a truly transformative movement.  q

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