INTRODUCTION
In this era, organizations must fulfil their obligations towards society for those who lack any form of entitlement. In the modern age, companies must exhibit that their primary focus extends beyond mere financial gains; instead, they must actively contribute to the betterment of society using volunteer work and initiatives aimed at enhancing the community and environment. Corporate Social Responsibility (CSR) represents the notion that businesses should willingly strive to enhance society and the environment. It operates as a self-regulated business model, ensuring that companies are ethically accountable to themselves, their stakeholders, and the general public. By engaging in CSR programs, philanthropy, and volunteering endeavours, businesses can not only contribute to society but also elevate their brand reputation.
According to Section 135(4) of the Companies Act 2013, all companies falling within the purview of Section 135(1) are obligated to disclose their CSR activities in their Annual Report to the Board. The Board of Directors of such companies must ensure that, in each financial year, they allocate at least 2% of their average net profits from the immediately preceding three financial years, as guided by their CSR policy. If a company has not completed three financial years since its establishment, it must allot 2% of its average net profits from the preceding financial years as per its CSR policy[1]. If a particular company fails to meet the provision of CSR requirements, then the company will be liable and can also be charged with a penalty of Rs.1cr. or can also be charged twice the amount that the company had to allocate towards Corporate Social Responsibility.
POLICY DIRECTIVE
In his tenure, Prime Minister Narendra Modi embarked on a multitude of endeavours and initiatives aimed at the betterment of society and the enhancement of our economy. One of the most significant undertakings was the Swachh Bharat Mission, a grand-scale sanitation campaign that was launched by the Prime Minister of India in 2014. The mission’s objective was to achieve a nation free from open defecation by October 2, 2019, as a tribute to the revered Mahatma Gandhi. Under the flagship program of PM Modi, known as the Swachh Bharat Mission, both private and public sector companies were allowed to utilize their corporate social responsibility funds to improve sanitation across the country. To facilitate this, the Union government developed various models that states and districts could adopt to receive funding for the program from corporate social responsibility funds[2].
To further streamline the process and consolidate contributions from both individuals and corporations, the Union government established the Swachh Bharat Kosh (SBK) under the Ministry of Finance. This initiative aimed to channel the financial support received from the corporate sector and philanthropists towards the construction of toilets in rural areas as part of the Swachh Bharat Mission. The inception of the Swachh Bharat Kosh (SBK) was in response to the honourable Prime Minister’s call on August 15, 2014, to achieve the goal of a Clean India (Swachh Bharat) by 2019, which marked the 150th birth anniversary of Mahatma Gandhi. A nationwide campaign was launched on Gandhi Jayanti on October 2, 2014, to mobilize resources and improve sanitation facilities, particularly in rural and urban areas, including school premises[3].
CSR IMPACT & SOCIAL COMMITMENTS
CSR is akin to a mandate bestowed upon colossal corporations, compelling them to enhance the well-being of the community as a unified entity. To fulfil this responsibility, they must operate with utmost transparency and conduct themselves ethically. A theory known as Neo-Classical Theory posits that companies possess obligations beyond mere profit generation, such as championing humanitarian causes, which can be achieved through the implementation of Corporate Social Responsibility. Depending on the specific CSR initiatives, corporate entities collaborate with the Ministry of Drinking Water and Sanitation, local governing bodies, and esteemed national-level non-governmental organizations with extensive expertise in the construction and maintenance of public toilets, individual toilets, and Solid and Liquid Waste Management projects.
A substantial portion of these corporations’ CSR funds are allocated towards the construction of new toilets in hospitals, rural areas, government schools, and other pertinent locations. This concerted effort combats the predicament of open defecation and significantly contributes to the advancement of sanitation. In the fiscal year 2022, a total of 1205 companies fell under the purview of CSR, with their combined CSR expenditure amounting to a staggering Rs.14,800 Crores[4]. Simultaneously, the government allocated a substantial sum of Rs.60,000 Crores towards the sanitation program[5]. Consequently, it can be deduced that prominent corporations contribute approximately one-fourth of the government’s financial allocation to the sanitation program, with notable contributions from Tata and Birla. Notably, Tata alone donates over 1,000 Crores towards CSR initiatives. Hence, these corporate entities play an indispensable role in fostering a positive impact on society at large.
The Swachh Bharat Kosh fund, established by the Central Government, catalyzes philanthropic and CSR participation in the government’s sanitation endeavours. Out of the 86 firms, a total of 9, equivalent to 10%, contributed 118.25 crore to the Kosh. Government data reveals that the Kosh, as part of the Swachh Vidyalaya initiative, successfully built 14,050 toilets. Surprisingly, the state of Jammu and Kashmir, often overlooked, received the largest share of 34%, closely followed by Odisha and Madhya Pradesh. This noble effort extended financial aid to 16 different states. Leading the pack in contributions was L&T, with an impressive sum of Rs. 60 crore, while BHEL and the Bajaj Group (Bajaj Auto and Bajaj Finance) each contributed Rs. 20 crore[6].
CONCLUSION
Corporations have made significant contributions towards initiatives related to toilets and sanitation as part of their CSR endeavours. They have played a pivotal role in addressing the global sanitation crisis and promoting access to hygienic and sanitary toilets through their investments and collaborations with various stakeholders. Their contributions include financial support for sanitation infrastructure projects in marginalized communities, education on hygiene practices and behaviour modification, as well as the development of innovative sanitation technologies. These efforts are in line with the United Nations Sustainable Development Goals (SDGs), specifically Goal 6, which aims to ensure universal access to clean water and sanitation.
In summary, I propose that to foster the participation of corporations in society through corporate social responsibility (CSR), the government should focus on enhancing the ranking of the ease of conducting business. By improving the ease of doing business in India, more corporations will be enticed to invest in the country, and in turn, they will allocate a portion of their profits to contribute further to society.
Author(s) Name: Tinku Garg (Symbiosis Law School Pune)
Reference(s):
[1]Mayashree Acharya, ‘Corporate Social Responsibility Under Section 135 of Companies Act 2013’ (Cleartax, 2023) <https://cleartax.in/s/corporate-social-responsibility> accessed 15 February 2024
[2]Financial Express, ‘Swachh Bharat Mission: How companies can use CSR fund for Modi government’s flagship programme’ (Financial Express, 2019) <https://www.financialexpress.com/india-news/swachh-bharat-mission-how-companies-can-use-csr-funds-for-modi-governments-flagship-programme/1480366/> accessed 15 February 2024
[3]Swachh Bharat Kosh, ‘Swachh Bharat Kosh’ (Swachh Bharat Kosh, 2014) <https://sbkosh.gov.in> accessed 15 February 2024
[4]Niti Kiran, ‘Tracking Indian Inc’s FY22 CSR Spending’ (Mint, 2023) <https://www.livemint.com/industry/how-indian-firms-spent-on-csr-in-fy22-in-charts11691584903091.html#:~:text=In%2520any%2520given%2520year%252C%2520the,13%252C977%2520crore%2520in%25202021%252D22> accessed 15 February 2024
[5]The Indian Express, ‘Union Budget 2023’ (The Indian Express, 2023) <https://indianexpress.com/article/opinion/columns/thomas-isaac-union-budget-2023-stability-expense-poor-rural-sector-8420517/# >accessed 15 February 2024
[6]Anushree Parekh, ‘CSR in Water, Sanitation and Hygiene (WASH)’ (The Bharti Foundation) <https://bhartifoundation.org/wp-content/uploads/2020/03/1487308491-csr-in-wash-what-are-india-s-top-companies-up-to-samhita2-.pdf> accessed 15 February 2024
