Corporate Social Responsibility
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Under Companies Act, 2013 as per legal mandate, any company with a net worth of the Rs 500 crore or more or turnover Rs 1000 crore or more or net profit of Rs 5 crore or more has to spend at least 2% of last 3 years average net profits on CSR activities as specified in Schedule VII . The rules came into effect from 1 April 2014 with amendment to the law in August 2019 to ensure stricter compliance.
To find out more about CSR activities of companies, I had an informative conversation with Mrs. Anupama Shetty who is head of CSR at Narayana Health (NH). NH is a chain of multi-speciality hospitals, heart centres and primary care facilities with its headquarters in Bengaluru. Many companies use CSR as a license to operate in that particular region in order to engage with local stakeholders but NH surpasses that description because they also conduct activities in regions where they don’t operate to address critical problems in high priority districts. NH mainly focuses on health and education programmes in connection to CSR and aims at impacting policies. The primary objectives of these programmes are to address issues of accessibility, affordability and equity of the weaker sections of the society.
At Narayana Health, Dr Devi Shetty, Founder and Chairman, introduced a community-based health insurance programme before the Company’s Act 2013 came into existence. This programme was conceptualized for farmers to enable them to have access to surgeries by paying a very small amount as premium. In terms of education, Dr Devi Shetty introduced a programme called ‘Udayer
Pathey’, which gave scholarships to rural students to help them become doctors. Another education programme called ‘Udaan’, was introduced in Bidar and Gulbarga, which helped some underprivileged students get through NEET last year. In terms of health, NH conduct operations to address the 3 most common types of cancers- oral, breast and cervical. They introduced a mobile mammography programme where they conducted awareness sessions and screenings for rural women. They also partnered with Britannia Nutrition Foundation to address the prevalent problem of anaemia in India. Britannia made biscuits with special forms of iron added to them which was given to adolescent girls in rural regions. It was later observed that there was a huge change in the haemoglobin levels of these girls after a survey was conducted.
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Corporate Social Responsibility, made mandatory in India by the Companies Act, 2013 upholds the above sentiment. It mandates the corporate giants in India to use 2% of their net profit for philanthropic and charitable purposes. However, it is not mandatory for small businesses to engage in CSR activities but small companies usually prefer to engage in CSR activities or smaller acts of charity because such activities are helpful in bringing goodwill to their business. It is an effective marketing and publicity strategy without actually being one. Some companies earmark a portion of advertising/marketing budget for CSR. CSR activities conducted by small businesses are usually localised and tend to bring in a lot of customers and enquiries by word of mouth & networking in the local context. It is also used as an effective tool in customer retention and generating repeat customers. It often results in great PR with local community leaders and government agencies. This in turn results in a positive public opinion and sentiment for all stakeholders. Spending on CSR activities, typically generates higher returns on lower investment especially for small businesses.
They might be losing on economies of scale in terms of business operations but they will definitely benefit via CSR.
Sometimes, small businesses partner with bigger businesses to conduct such activities. Mrs. Anupama Shetty recalled an instance where a small construction company in Jakkur, Bangalore wanted to conduct some activities in terms of CSR and reached out to her in the regard. She gave them the idea to introduce a health programme for the construction workers. However a programme qualifies as CSR only when they get the community to participate in the programme. Therefore, this construction company along with a team from NH conducted a health camp for this community of construction workers and their families.
To Summarise, CSR is a philanthropic activity, supported by thorough research in order to address pressing issues of the society. This is why is has become very important for companies to generate a lot of data through research and give a feedback to the government in real time for improvements and to identify new focus areas. For example NH and Britannia could inform the government that they had given an iron and folic acid tablet in the form of a biscuit which is a creative way of providing appropriate nutrition to children. The ability of the government to provide a good framework for monitoring and regulating CSR activities encourage large and small companies to improve their performance. There is a National CSR portal under the Ministry of Corporate Affairs which constantly tracks and analyses various statistics of CRS activities in India.
Written by:
Ashlesha George