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Changing the overall mindset CSR should be a part of every boardroom strategy and the basic DNA of the corporate world, says Vijay Pandya.........Vijay Pandya The concept of Corporate Social Responsibility (CSR) in India has witnessed a substantial evolution in the new millennium. The shift from basic, random efforts to structured, well-planned, focused initiatives has made a considerable difference in the effectiveness of CSR agendas as well as theirperception. While highlighting the correlation between CSR and corporate profitability has contributed to the transformation so far, the thrust will now be on ensuring inclusive growth and linking CSR with good corporate governance and best business practices. With a major change envisioned in terms of attitude and approach, the overall significance of CSR is expected to see a major rise in the near future. CSR is an effective business tool that provides returns in the long-term to both civil society and the industry. There is a need to bridge the gap between corporate governance and CSR, make CSR activities more accountable as well as more effective, further improve delivery systems and update the laws relating to these issues. Today India faces the challenge of making its growth inclusive and sustainable and promoting the concept of Public Private People Partnerships. CSR should be a part of every boardroom strategy and there should be a mechanism for effective, long term, sustainable partnership between industry and the government to take CSR forward. Corporate Social Responsibility, with inclusiveness as its ethos, has to become a part of the basic DNA of the corporate world in order to address the twin needs of enhancing society and building India, according to K V Kamath, President, CII, and MD and CEO, ICICI Bank Ltd. Addressing the CII Second National Summit on CSR 2008 and elaborating on the theme, 'The new business model: Engaging society, enhancing competitiveness,' Mr. Kamath emphasized that for a long time, Corporate Social Responsibility (CSR) has been equated with charity. It has to become a basic strategy and drive of business and focus on education, employment, health and financial inclusiveness. According to Dr Kirit S Parikh, Member, Planning Commission, industry and capitalism must re-invent itself by mainstreaming Corporate Social Responsibility (CSR) through People-Private-Public Partnerships if economic growth has to be inclusive and sustainable. "Capitalism requires to renew itself by including those who are excluded from its benefits so far", Parikh said, adding that the corporates need to move towards the Gandhian ideal of 'trusteeship' and making social responsibility operative by making local communities stakeholders and through affirmative action. Kajo Wasserhovel, State Secretary, German Federal Ministry of Labour and Social Affairs, shared that though their challenges are very different, India and Germany have set up a bilateral working group on CSR. Large corporates as well as SMEs need to work towards social accountability and adopt new CSR standards like the SA26000 which is in practice in many European companies. This is equivalent to SA8000 standard which has been adopted by over 200 Indian companies. Shefali Chaturvedi, Head Social Development Initiatives, CII, felt that "While, adoption of standards like SA 8000 is fast becoming a reality if you have to remain a preferred supplier to the developed world, it is more important to adopt an index to measure impact on human development around the company's operations. This will help avoid mistrust towards industry, unrest amongst the community surrounding the area of operation and contribute to inclusive growth in real terms." Anurag Goel, Secretary, Ministry of Corporate Affairs, suggests five steps - defining the scope of CSR; identifying stakeholders and generating awareness; creating an enabling and facilitating institutional structure; building and maintaining partnerships among all sections of society and delivery on a continued basis as a way to move forward in this area. CSR is effective if there is a clear cut target and strategy. The focus should be on investment, not with an eye on returns - although returns will certainly be there in the long term. To ensure that CSR is effective, one should ensure that the employees see the benefit of it, it is not just a tax incentive activity. Viraf M. Mehta, Chief Executive, Partners in Change, highlighted the need for good reporting of CSR activities by corporates, and the need for accountability. Also, the NGOs Act, dating back to the 1800s, and the Companies Act of 1956 should be amended to meet contemporary needs, so that company-based foundations can be distinguished from civil society NGOs, whose roles differ. There is the need for a bridge between corporate governance and stakeholders and others that are covered by the CSR domain. The biggest challenge will be changing the mindset of smaller companies and convincing them that CSR is a business tool that even SMEs can benefit from. CSR shows that a company is committed to the needs of society and not just shareholder values. CSR is far bigger than just giving back to society; it is a way to understand the needs of the people. It is a tool for companies to understand the needs of the customer, to stay ahead of society's way of thinking. For example, talks with NGOs several years ago made General Electric realise that awareness on climate change was going to be a big issue. CSR attracts good people who understand the values of the company and so helps build leadership for the future. Apart from improving the overall quality of life, CSR, sustainable development and good human resource practices can help improve India's long-term international competitiveness in attracting 'socially responsible investment'. Environmental, social and governance (ESG) compliance would make Indian stocks stronger and more attractive to issuers from other emerging markets, in the race for long-term, high quality investors.CSR should be a part of every boardroom strategy and the basic DNA of the corporate world, says Vijay Pandya
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