Social Responsibility of Corporates - Zeroing the Externalities

Most of us know that India grows through its industries. With this term we usually imply privately owned corporate firms making huge profits out of their production units and creating wealth for their shareholders and owners. While revering these modern temples of GDP growth some of us may think of those thousands of people who are displaced from their land for their creation. Some may think of those people who bear the brunt of the pollution that their plants and mines cause. Some may point to the people who are directly affected by the oft-lethal traffic nuisance created by their trawlers and trucks. And some of us (possibly with an alleged “leftist” inclination) may also grieve for the few hundreds of workers who give their lives every year in industrial accidents and that multitude who silently faces serious health issues due to exposure to dangerous chemicals.

Corporate Social Responsibility – Buzzword denoting these corporates' gift back to the society. In the last 3-4 years this term has grabbed a lot of limelight. Justifiably so, after all who would not want that the profitable ventures do their bit for the people they directly affect? When I joined Raigarh a couple of months back, I also revered these temples and appreciated their effort to pro-actively deliver to the people (showcased so fervently via magazines dedicated for this purpose). The district has a number of primary and secondary industries and is also amongst the leading mining (both major and minor minerals) zones of the country. After a number of rude and subtle surprises, my view on this has undergone a tremendous change.

The Undefined Monster

As they say, the devil lies in the details. While the Central Government’s CSR Directives in Companies Act  and the Chhattisgarh state’s recent CSR policy debate on the mode of funding of CSR activities, it is necessary to carefully define what activities constitute CSR and who will judge (and be accountable for) the same. For those unfamiliar with the ways of the world, let me point out that any laxity in this allows for senseless booking of expenditure under CSR heads. A private company may construct a road solely for the purpose of transportation of its mineral ore and book it under CSR – this may be something that the locals protest against, but again – who decides? Worse, the company may be running a private technical college with profit in mind and no reservations for the students of the particular district or state and still call it CSR. Very often, the companies may even use the fund booked under this head to pacify the “trouble makers” – the politicians and rogue environmental/RTI activists who thrive on their nuisance value.

Stakeholder Justice & Governmental Regulation

Like all the things that are never admitted yet commonly understood, CSR is usually treated by companies as the dole out that keeps the government’s “task-forces” away from their compounds (there are some notable and creditable exceptions but those companies are increasingly becoming rarer). The size of the CSR kitty is indicative of the bargaining power of the district collector. The latter gets this power because it is understood that no industry follows the rule book to the word in its operations.

I have come to know of cases where collectors have got the mines of prominent corporate closed for months at a stretch for the latter’s failure to provide drinking water to the village that they had resettled. Such examples are few. More commonly, the collectors suggest a few big ticket items that account for nearly 10-20% of the district’s total CSR booking by various corporate and leave the rest unmonitored.

I expected earnestness on the behalf of the companies, a sort of ownership for the school that is physically contiguous to their plant’s boundary or a sort of quality in their CSR constructions that reflects the quality of their own industrial constructions. I saw none. Most big companies, despite having dedicated staff and funds to look after CSR, don’t tend to respond unless they have some pending work with the Government – fixing of date for their mine’s public hearing or acquisition of some land for their plant’s expansion.

Is There a Silver Lining?

Despite my apparent pessimism, I will admit that I have come across a few companies (a small percentage though) that took CSR in a more people-centric manner. This is an issue that needs a consensus at all levels of Government’s hierarchies. If we decide to define the non-negotiable questions in terms of booking of funds under CSR and ensure effective, time-bound follow-up at the district level, things will begin to move in a consistent manner. Most of all, the higher officials of these private companies, should probably spend lesser time in delivering high-sounding lectures on “participative profit making” and actually think and chart out their stakeholders’ lists in a prioritized manner.

When we, as the government, acquire land for the industries, we are consciously uprooting helpless people (and proudly calling it “eminent domain”). The least of our expectations is that of justice to them and to those who directly bear the brunt of their negative externalities. I hope it is they who make it to the top of such lists and the money flowing in CSR addresses their concerns.

PS: All views expressed here are purely personal and have no connection with those of the Government. This post has been carefully modified to fit into the ambit of freedom of speech permitted to officers under the Rule 6 and Rule 7 of All India Service (Conduct) Rules, 1968.