CSR is a subset of sustainability4 min read . Updated: 25 Sep 2015, 01:34 AM IST
Shankar Venkateswaran, the chief of Tata Sustainability Group, has an insider's view on what works and what doesn't with corporate social responsibility (CSR) rules
Shankar Venkateswaran, the chief of Tata Sustainability Group, has over 31 years of experience working in the corporate and development sectors. A member of the drafting committee for the National Voluntary Guidelines (NVGs) for responsible business, Venkateswaran has an insider’s view on what works and what doesn’t with corporate social responsibility (CSR) rules. He talks about sustainability, why people should not be hasty in passing judgements in this first year of CSR reporting and how stakeholders can make a difference. Edited excerpts from an interview:
Has the sustainability angle been left behind in the race to be socially responsible as far as the new CSR rules go?
Yes, very much so. I feel quite strongly about that. The way we look at sustainability is that it must have many components to it. The first one is how you do your business, what are the kinds of issues you deal with specially on the ethical front, the social impact your business has and the environmental impact. The second part is what you do with your profits. All these taken together are an important part of sustainability.
CSR just deals with what you do with your profits. It is almost implying—not that it is being said—that we don’t care how companies make money as long as once they make it, they spend it well. To me that is just a very small part of the story. Businesses have a far greater responsibility and potential to be agents of change.
Don’t the top 100 companies already think about sustainability? Isn’t social responsibility one step ahead?
I think in India more companies have been doing the latter and not enough companies have been investing in how they make their profits and hence in sustainability. As it is we have very ordinary environmental standards and still they are not complied with. Traditionally, our businesses have been driven to do more in the social space, driven not by strategic intent but by a value which says we need to give back.
Did the NVGs not take off because of the word ‘voluntary’ and is CSR more top-of-the-mind because it’s about compliance?
Absolutely. I don’t blame the companies so much for forgetting NVGs and thinking more about CSR because of compliance. Though Security and Exchange Board of India, through its business responsibility reporting guidelines had mandated the top 100 companies to work on NVGs. We need to ask ourselves, “Do we only do things after it becomes a law because we have to?" Is there any value given to any company that does things voluntarily? Are market signals favouring those who think about sustainability?
Compliance is the minimum requirement to stay in business, else you are not legitimate. For me complying with the law is not a big deal; it should be how much you will go beyond the law driven by internal factors. Law, as we know, is the laggard of social expectations.
Is there something that makes the CSR law lag behind?
There are two-three factors that I think are very good. It has forced social responsibility to become a boardroom conversation which is very important. It was there in the Tata Group of companies because of who we are and where we come from and we have been addressing this governance question. But it has become more formal for all companies and there are more discussions now in CSR committees. The second thing is that it mandates disclosure. It then gives your stakeholders something to base a discussion on.
There are some problematic areas like Schedule VII (list of activities allowed under CSR) because it needlessly puts boundaries. There will always be 15 guys asking, ‘Is this also there?’ And if not, there will be lobbying to get it (the new activity) put there. It should have been left at a principle stage and companies and CSR committees should have had the freedom to interpret it (socially responsible activities).
Another thing that this Act has not taken into consideration is the time that it takes a company to get to that 2% (CSR spending) mark. It does allow you to explain why you could not reach the target and everyone I have spoken to in the ministry of corporate affairs say that they will not judge the explanation as long as the CSR committee has signed off on it. But it’s important for people who are observing this from the outside to not be judgemental either, because there is a lag between when you can put these (activities) into practice and the time you have to report them.
Will CSR get impacted if stakeholders like shareholders, clients and customers have more say in what a company chooses as its CSR initiative?
But they already do. In my view the ones that influence a company’s behaviour the most are customers, investors and re-gulation. These are the three biggest drivers. In India regulation trumps everything else. In western markets it’s a combination of regulation and investors. Here, often customers have a smaller role to play as do investors.