CSR v. Revised CSR

Is Constructive Social Responsibility different from Corporate Social Responsibility? This is the question that exercised me as I read through the news item Constructive social responsibility, by Sandeep Joshi in The Hindu of January 24, 2013 [1].

But before I go onto the issue I want to say how gullible I am. When the opening salvo in the news item is about the blinger non pareil Vijay Mallya taking out an insurance policy with a premium of  2.5 kg of gold-plated door in a temple for being given access to heaven in his afterlife, I was hooked on reading through the piece. In a way I am glad I fell for it.

The article is all about some corporates using their CSR kitty along the religious-route –  “give donations to temples, religious trusts, ashrams and religious preachers” – to reduce their tax load. The intent behind revising the Companies Bill is to “see that the CSB funds are invested in a way that it contributes to growth and quality of life of common people.”

I am not interested in donning a cynical hat to parse this initiative of the Ministry of Corporate Affairs under the stewardship of one of the so-called Young Turks of INC, Sachin Pilot. Rather, I want to see what the supposed moves mean for various issues of governance.

Not very long ago, the US Supreme Court decreed that corporations / companies are individuals insofar as enjoying freedom of speech. This was in the context of campaign contributions to political parties. The decision has been attacked vigorously, indeed even viciously. Nonetheless, assuming that such logic and appropriate extensions of the same will be valid in CSR issues, restricting such contributions to “growth and quality of life of common people”, a question can be raised on the validity of the efforts.

It is a question of freedom of speech of a company to what kind and nature of initiatives its monies will go. By locating religions beyond the pale, the government will be restricting the corporations’ freedom of speech. As regards CSR, there is also the issue of tax breaks.

Some time ago a visitor to this space claimed that companies have no social responsibility. He, in focusing on the business of companies in making money for their shareholders, argued against any kind of responsibility beyond that. He almost sounded like Ayn Rand!

I am much divided within myself on this issue. On the one hand, I see companies as amorphous and as such their responsibility cannot extend to anything that has not been codified. CSR has not been codified. Indeed, this also makes me argue against tax-breaks for contributions to CSR! On the other hand, I also feel that corporates, as they operate in the public realm, are integral to the society and are responsible for its well-being from which they derive immense benefits. Hence, CSR is valid, even if not codified.

For the moment, I am going to tilt towards companies having a responsibility to society. This is where my problem starts with the proposed revisions as mentioned in the article. Efforts are on to “plug …loopholes” that direct CSR towards “religious organizations or … self-styled godmen.” Ouch, that hurts.

No, I am not turning religious on you suddenly, dear reader. I continue to be unrepentantly and incorrigibly against religion as I have been over the past 30 years or so. But, why this targeting of religious contributions hurts me is my conception of the brand of secularism that that the nation seems to have subscribed to and follows. We are a religious nation. We are not against religions. As much as I do not like this, I am stuck with this.

Therefore, the plugging-of-loopholes cannot be, should not be, must not be exclusively for the fact that these organizations are religious. At the minimum, it has to be for reasons like no public good is being promoted. Even if the CSR contributions are “to please any godman, a sect or religious organizations” they cannot be taken exception to.

A CSR contribution can be questioned only if it can be incontrovertibly shown not to have advanced society in any meaningful way. A godman, by definition, is someone who advances society, at the very least spiritually. Ergo, he is a legitimate recipient of CSR goodies.

Ours is a spiritual nation (whatever that may mean) too! If a godman can show that the CSR funds he has received have been spent on elevating the spiritual quotient of people, it is well within the remit of law for him to receive and utilize CSR funds. This is where the un-pluggable loop hole is! Define spiritual uplift! You cannot. No religion helps you, no godmen helps you. It is a meaningless phrase and can therefore be imbued with any meaning one feels like doing at any given instant. How can you codify that, on the say-so of whom? Upon the words of which godmen or godwomen?

The young minister explains that CSR should go towards constructive projects and ideas. Even being quite undefined and indefinable, this is where the headline makes sense: “Constructive social responsibility,” conveniently playing on the acronym CSR. The revised CSR does have a slew of potential projects, “education, hygiene and sanitation in rural areas, particularly provision of toilets in girls’ schools … water and energy conservation technologies.” These are the issues that help politicians pull the chestnuts out of fire. No one is going to question them, not even the hardened Ayn Randian!

Now, I come back to Mallya. Whether he blings on himself or on the doors of a temple, it is his business. It is up to him to be logical any which way he pleases when he blings. I do not know whether his gold offering to temple will reduce his tax liability. It should not be allowed to.

Likewise, it is up to the corporates to decide what CSR they will choose – Corporate or Constructive SR. Why should they be offered any incentive to reduce their tax burden, riding on CSR, of whatever kind?

It is in this choice, I found my stance on tax breaks for CSR. No tax breaks for either version. CSR should not be allowed to confer a double-advantage – less tax and a better name in society, all for a single act. No go.

Similarly, no tax breaks for Vijay Mallya for his chosen method of blinging!

Raghuram Ekambaram

References

1.    http://www.thehindu.com/news/cities/Delhi/constructive-social-responsibility/article4336496.ece