India’s ‘Father of CSR’ Addresses The UN
(3BL Media/Justmeans) – Dr. Bhaskar Chatterjee, popularly known in India as the ‘father of CSR’, addressed the United Nations' (UN) 2016 Forum on Business and Human Rights this month, sharing insights into India's unique law on Corporate Social Responsibility (CSR). India is the first country in the world to enshrine corporate giving into law. According to the Companies Act of 2014, businesses with annual revenues of more than 10bn rupees (£105m) must give away two percent of their net profit to charity. It is known as the ‘2 Percent Law’ in India and has drawn worldwide interest. Areas that companies can invest this money in include education, poverty, gender equality and hunger.
Over the past five years, Chatterjee has spoken and lectured at a number of international meetings as the primary force for bringing a new paradigm to the realm of CSR. He was instrumental in framing and issuing the guidelines for this new law. At the UN, Chatterjee joined a panel titled, ‘State regulatory approaches: the practice in emerging markets’ to talk about the relevance of CSR legislation for a developing country. This UN Forum is the world's largest annual gathering on business and human rights, with 2,300 participants from government, business, other UN bodies, community groups, law firms, trade unions, academia and the media.
Chatterjee described how India's legislation was drafted and how it was passed by both houses of the Indian parliament as a measure to complement and supplement government efforts to accelerate the pace of inclusive development. In addition to issuing the CSR guidelines, Chatterjee as the Director General and CEO of the Indian Institute of Corporate Affairs, also spearheaded the National Foundation for Corporate Social Responsibility.
Some say this ‘2 Percent Law’ is waking up corporate India to its wider social responsibilities as companies now have to think seriously about the resources, timelines and strategies needed to meet their legal obligations. However, there are fears that companies will find ways of avoiding spending for good causes. A survey by KPMG found that 52 of India’s largest 100 companies failed to spend the required 2 percent last year. Chatterjee says, "Our nation has found great success in regulating the legislation through the 'comply or explain' principle. Rather than mandating a penalty, we require companies that fail to spend the mandated two percent of profits on CSR each year to justify, on their websites and in director's reports, the reasons for not doing so. It’s the public at large who will judge as to how responsible a company is to the poor.”
India is a country of 1.2 billion people with more than 700 million living on $1 per day. This 2 Percent Law has the power to stimulate calculated engagement for key social issues. Corporates can just comply at the very basic level of this Act or use this historic law to really innovate for the people and the economy.
Photo Credit: PR Newswire