Can undertaking Corporate Social Responsibility (CSR) in India, help achieve the various Sustainable Development Goals (SDGs)?

The Author, John J Vachaparambil is currently pursuing LLM in Infrastructure and Business Law, with Super Specialization in Sustainable Marine and Offshore Infrastructure Governance, at TERI School of Advanced Studies (SAS), New Delhi.

Even though people made donations worth millions of dollars, for supporting educational, scientific, and religious institutions in the early days, it was only in the year 1953 that the term ‘corporate social responsibility’ was officially coined by American Economist Howard Bowen through his publication titled ‘Social Responsibilities of the Businessman’. He is also known as the father of CSR.

In India, in the early 90s, Mahatma Gandhi introduced the concept of corporate social responsibility. During those time, CSR was based on the concept of trusteeship which would help in achieving the socio-economic growth. Sometimes, CSR was also based on family traditions, culture, and religious values.

India made history in the year 2014 by becoming the first country to legally mandate CSR. By undertaking CSR, a company can determine its impact on the environment, and on the society, and be conscious of their activities, rather than just focusing on making profit.

Even though the compulsory legal mandate for CSR was put out in 2014, traces of it can be found in the 1956 Companies Act. The Act under Section 293(1)(e) states that the Board of Directors of a public, or a private company shall ‘contribute to charitable, or other funds not directly relating to the business of the company, or that relating to the welfare of its employees’.

This provision of law was later shifted into the new legislation via an amendment. Now mandated under the 2013 Companies Act, Section 135 of the Act puts forth the eligibility criteria for the companies that has to undertake the various CSR activities mentioned under Schedule VII of the Act, how to establish the CSR Committee, and also how to determine the fund for undertaking a particular CSR activity.

Glancing through the numerous CSR activities mentioned under Schedule VII of the 2013 Act, it becomes very clear how an activity can help the nation achieve the various Sustainable Development Goals (SDGs).

For instance:

1. CSR activity relating to eradicating hunger, poverty, and malnutrition is directly related to Goal 1, i.e., on No Poverty, Goal 2, i.e., on Zero Hunger, and Goal 3, i.e., on Good Health and Well-being of the SDGs.
2. Similarly, the CSR activity relating to promoting education, including that of special education would help the nation achieve Goal 4 of the SDGs, i.e., on Quality Education. With proper education, Goal 8, i.e., relating to Decent work and economic growth can be achieved. Also, with education comes Innovation in Industry and in Infrastructure, i.e., Goal 9. With innovative infrastructural ideas, and technologies, Goal 11, i.e., on Sustainable cities and communities can be achieved.
3. Another important CSR activity is about promoting gender equality, and empowering women, which would help in achieving Goal 5 of the SDGs, i.e., on Gender Equality.
4. Also, to consider is the CSR activity relating to ensuring environmental sustainability, ecological balance, protection of flora, and fauna, animal welfare, conservation of natural resources, and maintaining the quality of soil, air, and water. This activity can help in achieving Goal 6, i.e., on Clean Water and Sanitation, Goal 7, i.e., on Affordable and Clean Energy, Goal 12, i.e., on Responsible consumption and production, Goal 13, i.e., reduce air pollution, helping in reducing the need for climate action. The activity also would help in achieving Goal 14, i.e., to protect life below water, and Goal 15, i.e., to protect the life above land.

The reason for including Goal 14 of the SDGs which discuss about conserving the oceans, and the marine life, as part of CSR is that the definition of the term ‘environment’ under the Section 2(a) of the 1986 Environment (Protection) Act, also include ‘water’.

Even though there is a direct relation between each of the CSR activities, and the SDGs, there will always be some obstacles. For instance, for a company to be eligible to undertake any one of the CSR activity under Schedule VII, that particular company has to, under Section 135 of the 2013 Act should have:

1. A net worth of Rs. 500 Crore, or more, or,
2. A turnover of Rs. 1,000 Crore, or more, or,
3. A net profit of Rs. 500 Crore, or more during any financial year.

This would result in the exclusion of the Small and Mid-Size Enterprises (SMEs) from undertaking CSR activities. This would also exclude many of the start-ups which is picking up a rapid pace in the country. This exclusion comes from the 2013 Act itself, wherein Section 2(85) states that a small company is a company having:

1. A paid-up capital not exceeding Rs. 50 lakhs, and not exceeding Rs. 5 Crore in some cases, and
2. A turnover which does not exceed Rs. 2 Crore, and in some cases not exceeding Rs. 20 Crore.

With such exclusion, it also means that most of these SMEs would not come under the ambit of the 2006 Environmental Impact Assessment (EIA) notification.

As a result, even though with so much effort made to achieve the SDGs by undertaking CSR activities, with such exclusions under law, it proves to become a lethal mix wherein there are efforts being made on one side, there is violations being made on the other side.

One of the recourse available to protect the environment, and to achieve the SDGs , is by having strict implementation of the penal provisions mentioned under the 1981 Air (Prevention and Control of Pollution) Act, and under the 1974 Water (Prevention and Control of Pollution) Act, and the other is to have timely intervention of the National Green Tribunal (NGT) which under Section 20 of the National Green Tribunal Act, 2010, grants the NGT the power to pass an order applying the principles of sustainable development, the precautionary principle, and the polluter pays principle. Also, the Hon’ble Supreme Court can also intervein in matters that violate the right to life under Article 21 of the Indian Constitution, which also includes the right to a healthy environment.

Ultimately, it is upon each one of us to protect the environment under Article 51A(g), and for the state to ensure such protection under Article 48A, of the Indian Constitution.