Corporate Covid Responsibility

Forbes India|July 3,2020

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Corporate Covid Responsibility
Companies are channelising a big chunk of their CSR money towards the coronavirus response, leaving initiatives for other social causes scrambling to stay afloat
Divya J Shekhar

Drawing from the experience of working in the social sector for over 20 years, and now in the tribal regions of Odisha and Jharkhand, Liby Johnson says people in these villages—including migrant workers who have come back home from the metros—will start feeling the pinch of the coronavirus pandemic more severely only by August.

State governments had sprung into action since the lockdown was first enforced in March, ensuring that the public distribution systems supplied food to people. Johnson, whose non-profit Gram Vikas works with about 1,500 villages to secure water, sanitation and rural livelihoods, says the villagers had managed to get sufficient food at home in April and May.

This security might not last, he says, because of a few challenges: First, cash income has reduced since public work through the National Rural Employment Guarantee Act (NREGA) and other schemes had stopped during the lockdown. Second, the 20 percent increase in village population (as per Johnson’s estimates from the regions he works in) due to reverse migration will put additional pressure on drinking water, sanitation, unpaid domestic labour for women, and housing, among other resources. “Third, fatigue will set in within the government system in a month or so, after which food supply and other essential services will not reach the poor easily,” he says.

Johnson has started to aggressively conserve organisational resources to prepare for these eventualities, along with another looming challenge: There won’t be enough monetary support coming in. Gram Vikas spends approximately ₹22 crore annually in social projects, about 35 to 40 percent of which comes from companies as part of their corporate social responsibility (CSR). Already, in March-end, a private corporation pulled the plug on a major funding that would have ensured water security in over 100 villages in east Odisha over the next three years, and diverted the money instead to PM Cares, the Covid-19 relief fund announced by Prime Minister Narendra Modi.

“We are yet to establish connection with our public sector undertaking (PSU) donors. They will take more time to finalise all the outlays, but have already announced hefty CSR support for Covid relief,” Johnson says. “The Jal Jeevan Mission was supposed to be launched [by the water resources ministry] this year, and it was supposed to bring in a lot of CSR support to drinking water and sustainability, but I reckon that will also be affected now.”

Under the Companies Act, 2013, India has mandated that every company with a net worth of at least ₹500 crore, or turnover of at least ₹1,000 crore, or a minimum net profit of ₹5 crore during any financial year, should allocate at least 2 percent of average net profits of the last three years toward its CSR policy.

This money can be deployed by the company directly, or through trusts and societies set up by it, or by non-profits acting as implementation agencies on the company’s behalf. According to Sattva Consulting, a social enterprise working with NGOs and corporates to implement CSR projects, over 50 percent of total CSR funds are deployed by companies through non-profits.

Data by the ministry of corporate affairs (MCA) as of June, analysed by Sattva, indicates that in the last five years, companies have cumulatively spent over ₹71,277 crore across 105,358 CSR projects in various sectors. The number of companies coming under the ambit of CSR and the amount of money they spend have also seen a year-on-year increase (see box).

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July 3,2020