By Himanshu Sekhar Panigrahi
It is really heartening to witness the release of the white paper on Corporate Social Responsibility (CSR) in Odisha, the first of its kind by a state in India. Made public on 17th May 2016, the white paper is an in-depth analysis of the CSR performance in the state in the first financial year 2014-15 after the enactment of the Companies Act 2013 that, under its Section 135, has made India the first country to make mandatory provisions for companies falling under the ambit to spend 2% of the average net profits of three preceding years.
Overview of CSR Trends in Odisha
A significant endeavor as it is, the document succinctly recounts the trend, spread, extent, and scope of CSR in Odisha. The paper encapsulates the findings of the study on social performance by 287 companies operating in Odisha. It has delved into their performance in different thematic sectors and geographic areas, and their mode of implementation.
Recommendations for Enhancing CSR Framework
In addition, it has provided a set of recommendations for building a better framework of CSR in the state. It is imagined that the white paper will manoeuvre the CSR roadmap in the state.
Odisha’s Position and Prospects in CSR Funding
Being one of the top ten states to receive maximum CSR fund in 2014-15, Odisha hopes to see a surge in the coming years as it welcomes big business houses through its investment-friendly approach. And, at the same time, it calls for a strategic and integrated approach by the companies in executing their social agenda so that the government’s efforts to alleviate its social and environmental problems can be supported.
Assessment of the State’s CSR Scenario
In this context, the release of the white paper that contains adequate stuff to visualize the state’s CSR scenario is a praiseworthy step. As the document illustrates, the overall CSR situation in the state is encouraging. However, some lacunae and disparities are evident that can be curtailed with resolute and collaborative approaches from all the stakeholders.
CSR Spending Analysis
Out of the total spending of 344 crore in 2014-15 in seven broad categories, 96 crore (28%) has been assigned towards infrastructure development. Other sectors that have received CSR funds are education (21%), health (15%), environment (12%), livelihood (8%) and skill building (3%). Other miscellaneous activities have registered 13% of the spending amounting 44 crore. Though the paper is shorn of details of activities under some sectors, it seems the funds are quite well distributed among them.
Addressing Neglected Sectors and Encouraging Innovation
However, the prime sector agriculture, considering its importance concerning the livelihood situation of the state, has not been accorded the priority it deserves. Further, in the coming days, environment and climate change needs to be given more focus. Encouraging innovation to deal with the problems of climate change and frequent occurring of disasters in Odisha should be treated as a critical area by the corporate houses. And, the companies may keep aside some funds for promoting business start-ups.
Major Contributors to CSR in Odisha
If industry-wise contribution is considered, top three areas have provided more than 80% to CSR spending. Steel, Iron & Ferro alloys sector tops the list with 41% spending, followed by Mining (22%) and Aluminium (18%) sectors. This may be ascribed to the fact that maximum numbers of industries are in these sectors in the state.
Top Companies in CSR Contributions
The leading ten companies who have contributed to around 70% of total spending must find a mention here- MCL, Tata Steel, Vedanta, NALCO, Bhushan Power & Steel, SAIL, Jindal Steel & Power Ltd, OMC, Utkal Alumina, and JK Paper.
Encouraging Broader Participation in CSR
This list denotes that both the public (central and state PSUs) and private sectors are almost equally enthusiastic in implementing their CSR agenda in the state. Also, Odisha seems to be a favored destination for the companies to execute their CSR programmes as the top ten companies having national presence have allocated 58% of their total funding in the state and 42% in rest parts of the country.
Potential for Increased CSR Resources
Nevertheless, players from other growing sectors in the state like IT and ITeS must join the CSR bandwagon. And, small companies, even though they do not come under the ambit for mandatory CSR spending as per the Companies Act 2013, should be involved in their little way in the movement. Participation of more State PSUs is too obligatory.
Geographical and Sectoral Disparities in CSR Spending
The paper infers about the scope of harvesting no less than three times more CSR resources in the state.
Recommendations for More Inclusive CSR Efforts
In terms of geographical coverage, though 24 districts have been taken up, 6 districts (Malkangiri, Kandhamal, Nuapada, Boudh, Gajapati and Deogarh) with apparently lower human development index have been left out only because these companies do not operate in these six. Further, so many other districts have received only paltry funds. Whereas, Angul, a relatively developed district in the state, has alone received 30% of the entire spending as it houses a good number of well-performing companies. This regional disparity is because of the ‘project area mindset’ of the companies, and it may not serve the interest of Odisha. Rather, they should see the state as a whole and make their efforts more inclusive.
It has been fairly understood from the white paper that though substantial amount of CSR funds are invested, programmes are implemented without conducting need assessment in terms of geographic area as well as thematic sector. Stakeholder engagement, specifically, community involvement, a crucial aspect for need identification and planning of CSR projects, is not followed in real sense. Owing to these, duplication of spending by companies, among themselves and with government schemes, is found to have occurred in some areas. Further, companies do not display seriousness in monitoring and evaluation (M&E) of programmes executed.
It is fine to comply with the mandatory provisions of the Companies Act. Nevertheless, CSR initiative driven by voluntary spirit is more intense and sustainable than that propelled by the regulatory measures. For creating long-term impact and contributing to the developmental endeavour in Odisha, companies must assimilate their CSR programmes with the schemes of the government.
Partnership with civil society organizations and NGOs for planning and execution purposes is desirable. The suggestion of the white paper for establishing a CSR platform at the government level to guide and institutionalize CSR programmes in the state needs to be considered. This may ensure sensible management of CSR resources which will complement and supplement the state’s development efforts.
About the Author:
Himanshu Sekhar Panigrahi is the Dy. Manager-CSR working at Hindustan Copper Limited (A Government of India Enterprise). The views expressed in the article are personal.
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