By Gagan Sethi*
In the new economic scenario, the State is increasingly investing in the infrastructure sector at the cost of social sector. In fact, there is an increasing tendency to leave implementation of developmental programs for the vulnerable sections to contracted NGOs, especially those that are dependent on Corporate Social Responsibility (CSR). These NGOs are registered as public bodies and enjoy tax exemptions. Time has come to focus on their good governance, to bring them under public scrutiny.
Till the mid-1980s, the civil society had three major roles:
(a) Reaching out to the most vulnerable sections, and directly intervening in their lives by provisioning basic survival needs and/or special services through an empowerment lens, which seeks to fight dependency.
(b) Work with people and technology to innovate and search for solutions with communities on issues of poverty, health, basic service delivery, so that communities begin controlling their own lives and move on to a developmental pathway.
(c) Protest and dissent on breach of human rights by State instrumentalities, even as pitching for public policies aligned with Constitutional values.
As a third sector, it was to be in creative tension with the State and market institutions. Post-liberalization the State became a facilitator for market-based initiatives and reduced its role as a regulator. Expecting market institutions to be socially sensitive and responsible, a few enlightened old and new companies laudably increased their CSR outlay, coming up with new initiatives their own registered bodies as extended arms of companies. The broad understanding was that inequalities need to be reduced.
At that juncture one area of suo-motu initiative that was expected was affirmative action in employment of SC/ST and Muslims. Despite assurances to the then Prime Minister Manmohan Singh, who was under pressure to enact a law this. Affirmative action did not succeed. One wonders if this will be possible now, with CSR initiatives having board representation of Dalits and Minorities.
The moot question that should be asked is: Shouldn’t Non-Profit boards, registered as public bodies, represent “public”? Shouldn’t they uphold the Diversity Principle in Board management?
Board Diversity is the 11th Principle of the 33 principles of Good Governance (click HERE). It says:
- Board includes members with the diverse background (including, but not limited to, ethnic, racial, and gender perspectives), experience, and organizational and financial skills necessary to advance the organization’s mission.
- Board has a variety of skills, expertise, backgrounds, and perspectives in order to make informed decisions and has some members with expertise in budgeting and financial management.
A public body board technically represents public aspirations while ensuring transparency and accountability of public funds (private funds when put to explicit public use become public). Reflecting public aspirations in governance thus needs a Board which engages with and comes from experience and exposure to diverse needs. The Diversity should reflect Social, Economic and Political Empowerment of people from ecological zones, ethnic, caste and religious backgrounds. Their discrimination would have to find engagement in Boards to decide how, where and how much of resources should be deployed.
When we set up Dalit Foundation, it was important that as a foundation committed to the Dalit cause we don’t limit support to only to scheduled castes. We took a broader view of Dalits being those who are discriminated against in order to engage them in emancipatory and developmental processes. This meant that we not only apportioned resources based on geographic population of scheduled castes but put a sizeable allocation to tribals and minority population, especially women, who face double whammy of poverty and its consequences of discrimination .
That pushed us to have an eclectic Board with members from different ethnic, religious, regional and caste background, superimposed with competencies in sociology, politics, state policy, and grassroots engagement. This was found necessary for challenging the existing notions of patriarchy and commitment to fighting caste and religious discrimination. We desisted from the temptation of an all Dalit Board.
India has a unique law: It’s Companies Act, 2013, and the Corporate Social Responsibility (CSR) Rules, which came into effect from April 1, 2014, make it mandatory for companies having a net worth of Rs 500 crore or more, or a turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more in a given financial year, to spend 2% of their profits on CSR programmes. ‘India’s CSR reporting survey 2016’, a report released by well-known consultants KPMG in January 2017, has revealed that in 2016, against the requirement to spend Rs 7233 crore, India Inc. spent Rs 6518 crore (90 per cent), which is higher as compared to previous year, wherein the companies had spent Rs 5115 crore (79 per cent) against the requirement of Rs 6490 crore.
Pointing out that this was an increase of 11 per cent in the spending, the report says, “The average spending per company has also seen nearly 15 per cent increase. This is an indication of India Inc. getting familiar with the requirements of Act and also getting the internal controls in place, a major reason why companies that were not able to spend amount during previous year.” The data also show that the spending mainly goes into what are considered “developmental” activities such as education 30.2%, health (26.6%), environment (23.3%), and rural development (9.9%).
However, there is nothing to suggest either in the KPMG report, as also in other CSR studies released recently, that there have been any concerted efforts to overcome social, let alone caste, inequalities through corporate funding for social well-being. Thus, the report says, just about 3.1% of the fund was spent for “reducing inequalities”, without identifying what exactly it means.
A top-notch Gujarat government official, Maheshwar Sahu, who looks after the CSR activities in the home state of Prime Minister Narendra Modi, Gujarat, came up with a book “Small but Meaningful: CSR in Practice” (2016), where he gives the instance of the way Mahatma Gandhi “influenced industrialist’s approach towards society”, adding, “industrialists GD Birla, Jamnadas Bajaj, LalaShri Ram, and Ambalal Sarabhai, were influenced by Gandhi’s theory of trusteeship”, taking up problems of “untouchability, women’s empowerment, and rural development.”
However, none of the 11 CSR case studies Sahu has jotted down – which include those by MNCs Cairn and Hazira LNG (Shell); state-controlled public sector undertakings Gujarat State Fertilizer Company (GSFC), Vadodara, and Gujarat Narmada Valley Fertilizer Company Ltd (GNFC), Bharuch; well-known industrial houses Cadila, Reliance, Adanis and Ambujas; and Setco Automotives and UPL Ltd (formerly United Phosphorous Ltd) – provide any instance of taking up untouchability issues, which Gandhi wanted to focus on, as needing urgent attention.
The reason for the neglect of issues related with social justice, especially caste discrimination and untouchability, is not far to seek. A scan through the board of directors of the CSR wings of top business houses suggests that none of them offer representation to either Dalits or those who are known to be understanding issues of social justice and equality. Take the Adani Foundation of the powerful Adani Group, for instance. Of the nine boards of directors of the Adani Foundation, six are from the Adani family. Even the advisory team or the management team of the Adani Foundation has no Dalit or anyone who can reasonable claim to be an expert on social justice, empowerment and caste. The situation is not very different for the Reliance Foundation, the CSR wing of the Reliance Industries Ltd (RIL). Reliance Foundation is chaired by RIL CMD Mukesh Ambani’s wife Nita M Ambani. Things are not very different with regard to other top business houses.
The Government of India has stressed that the corporate houses must spend as much amount as possible for the Prime Minister’s nationwide cleanliness drive, Swacch Bharat campaign. However, even here, facts suggest companies have donated just about Rs 476 crore towards the fund set up for this over the two financial years – in 2014-15 and 2015-16. The amount was mainly used for constructing toilets.
As well-known Magsaysay Award winning activist Bezwada Wilson says, there has been no effort here to address issues related, for instance, to Dalits dying in sewers and septic tanks. He says, “This Swacch Bharat campaign has nothing to do with making India free of manual scavenging. It is about building toilets – and toilets only. Does it talk about who is going to clean these toilets? How are we going to clean these toilets?”While as many as 12 crore toilets have been built, he adds, one shouldn’t be surprises that these“might as well be 12 crore death chambers”.
A recent study “CSR in Water, Sanitation and Hygiene (WASH)”, which surveys how corporates have been spending on the Swacch Bharat campaign, suggests that not only CSR in India is caste insensitive, it is gender insensitive, too. Thus, it says, 41% of companies focused on providing facilities for clean drinking water, 19% provided water storage facilities, and 14% reported programs in waste management, which includes distribution of dustbins, building soak pits and the construction of bio-digester toilets.
However, the study regrets, “Around 28% of Indian girls do not attend school during menstruation due to the lack of sanitation facilities in schools”, and yet “CSR support for menstrual management facilities was non-existent.” It adds, “Only 5% or four companies supported the issue by providing a package of services that could be availed by female students to ensure their regular experience in school remained unhampered through the course of menses.”
Who can ask these questions but independent members whose explicit role would be to align the company vision to a larger developmental vision which is inclusive? Not having members on Boards from disadvantaged communities would be unprofessional to the least and discriminatory at the worst. The predominant notions of Caste / gender and other forms of blatant discrimination need to be recognized.
Boards can be initially friendship Boards when organisations are in their start-up phase, but they have to move to become Accountability Boards as the organizations gain momentum, and further move to become Strategic Boards as the question of impact and sustainability become centre stage to an organization.
This movement pre-supposes a shift in the very design of Governance. It has to cross cut the notions of equality and non-discrimination. The voices which engage the Boards have to become pronounced by representation by thought leaders of these communities. They are available in plenty in this nation.
*Chair, Janvikas, Ahmedabad
A shorter version of this article was published HERE