Meena Raghunathan, former executive director of corporate social responsibility (CSR) at GMR Varalakshmi Foundation, talks about her book Doing Good: Navigating the CSR Maze in India (HarperCollins, 2022). She teaches at the MYRA School of Business, is writing a book on ESG for managers, and also serves on corporate boards to shape CSR agenda.
How would you explain the difference between CSR and ESG to a lay person?
ESG comes from the risk angle. It is a way of re-conceptualizing and re-thinking business to make it more sustainable by taking care of environmental, social and governance risks. CSR has its roots more in philanthropy, the desire to do good, make a difference to society. That said, what we call strategic CSR today is more about aligning CSR to the business context.
ESG probably has a higher potential to fix the way in which core business is done. CSR looks to fix problems in society without an effort to change how the business operates. Another key difference is materiality, which CSR does not take into account as rigorously as ESG. Also, CSR traditionally does not have the governance focus that ESG emphasizes.
Which sectors benefit most from CSR funding? Which sectors remain under-funded?
Statistics show that in the pre-COVID period, the education sector received the maximum funding. Including vocational training and special education, this period probably saw about 35 percent of the total spend going towards education. This was followed by healthcare, drinking water and sanitation. Activities related to environmental sustainability come next.
After COVID hit in financial year 2021, there was an almost 30 percent increase in healthcare spends. A lot of money also went into PM Cares and other government funds towards COVID relief. There was a consequent decrease in spends on education, environment and sustainability.
Funding to causes like orphanages, or activities like technology incubators and sports, has always been low. I feel that it will take a year or two for the situation to settle, and for companies to review and re-align priorities for the future.
Does the legal framework make companies focus more on compliance than creativity in terms of utilising funds? Why?
I agree! There was a short period during which non-compliance with CSR requirements meant jail for the responsible officers! Fortunately, now it is only about fines – both for the company and responsible individuals. In this regime, can we be surprised if the focus is on ensuring that the mandatory CSR amount is spent before March 31 rather than anything else?
By definition laws are about compliance, black and white options, yes and no answers. Development processes, on the other hand, are long-term, and they involve some uncertainties. They need both patience and innovation. We are dealing with people, change processes and field situations, not production or marketing where targets can be set and met.
The focus on management and metrics disempowers development sector professionals who should actually be setting the goals and delivering the impacts. The system lays emphasis on numbers and measurable targets that are comprehensible to business leaders. I feel that to some extent, this leads to the nuances of processes and space for mistakes being sacrificed.
How did your work at GMR Varalakshmi Foundation feed into this book?
I have spent most of my life working in the non-profit sector. I began working in the field of CSR in 2005, so I have been part of the pre-mandatory CSR era, and a part of driving company-level changes necessitated by the law.
The ability of a large corporate group like GMR to reach out and develop partnerships with other companies gave me an understanding of the potential of partnerships for impact. For instance, we were early innovators in the skilling space. As the GMR Group, with the backing of Mr G.M. Rao, the GMR Varalakshmi Foundation was able to reach large corporates like Voltas, Schneider, Volvo, to help us with expertise and equipment for specialized skill training, and thereby get better outcomes.
Moreover, I gained an understanding of the importance of top management support in setting the tone and climate for the way CSR is viewed within a company; the multiplicity of perspectives and expectations that businesses at different levels and different junctures have from CSR; the positioning of CSR within a business context and how to negotiate the spaces; keeping development goals as the focus while understanding the needs of business. All these learnings found their way into the book.
My work as the executive director, CSR, motivated me to do a lot of reading on the subject, which laid the foundation of the book.
How can corporates guard against the malpractices that go on in the name of CSR?
The top management must understand CSR in the right perspective, and communicate what the vision, mission, purpose and role of CSR are for the organization. The whole organization must understand these. A confusion about the purpose of CSR at a company’s mid and junior levels often leads to a distortion of what is done in the name of CSR and how it is done.
The CSR function must be staffed with experienced development professionals, who must put in place proper systems and processes—whether for selection of implementation partners, monitoring of field processes, or reporting. They must focus on impacts, ensure that there is proper evaluation and monitoring, and that feedback from these is used to improve outcomes.
The law makes the board and the CSR committee responsible for CSR, so they have a significant role in this oversight. They must direct the attention of management to ensuring impact. We definitely need a thoughtful NGO rating system, which will help companies in their partner selection. This system has to include well-governed and impactful local, small NGOs as well, not just the large ones. We also need capacity-building for smaller NGOs to be able to cope with the CSR requirements that are quite complex, and to deliver impacts.
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