Wide gap between 2% and 100%

So finally we have a legislation in place that mandates 2% spending on CSR. Consulting firms and NGOs are gearing up their strategies to leverage this opportunity to meet their respective (and perhaps contrasting) goals. Companies are trying to put in place systems to meet this new compliance. All good so far.

What’s concerning me is the fact that corporate responsibility is now compliance driven and not value driven. In essence the mandate implies that a company needs to be responsible only when it is profitable. It may also imply that the 2% compliance will become a yardstick for the balance 98%.

Responsibility is value driven and cannot be determined on the basis of profits. It’s also flawed to disconnect corporate responsibility from the core business. This legislation has perhaps pushed us back by a few years from what was achieved with the National Voluntary Guidelines (NVG). Companies voluntarily complying with the NVGs would have been a much yardstick of corporate responsibility.