Future Dimension of CSR Post COVID-19Karthick CS, Sujatha Gurudev, Poornachander B

June 25, 2020

Abstract

Corporate Social Responsibility (CSR) in India is mandatory under Sec.135 ofCompanies Act 2013, which requires specific companies to spend at least 2% of theirthree-year average annual net profit on CSR towards social welfare activities. The currentCOVID-19 pandemic has disrupted the country’s economy and has changed the lives ofbillions of people across the globe. In these unprecedented times, corporate companies playan essential role in responding to the pandemic by way of supporting the Governmentthrough various relief measures. In an assessment to estimate the contribution towardsCOVID by the leading companies in India, it was found that the top 50 companies hadmade a monetary contribution to the extent of INR.6,916 Crores. As many corporatesare motivated to contribute their CSR funds towards COVID relief, there is a suddensurge of CSR funds, which may cause long-term impacts on the existing CSR programs.However, at times of such catastrophes, priority to be given for the programs associatedwith immediate relief and need to recover from such situations and on post-recoveryfocus should be given to livelihood enhancement and healthcare-related programs. Theincreased contribution towards relief funds would cause misappropriation of funds andinappropriate resource utilization, which should be monitored and evaluated periodicallyfor the wise use of money towards better societal benefits.

Keywords: Corporate Social Responsibility (CSR), Corona Virus, COVID-19

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Future Dimension of CSR Post-COVID-19

1 CSR In India & COVID-19

India is the first country in the world tomake Corporate Social Responsibility (CSR)mandatory under the Companies Act, 2013.Under the law, it has been mandatedthat certain classes of profitable entities inthe country have to allot at least 2% oftheir three-year average net profit towardsCSR expenditure. This provision aims attransforming India’s social being and achievingthe Sustainable Development Goals(SDG)through a public-private partnership(PPP)model[1]. The current COVID-19 pandemichas made a disruptive impact on thecountry’s economy and has changed thepace of billions of people around the world.

The effect of the pandemic was not only beenrealized by one section of the society, butthe entire nation and its economy. Basedon the Business Confidence Survey-April 2020,conducted among its members by Federation ofIndian Chambers of Commerce and Industry(FICCI), it was reported that 72% of theircompany’s operations and 90% of their supplychains had been severely impacted[2]. Majorindustries have suspended their services dueto fear of spreading the virus. Duringthis unprecedented time, corporate companiesin India have played an indispensable role

in responding to the pandemic by way ofsupporting the Government by contributingto various relief funds, supporting the districtadministrations with healthcare services, andimmediate relief measures through CSRfunds. Spending budgeted CSR funds forthe unplanned near-term programs, may leadto long-term impacts on the existing CSRprograms. Since the planned CSR budgetsare nearly exhausted, and with the currenteconomic situation, there may be a lack offunds for the traditional CSR programs.

Source:Annual Reports and Press releases

Given those rising uncertainties concerningthe spending of CSR funds, an attempt wasmade to provide insights for the corporatesabout the current trends on CSR investments,need for taking immediate actions towardsCOVID-19 reliefs, how and where to spendthe CSR funds, strategies, governance and duediligence in CSR implementation.

2 Current Challenges in IndiaIndia has witnessed an outbreak of the

COVID-19 in late January 2020. Indiacurrently has the most significant numberof COVID-19 confirmed cases amongst theAsian countries with the positive cases inchingtowards 5.00 lakhs, positioning the country tothe fourth position worldwide with the numberof deaths crossing 15,000 (as on 24th June2020)[3]. While the Government of Indiais trying to keep up in providing immediatesolutions to support the revival, the informalsectors in India are bearing the brunt of thecurrent pandemic, which can hit the countrymore extensively, way beyond imagination.Hence, there is a need for immediate actionsto not only address the current issues arisingdue to the pandemic but also keeping inmind the way of life and state of economy

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Future Dimension of CSR Post-COVID-19

post-COVID-19. As India is a developingnation, there are various gaps and issuesassociated with dealing with the pandemiceffectively. Some of them are as below:

� Lack of infrastructure: The essentialrequirement or the need for the houris adequate responsive infrastructure,especially health facilities. Thereare about 5.1 hospitals per one lakhpopulation in India. India has just onebed per 1844 patients in governmenthospitals, and the doctor-patient ratio is1:1445, far from the WHO recommendedone doctor per 1000 patients (HariharSahoo et al., 2020)[4]. Thus, there isa need to strengthen the existing healthinfrastructure in India in all respects.

� Daily wage earners/migrantssituation: Due to the lockdownimposed by the Government of India,tens of thousands of daily wage/migrantworkers found themselves jobless or losttheir source of income affecting theirfamily’s wellbeing. Most of the migrantworkers returned to their homes tobe supportive of their family fearinghunger[5,6]. This has resulted in asignificant refugee crisis within thecountry for which India was ill-prepared.Currently, the primary challenge isto provide employment opportunitiesand sustain the livelihoods of all thoseaffected workers.

� Other vulnerable sections: Othersections of the society who have been hitthe hardest due to COVID-19 are smallvendors, urban slum dwellers, homeless,orphans, transgender people, etc. Dailywagers such as vegetable vendors,rickshaw drivers, tea stall vendors, etc.live hand to mouth and depend mostlyon daily earnings. And surviving theCOVID-19 in urban slums is anotherchallenge in India, which exposes a largesection of urban low-income familiesin deep impoverishment. Hence, thesesituations call for the implementation

of reformative administrative measuresproviding various required essentialfacilities to vulnerable sections of thesociety.

� Lack of funding in Research: As westand at the brink of what threatens tobe a prolonged battle against COVID-19,it is crucial to understand that whileshort term solutions are required to solvethe current problems, there is a needto plan for long term solutions to winover this, so-called battle. Investmentin Research and Development (R&D)enables innovation and strengthens thehealth infrastructure. In comparison tothe rate of development of the country,India underspends on R&D. It has beenproclaimed that India spends only about0.6% to 0.7% of its GDP on R&D,which is one of the lowest among theBRICS countries (Brazil, Russia, India,China, and South Africa) (MHIPE,2019)[7]. Hence, there is a severe need forconsideration for sustained investmentsin vaccine research.

� Need for Mental Wellness: Eventhough social distancing is vital forreducing the spread of coronavirus, themental wellbeing of individuals is beingaffected, as the crisis is generating stressand anxiety among people. Stresson daily wage workers due to losingjobs, stress on people who have beentested positive for COVID-19, stressamongst the healthcare workers, stresson women taking care of their children,stress on older adults, or people withunderlying health conditions, etc. aresome of the notable issues. India lacksintegrated and comprehensive mentalhealthcare services, and there, prevailsis a considerable treatment gap up to83% (Gururaj G et al., 2016)[8]. Hence,there is a need to strengthen this gap toovercome the problem.

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Future Dimension of CSR Post-COVID-19

3 Corporate’s Response towardsCOVID-19

Corporates are one of the key role playersin creating an impact for providing rapid,sustainable, and resource-efficient solutions.One such way is through channelizing theCSR funds into COVID-19 reliefs, maybeas an immediate response or as a sustainedresponse. The Government of India announcedthe COVID-19 relief package worth of 20lakhs crores, which is equivalent to 10% ofthe country’s GDP[9]; however, the reliefseems to be not adequate to address theplight among the poor section of the people.In this background, the Government ofIndia is seeking support from corporatesfor fighting the pandemic and restoringthe social wellbeing through CSR funds.However, there was an ambiguity amongstthe corporates whether the spending onCovid-19 and contribution towards variousrelief funds would qualify as CSR asper Companies Act 2013. Consideringthe prevailing situation, the Ministry ofCorporate Affairs (MCA) issued a GeneralCircular on the CSR spending on Covid-19[1]which states that, contribution towardsPrime Minister CARES Fund(PM CARES),State Disaster Management Authority tofight against Covid-19, various programsunder the heading “preventive healthcare andsanitation”, ex-gratia paid to temporaryworkers over and above their daily wages tofight COVID, etc. qualify as CSR.

Source:Ministry of Corporate Affairs

Considering this, companies havevolunteered by contributing generously

towards COVID-19 related relief programsunder CSR. An analysis was conductedamongst the top 50 companies in India(Futurescape, 2019)[10] on the responsetowards COVID-19 relief funds, i.e., PrimeMinister’s Citizen Assistance and Reliefin Emergency Situations Fund (PM CaresFund) and other state relief funds, and reliefactivities. Data on the corporate’s responsetowards COVID-19 was collected through therespective company’s websites, media sources,etc.

Source:Primary data

Based on the data collected, it wasobserved that the top 50 Indian companieshave so far contributed to the extent ofINR.6,916 Crores, which includes INR.3,570towards the PM Cares Fund and aboutINR.3,346 Crores towards other relief funds,i.e., State Disaster Management Authorities,State Disaster Relief Funds, and otherimmediate relief programs through the CSRpartners (implementing agencies). The reliefprograms implemented through the CSRpartners were mostly related to:

� Sanitation and disinfecting programs inthe COVID affected areas and providingfree PPEs to the frontline healthcareworkers (33%)

� Supporting the district administrationin extending healthcare facilitiesand contributing towards procuringventilators and other medical equipments(31%)

1General Circular-No15/2020, 10th April 2020, Ministry of Corporate Affairs, http://www.mca.gov.in/Ministry/pdf/Notification 10042020.pdf

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Future Dimension of CSR Post-COVID-19

� Providing immediate relief such as foodand ration kits to the migrant workersand affected community (25%)

� Livelihood promotion programs byinvolving Self Help Groups(SHG) (5%)

� Health awareness programs (5%)

� Other programs (1%)

Source:Primary data

4 Need for Corporates to ActNow

When the entire country is in a stateof turmoil in dealing with the currentpandemic of this magnitude, it is theresponsibility of corporates to step in andintroduce new approaches to tackle the issue.Companies, through their CSR interventions,

are supplementing the state’s efforts to combatthe crisis, utmost care to be taken in utilizingsuch funds to gain maximum benefit to thevulnerable section of the population andalso for gaining positive impact amongst thestakeholders. According to a report fromBank of America Merrill Lynch (BofAML)’sGlobal Research team “Companies allocatingresources to the Covid-19 crisis are likely tofoster employee and community goodwill andto enhance brand and reputation all of whichhave been critical drivers of performance ingeneral and even more so recently,”(Human,T, 2020)[11]. Companies can look beyondimmediate relief to get through the pandemicto create a positive impact on society and toimprove brand value. Concerning the CSRfocus areas, priority is to be given for theprograms associated with immediate relief andbasic needs during the current pandemic. Andduring the post-COVID-19 situation, the focusshould be to be given towards livelihood,healthcare-related programs, etc. The CSRteam, of the respective companies, should bea driving force in making difference and lessenthe chaos prevailing in the society. It is acrucial and critical time for companies to actas a “responsible business is good business”.

CSR FocusCOVID-19

PostCOVID-19

Livelihood

SkillDevelopment

HealthInfra

structure

HealthAwareness

Research&

Development

DuringCOVID-19

ImmediateRelief

HealthCare

HealthAwareness

LabourWelfare

SupportingGovt

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Future Dimension of CSR Post-COVID-19

5 Strategies and Governance inCSR implementation:

With a higher number of companiesstepping into COVID-19 relief and relatedactivities, the challenge arising is identifyingthe right model for CSR investment duringand post-COVID pandemic. Also, asmany corporates are finding a need andincreased urgency in allocating CSR fundstowards COVID-19, there could be ways ofmisappropriation of funds by the implementingagencies. Proper utilization of CSR fundsis one of the significant challenges formany companies. Lack of due-diligenceof the implementation agencies, structuredmonitoring, and governance systems may leadto moral gaps and frauds in handling the CSRfunds[12]. Most of the corporate companiesare dependent on implementing agencies suchas NGOs and Civil Society Organizations forimplementing CSR programs due to the lackof expertise and resources. CSR programsare aimed at creating positive impacts andgoodwill for the organization. However, thelapse in transparency, inadequacy, or gapsin compliance may lead to creating hostilityamongst the stakeholders, and even worsenthe situation during the current pandemicsituation. During the national emergencylike “2004 Indian Ocean Earthquake andTsunami” or the current COVID-19 pandemic,there is always a sudden flow of reliefmeasures observed either through Governmentor through corporate companies usuallyin the form of large amounts of money,goods, and services, etc. This may createpressure on the implementing agency todeliver relief quickly. A sudden surge of reliefmeasures will also create substantial economicopportunities among the implementingagencies due to large-scale reconstruction,which in turn may contribute to increasedrisk of corruption, inappropriate resourceutilization, and mismanagement of funds.The due diligence of implementation agenciesand partners, contracting, budgeting andpayments, monitoring, impact measurement,reporting, and communication plays a critical

role in the effective utilization of the CSRfunds. CSR experts should be brought in toconceptualize the identified CSR programs andeffective management of the CSR partners.Besides, companies looking forward forinnovate and derive maximum value from CSRinvestments can engage a third-party CSRexpert to evaluate the records and conductdue-diligence of the CSR partners.

6 ConclusionCSR programs are aimed at creating

significant benefits in terms of goodwill andreputation amongst the local community andstakeholders. During the times of pandemic,corporates must focus on strengtheningadequate governance structure or policy toaddress ethical lapses, thereby derive themaximum benefits out of the CSR programs.The analysis of the contribution of the top50 Indian companies showcases their responsetowards COVID-19 and their focus areas infighting the pandemic. With this background,there lies a significant opportunity to conductdetailed analysis with the Company’s financialreports on effective spending of CSR fundsand the impact it had created on the existingtraditional CSR programs.

References

[1] Sustainable Development Goals Linkageswith corporate actions in India, March2018, Federation of Indian Chambers ofCommerce and Industry (FICCI) , http://ficci.in/spdocument/22950/Sustai

nable-Development-Goals-ficci.pdf

[2] Business Confidence Survey - April2020, Federation of Indian Chambers ofCommerce and Industry (FICCI),24thApril 2020, http://ficci.in/Sedocument/20499/FICCI-BCS-April-2020.pdf

[3] WHO Coronavirus Disease (COVID-19)Dashboard, Data last updated:2020/6/23, 3:58pm CEST, h t t p s :

//covid19.who.int/

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Future Dimension of CSR Post-COVID-19

[4] Burden of COVID-19 pandemic in India:Perspectives from Health Infrastructure,https://www.medrxiv.org/content/10

.1101/2020.05.26.20113456v1.full.p

df

[5] Coronavirus in India: Desperate migrantworkers trapped in lockdown,22nd April2020, https://www.bbc.com/news/wor

ld-asia-india-52360757

[6] Coronavirus lockdown: The Indianmigrants dying to get home,20th May2020, https://www.bbc.com/news/world-asia-india-52672764

[7] Release of India’s R&D expenditureeco-system report, Ministry of HeavyIndustries & Public Enterprises, PostedOn: 24 JUL 2019 3:25PM by PIB Delhi,https://pib.gov.in/PressReleaseIfr

amePage.aspx?PRID=1580049

[8] National Mental Health Survey ofIndia-2015-16, Ministry of Health andFamily Welfare, http://indianmhs.nimhans.ac.in/Docs/Report2.pdf

[9] PIB’S Daily Bulletin on COVID-19, PostedOn: 13 May 2020 7:14PM by PIB Delhi,https://pib.gov.in/PressReleasePag

e.aspx?PRID=1623622

[10] Responsible Business Rankings 2019,India’s Top Companies for Sustainabilityand CSR,https://www.futurescape.in/responsible-business-rankings/

[11] Tim Human, Covid-19 response highlightsshift to stakeholder value,7th April 2020,https://www.irmagazine.com/covid-1

9/covid-19-response-highlights-shi

ft-stakeholder-value

[12] Corporate Resiliency: Managing thegrowing risk of fraud and corruption Aholistic approach ,Deloitte Forensic Indiain collaboration with FICCI, September2013,http://ficci.in/spdocument/20310/FICCI-Deloitte.pdf

[13] Disaster Risk Management and theRole of Corporate Sector–The IndianPerspective, Ministry of Home Affairs,GoI., http://www.undp.org/content/dam/india/img/disaster risk manage a

nd the role of corporate sec india p

erspective.pdf

[14] COVID-19 Dashboard as on : 24 June2020, 08:00 IST (GMT+5:30), https://

www.mygov.in/covid-19/

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About Authors

CS Karthick is a NABET approved Socio-economic expert and a certified CSR professional . Heis having 10+ years of experience in the field of Social and CSR. He had executed 50+ Social ImpactAssessment studies, 25+ International funded Environment and Social Impact Assesments(ESIA) &Resettlement Action Plans (RAP) and 20+ CSR studies for the corporates in the country.

Sujatha Gurudev is an Environmental Engineer with a Master’s Degree in Energy andEnvironment, having 5+ years of professional experience in the fields of Environmental Engineering,Sustainable Development, and Regulations.

B Poornachander is a Harbour & Offshore Engineer with postgraduate in Coastal Management.He had worked in varioius Environmental and Sustainablity related projects such as MarineImpact Assessment, Carbon Sequestration & Greenbelt assessment, Environmental & Social ImpactAssessment (ESIA) and Ecosystem conservation with core focus in Remote Sensing and GIS.

About Cholamandalam MS Risk Services Ltd.Cholamandalam MS Risk Services Limited (CMSRSL) is a 50:50 joint venture between USD

3.14 Billion Murugappa Group, India and Mitsui Sumitomo Insurance Group, Japan, and it hasa technical collaboration with InterRisk, a group company of Mitsui Sumitomo Insurance Group.Cholamandalam MS Risk Services is a Risk Consulting Company offering comprehensive Riskmanagement & Engineering solutions in the field of Safety, Health, and Environment. The organizationhas successfully executed more than 2000+ projects (Domestic/International), which not only helpedits clients maintain compliance but also optimize their EHS performance and set new benchmarks.Cholamandalam MS Risk Services being a certified “Environment Impact Assessment” Consultantorganization by NABET, has executed 40+ Social and CSR consulting projects in the country. Someof our Environment and Sustainability related services are:

Cholamandalam MS Risk Services Ltd.Parry House, 3 Floor, No. 2 NSC Bose Road, Chennai 600 001

Ph: +91 (44) 3044 5620-30 Fax: + 91 (44) 3044 5550W: www.cholarisk.com E: inquiry@cholams.murugappa.com

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