Spending 2% on CSR won't help if cos keep damaging environment

Tags: News
Making it mandatory for corporates to spend 2 per cent of profits on CSR will not benefit the society if they continue to adopt corrupt practices that are damaging to the environment, Planning Commission member Arun Maira said today.

"The new law where 2 per cent of profits have to be spent on CSR activities will not benefit the society. What is necessary is that corporates should consider this as their responsibility towards the society and not wait for such a law," Maira said at a CII conference on inclusive development and sustainability here.

He noted the level of people's trust in both public and private institutions are declining worldwide. Maira also said business responsibility is not just about CSR but also about understanding its overall impact on communities as well as the environment.

"During the process of formulation of the 12th Plan, we realised there is tremendous mistrust in both public and private institutions. Citizens are neither believing the government nor the corporates. It is, therefore, the responsibility of the corporate sector to build this trust among the citizens by conducting their businesses in a way that will benefit the society at large," Maira said.

Businesses should also work towards creating employment as well as encouraging the manufacturing sector, he said.

"Corporates should not merely concentrate on increasing the GDP numbers, because in this process, they may adopt certain practices that may be harmful to the society ... Instead, they should ensure sustainability for all of its stake-holders, including the citizens, by creating employment as well as encouraging manufacturing that will lead to a healthy GDP growth," Maira added.

The Planning Commission has also introduced a rating system for states to enable them improve on their business climate.

The rating would be done based on key parameters, including availability of land, skilled labour and taxation issues. It would be an annual exercise, which would identify the best performing states so as to allow others to take a cue from them by possibly adopting their business practices, he said.

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