Mandatory Corporate Social Responsibility in India: Policy Discourse and Mainstreaming CSR

Presented to the Organizational Communication Division of the International Communication Association 2015, at San Juan, PR.

Abstract
Our paper revisits traditional arguments of whether corporate social responsibility (CSR) should be voluntary or regulated, in light of the 2013 India Companies Act, which mandates CSR spending—making India the only country in the world to legislatively require CSR. Adopting a communicative approach to the study of policy discourse, and attuned to India’s geopolitical standing as an emerging economy, we engage in a critical discourse analysis, examining the Act vis-à-vis prevalent social practices of CSR in India, and ongoing discursive practices related to the text. Our findings suggest: 1) a blend of different CSR models operating—ethical/religious, statist, neoliberal, and stakeholder-based understandings; 2) a rhetorical emphasis on creating a “culture of CSR,” corporate governance, and institutionalizing communicative practice; and 3) three dialectics characterizing the discursive practices surrounding the CSR mandate (i.e., local/global, developmental/economic, and mandatory/obligatory). We close by discussing implications for CSR and development studies.

Transcript

1. MANDATORY CORPORATE SOCIAL RESPONSIBILITY IN INDIA* Policy Discourse and Mainstreaming CSR Rahul Mitra & Nathaniel Warshay *Forthcoming in D. Jamali, C. Karam, & M. Blowfield (Eds.), Development-oriented corporate social responsibility (Vol. 2): Locally-led initiatives in developing economies. Greenleaf Publishing.
2. RATIONALE ▪ Meaningful corporate social responsibility (CSR) as mandatory versus voluntary; centering questions of corporate governance (Aras & Crowther, 2009; Campbell, 2007; Frynas, 2005; Hanlon, 2008; Kallio, 2007) ▪ Case study: India Companies Act 2013 mandating 2% net profits spent on CSR by large companies (net profit > INR 5 cr, or USD 166,516) ▪ Critical discourse analysis (CDA): what discursive frames does the Act employ, how are these discourses spoken back to by industry leaders, and how does policy discourse shape CSR practice?
3. DEVELOPING NATIONS AND “RESPONSIBLE BUSINESS” ▪ Push for CSR research in developing and emerging nations (Breen, 2007; Jamali & Mirshak, 2007; Peinado-Vara, 2006; Stohl et al., 2007) ▪ Global supply chains, resource extraction and dumping, policy/regulation, multinational corporations’ organizational practices, CSR preferred modes ▪ Key CSR practices ▪ “Responsible business” aligned with nation-building (Mitra, 2012, 2013) ▪ Lax accountability, rampant greenwashing (Blowfield, 2005; Luiz & Stewart, 2013) ▪ Philanthropic rather than strategic CSR (Jamali & Neville, 2011; Visser, 2008) ▪ Gaps in the literature ▪ Little critique of the dominant voluntary model of CSR ▪ Influence of policy discourse little considered in studies of CSR practice
4. COMMUNICATIVE APPROACH TO CSR POLICY/PRACTICE ▪ Communication as constitutive of CSR practice (Chaudhri, 2014; Christensen & Cheney, 2011; Christensen et al., 2013; Schoeneborn & Trittin, 2013) ▪ CSR practices “talked into being” via ongoing interaction of texts and discourses ▪ CSR discourse serves as aspirational talk, gradually narrowing rhetoric-reality gap ▪ CSR strategies are interdiscusive across space-time contexts ▪ Need to study CSR discourse at the systemic level, not just organizational: role of policy discourse in shaping organizational practice (Canary, 2010) ▪ Critical discourse analysis (CDA) (Fairclough, 1992, 1995; van Dijk, 2012) ▪ Social practice (context)  Text  Discursive practice (production & consumption) ▪ Guiding questions for data analysis: Who is privileged and how? How do different discourses intersect/contradict each other?
5. KEY FEATURES OF THE CSR MANDATE 1. CSR mandate not applicable to SMEs, only large companies 2. CSR Committee tasked to strengthen “CSR culture,” in advisory role 3. Stronger corporate governance by appointing 1 independent director (at least) 4. Statist CSR evidenced in specific suggestions for CSR spend 5. Communication centered, through CSR information management and “spend or explain” logic
6. DIALECTICS OF POLICY DISCOURSE-CSR PRACTICE ▪ Local / Global ▪ Developmental / Economic ▪ Mandatory / Obligatory
7. LOCAL / GLOBAL ▪ Emphasize the “Indian-ness” of CSR, rather than as a “foreign” concept, and linked to “real-life” situations and exigencies not abstractions “The concept of parting with a portion of one’s surplus wealth for the good of society is neither modern nor a Western import into India… Over the centuries, this strong tradition of charity in almost all the business communities of India has acquired a secular character” (GOI, 2011a) ▪ Goal of CSR mandate to promote Indian companies’ global competitiveness ▪ Meet global “best practices” and standards ▪ Boost SME competitiveness ▪ Enable “continuous skill and competence upgrading of all employees by providing access to necessary learning opportunities” (SBLF, 2013)
8. DEVELOPMENTAL / ECONOMIC ▪ CSR “culture” to go beyond “bottom of the pyramid” (Visser, 2008) to focus on community sustenance and environmental sustainability ▪ Economic growth unsustainable without social development “A corporate entity’s primary responsibility is to its shareholders and to its employees. Your businesses have to be globally competitive. However, even to win this race, you must work in a harmonious environment, an environment in which all citizens feel equally involved in processes of economic growth; an environment in which each citizen sees hope for a better future for him and for his or her children.” (GOI, 2007: 2) ▪ Pushback on inadequate business case made by the government “There have been mixed reactions to the introduction of the ‘spend or explain’ approach… It may take a while before all of Corporate India imbibes CSR as a culture. Activities specified in the Schedule are not elaborate or detailed enough to indicate the kind of projects that could be undertaken, for example, environment sustainability or social business projects could encompass a wide range of activities.” (PwC, 2013: 37)
9. MANDATORY / OBLIGATORY ▪ Strong “expectations” by government and populace “Never forget that we are what we are because of what our Motherland has given us… India has made us. We must make Bharat [India].” (GOI, 2007: 5) “This is all the more relevant for listed entities, which,… have accessed funds from the public, have an element of public interest involved, and are obligated to make exhaustive continuous disclosures on a regular basis.” (SEBI, 2012: 1) ▪ Incremental application, regular consultations with industry and nonprofits “If done well, the CSR obligation will accelerate a new form of business in India, combining strong financial returns with social good. It is an opportunity for existing leaders to raise the bar on what can be achieved through CSR and sustainability. And it is a chance for the majority to reflect CSR much more actively in how they do business. If the risks of confusion, mediocrity, manipulation and a side-lining of CSR are addressed then it could put India at the forefront of business leadership.” (Draper, 2013) “Numerous consultations with stakeholders involved conversations around the inherent business case for the NVGs and assuaging fears that this process represented a path to heightened regulation and a compliance culture” (SBLF, 213: 20)
10. IMPLICATIONS ▪ Linkages between policy discourse and CSR practices on the ground, and interdiscursivity across texts and communicative actors ▪ Examine CSR communication at the systemic level, not just intra-organizational or intra-industry strata ▪ Policy/practice as ongoing conversation involving multiple actors ▪ Further nuances to the “corporate citizenship” (Anastasiadis, 2014; Matten & Crane, 2005) approach to organizational ethics and CSR ▪ Intersection of business case rights and social “expectations” ▪ Firm as political actor – corporate investiture in social justice issues, despite hesitance borne of apolitical credo ▪ Inevitable corporatized nature of human development, together with scope for co-performing structural boundaries and negotiating meaning
11. QUESTIONS/CONTACT ▪ Corresponding email: rahul.mitra@wayne.edu ▪ Full slides posted online via twitter at www.twitter.com/rahulmitra