CSR and Corporate Lobbying

The Nira Radia tapes have put a spotlight on corporate lobbying here in India. Whilst lobbying is a legitimate business in countries like the US, it is not recognised in India in statutory or non-statutory form. Corporate Affairs Minister, Salman Kurshid opines that lobbying is a part of the democratic system but its illegitimate use should be curbed. During the same week he also made strong statements about sustainable business practices. He was quoted saying, "CSR is not just charity. It is like an obligation and we owe it to the next generation."

According to Kurshid, the performance in terms of CSR was easily measurable with regard to public sector units as they had been directed to spend a specific portion of their profit towards CSR, there was nothing mandatory as far private sector was concerned.

This comes after a Parliamentary panel has sought a policy making it mandatory for banks, major PSUs and firms in public and private sector to invest 50% of their CSR funds for afforestation programs. The government of India is still mulling the regulation of CSR. The ministry of corporate affairs is revising the guidelines on CSR issued last year and will be adding detailed norms on environmental sustainability. The new rules will primarily prevent wasteful use of natural resources and ensure scientific treatment of industrial waste.

The present norms only urge companies to be environmentally conscious and left it is for them to take steps in that direction. They fail to provide a clear framework for compliance, leading to companies not taking adequate measures. All of the happenings, have thrown up an obvious question for me: can corporate lobbying be good for CSR?

In a country like India where lobbying is not recognized but nevertheless has an under-stated power, it can become a powerful tool for CSR. A company's CSR activities including lobbying is tied into business strategy and the both can be powerful tools to link business goals to societal needs. Responsible lobbying for better policies and integrity is not just the domain of civil society but can also become a forum for companies to raise their voice for sustainable business practices. It is now obvious that corporate lobbying requires government intervention in India in order to lay down policies that were previously not in existence.

Responsible lobbying can be a powerful tool in order to achieve CSR goals. For example in 2001, the US government was considering denying Guatemala duty-free status for its imports due to its government's failure to enforce labour laws. However, Levi Strauss & Co. relied on Guatemala for its textiles.  So rather than lobby with the US government, Levi's attacked Guatemala's lax labour laws. This resulted in stronger labour laws in Guatemala, positive CSR for Levi's and more importantly no tax on Guatemalan imports.

Regardless of whether lobbying is part of Indian business or not, the government should keep in mind the obvious feedback loop that it forms with responsible CSR. Any policy on either should not ignore the fact that one cannot be separated from the other.