Tamil Nadu CSR Summit: Forging Partnerships & Impact Pathways

I am happy to e-launch the Tamil Nadu CSR Report prepared by Sattva. It is an interesting document and has a lot of granular details. I commend the people who have put it together. I encourage everyone to read it. It is enlightening and, in some ways, thought-provoking about what is going well, what could be improved and where we can step up a little bit.
When I argued against CSR
Let me start with my concerns about the notion of corporate social responsibility. I went to business school in the US very late in life, at the age of 32 or 33, by which time I had already done a successful consulting practice, even as an immigrant in the US and had understood the world a bit. I remember distinctly that in one of my business ethics courses, I had to write an essay on the theme, “Should social responsibility be part of a corporation’s core agenda?”
I had argued lucidly and quite boldly that it should not be. I wrote about a particular context in the US that the shareholders elect the agents who run a corporate – the Board of Directors and their appointees as the management to deliver the results that they bought the share for. They did not appoint them to be guardians of society and to be purveyors of what is good and fair in the world and what should take priority over what.
The context changes and the law of the land is the law of the land. The primary concern is that when it comes to things like Corporate Social Responsibility, though there are guidelines and the government framework, it requires some conscientious thinking and humble data gathering and seeking, rather than using this as a vehicle to advance any personal agenda.
CSR and the MLA constituency development fund
In the recent Tamil Nadu assembly budget debate, the MLA constituency development funds allocation figured. This is somewhat a parallel to the CSR funds in the sense that each member can decide how to spend that but within some guidelines, in their constituency, to focus on grassroots, granular problems that policymakers at the state level cannot. We administer 3.3 lakh crore as state budget out of which the MLA Constituency Development Fund is 3 crores.
There was a universal request to me that MLAs should be given unlimited flexibility in determining how those funds should be used. I took it up to the Chief Minister, explained to him that while in opposition for five years, I had executed a record number of projects and told him that giving flexibility in the use of funds was not a bad idea. In five years, I did 150 projects ranging from anganwadis to providing drinking water, scanning machines at PHC and so on.
The Chief Secretary and many officers gave counter examples of how easily these funds can be mismanaged or misused and impressed upon me why the state needed to have some guidelines. There was not that much support for the notion of relaxing the guidelines which stipulate what percentage can be spent on each category.

The report points out that the bulk of CSR activity happens in Chennai and Coimbatore. The two aspirational districts are only getting about 1%. These are all a wake-up call…

So, that is the big dichotomy in things like CSR. Of course, it is good for the society and the human condition, if people who are wise in the business of profit also apply their minds on their resources to the benefit of individuals and progress of society. The question is: how and under what kind of framework and what ethical constraints?
Concerns and delights from the CSR report
From the TN CSR Report’s Executive Summary, let me point out a few things. It says that 92,605 crores has been spent on CSR in just six years since the inception of the legally mandated CSR activity. That’s a lot of money and it is roughly three times what the government of TN spent on Urban Development and Water Management last year. 38% of this CSR spend has been tagged as pan India. There are very few things that you can do successfully pan India. Even the Government of India fails to do successfully pan India, on things like Swachh Bharat.
We’ve all heard of the inability to get the funds used in time or the inability to ensure that water continues to be supplied to the toilets that were built on these funds. Because, those are municipal administration activities that cannot be administered on an ongoing basis indefinitely by the government of India. I see it as a little bit negative that 38% of the funding has gone on pan India initiatives.
I understand that the second-highest allocation is to the state of Maharashtra, which is probably 12 to 15 percent of the GDP of the country. I am concerned again that Tamil Nadu is only the fourth highest recipient of the funds in India, because it has the second highest GDP. 42% of the funds have been channeled by the implementing agencies, many of which I assume are in the non-profit sector, which can be a good or bad thing.
The report points out that women’s empowerment and the conservation of natural resources or environmental sustainability have seen declining trend in spending. That is a bit of concern.
I am heartened by the fact that 67% of the spending in Tamil Nadu has been towards education, healthcare and rural development, compared to an average of only 59% for India. I hope that more of that goes towards rural development. I am also concerned that just three or four big corporates account for 60% of the total CSR spending and that 72% of all CSR spending in Tamil Nadu comes from companies that are headquartered in the state. As a big state, we have many different companies headquartered elsewhere that have significant portions of their operations, offices or activities in Tamil Nadu.
Do not leave anyone behind
Our Chief Minister said very clearly in his address to the Economic Advisory Council that social justice and inclusive growth are integral part of our agenda and that we do not like to see any districts, areas or communities left behind.
The report points out that the bulk of CSR activity happens in Chennai and Coimbatore. The two aspirational districts are only getting about 1%. These are all a wake-up call and a motivator or incentive for the big corporates and those who are spending and allocating this money, to be more thoughtful, granular and detailed in their approach and activities going forward.
Are governments only for collection?
Let me confess that the nature of government is not conducive in many ways to the aspirations of the people. I was at an event yesterday where one of our economic advisors, Dr S Narayan, made the point that, for over a hundred years or so in the British time and even going back to our ancient culture, the nature of government administration has been mostly towards the collection of revenue–either land-based revenue or transaction-based revenue, and that we are not well-designed in terms of governmental set up, for an agenda of development, inclusive growth or job creation. That is certainly true.
Just look at the nature of our titles. The person who is the number one government official in our district is called Collector. Collector of what? Because at one point, he was a collector of taxes and revenue. That was the most important function for the government in the colonial days, when the British ran the government. It was their job of ensuring the empire got its fair share.

Many of the NGOs that add the greatest value to democracy and society are the ones that hold the government accountable…

So in that sense, we are not set up ideally. Ever since coming to office, it has become painfully clear to me that we need some profound reforms. Our Chief Minister again stated in his address to the Council of Economic Advisers that he is well aware of this and he stands ready for not just transformation, but for radical reforms.
Rope in the corporates
We must provide an opportunity for corporates who have the kinds of skills that the Government ought to have but doesn’t. The corporates have the kind of data-driven, performance-oriented, benchmarkable, accountable and documentable processes that a government of the development agenda ought to have. As one who has operated in the corporate world for a few decades, I can certainly validate that the corporate world has all of those.
There will be real value from this TN CSR Meet initiative if the corporate world can help shape the debate and the progress by applying the skills that they have, in the course of doing their CSR activities. They must be much more granular, data-driven, outcome focussed and performance evaluative. They must set up checks and balances and validation methodologies to ensure that the funds that people donate or that the corporations contribute, reach the last mile and are delivered to the end user.
When problems fail to bubble up…
I’ll go one step further. The problem with governments is that due to lack of proper administrative procedures, infrastructure, data continuity, institutional memory and institutional knowledge, big problems get recognized but maybe, cannot get resolved, while the little problems just fall through the cracks. They don’t come up to the level of being noticed, certainly by those who are politically elected, to deal with such outcomes or problems.
And it is here that I think the CSR efforts can play a big role because you–corporates–certainly have the capacity to work on the granular aspects of your area, your system, your branch office and surrounding issues that may not bubble up to the level of interest of a big government department or a ministry.

When we look around Tamil Nadu, we see that much of the water conservation efforts and redevelopment of ponds and other water bodies have been done by NGOs…

Many a time, you can be the leading example for us. When we look around Tamil Nadu, we see that much of the water conservation efforts and redevelopment of ponds and other water bodies have been done by NGOs, supported in many cases by CSR funds and personal relations. They serve as a benchmark and also as a kind of levelling mechanism to say, can the government live up to this standard or adopt these standards as our way of operating?
Going back on my opinion
So in that sense, contrary to my views on this subject held 20 years ago, I am now of the opinion that in the course of the progress of a society and the resolution of its problems, there is a crucial role to be played by the corporate entities that have the expertise, requisite infrastructure, skillsets and people that are sometimes lacking in the government–and in many cases glaringly. You will not only be a great benefit to society but you can prove to be the gold standard to which the government must be held accountable and can improve itself.
Many of the NGOs that add the greatest value to democracy and society are the ones that hold the government accountable, shed transparency on the functioning of the government, point out the weaknesses and glaring omissions and the anti-democratic or the anti-integrity activities. I am not talking about any particular party or any particular state.
Support those holding mirror up to the power
The balance of power in a democracy requires strong, independent institutions. Some of those institutions will be within the framework of the Constitution like the judicial system or independent bodies like the Election Commission or the Accountant General. But some of those surely must come from the civil society, press, activists, NGOs and so forth. The support of these agents through CSR is also an important way in which the corporates can add value to the improvement of the nature of our democracy, the fabric of our society and the lives of people.
Ms Meera Harish, Partner at Sattva Consulting replying to the minister’s speech said, “We had three things on the agenda in terms of outcome from today’s TN CSR Summit. These three are exactly the things that our Honourable Finance Minister Mr Palanivel Thiaga Rajan spoke about. It was so inspiring to hear that.”
She continued and said, “The one big lacuna that the CSR ecosystem has had for several years in this country is not having data and data backed insights. At Sattva, we have tried to do that. Both in India and Tamil Nadu, we work with corporates and successfully enable them to have data backed insights that can lead to decision making in CSR.”
She also suggested that we must move CSR a little more strategically, rather than just looking at it tactically – project to project or program to program –purely with a compliance lens. This will make us move the needle on the development agenda for the state and go deep in solving problems, she said.
She also emphasised the importance of partnerships. “Dhwani Foundation has partnered with us today bringing in a lot of grassroots NGOs to the summit. We have got the finest set of corporates from Tamil Nadu and rest of India who are working on Tamil Nadu. For example, the National Stock Exchange works on the two aspirational districts in Tamil Nadu. We also have a fair bit of academia in the panel and audience. There are many incubators with the IITs and IIMs of this country. They are solving for social impact,” she said and hoped that the summit has fulfilled its agenda. (Click to open the report).