Linking public sector Corporate Social Responsibility with sustainable development: lessons from India

Abstract

Economic think tanks predict India to be the world's largest economy by 2050. This would require India to accelerate its industrial and infrastructure development. Industrialization based economic development will have a negative impact on the environment and hence sustainable development. Such steps could affect the social and environmental bottom line of the national economy. In recent years, a number of regulatory measures have been proposed by the Indian government to ensure corporate support to the goals of sustainable and inclusive development. The objective of these regulations is to achieve triple bottom line based growth. Notable among them is the mandatory Corporate Social Responsibility (CSR) guidelines for public sector undertakings, first issued in April, 2010. I study the possibility and problems created by this effort by analyzing the policy documents and interviewing managers responsible for implementing CSR programmers in Indian public sector. Managers interviewed came from hydropower, coal, power distribution and shipping industries. Based on the study, four areas are identified that requires attention for effective linking between sustainable development and CSR; stakeholder engagement, institutional mechanisms, capacity building and knowledge management. Both government-public sector and public sector-community engagements have to be more streamlined. Institutional mechanisms have to be developed to see that CSR projects are effective and delivering. Importantly, managers at all levels need a better understanding of CSR and sustainable development. Since most projects are in rural areas, understanding of rural issues and sustainability is very important. Finally, such a large scale exercise in CSR should have a knowledge management mechanism to learn from the achievements and mistakes of the early years. I discuss the implication of the findings on India and other emerging economies many of which are struggling to balance growth and inclusive development. I conclude that the mandatory CSR guidelines for Indian public sector has the potential of achieving sustainable development only if early action is taken on the identified areas.