Ministry of Corporate Affairs recently released the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) for corporate India. Sustainability Outlook spoke with two members of the Guidelines Drafting Committee (Viraf Mehta, a social development expert and Vikas Goswami, Director- CSR at Microsoft) to understand more about the background and future steps on the NVGs.
What was the thought behind formulating the National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business (NVGs) in India?
Viraf Mehta - In 2008, the Prime Minister announced a Ten Point Charter for Inclusive Growth for Corporate India to ensure that our growth process is both inclusive and broad-based. In the meantime, the CII-UNDP India Partnership Forum came up with the Social Code for Business to help companies adopt a systematic approach to CSR with the essential ingredients of a 'business model'. In a nutshell, everyone was defining CSR their own way- there were too many definitions and this was conceptually problematic.
Hence, the first thought behind coming up with National Voluntary Guidelines was to respond to the need to evolve a common language and a framework for defining corporate social responsibility. The second key reason was that although there are global frameworks like GRI, Global Compact, ISO 26000 and OECD guidelines etc., the Government of India was very clear that it did not want to see a conceptual vacuum in India or guidelines which were almost unequivocally settled in the west.
With this in mind, while drafting the NVG we were not attempting to find a definition of CSR or corporate citizenship; instead we did the reverse. We wanted to find out the responsibilities of businesses and then we categorized these responsibilities as economic, environmental and social and a separate category for ethics and governance. Since we are emerging as a global economy now, our task was to be cognizant of what is happening in the rest of the world and take the best of what we see to develop the guidelines. But at the principle level, the challenge was to identify the indicators specific to our circumstances here. Hence, the National Drafting Committee was constituted to formulate the National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business which have since been endorsed by the Ministry of Corporate Affairs.
During the national consultations for the NVG held in the month of May, what was the industry feedback?
Viraf Mehta - I think the corporate India sees the point because for the first time it’s a national guideline and it is now a level playing field. From a content standpoint, 9 principles and core elements and 36 indicators provide a safe territory. There might be a request for more indicators and the suggestions can certainly be considered for inclusion but only after the current version of the guidelines has been implemented in the market. Corporate India has bought the rational for having these national guidelines, and now it is about the application.
The drafting committee was directed to provide suggestions on the uptake of these guidelines by businesses. The idea is to reach out to all the non-branded companies who have never undertaken sustainability initiatives before and get them to adopt these guidelines. I hope to see these voluntary guidelines actually evolving into a standard. But there are still concerns like: whether the guidelines should be mandatory or only voluntary or whether incentives are required to be provided for adopting these guidelines, etc. Certain recommendations on these lines have been provided by the Guidelines Drafting Committee.
What is the status of India Inc. with respect to sustainability reporting?
Vikas Goswami - Large companies are already engaged in sustainability reporting and they are keen to follow and understand more on the reporting side. But I wouldn’t say that it is a norm across the board yet. Even before getting into the status of reporting, companies need to assimilate the various dimensions of sustainability and only then reporting will follow.
How are you convincing the early adopters of the NVGs? Would there be any preferential programs for early adopters versus adopters 5 years down the line?
Viraf Mehta - Many companies have already adopted these guidelines without a need for additional convincing. But even the leaders haven’t gone the full way. They may be lacking in certain parts of their business vertical, example being the supply chain or human rights. There are plenty of challenges even for the global companies- which these guidelines hope to help with. Regarding instituting incentives 5 years down the line as opposed to now – the idea was to provide a level playing field. Various companies in small cities like Kanpur may not even know about these Guidelines. Hence before we can start incentivizing, media communication and other forms of communication need to be effectively used to shape awareness amongst companies about these guidelines. The guidelines should be translated in state languages, be available on the internet, and should be accessible by everyone. Only then it makes sense to have a competitive advantage.
Vikas Goswami - The early adopters will be large companies who are already working on the sustainability continuum – they now have a framework to understand and put a structure around what they are doing in regards to sustainability. It will be a cross section of companies. There are no incentives available as of right now. But when the new committee is formed, and as we start getting more feedback, maybe some incentive ideas will be suggested. These are unlikely to be tax incentives, but it could very well be that companies following the NVGs are entitled to preferential procurement tariffs as suppliers to the Government. But there is nothing set in stone yet as we have to wait for the market feedback and also a new committee needs to be formed (since the last one was disbanded).
Who would be the members of the new committee?
Vikas Goswami - Now that the NVGs have been launched, the forming committee has been disbanded. As a part of the next step, the Ministry of Corporate Affairs will have to first decide on what exactly they want – a more detailed or specific sector and /or size centric NVG. It is difficult to opinionate on who should be a part of this new committee, as it will differ based on what specific actions need to be undertaken further on the NVGs. For example – if the sector specific NVGs are to be formatted then sector specialists have to be involved. Likewise, size specific NVGs will require organizations like FSME.
How many approximate numbers of companies have shown interest in adopting the NVGs?
Vikas Goswami - It is too early to tell. We have to give some time for India Inc. to learn about and get accustomed to the idea first. In the initial meetings prior to the launch of the NVGs, the interest in a number of companies has been apparent. But the NVGs have just been released and are voluntary- so the market reaction would also depend on the promotion of these guidelines, only then we will be able to actually start putting a number on the list.
How would the NVGs be promoted- through workshops/trainings/awareness camps?
Vikas Goswami - GIZ will be working with the Ministry of Corporate Affairs on this matter and is already in the process of establishing a training center. The National Foundation for CSR founded by the Ministry of Corporate Affairs and the Indian Institute of Corporate Affairs are also looking into ways of training dissemination professionals who can go and operationalize the NVGs.
What kind of challenges lie ahead for the NVGs?
Viraf Mehta - There are different types of challenges that lie ahead. The first one is to get the civil society to start looking at these guidelines seriously- they should look at the content and not get stuck on whether guidelines are voluntary or mandatory. 99% of our Indian NGOs still operate as if business does not exist. Unless the civil society and the consumers equally get engaged in business decisions, incorporating these guidelines would be hard.
The second challenge is that of access. The guidelines are available only in English right now. It is just not a matter of translation into the vernacular languages. We have to work hard on promoting these guidelines to all the 640 districts – whether through the internet, radio, television or cell phones. The guidelines need to reach the smallest level of business, and not be just limited to the metros. Thirdly, the balance amount of work that needs to be done should be made very clear. The time for a generic discussion with businesses is long over. Now we need to focus on sectoral needs of these guidelines and also the reporting framework. If after a year, the basic concept of these guidelines is being challenged, that will be a major problem. The guidelines are aligned globally, yet are very Indian in their character.
A lot of companies are reporting on CSR/ sustainability initiatives in their own way. But, it will be beneficial to have a registry of some kind with the IICA which will track the companies that formally endorse these guidelines and commit to implement them in their business practices. Clearly the companies will need some time to absorb and tweak their systems to integrate these guidelines.
As we have learnt from JRD Tata – “Unless you aim for perfection, you will always fall short.” So it is important to set high standards, instead of keeping one’s expectations mediocre. I want to see both large corporates as well as SMEs adopting these guidelines.
Viraf Mehta is a social anthropologist was and is amongst a very early group of professionals from the ‘social development sector’ in India, to translate this interest into a formal employment with the private sector- Tata Steel from 1988-2001- where he was responsible for overseeing several aspects of one of India’s best known models of corporate community initiatives. He is also amongst the earliest proponents in India of corporate-NGO partnerships for development.
Vikas Goswami is the Lead Corporate Social Responsibility, Microsoft, India. She has vast and intensive experience of more than 18 years in the area of CSR and has worked for and advised many non-government and corporate sector organizations including MNCs and Indian companies.
This interview was originally published in Sustainability Outlook September 2011 issue. www.sustainabilityoutlook.in/