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Top corporate leaders tell FE's Rajiv Tikoo that they are all for shouldering corporate social responsibility, but they are against making it mandatory.

CSR is most effectively delivered in the strategic context of businesses and should be part and parcel of the value proposition created for the consumer and shareholder. This calls for proactive innovation to forge business models that synergise shareholder value creation with the larger purpose of generating a positive environmental and social impact. A focus on mandatory outlays would merely discharge an expenditure obligation, which may not only be wasteful but also lead to creative accounting. The focus of policies should be on outcomes, and not on outlays. Policy incentives based on outcomes will trigger innovation necessary to create larger societal value.

The emphasis of policy should be to first mandate disclosures on the triple bottom line performance of companies and create an institutional framework and mechanism to rate such performance. By making such ratings available to consumers, a market can be created for responsible business conduct. It is only when civil society exercises a distinct preference for products and services of corporations that deliver larger societal value beyond consumer value alone, that a market will emerge to support responsible businesses. If differentiated and preferential incentives were to flow to companies with sustainable business practices, powerful market drivers would emerge to support meaningful contribution to building larger societal capital.

CSR spend should not be mandatory. You should not force people to do something. That's not the solution. What the government can do is to ask companies to report their CSR spend in the balance sheets or explain why they are not doing it. Even the talk that the government should create a fund and corporates should pool their CSR spend into it is misplaced. We know what happens with government funds. From choosing the ultimate beneficiary to the mode of delivery, we will have no control over it. CSR is best left to corporates so that each one shoulders it according to ones value system and capability.

CSR should be voluntary in nature, but not mandatory. Companies in different industries and of different sizes face different situations and making it mandatory would be unfair. Having said this, we do recognise that there is a need for spreading greater awareness among the corporate sector that it is in its own interest to spend on CSR. A business cannot succeed unless it makes the community around it happy and prosperous. To encourage CSR, we should reward those companies, which have a good track record, through positive incentives. It is also important to highlight the best practice adopted by companies in India and globally.

A company's CSR agenda should be motivational. Mandating CSR spends would take away a corporate's enthusiasm in shouldering it. Today companies understand that business has to be done with a social conscience and that they have a responsibility to give back to the communities. Also, many companies recognise that their business performance is inextricably linked to their CSR work. We understand that CSR is a means to achieve sustainable development and all companies with a conscience are working towards this goal. We do not need statutory guidelines to work in the direction of CSR.

I believe that the government should consider encouraging corporates to undertake CSR initiatives rather than forcing it on them. Driving social consciousness or social/ stakeholder accountability through legislation might just end up creating a whole new industry of 'CSR professionals' who would be focused on standards and compliance for this legislation, rather than working towards the benefit of society at large. A mandate by law would only dampen the spirits of those who are doing more and paralyse those who wish to do their bit; now they would also wonder what they should ideally undertake to keep the lawmakers happy.