Tracking CSR Contributions in Agriculture

Background:

• India was the first country to make Corporate Social Responsibility (CSR) a legal obligation.
• Under Section 135 of the Companies Act, 2013, companies meeting certain financial thresholds are required to spend a portion of their profits on CSR initiatives.
• According to the National CSR Portal, companies spent a total of ₹1.84 lakh crore on CSR activities from 2014 to 2023.
• With such substantial funding, the question arises: how can CSR be used effectively to support agriculture, a sector that plays a vital role in India's economy and employs a large portion of the population?

CSR’s Current Contribution to Agriculture

1. Agricultural Employment and Economic Impact:

   • Nearly 47% of India’s population is employed in agriculture, which is significantly higher than the global average of 25%.
   • Agriculture contributes 16.73% to India’s GDP, highlighting its importance to the economy.

2. Challenges Facing Agriculture:

   • While India’s food production has stabilized, the sector faces issues like degradation of natural resources, stagnant farmer incomes, and threats from climate change.

3. Corporate Interest in Agricultural Sustainability:

   • Many companies are beginning to prioritize climate action and sustainability in agriculture within their CSR budgets.
   • A report by a CSR platform noted that 23% of surveyed companies listed “environment and sustainability” as their main CSR focus.
   • CSR contributions have funded initiatives such as grain banks, farmer schools, livelihood projects, water conservation, and energy-efficient irrigation.

4. Opportunities for CSR in Sustainable Agriculture:

   • As agriculture shifts towards sustainable and modern practices, CSR funds could play a crucial role in providing capital and infrastructure, which are key needs for the sector today.

The Main Challenge: Tracking CSR Funding in Agriculture

1. Lack of Clear Tracking Mechanisms:

   • A major obstacle to maximizing CSR’s impact in agriculture is the lack of precise tracking mechanisms to measure funds dedicated specifically to agriculture.
   • The current CSR reporting system does not distinctly classify agriculture-focused activities, making it difficult to assess the actual impact of CSR in this sector.

2. Ambiguity in Reporting Categories:

   • CSR activities related to agricultural sustainability may fall under 11 out of the 29 development sectors defined by Schedule VII of the Companies Act, which includes categories like:
     • Gender equality
     • Agroforestry
     • Poverty, hunger, and malnutrition
     • Environmental sustainability
     • Rural development
   • Since these categories cover a broad range of activities, many of which are unrelated to agriculture, it becomes challenging to isolate and track funds specifically allocated for agricultural initiatives.

3. Impact on Sectoral Assessments:

   • Without distinct tracking, it’s hard to perform sectoral impact assessments on agriculture-focused CSR activities, which limits the ability to measure progress and optimize resource allocation.

The Way Forward: Improving CSR Impact in Agriculture

1. Designating Agriculture as a Separate CSR Sector:

   • Given agriculture’s significance to India’s economy and its role in sustainable growth, it’s crucial to recognize agriculture as a distinct sector within CSR activities.
   • By doing so, CSR funds could be more accurately directed toward agriculture-specific needs, leading to greater transparency and a more focused impact.

2. Enhancing Reporting and Tracking Mechanisms:

   • Modifying the reporting framework to categorize CSR activities based on sectors receiving funds would streamline resource allocation.
   • This approach would allow for better targeting of funds, making CSR contributions more meaningful and effective.

3. Aligning CSR Efforts with Agricultural Sustainability Goals:

   • Identifying the key sustainability issues in agriculture and directing CSR funds accordingly would support the transformation of agroecosystems.
   • CSR funding could help address pressing challenges like soil health, water conservation, and climate resilience in agriculture, driving substantial change in rural communities.