THE NOW infamous Section 135 of the Companies Act, 2013 (“Act”) is the provision requiring companies to conduct corporate social responsibility (“CSR”) activities. CSR entails a visible contribution by successful corporations of activities for the social good, and Section 135 has led to much debate regarding its applicability towards sports. Schedule VII of the CSR rules set out the activities that are permissible CSR activities and sports are not specifically listed in the schedule as a permissible CSR activity. Although sports are not clearly mentioned under the schedule, there is hope that successful corporations will see the CSR requirement as an opportunity to enter into initiatives that help promote the grassroots development of various sports. It would be a stimulus that most if not all emerging sports urgently require in India. Given the various reasons why corporations will probably opt not to support sports, the optimism is most likely misplaced.
Firstly, since CSR is meant to be a non-profit activity benefiting society, permissible activities listed in the schedule such as the eradication of poverty and extreme hunger, promotion of education, reducing child mortality, and ensuring environmental sustainability, to name a few, will in all likelihood take precedence over an unlisted activity such as sports, no matter the latter’s social benefit. Also, CSR activities will be closely monitored by various authorities, and the perception of sports today in Indian society will make it a challenge for any corporation to pursue a CSR policy in sports that will meet necessary parameters such as transparency, accountability, and good governance.
The year that the Indian sports domain has had makes it even more challenging for a corporation to consider sports for CSR. From the ongoing suspension of the IOA by the IOC, the spot-fixing fiasco that has led to a simmering spat within and beyond the BCCI, and the now dormant sports regulations leading to an unregulated domain overall, it would be difficult for any corporation to initiate a sports CSR activity that would achieve positive results without suspicion, question-marks about the nature of the initiative, and the meeting of governance and accountability thresholds. It’s simply too risky in today’s environment. And let’s not forget that unless the draft Sports Bill, 2013 and the Anti-fixing Bill, 2013 see the light of day and become legislations/acts, the risk of initiating CSR activities in sports will remain high and probably untenable for risk-averse corporations promoting social benefits. This is unfortunate, because sports, if they receive the stimulus of CSR funding, would be able to benefit society in ways that include active and healthy lifestyles, and also extend beyond that.
It would be good for sports federations and non-profit organizations in India if corporations undertake or support CSR activities in sports, and in fact even if sports are not clearly listed in the schedule, there are categories where sports could conceivably fit in, such as sports as part of an educational curriculum, or developing sports for girls as a gender equality measure, as well as a viable career option for young athletes to compete, to work as sports administrators, and to become coaches.
CSR under the Act will in all likelihood not benefit sports initiatives for reasons above and beyond the fact that sports is not listed as a permissible activity. Perhaps the sports domain only has itself to blame. But, what this does mean is that a consistent source of financial stimulus will not reach emerging sports initiatives, and is another reason why sports regulations must be passed and enforced to make sure such things don’t keep happening to the Indian sports domain.
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