An effective corporate social impact strategy lies at the intersection of a clear and important social need, an organisation’s expertise to effectively address the need and the value created by the implementation of the CSR strategy.
Corporate citizenship is hardly a new concept for corporates in India – companies have always played an active role in realising social impact both within and outside their core business focus as part of their social responsibility.
However, the philosophy and approach behind achieving the same has evolved much – from employee-volunteering initiatives to institutional philanthropy to Corporate Social Responsibility (CSR) to shared value – in addressing the role of business in society. While the challenges being tackled by corporations remain largely unchanged, however, there is perceptible shift in the thinking around the long-term value such activities can create both for the organisation and the society.
Today, across the world, there’s a slow yet steadily growing realisation that the sustainable business models of tomorrow have to be inclusive by design and create long-term value for all stakeholders which is yet another reason for any company to develop a holistic CSR strategy.
Given the global nature of Indian businesses today, this thought process is embedded in thinking here, but what has accelerated the conversation is the 2013 Companies Act mandate enforcing companies to spend 2% of their net profit over three years on Corporate Social Responsibility.
Maximising the return on social spend
Given the substantial spending and mindshare from corporate boardrooms on CSR and the growing interest in shared value, there is a lot of discussion among corporate leaders on how to maximise the return on the investment. Corporate leadership is keen to bring a structured and measurable approach towards CSR investments and have a cohesive CSR strategy around the same that is communicated to all stakeholders.
1. Compliance
The focus is on meeting the requirements of the law and ensuring there are no risks to the organisation. Compliance-led organisations identify safe and low-touch CSR and social investments that are aligned to the statutory environmental/social laws as well as the governance norms of the organisation. In return, organisations seek standardised impact metrics in their CSR strategy to ensure effective use of the funds.
| Eg: Prime Minister’s Relief fund and Corporate Social Responsibility
The Schedule VII of the Companies Act outlines the various activities that a Company can undertake to effectively utilize their Corporate Social Responsibility Funds. One of the areas that have been mentioned in Schedule VII is “Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women.” While companies are mandated to setup actionable and outcome-based projects as part of their CSR focus, the option to contribute to Prime Minister’s Relief fund offers companies an opportunity to be compliant with the law without a rigorous implementation framework.
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2. Social Cause
The entire initiative centres on addressing specific social needs, based on internal priorities as agreed by the leadership team or aligning with national and international priorities (e.g. Millennium Development Goals). The organisation takes a strong philanthropy—based approach towards social impact and may institutionalise rigorous systems and processes for identification of the implementation partners, measurement of impact and standardised reporting. By disassociating from any business value, the organisation is able to stake a strong claim of being a responsible corporation.
| Eg: Swachh Bharat Abhiyan and Corporate Social Responsibility
Swachh Bharat Abhiyan is a national campaign by the Government of India to ensure sanitation covering 4,041 statutory cities and towns. Many companies are aligning their CSR strategies to the widespread implementation of sanitation infrastructure around the country.
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3. Stakeholder Engagement
There are three common stakeholders that an organisation tends to focus on:
Employees
Ensure that the employees in the organisation are engaged and involved in social impact activities on an on-going basis. Such initiatives are usually situated in and around the workplaces and create ample low-touch engagements that employees can be part of. The key measure of outcome for the organisation is the increase in employee engagement, the realisation of a ‘people-centric’ CSR strategy roadmap.
Local community
Focus is on the community around the organisation’s manufacturing and processing/servicing units (including factories, stores, warehouses, mobile towers), through a need-based approach. The key measure of outcome for an organisation that is specifically working implementing effective manufacturing CSR activities is credibility and good relationships with the local community.
Customers
With key outcomes being strong branding and better customer relations, customer engagement programs could range from a matching social act for every product purchased (for e.g. for every shoe you buy a shoe is given away to the underserved; for every product you buy 10% of the revenue goes back into education) to leveraging access to customers as a channel to scale the impact of the initiative (for e.g. a nationwide collection of used clothes through retail outlets towards disaster relief and refurbished cloth-based items).
4. Business value
There is a clear focus on the business value that is gained from the social impact initiatives and a healthy tension to ensure that there’s equitable value created to both business and society. The business value-led approach often addresses ecosystem level challenges that require patient investment without immediate business outcomes. The business often creates value to the entire sector through programs that it runs through leveraging the organisation’s business expertise. We have seen four broad categories of such initiatives.
4. 1 Product innovation
Building a product or a solution to the undeserved markets that might not be an immediate viable market for the organisation. Such a solution can be co-created with social partners who bring strong on-ground understanding and can leverage the product and business expertise of the organisation to effectively address the problem.
4. 2 Skill enhancement
Skill-focused initiatives of organisation help build capacity of the skilling ecosystem through investment in infrastructure, sharing industry expertise, on-the- job training support and hiring and retention-led engagements.
4.3 Value chain enhancement
Value chain-led initiatives focus on building and strengthening the chain both upstream and downstream. For instance, an organisation building a network of women entrepreneurs in rural areas helps establish an effective rural distribution network (which can be leveraged by other players as well). Similarly, investment in sustainability of rural producers ensures a predictable supply of raw materials for the organisation.
4. 4 Market development
Customer awareness is one of the strongest levers of market development for a wide range of products and solutions today. Initiatives creating awareness and demand for essential services including sanitation, financial literacy, clean drinking water and healthcare build a strong brand awareness and community demand that set a firm foundation for organisations to introduce new products and services.
What is the recommended approach?
The decision on what should be the right CSR strategy or approach for any organisation is based primarily on the organisation’s philosophy to social impact. While organisations check most of these boxes while designing their CSR initiatives and activities, it is important to agree on what is the lead anchor to design an effective and long-term initiative.
Leading companies have taken a portfolio-based approach where they have created a bouquet of CSR initiatives where each of the initiatives has a clear anchor. For instance, companies have built a portfolio of projects including initiatives focused on long-term business value (e.g. Skill development), social need (e.g. Education) and employee engagement (e.g. Volunteering opportunities for employees). Such an approach helps organisations to leverage the maximum benefit for the community and the company while ensuring that each of the initiatives has a clear and measurable focus.
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