Corporate Social Responsibility: Where do companies draw the line?

Choosing an issue may seem like a daunting task, but firms must think of areas where the capital can best be used to find solutions to the problem

Updated: Jul 28, 2014 05:21:15 PM UTC

Goodera is a global CSR & Sustainability platform, co-headquartered in Bangalore and Menlo Park. With our innovative cloud, mobile, voice and big data platform, embedded with strong domain expertise, we enable and empower corporates to manage their CSR and sustainability goals in a simple, transparent, measurable, and engaging manner. Goodera empowers every stakeholder in the ecosystem including corporates, foundations, employees, government and NGOs. With the vision to power the world of good, Goodera is our new brand identity (we were previously known as NextGen), that resonates with our objective to become a trusted and a reliable partner for every corporate in the world.

The process of conducting business responsibly has been termed in various ways over the years. Although India has seen fewer companies talking about citizenship compared to the rest of the world, the terms CSR-Corporate Philanthropy, Cheque-book Charity and Strategic CSR-are more commonly used to describe social interventions of companies. Where does one draw the line between the concepts presented by these alternatively used terms? One wonders if terminology really matters. Interestingly, it does when one takes a deeper look at the essence of these terms.

Over the past few months, we have worked with companies of different sizes, sectors and geographies, helping them comply with the new CSR Law. Our engagement with companies- ranging from the most progressive Fortune 500 MNCs to traditional, family-owned Indian SMEs-largely entails figuring out ways to tackle the CSR challenge. Like politics or cricket in India, CSR too is a popular topic of discussion in companies. Everyone, from the CEO to the last-mile worker, has an opinion on it.

In majority of our engagements with decision-makers at companies, one of the first and most important questions that we encounter is: “Which area of intervention should we deploy our CSR capital into?” This single, big question could be broken down into multiple smaller ones. How does a company choose between the subjects of health, education, women’s safety, skills, promoting sports, arts and culture? Should it be a social issue in which the world lags behind? Should the companies address areas where India is far behind? Or should they focus on fixing problems plagued by their neighbouring communities? Is CSR an art or science? More often than not, varied points of view from different members of the board, each championing causes close to their hearts, makes the decision-making process even more complex. How can the companies manage to accommodate the views of all key stakeholders, including the chairman, board, employees, auditors, government, media, civil society and NGOs?

Corporates complementing the government’s efforts towards social upliftment is among the key aspects of the new legislation on CSR. The value addition brought in by complementing activities, however, is something that needs to be examined. Sample this:The new CSR law is set to generate from the corporates a capital of Rs 20,000 crore which will be spent on CSR activities revolving around the subjects of Schedule VII of the Companies Act 2013. On the other hand, the expenditure by the Government of India exclusively towards education (among the 10 subjects of Schedule VII) in FY 2012-13 was about Rs 75,000 crore. In this context, the additional impact that could be achieved by companies may seem questionable. However, there could be significant impetus provided to such initiatives if companies were to focus on bringing to the table their strengths in innovation, project management and technology.

While discussing the million-dollar question of “where to spend?” with a CEO of a large financial services company, we stumbled upon the simplest and most logical answer. He pointed out that Corporate Social Responsibility for him could mean two things-corporate responsibility and social responsibility. There are scores of social problems plaguing our country and the world at large. Choosing to solve these problems is assuming social responsibility. However, the onus of addressing these dire social needs can be taken up by the respective governments and possibly, the United Nations. Through Corporate Responsibility, the CEO said his aim would be to solve a problem where he can truly contribute meaningfully to the solution-through his knowledge, resources, expertise and geographic reach.

It essentially boils down to the belief that companies know and understand their strengths and hence, the problems that they can truly solve. It is indeed a very simple thought. One might wonder if it’s actually worth writing and reading about. But so is the thought of peace and non-violence or that of achieving freedom. All it took was for someone to think simple and convey his/her ideas to the world. The CEO in question, who is possibly the most down-to-earth leader of a billion-dollar company, demonstrated a simple way of taking decisions. A basic filter that could help companies understand the right from wrong and yes from no. Would you agree?

-(By Abhishek Humbad and Prerana Manvi)

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