Are Corporate Social Responsibility spends the right yardstick to measure success?

Image: Shutterstock

The new company law passed in 2013 made India the first country in the world to have a Corporate Social Responsibility (CSR) legislation. This move was a notable step forward to ensure that corporates contribute to India’s social development.

The new law mandates companies with a net worth of Rs 500 crore or revenue of Rs 1,000 crore or net profit of Rs 5 crore to give away 2 percent of their net profit to social development-related activities such as education, poverty, gender equality and hunger, amongst others.

A March 2018 report* by CRISIL Foundation shows that around 57 percent of companies have adhered to the 2 percent mandate and around 70 percent of companies had spent more on CSR compared to previous year. A significant portion of this development can be attributed to the fact that nearly 75 percent of companies have started using implementation agencies, mainly non-governmental organisations (NGOs), for implementation of their CSR strategies.

Is CSR the perfect solution?
As the critics say, the CSR law in itself is more of a coercive exercise than an inspirational one, which could be easily contradicted since one can’t really put any mandates around inspiration.

When inequity in education, employment, and other basic resources become major pain points in the country, CSR should act as a means to inculcate awareness rather than being an indicator of social welfare.

Obvious gaps have also been identified with the general adaptation of the law in that companies do have the scope to use it for their convenience. Critics claim that few use their CSR programs as a means to market their image risking the shifting of focus away from societal welfare. There are also questions about the final impact of these CSR programs and their capacity to address the problems prevalent in areas that are remote and not within the purview of the cities where most corporates operate. It is given that the resources at the hands of these conglomerations will make a difference in achieving the scale that a given NGO running in one part of the country can achieve. It is also noteworthy that most difficulties that India is suffering from are a result of intricate social problems. These social problems cannot be solved overnight by CSR managers with an access to corporate funds but through a long-term commitment and changed mindset.

Changing Mindsets
A sustainable and impactful way of contributing through CSR can be difficult to achieve if it is left to a CSR manager to decide the ideal program and engagement model to be employed. Perhaps the most controversial discussion in the realms of the CSR law is if a business is allowed to decide social priorities in the first place. This would be of prime importance to businesses which are here to stay and hence need to make a positive, long-term impact on the society they work in.

Employee engagement is one of the most challenging elements in the puzzle of corporate social responsibility (CSR) endeavours. Employee Engagement should ideally act as not just the input for CSR programs but be aimed at success criteria for the same. It is only through employees that these CSR efforts would be able to bridge the gap of being a mere fulfillment of a policy to an actual change in the community at large. Employee Engagement can galvanise an entire organisation to bring in energy, passion, and creativity of people with different backgrounds to create meaningful social impact and leads to CSR becoming an integral part of an organisation's culture in the true sense.

For example, skill-based volunteering opportunities at HP Inc. have complimented the organisational CSR efforts by tapping the expertise of employees in high-value fields such as technology to address local challenges across different regions, like helping refugees in Kenya restart their lives through access to technology or creating healthcare technology tool in India that can track the nearest registered blood donor in a specific region using apps like Google Maps.

A company should strive to have a CSR program synonymous with its image. This would ensure that employees who are aligned with the vision and purpose of the company and brand, are naturally attracted to the CSR program. It will also ensure they can contribute their skills and manpower to the cause.

However, effecting a larger impact would also need people who are committed to impacting the community around them. Such traits should be then, encouraged and considered as a criterion for candidature in measures big or small, based on the recruitment process.

Once the engaged employees are on board, it is important that the focus is shifted to the cause being supported by the CSR program. The cause that the CSR program supports will be an incentive for employee engagement as it is the one which resonates the most with them. The cause being supported should create opportunities for employees to not just make a personal connect but to also support in platforms outside their work to generate more impact on the society in general. This could be achieved by having a more democratic approach in selecting secondary if not primary CSR programs.

It is also critical that the CSR initiatives are fully supported by and aligned with senior stakeholders and the management committee.This is important to ensure employees are motivated and convinced that their efforts are framing the vision and goals of the company.

This is important so that not only are employees motivated but also convinced that their efforts are framing the vision and goals of the company. Such environment provides an opportunity for employee innovation and leadership, which would definitely increase the overall satisfaction at work.

The most important thing to measure the effectiveness of a CSR program is to look beyond CSR spending. While measuring the impact of the investment is important, it is critical to have a CSR program work as a driver to create a corporate culture that transcends beyond work. It will create not just employees but also citizens who are committed to bringing a change in the society.

*Source: CRISIL Foundation report – The CRISIL CSR Yearbook, 2018
The author is a Chief Financial Officer at Maersk India & Manila.

The thoughts and opinions shared here are of the author.