CSR, the mandate:
According to World Bank (2002), Corporate Social Responsibility (CSR) is a process of managing the cost and benefits of business activity to both internal (workers, shareholders, investors) and external (institutions of public governance, community members, civil society groups, other enterprises) stakeholders.
In the year 2013, Corporate Social Responsibility (CSR) was mandated by the government in the section 135 of Companies Act, 2013 which mentioned that every company having net worth of Rs 500.00 Crore or more during Financial Year or turnover of Rs 1000.00 Crore or more during financial Year or net profit of Rs 5 Crore or more will carry out CSR activities. An explicit schedule VII has been provided mentioning the areas of interventions.
During the initial years, companies which fall under the mandate focused on compliance. However, presently the aim of companies is to assess the impact of its CSR interventions.
CSR, from the perspective of companies:
One might wonder, why companies are suddenly concerned about social change and development which till few years back was a monopoly of the development sector. Though government and NGOs are taking up the role of CSR implementing agencies, the face of the companies in the form of branding is the most important aspect. With the upcoming awards, recognitions and accolades, companies are increasing competing for socially responsible initiatives. These not only help the companies to present themselves as socially responsible, but also helps them in enhancing their publicity thereby adding to their business. The market values of companies are being impacted by their image in the social sector. For example, people tend to buy products of a particular brand, if that brand advertisers that Re. 1 would be contributed for social cause even if the product price is much higher than its counterparts.
Besides focusing on profit, the social image of a company also enhances its functioning. The history of Indian environmental movements is mostly regarding industrial harms caused to society. Be it a sports company chopping off plants or a soft drinks company draining away the underground water, industries have always been blamed of causing environmental hazards. CSR has given a scope to the companies to cover-up such environmental degradation. For example, a company which causes air or water pollution builds hospitals so that the number of health issues rising from such pollution does not come to the forefront. A clean social image also helps the company to have cooperation from the community.
Companies are also focusing on skill development and education sector in their CSR initiatives so that they can develop a future workforce required in their business model. India’s topmost companies performing best in CSR had education as the most important component of their CSR initiatives in the last few years. TATA, ITC, Aditya Birla are some of these companies, to name a few.
CSR, which initially seemed to be a burden on the companies has eventually come up to be a boon. There can be numerous reasons inspiring companies to enhance its CSR initiatives. Now, it is for the companies to look for their motivation. However, companies have already been motivated enough and they are focusing on impact assessment of their initiatives so that they can present themselves as responsible companies in the reports. Reporting standards have also been enhanced by the global standards.
Impact assessment as a core of CSR:
In the global scenario, impact assessment and presenting it in reports are important aspects of any intervention. Accordingly, all companies, including the multi-national ones, which have their business outlets in India, are paying attention to impact assessment and reporting standards of their CSR initiatives. International organizations like Global Reporting Initiative (GRI) have set guidelines and standards of reporting. GRI Guidelines apply to multinational organizations, public agencies, smaller and medium enterprises, NGOs, industry groups and others and focus on sustainability. Similarly, CSR initiatives are projected as not only being impactful but also as sustainable.
CSR impact assessment now a days, is mainly focusing on the impact on its stakeholders, optimal use of funds and sustainability of interventions. As discussed earlier, during the initial years, the focus was on compliance, now the focus has shifted to impact assessment. This is simply because, the companies are trying to present that over the last 3 years they have brought about changes in the society and have enhanced social growth and development.
The simple reason behind focusing on CSR impact assessment is to present itself as a responsible company. They are involving third parties for assessment and recruiting experts for writing and presenting reports. This reflects that CSR is being given utmost importance by the top most companies. While companies are focusing on impacts, critiques are of the opinion that such interventions are not adequately in-depth and much areas are yet to be explored by CSR. We can expect to have more responsible CSR interventions in the upcoming years with the companies increasingly realizing the need of CSR for their own benefits.
CSR, the ray of hope :
To sum up, CSR is not only beneficial for the society and stakeholders, but also for the companies. There is still a lot of scope for CSR initiatives. CSR has an immense potential in changing the social scenario since there is ample budget, human resource and expertise. Most importantly, CSR, as a platform provides scope to NGOs, government and companies to work together towards all-round development. With the upcoming expertise in the field of CSR and with increased recognition, we can expect to have more innovative CSR interventions in the years to come.