Today, Corporate Social Responsibility or CSR has more often than not become an instrument of branding and PR. The true spirit of of ‘giving back to the society’ has either diluted severely or in some cases has been completely lost. If you dig a little deeper you will realize that the real motive behind CSR efforts of many companies is often more than what meets the eye.
The Companies Act 2013 requires large (above a specified threshold level) firms to spend 2% of their net profits on corporate social responsibility (CSR) projects. This law came into effect in April 2014. While a handful of ethically inclined CEO’s steer their brand into genuinely investing in social good, the overall observation is far from what is desired.
A recent report by the Public Relations Society of America found that CSR efforts are primarily driven by a need to keep up appearances, rather than a genuine desire to help the community. The top motivators for brands’ CSR included reputation (88 percent), competitive positioning (71 percent) and profitability (56 percent).
According to the basics of corporate accounting, the required expenditure that does not lead to higher profits is essentially a tax. The CSR law can be viewed as a 2% tax, albeit spent by the firms rather than given to the government. This is a back-door way to increase corporate taxes without a transparent political debate.
A survey by accountancy firm KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% last year. A smaller proportion has gone further, according to an Economic Times investigation, allegedly cheating the system by giving donations to charitable foundations that then return the monies minus a commission.
While CSR is a mandatory part of every eligible business in India, companies look at CSR as another tax-saving or profit-making medium, defeating the purpose and belief in the concept, not to mention the honest view that employees have about it.
Supporting Development Sector in India
Corporates have the money, strength and the reach to carry out socio-economic activities effectively. Here I have compiled a quick list of ways in which companies can deploy the awesome power in their hands towards real socio-economic development in India.
I. Launching and Supporting Social Enterprises
Social entrepreneurship in India is on a steady growth path. Budding social entrepreneurs need financial and operational support to pursue deeper reach into BoP and achieve scalable growth. While there are a few high quality impact incubators in India, corporates can further provide a much-needed boost by directly lending support to social start-ups.
The Nudge Foundation, a Bengaluru based non-profit backed by Nandan Nilekani and Tata Trusts, will offer Rs 10-lakh seed-grant to each selected startup along with an intensive six-month incubation. They are the first ever incubator in India to support non-profit ventures working towards pulling people out of poverty.
DBS, a Singapore-based bank with more than 280 branches across 18 markets, set up the DBS Foundation (DBSF) in 2014, with a S$50 million (USD ~$36 million) commitment to addressing the region’s evolving social needs. The bank dedicates a significant amount of time and resources to social good initiatives and actively supports social entrepreneurship, as part of its efforts to be a force for good.
The foundation partners with renowned social enterprise mentors, with a focus on facilitating knowledge-sharing, as well as increasing the capacity of early-stage social enterprises to achieve social and commercial viability. These partners also provide incubation, boot camps, workshops and some financial support to social enterprises. Some of the Foundation’s partners are incubators and they include NUS Enterprise, HUB Singapore, Village Capital and Tata Institute of Social Sciences in India, SE Insights in Taiwan, YouChange Foundation in China and the Hong Kong Council of Social Service.
II. Adopting Processes That Safeguard The Environment
Imbibing sustainable practices in their core and secondary operations can propel companies towards being more responsible and cognizant of their impact on the environment and people. In may Western societies a new breed of conscious consumers and powerful sustainability advocacy groups have emerged thus putting pressure on corporate giants to make a transition.
Unilever and d.light have teamed up to improve access to solar lanterns and boost the performance of small retail outlets.
III. Helping excluded groups of people grow
Differently abled and disadvantaged individuals do not seek sympathy. They seek empowerment. Igniting their abilities and giving them a shot at a better and self-reliant life is a formidable way in which corporates can bring about a more inclusive society. This can be accomplished by partnering with social enterprises and NGOs to identify and hire such individuals or by enrolling them as service providers.
Mirakle Couriers, a courier service that employs only deaf individuals now competes with the big guns in the courier industry, without seeking sympathy. Amazon has engaged this popular social good brand, as their courier partner in some parts of Mumbai.
Studies and statistics amply indicate that companies can and should do more than just assign money to CSR. With so many other ways to create a social impact, corporates and business houses can prove to be instrumental in driving development in the real sense in India.