The Indian Parliament has mandated that corporates ought to spend 2% of net profits on CSR activities. While it is still early days, much is being said about the implications of this mandate and many in the corporate world are examining what the bill means for them.
The role of the new CSR manager is now in fact centre-stage. Each impacted company now needs resources who can think strategic, across stakeholders and for the long term. For the newly appointed CSR manager who needs to plan the strategy and spends for 2014-15, ‘What should be spent, where and on whom?’ is the big question.
The response of most people has been to look at historical precedent. Typically many CSR initiatives have been ad hoc and not necessarily linked to requirements or a long term strategy. They may also not have formed part of standard corporate reporting. Given the uniqueness of the Indian landscape studying international csr / sustainability reports also does not yield much other than the areas in which the international partner may have invested.
Giving a convincing and definite answer to the direction in which the organisation needs to go needs a framework for the CSR manager that could perhaps incorporate the following:
First, ask some tough questions?
WHO – is your core audience, for which CSR initiatives need to be designed?
WHAT – is your value proposition and is this in synch with your core business?
WHEN – did your competition launch their CSR initiatives, do you want to be distinct from them?
WHERE – is the sweet spot, through which you can benefit both the community and the company?
WHY – are you investing in CSR? Can you deliver what you are promising?
Then look at HOW you are going to implement
1. Allocation by strategic importance and Need – For CSR to be effective it needs to be strategic, which is why allocation of funds that are close to the companies goals and vision is critical. Choosing regions / projects / issues that fit these strategic parameters is critical.
2. Impact assessment – Our study of GRI reports of ET 500 companies has revealed that most CSR activities tend to be focused on employees and surrounding local communities. Though this makes business sense as it enables companies to keep employees and communities on their side, there is a need to shift focus to larger communities. Customers are a key constituency. They are hardly addressed. Without customers there would be no company.
Mapping needs by region and by stakeholder groups can help in choosing the right projects that maximise impact. India, for example has a large number of suppliers as well as consumers for most apparel companies. A good way to allocate resources could also be to budget on the basis of importance and strength of stakeholder groups, whether they are consumers, suppliers, partners, communities and employees.
3. Strategic partnerships – With large social improvements waiting to be tackled there is a crying need for companies to band together to address problems rather than focus on piecemeal improvements.
Corporates in some countries are working together to solve common problems. For example, an initiative called “HerProject” was started to improve lives of women and create business value. This project was started with participation from major brands such as Abercrombie & Fitch, Clarks, Columbia Sportswear, HP, Levi Strauss & Co., Nordstrom, and Timberland. Can more such partnerships be evolved?
Social impact bonds could also be a way in that direction.
And lastly COMMUNICATE what you are doing
It is not only important to do but also important to communicate what you are doing. Companies need to care about CSR as it improves brand image, minimizes negative press and harmful impact on share prices, improves ability to attract and retain the best employees, less regulatory oversight and improves long term sustainability of the business. Hence reporting, signals to the world contribution towards CSR. The feedback from stakeholders goes towards revisting the investment considerations and improving the resource allocation process.
Figure 1: CSR Investment process
In most organisations who take CSR seriously, it is relatively straight forward to develop the right strategies and processes required to integrate CSR within the organisation. The most common barrier is getting sustained buy-in from middle management. Given the pressures they are under, managers understandably don’t prioritise the latest initiative from the corporate office and quite often see these initiatives as barriers to ‘getting the job done’.
To achieve real change, it just isn’t enough to have all the right structures, processes and indicators in place. You also need to generate enthusiasm for the CSR program from those who will be responsible for delivering it. This is where personal values come in.
The CSR manager needs to empower and motivate others to integrate CSR initiatives into their roles in a way that helps them achieve their targets, live their values in the workplace and improve the corporation’s integration of social good.
Article coauthored with Utkarsh Majmudar and originally published in Economic Times.