In 2014 the results of our CSR ranking study (www.responsiblefuture.in) made interesting reading with strong evidence that the journey towards business transformation has begun for many of India’s top companies. It was no surprise to see several Tata companies, Mahindra and Maruti in the top 10 list.
While many senior managers admit that they are still struggling to make the business case for long-term investments in sustainability and CSR, there are others who have taken the lead and are setting the pace for responsible growth.
Another insight that we obtained by reading the sustainability reports, websites and annual reports is that companies seldom talk about future goals. Instead, they all seem to play up their past successes. The same activity in some reports is repeated across years, in some cases the same activity is repeated 4 or 5 times.
We also saw a disconnect between challenges and action, where the challenges are understood and the desire is to ‘do something’ but the implementers are confused about what that ‘something’ should be. So while every companythat we studied had a high opinion of their own performance, a closer look has many times revealed gaps.
In 2015 companies will continue the journey towards business transformation via sustainability and CSR initiatives with some key trends emerging.
1. Make in India but with Responsibility
The new thrust towards Make in India shifts focus from services to manufacturing. It includes both Indian as well as foreign companies catering to both domestic as well as international demand. This has a number of implications:
a. Manufacturing companies require larger investments and are more likely to fall in the mandatory CSR bracket.
b. The CSR lifecycle for manufacturing typically starts with local community driven inventions. This is likely to see a surge as Make in India picks up steam.
c. International markets demand greater focus on social interventions. This is manifested in no child labour, humane working conditions, environmental safeguards etc. This will force companies to spend more on CSR in India.
d. We have earlier said that talent pool for CSR managers is limited. The demand for trained CSR managers will increase multifold.
e. Make in India will lead to a thrust towards efficient supply chains. Sustainable supply chains will demand attention.
f. Support system for improved disclosure and CSR governance will be in demand.
2. Global Indian Corporations need to manage International Risk and Reputation
Indian companies are going global. They are addressing not just customers of developed countries but under explored markets in Africa and Latin America. Mining rights in Australia, factories in South Africa and telecom networks in Kenya are the growth engines of the future.
Globalisation and this expansion in scale for Indian companies offers unique opportunities, though at the same time it brings tremendous risks. Scale is many times difficult to manage when companies use strict command and control structures that can’t really adapt to changes in local environments. Technology and the fast moving flow of information are great disruptors that have brought many a global corporation to its knees.
Customers, Suppliers and Governments have been joined by NGOs, Communities, Employees and Media over information networks to create Social Risk.
Global Indian companies now need to factor in the new reality where Reputation, Responsibility and Risk are increasingly interconnected.
3. CSR and Reputation will be part of Strategic Intelligence
Going forward companies will connect with you and me not just as consumers but as people. The personal digital brand is now the most powerful entity in the world. It can influence consumers to promote or turn away from corporations. It can influence trends and shake up the established norms.
Information is today freely and readily available, what one does with the flow of information and how quickly the corporation responds is really what will matter in the digital world of tomorrow. CSR will be more about genuine impact that simple philanthropy. It will be about connecting causes to brands and people. Genuine inside out responsibility for the world we live in built into product lifecycle, communication and on ground engagement.
4. CSR management will need insight and adaptation not just knowledge and skill
Linkages of CSR to core business and strategic intelligence management will help companies navigate the quickly changing landscape and even manage unexpected twists. Though this can only happen if the CSR manager of tomorrow has not just knowledge and skill but insight. Insight into stakeholder groups, customers, suppliers and communities.
These insights will help companies find breakthroughs that can help solve everyday problems, connect through conversations and help people. The connected world no longer forgives centralised model of one way corporate communication that was the norm in the last century. The insight is necessary to tune CSR activities to local needs and aspirations rather than a common approach across the global footprint. Adaptation to changing needs, regulations and societal changes will be imperative.
5. Innovate, Transform and Engage
Most corporates think inside out – “I spend so much money therefore I am a socially responsible company”. Others focus on the no of activities or Spread. They key question though is, Are my activities impactful? Are they genuinely changing the ground reality? Companies need to build, innovate and transform on a regular basis. Our study of India’s top companies has revealed that companies are investing in products and services that will build sustainability at the core. New Technologies, Dematerialisation, Reuse and Recycling will drive business innovation.
In 2014, companies have attempted to market causes to Indian customers. Some causes resonated other stayed mere ad campaigns. Companies need to earn trust and so do the causes they support. Providing a service without looking at customer safety, selling products which do more harm than good won’t help in getting customers to believe in your brand no matter how charitable you are.
Responsibility is about your values that integrate with the 4 Ps of marketing – product, price, place and promotion. Just as FMCG companies need to think about better packaging, Banks need to think about whether services at concessional rates or loan waivers to the poor really qualify as CSR.
2015 is likely to be the year where customers impact cause and vice versa. Campaigns that don’t just talk but initiate customer action.
Article coauthored with Utkarsh Majmudar and originally published in Economic Times.