CSR and Sustainability
Consider the hard facts. Two billion people on this planet do not have access to safe water, heath care, or financial services. A billion people do not have access to electricity. Two hundred and fifty million children do not have access to education or childhood immunization. The problems are immense and need speedy solutions. With public funds being limited the need for private investment in public areas is acutely felt. Impact investing expands the role of private enterprise in addressing the world’s most pressing social problems. Impact investing is defined by The Global Impact Investing Network (GIIN) as: “investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.” Impact investing also goes by several other names - socially responsible investing, social investing, mission driven investing, responsible investing etc.
Impact investing is set to soar. Industry research suggests that approximately 2,200 impact investments worth $4.4 billion were made in 2011.This is almost doubling of investments from 2010. In India, the impetus is likely to come from the new Companies Bill (2012) that mandates 2% investment in CSR activities subject to certain criteria. Growth in impact investing is likely to come from four sources:
|Case Study: Vaatsalya HealthcareThe poor in tier two and three cities in India have limited access to healthcare services, as primary and secondary healthcare infrastructure is inadequate and tertiary healthcare infrastructure is largely concentrated in metropolitan areas or larger cities. Vaatsalya addresses this gap in primary and secondary healthcare infrastructure by offering high quality, no-frills, affordable primary and secondary healthcare services. Vaatsalya currently operates across 17 tier-two and -three cities in South India, such as Mysore, Shimoga, and Ongole. (www.vaatsalya.com)|
- Massive pent-up demand at the bottom of the pyramid - a large number of consumers and producers in this segment will join the market
- Driving green growth - investment in renewables are forecast to grow at a steep rate
- Reconfiguration of the welfare state - fundamental shifts in the ways in which we approach public good output will create opportunities for the private sector
- Emerging lifestyles of health and sustainability segment at the top of the pyramid - this is already a fast and growing segment
More and more, Indian companies are building long-term commitments to CSR. While some of this is driven by the 2% mandated spend in the Companies Bill, most are well aware that global resource depletion and increase in extreme climate events will force every enterprise, large and small, to make CSR and Sustainability a focal point. The question that many are concerned with these days is, Who should the CSR and Sustainability department report to? In 2010 the CMO of a large FMCG company famously said that ‘Sustainability sits best under marketing’ alluding to the fact that new ethical products and socially responsible practices need marketing to drive consumer behaviour and usage patterns. Many disagreed with this perspective, saying that marketing departments have been the cause of fueling unsustainable consumption patterns and that unethical companies can simply get away by savvy marketing instead of making genuine changes towards socially responsible practices and products. Unilevers ‘Project Sunlight ‘ has activated this debate again. Project Sunlight, launched across India, Indonesia, US, UK and Brazil, and hopes to induce mass behaviour change by nudging consumers towards responsible consumption. Many ask, ‘Can marketing really do good? Isn’t marketing just responsible for by driving more unsustainable consumption? Can these types of campaigns really achieve anything? India has seen a proliferation of brands and the growth of a vibrant advertising and marketing industry. Marketing departments have been the primary communication interface with the consumer. We believe that this important role of marketing is still driving and will continue to drive change towards sustainable consumer behavior. While unethical companies can definitely use marketing to ‘green wash’ their way into consumer hearts, it is still a very short term business strategy. There is considerable commercial potential of a new approach to business, based on the provision of more “responsible” mainstream brands. The marketing function influences and partly defines the brand package as experienced by consumers; it also measures the physical and emotional responses of those consumers in order to innovate. To drive change we need to communicate better and who better than the marketing department to use its budgets wisely and drive social change. The mandatory nature of CSR spending by large corporations in India makes a viable business case for Cause Marketing campaigns. Cause Marketing programs can be used to drive revenues, exposure, and genuine impact for social good.They can rally consumers and employees around a cause lending credence to a brands value system. According to a survey in 2010, two-thirds of global brands now engage in cause marketing, up from 58% in 2009. The same survey found that 97% of marketing executives believe this to be a valid business strategy. Cause-marketing, if done authentically, enhances a firm’s reputation in the eyes of stakeholders. As social media platforms continue to grow consumers will demand more transparency from corporations and nonprofits. Additionally, smarter consumers now have online tools (BrandKarma, GoodGuide, Positive Luxury, and more) to help them interact directly with organizations, track corporate practices, and share their demands in real-time with marketers. Well-conceived and well-executed, long-term cause campaigns continue to be powerful tools for strengthening individual brands and their relationships with consumers.
CSR and Sustainability
How Corporate India Can Leverage a Mandatory CSR Bill to Shift Gears For the Long Term
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