By combining smart CSR strategy, effective partnerships and strong programme management, financial services companies can create a virtuous circle that marries social impact with business benefit across almost any sector.Read More
Filtering by Category: CSR
All the latest CSR news from India and around world!Read More
How companies can contribute to a "better" world through effective corporate sustainabilityRead More
We first met with Outsized a few months ago. Apart from being a great bunch of people, we instantly believed in their mission – to bring together the best boutique consultants in a way that enables large companies to access unique talent and expertise that they might otherwise struggle to access. Of course we have massive respect for the big consulting firms, there’s no competing with them on research capacity and pure scale of abilities. But there’s a certain value that comes from working with boutique consultancies who can offer high-level expertise in a specific field, a fresh perspective for every client, and plenty of face time with directors and founders.
The problem for companies in hiring a boutique consultancy is finding the right one for their needs and being able to blindly trust in its ability to deliver. That’s where Outsized comes in – by working personally with hundreds of small consultancies and undertaking background checks on previous clients and projects, they are able to offer a suite of pre-vetted options to large clients, specialising in financial services.
We love a bit of innovation and were quick to work out how we could collaborate with the Outsized team. Our founder Laura wrote this piece for their thought-leadership forum in July and we are excited to announce the launch of a bespoke service product in the CSR space. Called “Right Track”, it’s designed for clients who currently don’t have a holistic CSR vision, or want to align their CSR activities more tightly with business objectives.
You can read all about the new “Right Track” service product here.
By Anant Shrivastava
In our latest bi-monthly roundup we cover recent CSR circulars and amendments, and interesting reports on employee engagement and Swachh Bharat. Exciting times for India Inc! New financial year, better CSR?
No CSR for tobacco companies?
A circular released by the Ministry of Corporate Affairs (MCA) on 16 May, 2016 states that CSR activities undertaken by companies cannot prohibit or conflict with any other prevailing laws of the land including Cigarette and Other Tobacco Products Act (COTPA), 2003. This could mean that tobacco companies are prohibited from undertaking CSR activities as they can be viewed as marketing or promotion of the brand, which is prohibited under COTPA. This essentially allows tobacco companies to escape from any kind of social responsibility. We question whether this circular is a smart move on the Government’s part. While it’s important that tobacco companies are not allowed to promote their brands through CSR, there can be smarter ways to ensure they still undertake CSR activities as mandated by the Companies Act, 2013. Companies can implement CSR activities without promoting individual brands. We hope that the Government issues clear guidelines on the matter and ensures that all companies that fall within the purview of the Act participate in CSR.
Integrating CSR into leadership boosts employee engagement across companies
We’ve always held the view that CSR should be strategically integrated from the top down within organisations. A new study by the Hay Group division at Korn Ferry has found out that including CSR into leadership development results in a higher employee engagement throughout the company and boosts overall performance. While the study provides evidence that leadership programmes with components of social responsibility have delivered high impact, it also points to a huge current gap – only 36% of employees are “highly engaged”. Further, only 59% of the participants felt that their organisation actually included CSR in leadership development. This presents a huge opportunity for companies to get their act right and leverage CSR for business benefits. Such studies serve a useful purpose by providing data-backed proof of the business value of social responsibility!
The Government’s unrealistic expectations on CSR?
Is the Government expecting too much from companies in the form of CSR and deviating from the core purpose of mandatory social responsibility? This Livemint article suggests so. The Government regularly urges private companies to contribute to its own social welfare schemes to “fill in the gap” that it is failing to adequately address. But as the article highlights, the total spending on CSR by companies is miniscule compared with the amount spent by the Government. Further, some Government requests are in clear violation of the Companies Act itself. We think the companies should be allowed freedom to choose and implement their own CSR initiatives that leverage their expertise to deliver maximum impact. The Government should realise that companies are not responsible for supporting its own schemes. The nation stands to benefit more if there is spending in diverse areas than if all the funds are pooled into few Government initiated schemes. We can only hope they are listening.
Proposed FCRA amendment – a boon for companies, NGOs, and controversially, even political parties!
A proposed amendment to the FCRA aims to makes it easier for companies that have more than 50 percent foreign shareholding to spend on CSR activities without the non-profit partners requiring FCRA clearance. If the amendment goes through, it will reduce the burden of additional due diligence warranted in case of FCRA contributions. Many NGOs, especially smaller ones that do not opt for FCRA clearance and therefore miss out on corporate funding, also stand to benefit from this. However, as this article states, the amendment may also help certain political parties get away with FCRA violations. We certainly welcome the proposed amendment if it simplifies giving and receiving of corporate funding for social good but at the same time, it should not be leveraged for political gains.
Treat CSR expenses as non-cost items – Institute of Chartered Accountants of India
ICAI, the apex body of chartered accountants in India, has issued an exposure draft of the guidance note on treatment of CSR costs. The note specifies that companies should not treat CSR expenses, including expenses above the 2% obligation, as business expenses (product or service costs) and should only include them in the profit reconciliation statement, commonly known as the profit loss account. The note also specifies that any income or surplus through CSR activities cannot form part of the business profit and should be adjusted against the CSR expenses to give the actual amount. This note does not have a significant implication for companies. Donations by companies have always been accounted in the profit reconciliation statement and CSR expenses should continue to be treated that way. But it serves a useful purpose of providing clarity on accounting of CSR expenses and ensuring full compliance with the Companies Act, 2013.
The complete exposure draft can be found here.
Has CSR funding helped the Swachh Bharat Mission?
Samhita, in association with the Indian Sanitation Coalition, has released a report that states the contribution of CSR funding in the Swachh Bharat Mission. 90 out of the top 100 BSE companies were involved in the initiative in some way, including public sector companies. It is evident that Swacch Bharat is getting corporate funding. But are companies making efforts with the aim to deliver maximum benefit and actually changing the state of sanitation in India? Consider this: according to the report, 75% of the amount spent was on infrastructure projects i.e. building toilets and only 25% on the other aspects such as community behaviour change programmes, maintenance etc. The majority of the amount was spent in states with heavy industry presence, while states like J&K, Assam, Arunachal Pradesh missed out, despite dire need for sanitation facilities. With just 17 percent of the amount spent on urban areas, companies also largely ignored the requirement of sanitation facilities in poor urban slums.
We feel there is a learning for all the three parties involved in ensuring the mission is a success. The Government needs to shift focus from developing infrastructure to addressing community behaviour around toilet use, something that has been repeatedly asserted by experts in the field. The NGOs working in this sector need to ensure that programmes around behaviour change have robust impact measurement and can show tangible outcomes to corporate donors. Intangible outcomes are a big factor for companies to be disinterested in such initiatives. Finally, companies ought to resist tokenistic participation in the mission and start thinking about the entire lifecycle of a sanitation project. Building toilets is just the start. Equally important is ensuring the community uses them and that they are maintained in the long-run. Corporate India should think about the enduring benefits from this programme rather than the one-time activity it has become!
By Gauri Sharma
Innovative CSR & sustainability managers are raising the bar of “traditional” corporate responsibility by leveraging it to solve pressing business problems, deriving business value while advancing the company’s sustainability performance. Employee engagement – which is vital to building a successful, future-facing company – is one such critical business challenge sustainability managers are learning to address. Good employee engagement strategies have been proven to lower attrition and absenteeism, and improve productivity, efficiency and work quality – creating an energy and reputation that attracts the best, innovative talent.
Now more than ever, it’s imperative to crack the challenge of disengaged employees. India will become the youngest country in the world by 2021, with 64% of its population in the working age group of 20-35, meaning that millennials will constitute the majority of a company’s workforce. Research shows millennials to be more socially conscious than any generation before, looking to work in companies that have a purpose beyond profit and where they can have meaningful impact.
Smart companies and sustainability managers are tapping into this trend by engaging their employees in their social and environmental purpose. It’s great to see how some companies are changing the game by crafting cutting-edge sustainability engagement programmes to make the business more responsible while creating a more engaged, productive and conscious workforce. Here are some of the best.
1. Dashboards – measure and amplify “doing good”
Innovative and easily-accessible dashboards are increasingly being used to spur and measure employee participation in sustainability initiatives. AT&T has been at forefront of this with its voluntary, company-wide portal called Do One Thing (DOT) which encourages employees to commit to regular, measurable actions that positively impact their communities, themselves and the company. From small initiatives such as recycling to edgy initiatives like developing sustainable technologies – AT&T has enabled it all by bringing engaging dashboards for sustainability.
2. Gamification – make sustainability fun
Companies are intelligently applying game techniques to motivate employees to opt for more sustainable practices, fast-tracking their overall sustainability improvements. In 2014, Sony Electronics (SEL) created an online Green Workspace Certification to encourage its employees to adopt more sustainable practices and engage in Sony Group’s larger goal of achieving a zero environmental footprint by 2050. SEL essentially turned sustainability into a fun game with a live stream of projects, team rankings and progress tracking, and divided the certification into four levels: Seed, Leaf, Tree, and Forest.
3. Green appraisal – integrate performance and sustainability
By adding a sustainability criteria to performance evaluation, companies are incentivizing employees to become change makers and actively participate in their sustainability agenda. To achieve its target of 100% employee engagement in CSR & Sustainability by 2020, Campbell Soup Co. assesses every employee’s performance on the basis of contribution to the company’s CSR and sustainability practices and goals. It has also integrated sustainability metrics into its executive compensation calculation. Similarly, in 2008, Intel made a bold move by linking a portion of executive and employee compensation to the achievement of the company’s corporate responsibility metrics.
4. Hackathons – disrupt the sustainability status quo
Hackathons have proven to be a great tool to crack business challenges. Dynamic companies are cross-utilizing them in sustainability by rallying employees to hack and pitch cutting-edge ideas that add social and environmental value to the business. 3M’s Innovation Power Pitch for Sustainability called on its employees across the world to pitch innovative ideas around potential sustainable products. The winning idea was given a research grant bring this product to life. The ever-inspiring Etsy, organized a Hack Day – bringing together 150 team members who came up with 22 ideas ranging from increasing women in leadership roles to a programme that tracks the company’s carbon footprint.
5. Volunteering 2.0 – utilise expertise for good
Companies are crafting smart and more effective employee volunteering strategies that leverage their employees’ knowledge and skill set for good. As a part of Godrej’s volunteering program, its employees capacity-build NGOs and work collaboratively with them to create long-term sustainable models. Pfizer’s Global Health Fellows program enables its employees to work with NGOs in developing countries for up to 6 months, addressing healthcare challenges in under-served communities. Skills-based volunteering not only deepens employee engagement, but also develops leadership, soft skills and professional expertise.
6. Conscious consumption – inspire positive change
Through exciting internal sustainability campaigns and offerings, companies are inspiring positive changes in their employees’ lifestyles. During World Water Week in 2012, Levis’ held a Go Water<Less Challenge asking its employees around the world to wear the same unwashed pair of jeans the entire week. By encouraging employees and even consumers to reduce their environmental footprint by using less water, Levis’ created significant buzz and also brought attention to its Water<Less collection. In 2011 SAP developed TwoGo a cloud-based carpooling app for its employees to reduce its carbon footprint and costs. In 2013, this app was launched externally, enabling other companies to leverage the same benefits. Very recently, Tata Consultancy Services (TCS), put up a message in their Bangalore office canteen, with an aim to cut down individual food shortage – “Take all you can eat, but eat all you can take”, tying into TCS’s overall waste reduction policy.
Progressive companies and sustainability managers around the world are aligning and integrating their CSR and sustainability vision with their employee engagement strategies. The result is that critical business challenges are being addressed as the business becomes more socially, environmentally and economically sustainable. It’s becoming increasingly evident that commitment to sustainability and CSR is no longer nice-to-have, but actually a great core business strategy.
Gauri Sharma is a Consultant at Do One Thing, a strategy and communications consultancy, driving responsible business in India.
This article was originally published on 25th May 2016 in The CSR Journal
Our Founder & MD, Laura Quinn, wrote a great opinion piece in the The CSR Journal, titled "Philanthropy To Purpose: India Inc. Is Finding Its Socially Responsible Feet".
The article describes India Inc's journey from corporate & family-led philanthropy, to the introduction of the CSR legislation and how that led to systems and processes being put in place to manage CSR compliance. After two years of the legislation, we are now seeing a surprising but truly encouraging trend - Indian companies integrating "purpose" at the core of the business strategies. Read the full article here
By Anant Shrivastava
It’s been an exciting couple of months with significant buzz in the world of CSR and sustainability. DOT brings you news from India and beyond with articles ranging from recommended changes to the Companies Act, benefits of impact investing and creating shared value to how luxury brands stepping up their CSR game. It’s becoming increasingly evident that strategic and well-integrated CSR is the way forward and is no longer a nice-to-have!
CLC recommends changes in Section 135 of the Companies Act
The Companies Law Committee (CLC) setup in 2015 to make recommendations to the govt. on issues arising from implementation of the Companies Act, 2013, has recommended several changes to the Act, including Section 135 of the Act pertaining to CSR. Recommendations on CSR have been made after considering the suggestions contained in the High Level Committee on CSR report that came out in October 2015. The complete CLC report can be found here. Recommendations have been made around the following points:
- Information on annual disclosure of companies around CSR should be compiled by MCA and made available in public domain
- The govt. should play no role in monitoring CSR implemented by companies and it will be the companies’ responsibility to systematically monitor their CSR activities
- Composition of CSR committee for companies not required to have independent directors should be prescribed as ‘having two or more directors’
- Clarity on computing net profits for determining whether a company qualifies for mandatory CSR spend
- Specific inclusion of requirement of foreign companies to comply with the CSR obligation
- Areas for CSR listed under Schedule VII to be interpreted as ‘subjects’ rather than specific activities – allowing companies to interpret them liberally
- No carry forward of unspent CSR fund to the next year
- Companies, including PSUs, to be given flexibility for some years to experience the implementation of mandatory CSR before any steps on unspent funds are taken
- Section 8 ‘not for profit’ companies should also implement CSR activities if they cross the financial threshold specified in the Act
The next steps will likely involve these recommendations being presented in the parliament in the form of a bill which could either be passed or rejected.
While some of the above recommendations are indeed helpful for companies in terms of ease of understanding the Act and implementation of CSR activities, this report missed any suggestion on a crucial issue – tax treatment of CSR activities. It’s high time the govt. provided clarity on the same as companies seem to be struggling to understand tax implications of CSR spends in various areas. A uniform tax treatment can prove to be really useful and prohibit a bias for activities that allow more tax benefits than others.
Leveraging social media for effective CSR communication
Social media is ubiquitous. People, companies, even governments use it in some way to communicate. Businesses have been using the power of social media to reach out to all their stakeholders but, according to a study, social media is heavily underused for communicating the social good done by companies. This Economic Times blog explores how firms can utilise social media to effectively communicate about their CSR and the numerous benefits it has to offer. Social media is a powerful but fast evolving tool and companies will need to build expertise if they wish to use it as a communications medium for CSR.
Going beyond CSR – creating shared value
Even though companies are embracing CSR and ensuring they undertake efforts that benefit society and/or the environment, CSR is still viewed as something that’s extra to the business. We’ve stressed before that CSR is beneficial for both the communities and businesses and plenty of studies exist to support that. Maybe, what’s needed to emphasise the point is looking at social responsibility from a different angle. This article, co-authored by one of the co-founders of the Shared Value Initiative India, attempts to do that. Shared value is an essential concept for businesses where they operate with the aim of creating a more equitable world, maximising shareholders’ wealth in the process. The initiative has seen some success in bringing together companies, government, and civil society organisations to adopt and share practices that allow creation of shared value through business. We hope more business leaders are listening and will work to align their firms in this direction.
A short refresher on what makes a good CSR programme
Every few months, we try to highlight articles that show what constitutes an effective CSR initiative. This article by Paroma Roy Chaudhary succinctly captures the essential components of CSR that benefit both the community and the business – alignment with business, brand impact, local relevance, robust monitoring and evaluation, and professional management. Perhaps the one vital component missing is effective communications around CSR. We’ll continue to provide such refreshers in the hope that more companies take note and do good by doing it well!
Impact investing – Need of the hour for India?
Impact investing is often mixed up with philanthropy, CSR, and other similar sounding terms. As a result, its true meaning is often lost. This article defines it from an academic viewpoint and goes on to discuss its benefits especially in the Indian context. Impact investing in microfinance has already benefited millions in India and has provided significant returns to investors. Being a tried and tested model in India’s developing economy, it is high time that companies and individuals focus their attention on it. This could be the answer to the currently limiting CSR legislation because it provides opportunities for innovation in the development space while giving social and financial returns.
Good news – More companies view CSR as a strategic process!
Findings from a survey conducted by FICCI show that an increasing number of companies consider CSR to be a strategic decision making process in the business. Around 150 companies participated in the survey which captured responses on management involvement in CSR, implementation and monitoring of CSR activities, clarity of Section 135 etc. It’s heartening to see companies making efforts in understanding and complying with the Act. However, companies also raised some concerns in terms of clarity of the Act (especially tax related regulations), finding credible NGOs, lack of CSR professionals to manage implementation etc. It’s clear that a collaborative effort by the govt. and corporate sector is needed to mitigate these issues and allow ease of planning, executing, and monitoring of CSR.
Are luxury brands doing their bit of social good?
Although a number of luxury brands across the world have been involved in social initiatives, they’re not synonymous with CSR to an extent that some other sectors are. The luxury sector has so far taken a very traditional approach to benefiting the community, mostly through charity. Strategic CSR is yet to be largely taken up. This may be changing. This article talks about the work that’s being done by brands such as Louis Vuitton, Gucci, and Chopard and while it may not exactly be “strategic CSR”, these brands are going beyond philanthropy and thinking of long-term social initiatives. A good move considering any business that works with customers who are socially conscious and judge companies on their social footprint stands to only gain through social responsibility initiatives!
CSR and sustainability as tools for attracting investment
Indian companies stand to gain in another area through robust CSR and sustainability initiatives – fund raising. This article by Singapore based investment consultancy CSR Works mentions that Indian companies need to step up their CSR disclosures and sustainability reporting if they need to tap in to the $21.4 trillion pool of Socially Responsible Investment (SRI) funds. Sometime back, we’d written about the poor quality of CSR and sustainability reporting by Indian companies and this news highlights how companies are missing out on investments as a result of it. Will firms take up this issue soon? We can only wish as we wait and watch.
Analysing the spend
Since April 2014, India's largest companies have been mandated to spend two percent of their average profit from the last three years on social development activities.
Final reports of the first year of mandatory CSR spending (FY 14-15) came in last summer and the Energy industry (Oil, Gas and Power) had the highest CSR spend obligation at INR 2181 crore. Additionally, ONGC, an O&G public sector company, had the second-largest CSR spend in India with INR 495 crore (the largest being from Reliance Industries). Thus, the sector has a huge impact on shaping CSR as whole in India. DOT works closely with British Gas (BG) India on their social investment and thus, we have a keen interest in understanding trends within the sector. We conducted a study on the Oil & Gas (O&G) Industry’s first year of CSR spend, with a focus on 12 of the top O&G companies in India.
Missed two percent but not by far
On average, the O&G industry spent 1.5% (INR 972.9 crore)* of its net profits on CSR, slightly missing its two percent target of INR 1296.7*. Three O&G companies (India Oil, HPCL and BG India) spent their exact CSR budget whereas Oil India exceeded its budget by 36%. Given the magnitude of funds the sector was obligated to spend, it was a great start, and a clear indication that companies are committed to CSR.
Some observed trends
Within the O&G sector, several key trends emerged regarding how their CSR budgets were spent, much of it in line with India’s top companies across industries.
- Most O&G companies invested in at least one large project aligned with government initiatives, especially Swachh Bharat and Skill India. This gave companies a strong direction, reputational benefit and a good social license to operate driver. However, spending large sums of money on government initiatives under CSR doesn’t seem to be in the true spirit of the law as it shifts accountability of money’s impact from the company to the govt.
- About 90 percent of the CSR expenditure was in four of the ten spend areas of Schedule VII: Education and Vocational Skills; Hunger, Poverty, Healthcare and Sanitation; Environmental Sustainability; and, Rural Development. This made sense since these are the most basic provisions and broadest categories on the list, but also meant investments in tech incubators, sports development, and reducing inequalities were disproportionately low.
- Roughly 60% of the O&G sector’s CSR budget was through implementation agencies rather than direct implementation of CSR activities, working with credible and transparent NGOs and organisations on large projects.
- However, O&G Companies deployed a greater number of projects locally around their areas of operation, meeting the needs of panchayats and local communities. Activities tended to be ad-hoc rather than strategic, focused on driving license to operate in areas of operation. Although some are worthwhile on a small scale it’s questionable whether some are truly compliant with Section 135.
- Overall, the CSR focus of O&G companies leaned towards social development rather than environmental sustainability as the latter tends to be integrated within business operations and covered separately in sustainability strategies and reports.
- Of the companies that didn’t meet their two percent target, many indicated their reasons for underspend were to on-board expertise and focus on creating strategic projects that will have a larger impact on society.
Going beyond compliance
Compliance-wise, FY 2014-15 has definitely been a good start for CSR in India. However, mere compliance doesn’t necessarily make for good quality CSR. On the one hand, it forces companies to spend hurriedly and focus on spend instead of impact. This was clear in some reports where companies clearly interpreted the law liberally, investing their CSR funds in ad hoc or misaligned projects like horse shows or parades.
At the same time, it was evident that companies were struggling to create innovative, long-term, impactful projects for their CSR spend. As such, we hope that in the coming years, the sector will focus on a more strategic approach that will deliver enduring benefits for communities.
Suggestions for improvement
More innovation: There is a great need for companies to create systemic change in the way development is done, rather than simply supporting the programmes that already exist. By combining monetary contribution with the skills and technologies at their disposal, O&G companies can enhance their social impact. For example, apart from spending on building and running vocational centres, companies can also channel their knowledge to come up with standardized mechanisms for impact measurement of these centres – monitoring enrollment, attendance, absenteeism, placement and quality of training. Such innovations can also be scaled across industries, multiplying the impact of the initial CSR investment.
Increased collaboration: There is significant similarity in the social investment initiatives being taken up by the O&G companies. By pooling their expertise and CSR funds, O&G companies can collectively work on more innovative and strategic interventions, potentially resulting in an industry-wide coalition to ensure high impact of the CSR funds in the O&G industry. For example, in 2013, Europe’s fruit juice industry launched the Fruit Juice CSR Platform with the aim of integrating CSR across complex supply chains via a collaborative sector-wide approach.
Beyond mere alignment with government initiatives: Considering a significant number of O&G companies are public sector enterprises, aligning with government initiatives such as Swachh Bharat and Skill India is in-line with expectations. However, if companies go beyond mere fund allocation and work with the government to identify specific gaps that can be filled by CSR funds, the O&G industry’s CSR investment could have a larger, nation-wide impact. For example, companies have spent a significant sum of money on construction of toilets under Swachh Bharat, whereas there is a dire need for investment and expertise in other aspects of Swachh Bharat such as, implementing waste management programs and reforming open-defecation behavioural patterns.
(*Aggregated on the basis of secondary data from the 12 O&G companies in India)
It's been an amazing 18 months managing BG India's social investment strategy and programmes - working with numerous advisors from their head office, various CSR Committee members, a handful of incredible NGOs and of course the core team in Delhi and Mumbai. Over the months, we've also had the opportunity to visit a number of project sites and speak to countless men, women and children on BG India's social investment projects and the impact.
This Social Investment report provides a glimpse into the work we've been doing for the company across urban and rural Maharashtra. From local education, health and rural development projects to strategic state-wide initiatives, we're happy to have had a hand in making a positive impact on communities in and around where BG India operates.
We'd encourage you to have a read and are excited for what the next months working with BG brings!
By Anant Shrivastava
BSE’s Samman platform launched
BSE’s much talked about platform to connect companies with credible NGOs for CSR initiatives finally went live on 9th December. Although the site specifies that it’s a Beta version, and it feels the same way, this is certainly a step forward in helping companies pick the right partner for implementing their CSR initiatives. The actual usefulness of the platform for both companies and NGOs will become clearer as feedback starts to come in next year. But as we’ve said before, we hope this list of “govt. vetted NGOs” as a quick solution to CSR needs doesn’t kill the much needed innovation and game changing approach practiced by a handful of NGOs, lest they miss out registering on the platform.
MCA FAQs on CSR
These FAQs released by the MCA answer some important questions around the CSR legislation. As companies gain maturity and understanding of the Companies Act, 2013, such periodical communication serves as a useful tool to help them build their expertise on the subject. Important areas such as tax benefit from CSR, monetization of employee time, CSR obligation for Section 8 companies etc. have been covered. A useful read, indeed!
PSUs to focus on CSR for the poor?
The Committee on Public Undertakings (CoPU) has urged the govt. to amend the Companies Act so that benefit from CSR initiatives reaches the poor. An analysis of the CSR expenditure pattern of companies in 2014-15 revealed that the largest spend was done by companies in Maharashtra, which is already India’s wealthiest state and is not exactly “backward”. Therefore, if such an initiative by PSUs ensures CSR funds reach more backward states in India, it can potentially deliver benefits to areas with a greater need. The private sector may also follow PSUs in modifying their CSR to benefit the poorest. What’s important is that the Act is amended to avoid any ambiguity around what those poor and backward areas are. All that comes with a big IF, that is if the recommendation is ever heeded.
Has the CSR legislation killed employee volunteering?
With the Companies Act clearly specifying that employee volunteering cannot be monetized to count towards the CSR spend, has this negatively impacted volunteering in the corporate sector? This Livemint article talks about the volunteering and its contribution to CSR and employee engagement within a company. What’s clear is that volunteering is certainly useful to keep up employee satisfaction while also making them more effective at their jobs. Smarter companies have managed to continue with structured employee engagement programmes outside of the CSR legislation for the benefits it offers.
Why businesses that are good at CSR are bad at paying taxes?
It’s fairly easy to think that tax avoidance goes against the spirit of CSR. After all, paying due taxes is responsible behaviour! But opinions in the business world vary. This Economist article explores some of the reasons why firms that are good at CSR are also keen to avoid taxes. Reasons suggested vary from hypocrisy to different objectives of the various people and departments in a company to how CSR and tax avoidance are tools for maximising profits – the ultimate goal of a business to high rate of corporate taxes. Even though individual reasons for tax avoidance vary, an important takeaway is that firms are responsible to pay their fair share of taxes and must differentiate between moves that promote business while reducing tax burden and dodgy manoeuvres carried out to avoid paying taxes anywhere.
More data on CSR performance in FY 2014-15
With the disclosures for FY 2014-15 finally out, it’s clear how companies in India are reacting to the CSR legislation in the Companies Act. According to this article that references a CII study, 87% of the 1181 listed companies on BSE complied with the legislation and spent around Rs 6400 crore on CSR in the financial year. 52% of the companies that spent money on CSR failed to spend the required amount. Another study by Crisil indicates that large companies fared worse than SMEs with only 31% (with turnover greater than Rs. 10,000 crore or more) spending the required amount. There is clearly a lot of room for improvement. Hopefully, things should get better in the second year of the legislation. If they don’t, it would mean that corporate India and the govt. need to introspect on what’s not working out – the CSR law or the companies’ understanding and acceptance of it. Changes in either the legislation or the approach companies take to CSR may be required.
Maharashtra govt. asks companies to address development priorities through CSR funds
In a meeting with representatives from the corporate sector, the state govt. requested companies to use their CSR funds for addressing states development priorities and announced availability of a dedicated resource in the Chief Minister’s office to allow facilitation of government-corporate partnerships for the same. While this step can surely be an effective way to address challenges in the state, CSR funds are not meant to fill resource gaps in govt. schemes and this move has a potential to become just that. Further, the present rules on CSR in the Companies Act are already inhibitive for innovation in the CSR space so it’s essential that this move doesn’t add to limiting the ways companies do CSR.
Inclusion – beyond CSR and as a business strategy
Companies in India have been at work for some time now to be seen as “inclusive” workplaces. While inclusion is certainly a must for any progressive company and adds to the social responsibility values of a business, firms are beginning to realise its benefit for business growth and are incorporating it in their business strategies. This article by Navi Radjou, co-author of Frugal Innovation, talks about some of the leading players to embrace inclusivity and the business advantages it offers.
By Laura Quinn
Last Friday I was very happy to make it to the Godrej Good Conclave in Mumbai, which focused on how to create a more employable India, and how to do it at scale. As part of its “Good & Green” strategy, Godrej has an ambitious aim to train one million youth in skills that enhance their earning potential, by 2020. Apart from some guts, an aim like that takes a genuine commitment to work with stakeholders across the ecosystem in order to find new solutions to the numerous issues in India’s employability landscape. And so the Godrej Good Conclave was initiated, by Mr. Nadir Godrej himself.
The speakers and audience were as well-curated as you’d expect at an invite-only event like this, with CSR funders, skilling NGOs, and advisory organisations all present. Overall it was an intelligent and enjoyable day of conversations that threw up some interesting debates. But for me some key issues emerged that absolutely need to be addressed if we’re to tackle India’s employability gap with any real success in the coming years. Issues that need not only require debate but that require action, innovation, and multi-stakeholder commitments.
In general, understanding the impact of employability programmes feels stuck in the dark ages. It was absolutely surprising to hear how NGOs and funders are starting to shift from measuring the number of people trained to measuring the impact of the training. That should be absolute basic hygiene in any programme from the beginning. Of course it’s critical to note that the particular complexities of skilling make impact-tracking more complex that some other programmatic areas but that’s exactly why, instead of putting in place basic tracking mechanisms now, we need to be talking about how to innovate methods of impact assessment within the space, with employers and trainers working together. If we work together effectively we can combine forces to undertake large-scale tracking, compare different methodologies, and sharing smart, “best-practice” learnings across all stakeholders.
The critical role of employers
Employers are one of the critical end goals of any employability programme but their role as stakeholders in the dialogue is too often understated, including a noticable absence of voices from the formal employment sector at Friday’s event. Some of the key messages coming out on Friday involved issues of making formal sector jobs attractive to young people and aligning their aspirations and attitudes with those of employers. Anyone interested in training for employability needs to be working actively with employers to successfully close the loop from training to sustained, long-term employment.
Overall the biggest issue that came out of the conversations for me was that working towards a market-based solution is critical. Industry needs a workforce, and people need and want jobs. It’s an industry in its own right and a natural market-based process. Non-profits that provide employability training tread a very fine line in potentially undermining the inherent value of that training and preventing the natural market of a skilling economy from taking hold. Although NSDC has done come commendable work in standardising training courses, there’s too much complexity and poor delivery to build “consumer” confidence that training is being done to the highest standard and will lead to long-term employment.
It was great to debate some of these issues on Friday, but it would be even better if we could get together to act on them. There’s a lot of talk around the problems but not enough around how we create and test new, innovative solutions. So, inspired by Godrej’s first step in convening the right stakeholders together, we might just take on that mantle and see if we can make it happen...
By Anant Shrivastava
BSE CSR platform ‘Samman’ to launch finally?
According to this Hindu article, the platform which has been talked about since April 2015 and aims to connect companies with NGOs to facilitate both parties in undertaking social activities using CSR funding will go live before the end of this year. It will certainly be useful for companies to find credible, transparent organizations and programmes of interest to be funded. However, NGOs that cannot/do not get themselves listed on the platform stand at a risk of not being funded. We hope companies are open-minded while looking for programmes to fund and don’t limit themselves to just the thousand or so organisations that will be listed on Samman.
Companies Act may be amended for clarity on CSR norms
Based on the recommendations submitted by the Government appointed Baijal Committee in September, certain rules as well as the Act could be changed to allow greater transparency around CSR spending. The panel is expected to submit the final report to the MCA in December. Changes are expected to provide greater clarity on many ambiguous areas of the CSR rules including the differential tax treatment of various forms of CSR expenditure as mentioned in this Business-Standard article. In the present scenario where the rules are vague in places and left open to interpretation, such an amendment should prove to be beneficial for all stakeholders in the game.
India ranks no.1 on CSR reporting (but there’s more to it in the fine print..)
India tops the world in CSR reporting with 100% of its top 100 companies reporting on their CSR initiatives. While this is good news, it is hardly surprising given that the government mandates companies above a certain size to report on CSR activities. What is worrying though is the quality of reporting – something where India lags behind many countries. According to this Livemint article, it’s clear that corporate India still has a long way to go before it starts to produce high quality responsibility reporting especially issues such as carbon emissions. Perhaps decisions taken in the ongoing CoP 21 in Paris will distill down to corporate India and make them realize the importance of accurate and high quality sustainability reporting. Only time will tell.
State govt. requests CSR funds for tribal development
Maharashtra CM Devendra Fadnavis requested corporates to utilize CSR funds for the benefit of the tribal population of Maharashtra. This is a good example of government identifying the challenges that can then be addressed by corporate India through CSR funding. However we’ve stressed this before and would like to say this again – participation in such govt. led initiatives should be voluntary and unwillingness on companies’ part to contribute for such initiatives should not come at a cost or penalization in any way.
Transparency for CSR funds should be a two way street
Companies often go to great lengths to ensure that the NGO partners they work with are transparent, ethical, and corruption free organisations. This involves a rigorous due diligence process and rightly so as there are many NGOs that are corrupt and end up utilising CSR funds for vested interests. But shouldn’t the companies be transparent as well when it comes to their expectations from NGOs, processes for grant giving etc. to help NGOs apply for funding? This article written by the development director of a hospital describes the tedious and unnecessary process NGOs often have to go through to just gather information about available corporate funding. We feel that just as NGOs need to step up their game and become professional in order to secure funding, companies also need to structure their grant giving mechanisms efficiently to benefit the NGOs and ultimately the society in the most efficient way.
Mark Kramer on why a philanthropic model of CSR has limited benefits
Mark Kramer, co-founder and Managing Director of consultancy FSG, stressed in an interview the limitations of a purely philanthropic model and talks about the need for a profit-driven business model for addressing social issues. We agree entirely that, although the traditional CSR model can help to address social problems, there is a critical need to look at social issues from a business perspective. A commercial angle brings greater accountability, professionalism, and often, better resources to tackle challenges than a purely charity-based approach.
Social mission and profit are not mutually exclusive, even for startups
India is on its way to becoming a startup hub (if it’s not there already). But not many startups have a clear social mission or ‘purpose’. The reason is often that they are too busy focusing on other vital aspects of business like, well, starting up! But social consciousness can and should be a part of business strategy for start-ups from day one. Plenty of studies exist to show that a social agenda adds to long term profitability of a company. The same applies to start-ups as well. This article tells the story of how Warby Parker, an online glasses retailer, was able to derive success by being a socially responsible company from the beginning.
Tying CSR with climate change
The climate change conference in Paris in November and December, aimed at helping around 196 nations make decisions on mitigating climate change, is expected to be followed by significant policy changes at national and global levels. Implementation of such policies will come at an added cost that will be borne by multiple stakeholders including governments and the corporate sector. How can the government and companies work together to utilise the mandatory CSR spending to ensure maximum positive environmental impact? A Didar Singh, the secretary general of FICCI, provides insights in this article.
PSUs fare better than private sector in Oxfam’s IRBF 2015 index
Oxfam Foundation released the India Responsible Business Index in October that measures the BSE top 100 companies’ on voluntary disclosures and policy commitments against the National Voluntary Guidelines (NVGs). According to this index, PSUs are doing better than private sector on criteria such as non-discrimination at workplace, community development, respecting human rights and employee dignity, and involving the community as stakeholders in business. The only area where private companies fare better is instituting sustainable policies in their supply chain. We think that initiatives like this that put out such information in the public domain have an effect of motivating companies to do more on sustainability and reporting front. For complete information on IRBF, visit http://www.responsiblebiz.org/
Last week, Payal, our director of social investment, wrote a great opinion piece for Mint on the role that India Inc. can and should play in helping India reach the post-2015 Sustainable Development Goals. Market-oriented solutions, investing in innovation, skilling the workforce and closed-loop manufacturing - a good read on a Monday morning! Get the full piece here.
By Anant Srivastava
Grameen Bank founder on the need to create social businesses from CSR
Muhammad Yunus, Economist and founder of Grameen bank speaks briefly on utilising CSR funds to create and support social businesses. It is something we’ve always agreed with. For-profit social enterprises are a great way to ensure that social causes become sustainable in the long run. Presently, CSR funds can only be invested in a technology incubator at a government approved institute. The urgent need of the hour is to expand the scope of impact investing through CSR funds. We can only hope the government is listening.
Strategic CSR – using CSR to build your brand
The only way to do good CSR is to do it strategically. As companies continue to learn from their mistakes and challenges faced in the first year of mandatory CSR and realign their CSR strategies for the future, this Economic Times article provides a fresh take on an old, sound business advice of using CSR to benefit perhaps a company’s most valuable asset – its brand.
Incubators evoke little interest of corporates for CSR money
The first year of mandatory CSR spending proved to be dismal for incubators hoping for CSR funds. 85 of the top 100 companies on Bombay Stock Exchange for which data is currently available, spent just Rs 6.23 cr in total on incubators, that’s less than one percent of their total spend of Rs 6,500 cr. The reasons as mentioned in detail in this Livemint article range from lack of awareness and closed mindedness of companies on considering what counts as CSR to inadequate information on the government approved incubators that can receive CSR funding. It has to be seen if with time, companies’ understanding and perspective on CSR improves and funding incubators becomes a part of mainstream CSR.
Mandatory CSR at the cost of effectiveness and broader sustainability?
From the annual reports being filed, it’s clear that around two-thirds have complied with the government mandated CSR spending. This percentage can be expected to go up in the coming years as companies mature in their understanding of the mandate as well as their internal capacities to undertake CSR activities.
But is this happening at the cost of effectiveness of the activities being implemented? Are companies doing CSR only to comply without bothering about the actual social impact? It may be too early to tell. Thorough impact assessment of CSR initiatives can only happen 2-3 years after the implementation but it is important from the beginning that companies design and follow robust monitoring and evaluation mechanisms to assess impact.
Compliance with the law can also come at an added cost of companies losing focus of broader sustainability principles as pointed out by Shankar Venkateswaran, chief of Tata Sustainability Group, who has been a part of the drafting committee for the National Voluntary Guidelines (NVGs). In our view, this can be prevented if companies take a strategic approach to CSR and consider it as a subset of their broader sustainability practices.
MCA appointed Baijal Committee publishes recommendations on the CSR legislation
The 6 member committee headed by Anil Baijal to come with guidelines on the effective implementation of the CSR legislation as well as monitoring and evaluation of the activities has come out with its first report.
Some important recommendations made by the Committee which could be followed after the government’s approval are:
- Companies (especially smaller ones) should get leniency for the first 2-3 years in complying with the legislation
- Differential tax treatment for various activities under Schedule VII should be curbed to prevent companies forsaking societal benefit for tax saving in choosing CSR activities
- Companies that need to spend more than Rs 5 cr on CSR should take a programme based sustainable approach to CSR while companies spending less than 5 cr can take a less intensive project based approach
- Private companies like public companies should be allowed to carry forward the unspent amount to the next year to be spent in addition to a fresh spend requirement of 2% of the profit.
- Administrative overheads cap can be increased from 5% to 10% of the overall CSR spend. Also, expenditure on capacity building should not count as overhead
- Instead of a govt. vetted databank of implementation agencies, the onus of due diligence before selecting an agency should rest with the board and the CSR committee of the company. Similarly, for monitoring and evaluation of CSR activities, the boards and CSR committees should develop and follow methodologies instead of relying on the government and are free to leverage external firms if required
Hubristic CEOs less likely to spend on CSR than narcissistic CEOs
As absurd a headline as it is, it’s actually true! A study of 464 companies conducted by faculty members from premier universities including the world renowned INSEAD business school found out that hubristic (those full of self-confidence) CEOs are less likely to engage in CSR activities as they attribute the success of their firm solely to their ability and actions rather than external factors. Thus, CSR as a means of engaging and benefiting stakeholders’ just isn’t necessary for them. Narcissistic CEOs, on the end, tend to do better at CSR as they crave for external validation often fulfilled by CSR in the form of good publicity for the company and leadership. Perhaps a little narcissism isn’t all that bad...
By Laura Quinn
A confusing place to be
Imagine an annual budget of Rs. 20,000 crores managed by 80 managers, none of whom ever speak to each other. Now imagine it’s actually 8,000 managers overseeing that budget, without ever meeting or sharing a word. And turn those managers into three to five-person management committees instead of individuals. Oh and tell each of the 8,000 committees to produce and submit its own, separate annual report. Now think about analysing each of those reports individually because that’s the only way to know how the Rs. 20,000 crores was actually spent. And finally try to make sense of what was achieved, what the impact was, or what was missed out entirely.
Impossible? Correct. Welcome to the world of Indian CSR.
Since the Companies Act, 2013 came into force last April, around 8,000 companies have been mandated to spend two percent of their average net profit from the past three years on Corporate Social Responsibility, within some ambiguous yet fairly restrictive rules set out in Section 135. Estimated as a total CSR budget of around Rs. 20,000 crores per year, the opportunity is tantalisingly close to being incredible. It’s the first legislation of its type in the world - no other country has ever even attempted it - and a funding injection of this scale could represent a critical turning point for India’s development sector, which was variably estimated to have annual revenues of only Rs. 30-35,000 crores before the legislation came into effect. But this funding can only make a difference if it is managed well and directed effectively.
Unfortunately, the reality after the first year of the mandate is quite the opposite. In fact, it’s all a bit of a mess.
- In the best cases, funds are being managed by a CSR manager or team that understands the development sector. But in most, CSR falls under the remit of Corporate Communications or HR departments without the necessary skills and resource to assess NGO partners or measure impact effectively.
- Companies aren’t talking to each other meaning the same mistakes, inefficiencies and failures are getting repeated hundreds of times over from company to company.
- Grey areas in the legislation, and lack of collective experience in interpreting it, are creating a sense of risk-aversion that’s stifling innovation, boldness, and the progress of new ideas for tackling development issues.
- Those social causes which are most attractive (to employees, investors, the Government, and media) are getting a glut of funds - with the Government’s pet missions attracting inflated investments with big tax incentives.
- Tried-and-tested, grass-roots programmes with simple metrics, immediate impact on-ground, and annual funding schedules, are seen as safe options while long-term, more experimental initiatives that have the potential to be real game-changers, are seen as too risky to attract the investment they need.
Ultimately, 70 percent of companies failed to meet their spending targets within the rules of the CSR legislation in 2014-15.
An incredible opportunity
However, as messy as it seems - and it really is - companies are in fact trying. Across the board corporates are struggling with similar issues, trying to interpret the rules, looking for the best programmes to support, and broadly wanting to make a difference. And it’s critical that they do; the CSR ecosystem needs companies see the value of their social investment in order to create a virtuous circle of increasing spends for the long-term. But despite this, the CSR scenario in India right now is inefficient, old-fashioned, eager for easy wins and, perhaps most distressingly, the enemy of innovation.
These are not the qualities of great businesses, and it’s certainly not how to go about changing the world. If Indian CSR continues in the direction it went in 2014-15, India Inc. is going to waste a truly incredible opportunity to transform this great nation.
What we need is a collective strategy, and we need it now.
Let’s imagine the best-case scenario. Try to envisage the collective brainpower of India’s 8,000 most successful companies and all the skills, talent, technology and capabilities they hold. Think about efficiency; think strategy; think “lean” approaches and cloud-based monitoring systems. Think of business-based, financially-sustainable solutions that enable people to lift themselves of out poverty. Think of companies combining forces without the concerns of competition. Imagine being free to invest Rs. 20,000 cores a year in social development without the burden of the public purse. Think of all the innovation and technology that’s at the forefront of one of the world’s biggest markets being directed towards solving its greatest social problems. It's dizzying to even think about the positive impact it could have. And it’s not even that far from being possible.
It’s time to tidy up
Sorting out the CSR mess isn’t going happen overnight. But this opportunity – the first of its kind in the world - is too important to fail. So we, as the CSR “industry”, need to start tidying it up now, and not rest until we make it something to be truly proud of. And there are three simple places to start.
1. Measure and manage
Before we can even begin to figure things out we need a simple way to know what’s being spent, where, with whom, and for what (social) return. ROI is one of the basics of doing business and we must make it a basic of CSR too. A simple, customisable, low-cost, SaaS system would enable companies to measure the effectiveness of their spend, and enable a macro analysis of where money is going, what’s most impactful, and how improvements can be made. We need a Tally for CSR, simple to use and open to all.
2. Share learnings and benchmark programmes
Even after just a year of the CSR mandate, the more able companies are already reassessing their CSR investments based on learnings so far. But most companies don’t have a CSR specialist, and the job of selecting NGO partners and monitoring programmes is left to another function to manage, without past experience in social impact. Inexperienced teams aren’t sure what to look for, or even which questions to ask and the result is hundreds of companies all wasting time (and money) learning the same lessons and funding potentially inefficient programmes. By creating platforms where companies investing in the same CSR space can share best-practice, discuss failures, build on mutual ambitions and eventually pool funds, we can ensure that investment is being directed to the programmes and ideas that will prove to be most effective in the long-term.
3. Inject innovation into impact
One of the great seductions of enterprise is its demand for innovation. Finding the cracks in what’s been done before, combining disconnected ideas into something ingenious, taking leaps of faith that others say it’s foolish to even dream of, is the lifeblood of any great entrepreneur. And social development isn’t so different. But taking a leap of faith, finding an unlikely new macro-solution, or simply thinking differently, are all impossible when your brief is to stay safe and not attract any unnecessary attention. We need to build a critical mass of companies who are ready to take risks with CSR spending and apply the pioneering nature of business to their CSR strategy. If we bring smart companies and great private sector leaders together in innovating CSR and social impact, there’s almost nothing they won’t be able to achieve.
Do One Thing is an impact consultancy based in Delhi that applies strategic thinking and innovation to corporate responsibility.
Here's our topical round up of the most important CSR stories in India throughout June and July.
Two-thirds of companies miss the CSR spend targets
Apparently two-thirds of companies have failed to meet the two percent spending mandate including some surprises such as HSBC and Axis Bank. Reasons for failing to comply aren’t yet clear but here we elucidate on how issues with the legislation itself may have contributed.
But it’s not all bleak news for CSR initiatives
Even though the corporate sector on the whole failed to spend the required amount on CSR, the IT sector did quite well. The cumulative spend on CSR by TCS, Infosys, Wipro and Mahindra was almost five times its previous year’s value. Thus, not all is gloomy and we’re hopeful that as companies build their understanding of the act and recognise the needs of the social sector better in the coming years, channelising of funds in social programmes will grow as will the impact created.
Government launches ‘Skill India’ initiative, plans to use CSR funds
With talent shortage being identified as a concern across all sectors, the Government seems to be working towards a resolution. It recently launched the Skill India initiative on the World Youth Skills day (15 July). The National Skill Development Corporation plans to work with corporates on utilising CSR funds to fulfil this objective. Considering NSDC’s standardised curriculum and certification, youth trained through NSDC’s programmes stand a higher chance of gaining employment and, if implemented well, this initiative could provide companies with a talented workforce and gainful employment to possibly millions of youth across India. However, the impact of NSDC’s work on the ground and its ability to work effectively with CSR funders, still remains to be seen. We for one have tried and failed to engage with them more than once.
Ratan Tata calls for a robust monitoring mechanism for CSR spending
Tata Group’s Chairman Emeritus, Ratan Tata, called for strong need to monitor companies’ CSR spend fearing it may be wasteful or siphoned off for other purposes. We agree that compliance with the mandatory CSR spending is in its nascent stage and a robust monitoring mechanism is needed to ensure optimal utilisation of funds. Perhaps the government’s proposed platform for monitoring CSR projects will do what’s required. The six member panel in the MCA headed by Anil Baijal is expected to come out with its initial recommendations on the monitoring and evaluation of CSR programmes sometime in August as mentioned in this Economic Times article.
Regulations around FCRA may be hurting the CSR ecosystem
The Government has mandated that companies with over 50% foreign shareholding have to carry out their CSR initiatives through NGOs, trusts, or foundations that have FCRA clearance. As examined here, both the corporate and the social sector feels this limits the social good that can be brought through CSR funding. With the govt. tightening the regulations around FCRA clearance and the complexities involved in getting the clearance in the first place, this move is proving to be prohibitive than encouraging for companies to do CSR.
Gujrat to set-up CSR authority to channel CSR funds for state development
The Gujarat govt. has set up a CSR authority which will ask companies for their CSR funds so the same can be used for development across sectors where the need is highest. This could be a good thing, provided there is transparency and accountability around the use of funds and the impact created which, as we know, can be a big ask from government departments! Even though the govt. is giving corporates the option of contributing CSR funds directly to NGOs instead, could this move instil fear in companies of antagonizing the govt. if they don’t channel funds through the new authority? If that happens, there is a chance that some smaller but interesting social projects that could have benefited from CSR funding might lose out to large-scale development initiatives favoured by the government.
As we move into the new financial year conversations on the future of CSR abound. We’ve rounded up a few of the more pertinent updates, comments, and happenings, including our take on the President’s speech at the CII’s National Summit on CSR.
The Hindu talks long-term business benefits of CSR spend
Will CSR investment pay off for the company in the long-term? The Hindu has a crack at how it might, including market development, and increasing customer buying power – we think there are some much more tangible benefits for businesses but good to see the debate is alive and kicking.
Huff Post gives an articulate overview of the watch-outs of “CSR” in India right now
Hyperlocalisation around areas of operation, paying from products instead of processes, desperate alignment with the government agenda – some CSR watch-outs from Amitangshu Acharya in the Huff Post that we are definitely inclined to agree with.
States get micro with yet more guidelines
States are now forming their own CSR guidelines, as evidenced by this piece about Odisha’s plans in the Business Standard, and rumours that the same might be happening across the country. Companies are still struggling to adopt the rules of the Companies Act, which are cloudy enough to have kept many corporate legal teams busy throughout the last year – so we’re dreading more guidelines from states that are likely to add to the confusion, make the idea of CSR even less desirable for India Inc, and prevent companies from making innovative, meaningful impact at scale.
Sammaan: Can a new mega platform bring corporates and NGOs together effectively?
Sammaan is a new platform for CSR created by the Bombay Stock Exchange, CII and IICA announced in April 2015 and set to launch this summer. It will enable companies to browse verified NGO partners and programmes, invest through the platform itself, and monitor spend through a custom dashboard. It’s an ambitious concept and one that will require intensive resource to keep it relevant and updated, let’s see if BSE can make it happen.
New financial norms from ICAI, interpret at your own risk
Companies are to debit (charge) its profit and loss account (P&L a/c) with CSR expenses incurred by it during the year – and such expenses are to be shown as a separate line item in the P&L a/c. This is according to new norms issues by ICAI in May 2015.
And finally… President fails to impress in CSR keynote
We attended the “National Summit for CSR” organised by CII in April. The President of India was scheduled to make the opening address amidst much fanfare so we were curious to see what big ideas he might table. After a long delay and six introductory speeches he finally took to the stage but the outcome was disappointing to say the least. This was his opportunity to rally the corporate community around the potential of CSR and responsible business to bring fresh energy and expertise to India’s development agenda and drive private-sector thinking in new, exciting ways. Instead he regurgitated a familiar spiel around the Companies Act mandate and the government’s priority areas, which everyone in the room was well aware of already. A disappointing morning and more reason to feel concerned that, whilst setting out a good CSR spending mandate, the government has forgotten to inspire businesses to be truly responsible and revolutionary in their everyday operations.
Another month another ferocious period of change and in India's CSR landscape. Here are some of the top stories for the month...
/ Making CSR work
In a time when most companies are jumping on the CSR bandwagon, how can companies ensure that their CSR programme is effective? What works and what doesn't? This Business Standard article explores through real life examples what approaches are effective. A good reiteration of the balancing act that companies need to achieve to make their CSR programmes as impactful as possible.
/ PSU banks - combined CSR?
Modi has suggested public sector banks to pool their resources and collectively undertake a single CSR project. Potentially a great idea to pool huge resources into a single cause, but how do you get multiple organisations with multiple subsidiaries (and let’s not forget multiple CSR committees!) all on the same page backing the same programme? It’s a challenge that might turn out to be just too difficult.
/ The rise of crowd-based CSR platforms
As CSR becomes mandatory and hopefully more common across India, we’re seeing a rise of crowd-based CSR and NGO support platforms. One such startup is Power For One, which enables companies to create a win-win situation by simultaneously promoting their CSR support whilst garnering more support for their partner NGOs from their own consumer base. But it’s very easy to be misguided in this area too, lots of bright young things are seeing potential in the CSR “market”, if you could call it that, and filling the gap with apps and platforms theat may not turn out to be necessary or useful in the grander scheme of things. We fear this Kochi-based startup might fall into that category.
/ Soon, a platform by Ministry of Corporate Affairs to track CSR spending
The MCA is in the planning stages of launching a data analytics platform to monitor the CSR spending of companies. We found a circular on the MCA website stating the formation of the committee, its members and core responsibilities. A report from this committee is expected within 6 months after its first meeting. Although a standardised system of tracking CSR spend and monitoring of CSR activities is a good step forward to bring transparency and accountability, it remains to be seen whether the MCA has really got the resources to back it up, or whether a system like this will ever be able to ensure against corruption or fraudulent claims.
/ Employee volunteering to count as CSR spend?
The Government is considering including employees’ volunteering as a part of a company’s CSR spend. More than just helping partner organisations, employee volunteering serves to instiutionalise the idea of CSR and community investment within a business so it’s definitely worth supporting companies who incorporate this into their CSR planning. However, it could also be the simplest way for less-transparent companies to artificially their CSR burden by over-claiming the number of volunteer hours. This article in HT discusses some of the issues in evaluating pro-bono work.
/ CSR priorities in 2015
In our December round-up, we published a study done by responsiblefuture.in on the leading companies in the Indian CSR space. Here is a follow up on that by the same website discussing the emerging trends in the space for the year 2015. The article rightly talks about the emergence of manufacturing companies as CSR champions after the ‘Make in India’ push by the current government. It reiterates what we and others in the CSR space have been saying – CSR is an essential part of business strategy of a company. The article also touches on the importance of finding CSR managers who are insightful and can adapt to the changing needs and trends in the space.