CSR beyond statutory obligations: CSR 3.0 version «

CSR beyond statutory obligations: CSR 3.0 version

As the importance of being socially responsible is being recognized throughout the world, governments are aware of the national competitive advantages won from a responsible business sector. Large corporations have progressively realized the benefits of implementing CSR initiatives in the areas where there operations are located.
Current CSR Regime: Version 2.0: Statutory Obligation:
New CSR guidelines for companies have came into effect from 1 April 2013 and are a revised version of the previous comprehensive Guidelines on Corporate Social Responsibility for Central Public Sector Enterprises issued by The Department of Public Enterprises (DPE), in April 2010. Range of budgetary allocation for CSR and sustainability activities (as % of Profits in previous year) has been revised to be for companies with profits less than INR 100 crore will be 3%–5%, those with INR 100 crore to INR500 crore 2%–3%, and those with profits INR 500 crore and above 1%–2%. Further, while the earlier guidelines focused mainly on CSR activities for external stakeholders, the revised guidelines by the Deptt of Public Enterprises also take internal stakeholders, particularly employees, into account. The new CSR Guidelines also include a dedicated section on sustainability reporting and disclosure.
So we come to a situation that while voluntary charity and philanthropy by business houses and business leaders due to idealism or income tax benefits were considered as CSR Version 1.0, we have now moved to a compliance based CSR which can be called CSR Version 2.0. However, the criticisms that is coming up from several quarters today is that this regime lacks passion, is done for compliance, kills a lot of funds internally and in administration of the CSR role, and less strategic in nature. It is the statutory obligation that is forcing the corporate role and not a desire to make a sustainable impact in the communities a corporate is working in. And hence there is the need of CSR Version 3.0 going beyond statutory obligations. The Policy Times and Jamia Millia University recently even organized a national seminar on this very theme.
Recently, the Minister of State for Corporate Affairs, Govt of India, PP Chaudhary, said in this context, “CSR cannot be an ad hoc work, but should part of a long term strategy, a core business function not a peripheral activity, ideally bridging the rural and urban divide, and Indian corporate houses need to work towards that ahead.”
Sustainability beyond Community Relations:
CSR needs to look beyond community relations (which is only the first level and good in case of hygiene and education), and start strategic CSR in areas around policy advocacy and business continuity. Specially in cases where there can be a civil society unrest affecting your business. Create a coalition with other organizations, NGOs and media to take on a larger issue. As a market leader, if one is, a corporate entity is expected to advocate for something that is bigger than your regular operations. This can be a cause related to environment, vocational education, education or health of the girl child. Many advocate linking girl child education as a part of CSR in all cases of CSR initiatives as far as possible.
Next, one needs to draw attention towards ethical conduction of business and decision-making itself, and shouldering responsibility and mentoring towards your employees as a part of CSR. EY Report on CSR also calls for a CSR framework which is a way of doing business resulting in a significant impact on community and long term sustainability.
In fact, many rightly believe that sustainability is to be factored in how the business itself is done (with people and planet focus), and not just what is done with a part of the profits, as mandated by the low today. New policy framework about CSR must factor this. The UN Global Compact also talks about 10 Principles of Sustainability that includes social, ecological, human rights and governance issues as well, and it is a good guide to CSR Strategy & Action of tomorrow.
There is another interesting rural angle for CSR tomorrow. Nearly 2 companies in India are there for every village. Around 6.5 lacs villages are there in the country, while 12 lacs registered and active companies (all may not be in CSR net yet) exist. Some 2.5 lacs villages out of these are with below 500 population and 4000 villages with above 10K population. So one large and one small village can be taken to ensure some basic amenities assured for a reasonable quality of life as part of CSR by every two companies (one large and one small). Along with the relevant govt projects.
A commitment to sustainability needs to be there regardless of political changes, shifting thereby the concept of Corporate Social Responsibility to Social Impact. EY-PHD Chamber CSR Report also calls for Strategic CSR initiatives contributing towards national building. We have moved from institution building (schools/hospitals) to community development (water management, SHG empowerment), Now in Version 3.0, the need for CSR is move to protect Rights & freedoms (new paradigm): Right to Edu, Freedom from Poverty or Disease, etc. Amit Sengupta, Journalist & Editor, Delhi, also echoes the same and calls for a paradigm shift to bring in contribution towards protecting human rights as a part of CSR agenda.
Sustainability output to be pre-requisite for scalability in CSR, and outputs need to be quantified, while qualitative output can be additional. Hence, clarity on metrics of success. Also, financial resource budgeting & planning to be a part of CSR strategy meet. Active third party monitoring & evaluation to be a part of CSR strategy. This measurement and matrices is a major concern and limitation of the current CSR regime.
Measurement of CSR Impact:
Many advocate to move from cheque-book CSR to ROI CSR with global standard measurement matrices. CSR start-ups need to be encouraged and a govt portal on CSR for public opinions, suggestions, etc must be there. CSR needs to be driven with the common man at the core and not just a boardroom strategy. Hence, decouple CSR committee from management especially promoter driven boards, have an independent director chair for CSR and audit it to ensure genuine work and prevent leakage. CSR has to be from within, and not through family foundation which keeps CSR funds within the family, and often defeats the purpose. Area of activity clause too is a major concern and a tool to outrightly reject a genuine CSR proposal.
Many have called for specific areas of concern and broadening of CSR scope. For example, some experts have called for local population friendly HR policy to recruit available young talent locally and grooming them as a part of CSR, and creating quality life enabling infra-structure in the vicinity of your operations are major concerns. Further, CSR can include supporting talent from poorer families acquire technical skills to succeed professionally, can provide free and comprehensive Mass Open Online Courses in the vicinity of operations, and can also promote neglected sports like Hockey or Boxing. Further, it is high time CSR also looks at art, culture, music. For example, training street kids in music, supporting arenas and live performances, bringing down artists and film-makers for a cultural exchange.
Interestingly, less spoken about areas for CSR are also being advocated. CSR should include support to people dying on the line of duty: policemen, journalists, armymen, firemen, etc. Further, CSR can include social outreach to help children who are vulnerable in cyberspace, a sort of media literacy from the school level.
Strategic CSR to Reputation:
However, ground reality is that strategic CSR will need to get more linked with business for long term sustainability as a project and sustain the interest of the corporate house. For example the: Shakti project of Hindustan Lever empowers poor and marginalized and deserted women and also ensure topline for the company. Also, CSR needs mainstream media interest and reporting actively. So both the mainstream legacy and new media need to take interest in CSR and beneficiary stories as a part of broad development communication. This will also contribute to corporate intent, public interest and corporate reputation.
Undoubtedly time is ripe for CSR Version 3.0 which looks at the entire gamut of strategy, impact and sustainability of CSR and not statutory obligations.
The author is a noted media academic and media writer, and is currently the Media Dean of Pearl Academy, Delhi and Mumbai. He has served earlier as the Dean of Symbiosis and Amity Universities.