How companies can look to expand their social footprint in the light of new regulation and models in this space.
Where and how does corporate social responsibility fit in the modern business context? The answer is brilliantly captured in the title of a conference I spoke at some years ago: The Death of CSR, The Birth of Responsible Business. Treating CSR activities in isolation serves a limited purpose. It is time we look at the business case of CSR – of doing “good”. I hope that the new legislation in this area will result in introspection that will lead us to expand the traditional definition of CSR from detached philanthropy to integrated and strategic activities.
However, it was not too long ago when businesses were more reactionary in their approach to social responsibility. Companies were often forced to develop sustainability strategies or improve their business practices as a result of changing laws or public pressure. Fortunately for us, the IT-BPM industry has been leading the way in India, proactively synergizing business and social good.
Many companies give employees opportunities to enhance their skills by providing pro bono services to social organizations, in areas such as program management, leadership, communications, and product development. Several product companies have developed applications to bridge the digital divide, to get real-time information on basic essential services, and to provide better physical access to persons with disabilities. Employment is getting created in the most remote places because of the unique business models of the sector and technological advances.
These are just a few examples; the potential of synergy is limitless. For a business that wants to mitigate risks and stay a step ahead of both public opinion and government regulation, being proactive in this area is not just the right thing to do – it is the smart thing to do.
Although the CSR rules formulated under the Companies Act 2013 have received a fair amount of attention, this is not an area that the government has ignored in the recent past. The National Voluntary Guidelines (NVGs) laid out by the Ministry of Corporate Affairs in 2009 (and finalized in 2011 after industry consultation) describe a set of essential principles that cover the entire gamut of business activities and functions including supply chain, sustainability, employee well-being, and human rights. Most importantly, the NVGs provide a strong “business case” for following each of these principles, which includes risk mitigation, revenue growth, cost savings/productivity and branding.
With the new law, concerns have been surfacing that CSR may move from being a broader, all-encompassing initiative to a narrower one. Still, the stipulation that all companies of a certain size must contribute 2% of their net profits to social causes could direct necessary attention to inclusive growth as long as we do not lose sight of the guidelines previously spelt out and the progress we have already made on this front. We still need to think of CSR in holistic terms and as a non-negotiable aspect of doing business.
It is easy to get caught in a numbers game and talk about the size of a company’s dedicated CSR pot. However, a company’s social imprint could be more significant than the quantum of funds it brings to the table. Businesses, individually or collectively, have the ability to create catalytic change in India, at the local and national levels. Their initiatives, if targeted and well thought out, can minimize social inequity of various forms and unlock new and exciting opportunities for economically sidelined groups.
Of course, no discussion on the subject of inclusive growth would be complete without talking about social enterprises and impact investors. With a new business emerging every day, it is exciting to see these socially motivated entrepreneurs bringing more visibility and fresh perspective to seemingly intractable problems. Social enterprises provide new ways of looking at these problems and force us to rethink the conventional model of donation-based redistribution.
There is also a positive shift in the way we view those on the lower rungs of the socioeconomic ladder – as producers, employees and consumers rather than as recipients of largesse. The jury may still be out on some of the solutions but the fact that this group is alive and thriving in India bodes well for the ecosystem as a whole.
There is good reason to be optimistic about the renewed energy and momentum in the CSR space. The recent legislation in this area is also going to put a great deal of money into play. Companies that are committed to being socially responsible have to use their money wisely – in applying their values across all aspects of the business and in aligning themselves with causes and partners in order to maximize their social impact.