Time to Make CSR More Strategic

By Suresh Kr Pramar

The current global financial crisis has impacted Corporate Social Responsibility ( CSR) in India adversely. Business houses, trying to restructure their resources, have run the red line through CSR budgets. CSR managers claim that managements have issued instructions to put on hold all new CSR projects. Budgets for many ongoing projects have also been curtailed. The global financial crisis has helped strengthen the belief that CSR, for most Indian business houses, was not a very serious issue.

A study by Rajat Panwar and Eric Hansen, of Forest Business Solutions, reveals that most Indian business houses feel that CSR was only possible if profitability was high. They have quoted an Indian manufacturer who said that “no social activity was possible without at least 25 per cent profitability”.

Urban Nightmare by LeoLeonardo

A study by Tatjana Chahoud for the German Development Institute reveals that  “India’s economic reforms and its rise to become an emerging market and global player has not resulted in a substantial change in its CSR approach…Indian CSR is still in a confused state.” The study indicated that “Indian understanding of CSR seems to be shifting from the traditional philanthropy towards sustainable development.”  Nevertheless, philanthropy continues to be widespread in many Indian companies, “since community development still plays a decisive role in the CSR agenda of most companies.” All the PSUs included in the survey indicated that their CSR was philanthropic.

Current economic conditions have created an environment in which CSR has become both increasingly challenging and acutely necessary. Social programmes are in need now more than ever since the crisis hit the economically vulnerable sections of the society more severely. Companies need to come up with new and creative ways to win business in a down economy.

The present circumstances point to the need for companies to embrace strategic CSR programmes that are tied to their core competencies and that are designed around long-term commitments to deliver social change.  Strategic programmes are poised not only to deliver the most effective and efficient social programmes, but also to provide the strongest returns to the business.  Ultimately, the more integrated CSR is in the business, the greater chance it has to be able to achieve maximum impact even in the midst of changing economic circumstances.

Instead of cutting down on its community activities, Indian businesses need to use this opportunity to strengthen and streamline their CSR agenda. There is a need today for Indian businesses to re-examine their CSR interventions and determine their effectiveness. Surveys have clearly indicated several loopholes in the infrastructure and implementation of CSR in most companies.

Construction by Leonard Clagett

With less money to spend, businesses need to put in extra time to think tactically in terms of the big picture. At the end of the day, each company wants to see its investments in the community have a direct complementary impact on its business. There is need to refocus  and question what true goals a company’s CSR programmes are  trying to achieve . Companies should use this time to measure impact and conduct an analysis of CSR  programmes to date, asking, “Have we really achieved what we said we would achieve?”

The Tatjana Chahoud study revealed that “CSR is firmly rooted in the top management.” While understanding of the concept at the top management level is strong, little of this trickles down to the implementation level. Few companies have CSR managers who have the required levels of knowledge and awareness about various aspects of CSR.

The present crisis offers an opportunity to make CSR more strategic to tackle the new and emerging needs that the present economic downturn is likely to bring. Cutting CSR budgets at present will worsen the plight of the vulnerable sections of society. It will send out the message that CSR is a fad to be indulged in only when the going is good. The present is the time when CSR activities need to be increased to help those in need the most to rebuild their lives and trust in business.

The financial crisis has hit businesses but has affected most intensely the poor and vulnerable sections of society. While businesses have the government to bail them out with subsidies and concessions, the poor have no such backup. To make matters worse, governments, both state and central, are slashing welfare budgets to finance economic recovery. Governments are throwing money about because they believe that if only people could be persuaded to spend again, then the economy would be all right.

Business has a very decisive role to play in helping the vulnerable and poor to tide over the current crisis. Those who continue their CSR commitment are likely to reap substantial benefits. The present is the time when there is need to enhance substantially CSR activities. There is a need to target those most in need and try to rebuild some of the trust in business that has inevitably been lost. The present crisis is the result of the loss of credibility and trust in business. The common feeling all around is that people at the top in business have been greedy and have neglected their responsibility towards society.

Child's Worst Nightmare by SpasticPoison

As the financial crisis plays itself out over time it will show in very uncertain terms that Corporate Social Responsibility is not a fad but the need of the hour. Indian businesses need to shift their attention a little more to their responsibilities towards the society. While the financial bottom-line is important, there is also a need to consider the needs of society and create goodwill.

There are four areas which require urgent attention to improve CSR performance in India.

First: Management needs to pay greater attention to the need for training the people responsible for CSR. A  2006-2007 Partners in Change survey revealed that the lack of knowledge and awareness about CSR was one of the three important hurdles. It also pointed out the need for increased levels of awareness among all employees and need for training for CSR and Human Resource staff. Well -trained and knowledgeable staff will help to ensure greater spread, penetration and effectiveness of the company’s CSR agenda.

Second: Companies need to raise the levels of transparency through improved communication. Preparing Sustainability and CSR Reports should be given serious thought. Companies also need to think of tailoring their corporate advertisements with increased social messages highlighting their responsible activities.

Third: Employees at all levels should have the knowledge and the responsibility to contribute to the company’s responsibility programmes.  A top-down approach does not create a sustainable CSR programme.  Disseminating the company’s CSR mission among its employees should start from the very beginning, at the time of recruitment.

Fourth: Companies should build effective partnerships with civil society organisations to implement their community development programmes. They need to learn from the best of the voluntary sector. Companies can help create social enterprises which can operate in a competitive market environment and still deliver valuable social services to address the needs of the vulnerable sections of society. A successful social enterprise offers a much more sustainable solution than having charities depending on aid.◊

Suresh Kr Pramar is the Editor of CRBiz.