Recently the Government of India has promulgated an order as per the Companies Act 2013 that stipulate companies with a turnover of Rs. 1,000 crore or more or net worth of Rs. 500 crore or more or net profit of Rs. 5 crore spend every year at least 2 per cent of their average net profit over the preceding three years as a part of CSR. According to the Indian Institute of Corporate Affairs, of the 1.3 million companies in India, about 6,000-7,000 companies are covered under the new CSR rule, expecting an annual CSR spending of Rs 15,000-20,000 crore by India.CSR is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local community and society at large, to improve their lives in ways that are good for business and for development (World Bank). Companies realize CSR can be successfully used to 1) create brand awareness, 2) increase employee participation and bonding, 3) improve community relationships and 4) ensure corporate accountability. Many companies are pursuing CSR as an obligation rather than focussing it as a strategic program with long term benefits. Most common statement one hears in the corporate corridors is that they have engaged an NGO to distribute food or plant trees or blood donation camps. Managing CSR must start with what are your corporate objectives?. What social activities are consistent with your founding principles and business?. What values do your want your employee want to enshrine and be associated with?.
We suggest companies first do a CSR audit and then use RBM to manage the CSR process incorporating the best of GRI G4 and ISO 26000:2010 guidelines. CSR audit can be done by internal resources or external consultants. The first step in CSR is to assess your current practices and any violations from your CSR charter. Start with your mission statement, and CSR mandate and check whether any of your vendors, employees have violated any of the principles. Do an RCA and identify approaches to stem the outlier. Evaluate how your customers and employees think about your company, competitors and how your business plans are consistent with the mission mandate. Assess positives and negatives, the trends and directions to chalk out the next steps. Once an CSR as-is evaluation is done, share it internally to get feedback on the status and what areas could be improved.
Next, do a benchmark analysis covering industry-wide ethical practices, corporate code of conduct best practices, what social cause programs have yielded the best results and why, what have not worked, what are the trends, etc. Forecast the next 5 years investments set-aside for CSR activities, what CSR activities can add value to the society and the organization in terms of impact and branding. Identify which NGO activities and plans align with your short-term and long-term goals. Use Result based management (RBM), a strategy management tool for planning and performance evaluation to align the investments across various projects of different NGOs. RBM helps to measure the result of the activities periodically and emphasize more on what is to be accomplished. RBM has various dimensions. Results are realistic, risks are identified and managed and appropriate indicators are used to monitor the progress of the expected results. These indicators help the organization in assessing whether or not the activities are yielding the desired results. RBM helps to bring clarity on the purpose of the programme and the desired results from the very beginning. RBM captures the progress of activities in short, medium and long term, thus helping your company know how CSR is working, what activities are yielding the most and what partner activities are most promising. CSR is an important element to just outsource, own and manage it to see better business impact.
Pratibha Sharma and Deepesh M