Difference between Social Bonds and Social Impact Bonds

In the course of my professional engagements on social bonds, and academic deliverables on social impact bonds, recently I have been confronted a lot with questions pertaining to the difference between the two instruments. This has motivated me to look into the instruments in detail and ascertain the variations on my own.

A social impact bond refers to an innovative financing mechanism in which governments or commissioners enter into agreements with social service providers, such as social enterprises or NGOs, and investors pay for the delivery of pre-defined social outcomes (Social Finance, 2011). The first Social Impact Bond was launched by UK-based Social Finance Ltd. in September 2010.

Social Bonds, on the other hand, are relatively new financial instruments primarily modeled around International Financial Corporation’s existing themed bond products -Banking on Women (BOW) Bond Program (2013) and the Inclusive Business Bond Program (BOW). Social Bonds are bond instruments whose proceeds are exclusively applied to finance a project that delivers social outcomes. This can include projects ensuring access to essential services, affordable housing and micro-finance. The structure of the instruments are similar to Green Bonds. It is the market perception that probably it was the success of Green Bonds that led to the recognition of bonds as viable instruments to address non-financial objectives. It worked for the green objectives, so the next step was social projects.

From a governance perspective, the major difference between the two instruments is that while social bonds are being backed by an international finance institution like IFC and despite being a new instrument, regulated to some extent by ICMA’s Social Bond Principles, there is no existing transnational governance on Social Impact Bonds. This is mostly explained on the basis of the difference in the nature of instruments.

While Social Bonds are intrinsically investor-centered, Social Impact Bonds centre around the local public institutions who are more likely to be the issuers of the instrument. In practice, the term ‘bond’ is construed to be a misnomer for instruments like Social Impact Bonds for they are essentially ‘payment by results’ contracts with “outcome funders” like governments and agencies who pay back the private investors funding the project. The repayment of the principal and the interest is solely dependent on the performance and  success of the project and investors  risk losing everything in case of failure. Social Bonds, on the contrary, are functionally a debt instrument like any other bond with fixed returns and a promise to use the proceeds for the mentioned objectives. The risk is comparatively very low, explaining the investors’ interest in this model of financing social projects.

One would expect that since both instruments target at achieving social outcomes, there would be a similarity in the impact measurement processes and the outcome metrics that are defined to measure social performance. From a practitioner’s perspective, this is not true and the difference emanates from the very nature of the instruments. The success of Social Impact Bonds depends upon effective impact measurement. The outcome metrics are linked to the payment structures and are determined specific to the target cohort, the nature of intervention, and the local context. The structure leaves little flexibility to accommodate investor preferences. Social Bonds, on the other hand, are more flexible instruments and metrics are usually defined on the basis of the investor’s ability to measure with the existing systems.The instrument allows for this flexibility and the rationale is that imposing restrictive metrics will deter investors interest and affect the scalability of the market.

Overall, from a market perspective, Social Bonds are seen more favorable to Social Impact Bonds as emerging innovative financing instruments to address development challenges and that is reflected in the growth rate of the instruments. This stems from the enhanced investor flexibility and lack of need to engage with other stakeholders. Social Impact Bonds are increasingly being perceived as a small market for specific focused projects.

REFERENCES:

Advertisements

Maturity of ESG Practices in India

India is increasingly aligning itself with the global trend of socially responsible investments and has even made it to Candriam’s latest list of investable ESG-friendly countries. According to the data provided by Morningstar, the asset size of funds dedicated to an ESG strategy was $28.54 billion in emerging markets with an annualized growth rate of 27.6% over the three years, from July 2014. According to the Morningstar India Sustainability Index, Indian companies are faring better than those in other emerging markets in this regard.

Traditionally, Indian firms are not known to be ESG compliant. In fact, in the recent years, few global companies have divested out of certain companies in the country for failure to comply with the international ESG standard benchmark. Investors from developed markets are now more conscious of parking their funds in companies that not only create value for shareholders but also have good ESG policies. This has been a significant push for Asian companies to move towards improved stewardship from on ESG issues.

The ESG investment landscape in India is still at the nascent stage and it is green financing that is the forerunner. This is due to a reorientation of public policies in favor of greener growth, consistent with the commitments undertaken by the country at the COP21 to transition to a low-carbon economy. Most stakeholders have become environmentally conscious and are consistently looking to integrate environmental aspects of their businesses in their mainstream investment strategies. Renewable energy has been deemed a priority lending sector for banks, and the Securities and Exchange Board of India (SEBI) has issued voluntary green bond guidelines.

Yes Bank as the first and only Indian Bank to be ranked in the Dow Jones Sustainability Indices (DJSI) for the third consecutive year in 2017 stands out for its ESG practices. The Bank issued the country’s first ever green bond, one of the first among the emerging economies, in February 2015. It also developed internal indices for selecting projects to give loans to that along with financial performance also measure the environmental, social and governance (ESG) impact of the project. For its sectoral leadership in ESG performance, Yes Bank has been selected as an index component of FTSE4Good Emerging Index, which comprises companies from 20 emerging economies, selected through an assessment on over 300 data points that include distinct environmental, social and governance pillars.

As of 2017, stocks of Indian companies committed to mitigating risks arising from climate change have fared well belying the belief that socially responsible investments find it difficult to generate long-term performance. This is reflected in the performance of the BSE Carbonex index which is a thematic index measuring a company’s ability to address climate change risk and opportunity. In line with sustainability investments, another of the BSE Indices that is extremely relevant here is the BSR Greenex index that consists of the top 25 stocks that adopt relatively better energy-efficient practices.

On the social and governance front, NGOs like Oxfam India, Corporate Responsibility Watch, Praxis and Partners in Change have collaborated to come up with the India Responsible Business Index (IRBI), now in its second edition after 2015. This index ranks the top 100 BSE-listed companies on their performance on five parameters – inclusive supply chain, community as stakeholders, community development, employee dignity, and human rights & non-discrimination at the workplace. The information is accessible by all stakeholders and can be used by the companies themselves to self-assess and take corrective actions. The only limitation is that none of the information provided is externally validated as the Index is based on self-reported and publicly available disclosures (Sustainability & Business Responsibility Reports). Every company’s policy commitments are measured against the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business. The IRBI exercise, nevertheless, is an example of a successful ESG engagement process which has the potential to influence the behavior of companies in different sectors in the long-term.

There is still a long way to go. Only four Indian business houses have made it to the DJSI World Index this year. ESG has become a concern among Indian companies, but it still has to become a priority. As the research from Cambridge Associates goes, if successfully integrated, ESG strategies have the potential to make a stronger contribution to the  overall performance of companies in emerging markets than to those in developed markets.

REFERENCES:

  1. http://www.international-adviser.com/news/1038387/ems-dominate-list-esg-friendly-countries
  2. http://indiacsr.in/yes-bank-maintains-its-position-on-the-dow-jones-sustainability-indices/
  3. http://www.livemint.com/Money/DiR07xxx6iZucroHNjhNDO/BSE-Carbonex-index-outperforms-Sensex-so-far-in-2017.html
  4. http://www.livemint.com/Companies/3bTodoRzkIluq20saQoInO/Companies-turning-more-responsible-but-still-a-long-way-to.html
  5. https://www.top1000funds.com/analysis/2017/02/08/dont-let-distractions-thwart-esg-focus/
  6. http://economictimes.indiatimes.com/news/economy/finance/indian-companies-not-adhering-to-environment-guidelines-could-be-snubbed-by-global-investors/articleshow/55080383.cms

Is the exclusion of “social business projects” from Schedule VII a missed opportunity for the Indian development agenda?

My past year at HEC Paris while pursuing the Masters program in Sustainability and Social Innovation exposed me to the concept of “social business”. At the outset, please note, for the purpose of the initial analysis, I am not referring to a social enterprise, the concept of social entrepreneurship or Mohammad Yunus’s definition of “Social business”. I am referring to the definition of “social business” as adhered to by many big multinational companies which revolves around business strategies consisting of product development, logistics among others, for the bottom of the economic pyramid population. The concept that enables both corporates and NGOs to benefit from the competencies, infrastructure and knowledge of the other to operate in low-income markets, the business case being the identification of business opportunities in catering to poor people so that it is a win-win situation for all.

To say that I was fascinated with this innovative business model that provides an opportunity for interests and capabilities to converge would be an understatement. What made me uncomfortable on a personal level, however, was the underlying corporate agenda to grow new markets at the bottom of the pyramid and the consequent risk of profit-making from the poor overriding all other considerations. But so far the convergence allowed for sustainable development and the accelerated eradication of poverty, it seemed like a very plausible solution to address the biggest developmental challenge plaguing India – Poverty. Provided, of course, that adequate safeguards were put in place.

When I came back to India, motivated by these models and the knowledge of them already being implemented in the country by foreign companies, the most obvious question that I asked was:

Why aren’t the top Indian companies following the same path in pursuance of their CSR policies?

In fact, they should have more than enough reason and opportunity to, considering India is the only country in the world to legally mandate a CSR expenditure of an amount of 2% of the net profit of certain companies for the preceding 3 years. With such enormous funds at disposal, social business projects would seem like the perfect avenue for CSR fund utilization. And since companies would benefit from the new markets for their products and services, they would have sufficient incentives too.

What I had conveniently forgotten was how inconsistent such a concept would be with the inherent philanthropic philosophy of the Indian CSR law as contemplated under Section 135 of the Companies Act, 2013. The law explicitly prohibits a company from engaging in a CSR activity related to its core business or generating profit from it. I also had a misinformed understanding that “social business projects” were still included as potential CSR activities under Schedule VII. The Clause prescribing for the same had, in fact, been deleted by the Government vide a notification dated 27th February, 2014 without giving any specific reason. Furthermore, the clause on the residual powers of the Government to prescribe other permissible CSR activities was also deleted vide the same notification.

If “social business projects” were still to find a place in the Schedule, there are no sources to ascertain the legislative intent behind the insertion of the term in the first drafto determine the scope. Although an interpretation can be derived from the consistent prohibition on profit-generating CSR activities since the initiation of the law in the year 2013.

So should companies in India be allowed to implement social business projects under the CSR mandate?

It appears to be a double-edged sword. One side is the genuine contribution to the developmental agenda through the integration of the poor in the main markets, and the use of corporate competencies to facilitate an on-ground transformation by ensuring affordable access to basic goods and services. The other side is the potential for manipulation of the rural population, of whom one-third are illiterate, by established multi-level marketing networks, convincing them of a need of something which is inconsequential in the face of their basic sustenance challenges. In a country, where people have fallen victim to several schemes run by companies [pyramid schemes, ponzi schemes, marketing shams, etc. ] time and again resulting in the misappropriation of funds, one can’t be careful enough. If wide powers of pursuing business interest with social value through CSR funds are vested in Indian companies legally, there will be substantial scope for exploitation. Furthermore, in view of the lack of elaborate monitoring and accountability mechanisms by the public authorities, maybe it is a good idea to not presently include social business projects as a separate permissible CSR activity for Indian Companies. There is potential for more harm than good. Companies can continue to develop radically affordable products for the poor in pursuance of a business strategy integrating social concerns without a CSR validation.

It is also important that since these limitations may not apply to foreign companies, instead of blindly perceiving the involvement of foreign companies in the apparent solving of the domestic social problems as a boon due to the inflow of funds, timely impact assessments are undertaken at a public level to ascertain the legitimacy of these interventions.

How else can the CSR funds be utilized in an innovative manner to address the developmental challenges in India?

An alternative to allowing companies to pursue their core business interests for the disbursal of the CSR funds through a direct involvement in the social business projects, would be the insertion of a clause in Schedule VII allowing for the utilization of the funds to set up incubators for social businesses and social enterprises. The definition of a “social business” should preferably be restricted to those businesses that are driven by a social cause, and are motivated to make money so they can continue to deliver on their social mission. This could include:

  1. A non-loss, non-dividend company devoted to solving a social problem and owned by the investors who re-invest all profits in expanding and improving the business.
  2. A profit making company dedicated to a predefined social cause which uses the profits to solve the social problem.

Schedule VII already contemplates the utilization of funds for incubators, only the scope is restricted to: technology incubators located within academic institutions which are approved by the Central Government. This does not allow the utilization of the funds to foster social entrepreneurship or social innovation at the grass-root level. Where companies are unable to actively design and implement programs dedicated to addressing developmental challenges, CSR funds should be used as an enabling and empowering financing mechanism for individuals/enterprises dedicated to solve a particular social or environmental problem. The corporate’s role should be limited to providing assistance to these entities.

Corporate social responsibility in India has largely taken the color of donations or philanthropy. The exceptions to this are companies that are committed to designing and implementing social projects consistent to their core values through their Trusts and Foundations. The CSR law in India, still at its nascent stage, leaves ample scope for funds to be diverted for CSR activities enlisted in Schedule VII with the sole objective of regulatory compliance and without any intention of a sustainable impact. This is despite the inclusion of prohibitions on one-off-events and the requirements of identification of beneficiaries, activities and projected outcomes to ensure that a activity is carried on in a project mode. Due to the absence of appropriate enabling provisions, a failure to effectively and efficiently utilize the CSR funds at disposal will definitely be a missed opportunity for India’s developmental agenda.

REFERENCES:

  1. https://hbr.org/2007/02/cocreating-businesss-new-social-compact
  2. http://www.mca.gov.in/Ministry/pdf/CompaniesActNotification3_2014.pdf
  3. http://www.mca.gov.in/SearchableActs/Section135.htm
  4. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/Corporate_Social_Responsibility___Social_Business_Models_in_India.pdf
  5. http://www.motherjones.com/politics/2012/05/government-corporations-profit-poor-people/
  6. https://www.csmonitor.com/World/Making-a-difference/Change-Agent/2014/0115/Ziqitza-ambulances-make-money-while-serving-India-s-poor
  7. http://www.moneylife.in/article/qnet-ldquoit-is-a-chain-where-a-person-is-fooled-and-then-he-is-trained-to-fool-others-to-earn-moneyrdquo-says-bombay-hc-order/46857.html
  8. http://www.bbc.com/news/business-29916178
  9. https://scroll.in/article/603226/5-pyramid-schemes-india-fell-for
  10. http://www.moneylife.in/article/will-a-new-law-to-check-pyramid-schemes-work/47970.html

[All views are personal and do not reflect the views of any organization]

 

Role of Employees in CSR Communications

CSR_logo

Employees represent the most powerful brand communications channels. The most fruitful way to link philanthropic or employee volunteerism programs and the corporate brand is through a company’s employee base. What they say about their company and its offerings can often have more impact on company’s brand equity than any advertising campaign. If they understand them, endorse them and –most critically- feel a part of them, they will communicate this understanding with accuracy and passion. Keeping employees informed is, thus, key to successfully integrating philanthropic efforts with corporate brand building.

The first objective concerning employee CSR communication is to create publicity and a good reputation through word of mouth using CSR. Employees represent a powerful channel through which it is possible to communicate in positive terms about the company. The second objective of CSR communication with regard to employees is to increase employees’ satisfaction and commitment through CSR. So employees working in an ethical and socially responsible company are more committed to it. The third objective discussed in the literature with regard to employees is to increase the appeal of the company as a future employer through CSR. The fourth CSR communication objective is to reduce employee turnover through CSR. When employees consider their organization as socially responsible, they are less likely to leave. Furthermore, employees are also seen as a valuable source of information about how those outside the corporation are reacting to the CSR initiatives. That is why employees should be a primary target for CSR communications.

Effective CSR communication is grounded in employee support. The premise is that employees committed to CSR facilitate trustworthy CSR communications. Employee will verify messages that external shareholders hear from the corporation as well as communicate their own positive messages about the corporation’s CSR initiative. The better informed the employees are about CSR, the more effective they are at communicating about the organization’s CSR activities. This is also an opportunity for employees to feel a greater sense of involvement and identification with the CSR initiative, thus signifying the importance of corporates securing employee commitment for CSR concerns at every level.

Employees are considered as one of the most important stakeholders for CSR communications as they are not only an audience but also a key component when it comes to external communication with stakeholder audiences.  Therefore,the important task is to first adapt employees’ perceptions and then their attitudes and behaviors, so they can deliver the message with a higher level of congruence to external stakeholders (communities, consumers, financial groups, and government, etc). Internal consistent and congruency are vital to a successful external communication of corporate identity. Internal communications particularly assumes predominant importance in a situation where the organization deals with major changes such as adopting corporate sustainability model.

The channels of communication used for communicating with employees calls for a mix of one-way and two-way channels of communication including informal communication through conversational dialogue. There are various ways in which the engagement of the employees can be achieved. For instance,  utilization of emotional relationships and encouragement of collaboration through community and demonstration of underlying value as factors in CSR communication strategy will help companies attain their employees’ objectives. Similarly, internal communication with company employees can occur through many channels including the Company Value Statement, Regular All-Staff Meetings, New employee orientation, Suggestion Boxes, Posters and Banners, Newsletters, Intranet, Memos or Emails, Internal Web Portals, and Internal videos or Brochures.

In order to make sense within the organization, CSR needs to be implemented from an inside out perspective, allowing employees to be a part of co-creating an ethical organizational culture. This will enable employees to act as promotional assets and good corporate ambassadors for their organizations to external shareholders.

Today, the power of employee word-of-mouth has been greatly magnified given the popularity and scope of social media platforms such as blogs and social networks. It is, therefore, advantageous for the employees who work in CSR to be active on social and online media. This will enable them to locate relevant online discussions and contribute their own posts. Employee blogs, employee tweets, posts to discussion board are low-cost options that can, further, go a long way in establishing the credibility of a company’s CSR activities along with extending the reach of the CSR messages. Videos or images posted about a company’s CSR activity by employees can help create a content community. Employees can also be asked to help tell the company’s story and those who do so can be publicly recognized via intranet, or posters within the organization or meetings with the CEO. All this is just an extension of corporate transparency.

A company is in a position to exert greater control over the content of CSR communication by members of its value chain, i.e. employees, than by those who are not part of the value chain. Companies should, hence, encourage informal yet credible communication channels such as word of mouth. Companies should not underestimate the power and reach of employees as CSR communicators since employees typically have a wide reach among other stakeholder groups through their social ties and are often considered as credible information source. Thus, companies should “tune up” their internal CSR communications strategy and find ways to engage employees and convert them into companies’ CSR advocates. Employees should be informed consistently, concretely, and coherently about CSR initiatives, including program specifics, rationales and successes. Moreover, they should be included as participants in the planning, design and implementation of CSR activities. Keeping the employees informed and actively involved will strengthen their commitment. Active and meaningful CSR communications will also translate to higher levels of employee retention and engagement. Studies show that companies with a high level of engagement are, on average, more successful.

Thus, employees are indispensable for reinforcing a brand’s CSR message.

REFERENCES:

  1. Supriya Motwani, Communicating CSR is More Challenging than Paying CSR at http://www.irdindia.in/journal_ijrdmr/pdf/vol1_iss1/8.pdf
  2. Shuili Du, C.B. Bhattacharya, and Sankar Sen, What Board Members Should Know About Communicating CSR at https://www.conference-board.org/retrievefile.cfm?filename=TCB%20DN-V3N6-111.pdf&type=subsite
  3. Mohamed Bibri, Corporate Sustainability/CSR Communications & Value Creation: A Marketing Approach at http://www.diva-portal.org/smash/get/diva2:831498/FULLTEXT01.pdf

Online Media is vital for effective CSR communications

Logo

Digital disruption is today’s reality. Internet has exploded as a primary distribution point content creating new opportunities to engage people in topics they really care about. Companies in the field of CSR & Sustainability are being forced to make a 360-degree turn and revamp their communications, marketing, supply chain operations, and basically every part of the business. Social media has begun to play a key role in how companies shape their CSR policies and present themselves as good corporate citizens. As business leaders strive to build more sustainable and social responsible entities, formal social media strategies are becoming paramount. The future of CSR & Sustainability is, unarguably, digitally-driven and socially-savvy.

CSR is an interdisciplinary emergent field. In order to acquire a growing understanding of how to navigate the numerous way of handling CSR, communication and dialogue about it is a necessary step forward. What complicates the communication process, thought, is the variety of interests surrounding a CSR initiative. Not all stakeholders want the same information about the initiative. For example, some investors are interested in the financial effect of the CSR effort on the corporation (e.g. ROI), while local communities want to know how the actions directly affect their lives. The CSR communication needs to be tailored to each stakeholder yet maintain an overall consistency.  Without the stakeholders’ awareness of the company’s CSR activities, corporations are unable to draw any reputational benefit from it. Consumers’ awareness of a corporation’s CSR efforts is, particularly, a key pre-requisite for positive reactions to such activities. Therefore, the CSR communication stage should consist of a plan that outlines the stakeholders to be addressed, channels (media) to be used to reach them, and primary messages to be sent to each stakeholder group. Creative communication solutions are, furthermore, needed to communicate corporate responsibility messages in a way that is striking, relevant, and understandable.

Digitalizing CSR communication is a challenge and one needs to start with a communications strategy that extends over the full year. It is important that the strategy encompasses multiple channels and multiple-messages, even considering different formats of content such as social media, blogs, video, photos and newsletters. The penetration of digital and social channels into daily, working routine has reached a tipping point in terms of stakeholder’s access to corporate information and engagement over environmental, social and governance (ESG) issues and the four main trends that have been identified are:

  1. An ever increasing adoption of social media networks as legitimate channels for CSR communication.
  2. The necessity of leadership to get active on the social web and develop interpersonal relationships as consumers increasingly engages with companies on social media around CSR topics.
  3. Targeted, relevant and useful information for effective CSR communication that need to ‘packaged’ in the right form by adopting more innovative approaches such as infographics and videos (visual story-telling is easier to absorb). Social media users are not interested in grand claims and general strategy overviews, but in concrete examples of how strategies are translated into everyday action and evidence of how companies are addressing major environmental and social impact through case studies, projects in action, answer to stakeholders’ questions, videos, news and updates on initiatives.
  4. Community feedback still has to be integrated in the company’s operations in addition to transparent stakeholder engagement.

Social media is one of the most valuable communication channels for CSR. The biggest benefit is that it allows brands to create distinctiveness and an opportunity to stand out with their CSR communications. Organizations can use social media to:

  1. Learn what CSR issues are important to stakeholders (find emerging issues)
  2. Determine if stakeholders are aware of CSR activities
  3. Assess stakeholders reactions to initiatives
  4. Increase awareness of CSR initiatives
  5. Provide an avenue for stakeholder engagement

The number one priority in social media is listening. Points 1 through 3 involve listening. Listening to stakeholders helps managers to understand the stakeholders and their CSR concerns. This CSR knowledge base provides a foundation for engaging stakeholders and eventually promoting awareness of CSR initiatives.

Communicating the company’s CSR messages in social media can be a basis for creating an echo. An echo occurs when people pick up the CSR messages and relay them to others- the online version of word-of-mouth communication. The CSR messages may or may not have the potential to become viral but the use of social media will help create the potential for echoes to emerge.  Fans on Facebook, followers on Twitter, and people reading the blogs are exposed to the message and can create echoes through retweets, reposts, and any other opportunity to share information with others. The online echoes cam also provide people an opportunity to add personal endorsements to the message. Trends will only emerge if people are ready to embrace the trends. This means the viral effort amplifies an existing need or concern rather than create a new one. All in all, social media are the key component to external word out of mouth for a company’s CSR initiatives.

The unique aspect of social-networking sites is that a person’s social network is exposed to others. The ability to see the social networks of others provides an opportunity to make additional connections that would have not occurred otherwise. Fan pages, particularly are public and allow organizations to add a variety of information and to engage directly in discussions with stakeholders. CSR initiatives and issues are a logical topic that could emerge on a fan page.

Using social media for CSR may or may not be a “business decision,” but it can help build positive reputation and possibility increase customer loyalty and sales. Major brands are finally starting to tap their customers to create an audience/support network for their CSR initiatives. A powerful mix of content, media, and entertainment can bring to CSR programs enormous success. It is critical to be transparent when it comes to a company’s CSR program, especially when harnessing social networking platforms. Being real, open and communicative is vital to reputation management. Online networking can help significantly improve a brand’s image externally, as well as boost company morale. For instance, Nike recently launched an online social media network called the We Portal, which serves as a platform for employees to discuss ways they can socially engage with one another, and how the company can be more sustainable.

The social media posts can be paired with efforts to target important CSR online resources. Public relations have since a long been an option for the low-cost dissemination of CSR information. The online environment provides some unique opportunities for uncontrolled CSR public relations. Common public relation tactics that can be used for CSR promotion are digital brochures, news releases; section of a corporate website devoted to CSR, special websites to discuss CSR, employee blogs, employee tweets, posts to discussion boards and targeted CSR information sent to CSR social media (bloggers and tweeters). Sending information to social media sources mimics a news release on the digital platform and acknowledges the growing power of social media. There are a number of CSR online portals and blogs that attract a great deal of attention. If a corporation can distribute through these outlets, the reach and credibility of the messages are greatly enhanced. The upside of these uncontrolled tactics is the third-party effect.Third –party endorsements serve to complement and to reinforce CSR messages from corporations. Legitimate third parties transfer their CSR credibility to an organization when communicating their support for that corporation. The company (1) saves on the cost, (1) does not appear to be an active promoter, and (3) gains CSR credibility from the CSR parties. Influential opinion leaders, e-fluentials and even average people may also contribute their own interpretation of the messages. Adding their own viewpoints may, further, increase perceptions of the authenticity of the messages. Either a few influentials can be targeted with the initial message or a lot of people can be targeted using mass efforts to reach a broad spectrum of target audience. The two step model involves (1) the mass media being used to deliver the message and (2) the people who receive that message transmitting it to other people. The system can continue multiply as people keep relaying the message to others. The argument for using social media in essence as evident here, is that they facilitate the ability of people to share messages. The journey through this two-step flow and viral-marketing process provides a rationale for crafting a CSR social media strategy.

Working with CSR Bloggers is a long-term investment that a company should consider making. Companies should cultivate relationships with these bloggers instead of merely pitching their CSR stories to them. This would involve understanding what type of information the blogger really wants, sharing relevant information, and responding to the questions of the bloggers.

Corporate websites are recognized as one of the most important media genre for CSR communication. Not only do they have global reach, they also allow the organizations to persuade, inform, educate, and interact with stakeholders via blogs and links to social media sites. They are low cost options, for providing detailed CSR information with corporations frequently providing a section including any CSR or sustainability report they produce. A tab “What we stand for” on corporate citizenship and volunteerism can be added on the websites adding small elements of all CSR works. CSR profiles and projects together with CSR strategies, reports, code of ethics, etc. can either be placed in hypertext format or as downloadable pdf files. For example, Starbucks posts its annual “Global Responsibility Reports” that are available for download as pdf files. Starbucks’ website also presents information about its CSR actions in great details and provides visuals to reinforce the text.  For ease of consumption by consumers, a more condensed version of its “Global Responsibility Report” is also available in the form of a “Global Responsibility Scorecard.”  Similarly, Vodafone is one of the many corporations that devote a specific section of its corporate website to CSR. Some corporations create separate websites focusing on CSR. For example, Intel has a CSR website, CSR@Intel which is primarily a blog for its employees. Most companies provide attractive photographs and links to additional information for those interested in the details of their CSR activities.

Apart from blogs and social networking sites such as Twitter, Facebook, Linkedin, MySpace, Pinterest, virtually every topic has an internet forum somewhere. Companies need to identify forums relevant to their operations and their CSR issues. These forums provide a place for the stakeholders to share and discuss both information and opinions. For instance, Starbucks is one of a number of corporations that have begun to operate their own internet forums as a means of engaging stakeholders with CSR. Furthermore, Companies can embrace games, apps, maps along with new and emerging social media platforms as well to reinvent the way their sustainability reports can be packaged and shared. Content communities emerge when people converge around some object of interest. YouTube (video) and Flickr (still images) are prominent content communities. A corporate may find content communities relevant to their CSR issues. Moreover, videos or images about a company’s CSR, posted by either or employees or external shareholders, might create a content community.

Story-telling is vital for corporate CSR efforts. From a recruiting and retention point of view, it’s a key motivator for younger audiences. Capturing all tweets, photos, and videos about CSR initiatives and encapsulating them in one Storify post can be used on the corporate blog. Stories are also an opportunity to showcase employees’ contributions to the CSR programs. Stories should be told through consumable infographics and in innovative ways that make it more digestible for customers, employees and stakeholders. Blogs, podcasts, Instagram story posts and video bursts are all tactics that one can integrate into pre-existing content marketing strategy.

Online media provide an opportunity to reach people while appearing low cost and low effort, and using third parties. Corporations should identify the social media channels to utilize and any specialized online CSR outlets to target. Escalating costs for the CSR promotional communication tactics increase the likelihood of a boomerang effect from the CSR messages. Excessive spending on messages that tout the corporations’ involvement in the social concern may create the impression that the corporation is more interested in generating publicity for itself than supporting the CSR concern. People know that online posts cost virtually nothing and do not seem to involve a great deal of effort. This makes it an ideal vehicle for CSR promotional communication.

Although a corporation may not have CSR-related news to communicate every day, CSR-related activities occur continuously throughout the year. Continuous promotional communication is more robust and appears as an ongoing conversation with stakeholders about CSR. Being a part of the conversation engenders greater trust in CSR messages than the occasional statement on the subject. Corporate websites should be updated frequently to report ongoing activities. Rather than framing CSR as a once-a-year topic, the continuous approach demonstrates it is a topic that corporation contemplates regularly. For this, social media are an excellent resource. Given the nature of social media, periodic CSR messages will not appear over-promote. Stakeholders expect regular blog entries, tweets, and posts to Facebook. Using a combination of social media and websites will not make it appear as though the corporation is devoting too much time and money on promoting its CSR initiatives.

As the adage goes, “there’s power in numbers” and social media provides companies- who actively engage- with an influential, built-in network of passionate consumers that become followers of a brand and are interested in what it is doing. Social media strategies not only amplify good actions of the companies but also generate doves of supporters. From raising awareness, to connecting with consumers in the way they want to engage and foster positive action, leveraging CSR in the social media world can strengthen consumer trust and loyalty, encourage followers to take and participate, and put a halo over the brand that dives in.

There is a definite and powerful correlation between the companies that rate highly for overall sustainability performance and those companies that do best for CSR and sustainability in the digital space. Sustainability practitioners were at first slow to realize social media’s potential to help communicate their efforts but over the last three years they have made for the lost time. In 2011, just 60 companies had dedicated social media channels to talk about sustainability. By 2011, the number had doubled. By 2012, 176 major companies around the world had allotted dedicated resources and social media channels to their sustainability dialogue.  And the number has only increased since then. Twitter and Facebook have been the favorite channels for sustainability communicators. Of more interest are the dedicated blogs or sustainability social media magazines being published, suggesting the continued importance of editorial storytelling in describing a company’s practice on sustainability and CSR. Social media and sustainability work well together because the foundations of both are the same: authenticity, transparency, community, innovation, and creativity.  Therefore, it is crucial that digital communications teams and CSR teams collaborate and work closely.

The growing importance of social media demands a more thorough analysis of its application to CSR communication. Integrating social media into sustainability is becoming inevitable because the need to go beyond mere reporting is growing exponentially. It is now time for digital adopting in CSR Reporting. By re-purposing material from the CSR report and tailoring it for other digital channels, companies can realize the full potential of their CSR communication by reaching out to a wider public or additional stakeholders with specialized interests. How companies understand and use their social media to communicate their sustainability activities will only grow in importance as it becomes part of the business communication mainstream. As a route to engagement, dialogue, and building reputation, the power of Social Media is huge.

REFERENCES:

  1. Excerpts from the book Timothy Coombs, Sherry J. Holladay, Managing Corporate Social Responsibility: A Communication Approach, First Edition.
  2. Melissa Jun Rowley, Why Social Media Is Vital to Corporate Social Responsibility at http://mashable.com/2009/11/06/social-responsibility/#MbHArelafaqi
  3. Katharine Panessidi, Using Digital Media for CSR, at http://blogs.imediaconnection.com/blog/2010/06/18/using-digital-media-for-corporate-social-responsibility-csr/
  4. Laura Hall, Tying Together Social Media and Corporate Social Responsibility at http://www.convinceandconvert.com/guest-posts/tying-together-social-media-and-corporate-social-responsibility/
  5. Iliyana Stareva, The Rise of Social Media for CSR and Sustainability at http://www.iliyanastareva.com/blog/rise-social-media-csr-sustainability
  6. Matthew Yeomans, Communicating sustainability: the rise of social media and storytelling at http://www.theguardian.com/sustainable-business/communicating-sustainability-social-media-storytelling

 

 

Sustainable Business Practices as regulated by SEBI in India

CSR_logo

The legislation around sustainable responsible practices by businesses in India is limited to guidance like the National Voluntary Guidelines, which the Securities and Exchange Board of India (SEBI) had asked the top 100 firms to adopt a few years back.

SEBI as per its circular dated August 13, 2012 mandated the inclusion of a “Business Responsibility Report” (BRR) as part of company’s Annual Report for top 100 listed entities based on market capitalisation at the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) as on March 31, 2012. The reporting framework is based on the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs)’ released by the Ministry of Corporate Affairs, Government of India, in July 2011 which contains 9 Principles and Core Elements for each of the 9 Principles.

The Key Principles and their core elements are enumerated as follows:

  1. Principle 1- Ethics, Transparency & Accountability. Businesses should conduct and govern themselves with Ethics, Transparency & Accountability.
  • Businesses should develop governance structures, procedures and practices that ensure ethical conduct at all levels; and promote the adoption of this principle across its value chain.
  • Businesses should communicate transparently and assure access to information about their decisions that impact relevant stakeholders.
  • Businesses should not engage in practices that are abusive, corrupt, or anti-competition.
  • Businesses should truthfully discharge their responsibility on financial and other mandatory disclosures.
  • Businesses should report on the status of their adoption of these Guidelines as suggested in the reporting framework in this document.
  • Businesses should avoid complicity with the actions of any third party that violates any of the principles contained in these Guidelines.
  1. Principle 2- Product Life Cycle Sustainability. Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
  • Businesses should assure safety and optimal resource use over the life-cycle of the product – from design to disposal – and ensure that everyone connected with it- designers, producers, value chain members, customers and recyclers are aware of their responsibilities.
  • Businesses should raise the consumer’s awareness of their rights through education, product labelling, appropriate and helpful marketing communication, full details of contents and composition and promotion of safe usage and disposal of their products and services.
  • In designing the product, businesses should ensure that the manufacturing processes and technologies required to produce it are resource efficient and sustainable.
  • Businesses should regularly review and improve upon the process of new technology development, deployment and commercialization, incorporating social, ethical, and environmental considerations.
  • Businesses should recognize and respect the rights of people who may be owners of traditional knowledge, and other forms of intellectual property.
  • Businesses should recognize that over-consumption results in unsustainable exploitation of our planet’s resources, and should therefore promote sustainable consumption, including recycling of resources.
  1. Principle 3- Employee Well Being. Businesses should promote the well being of all employees.
  • Businesses should respect the right to freedom of association, participation, collective bargaining, and provide access to appropriate grievance Redressal mechanisms.
  • Businesses should provide and maintain equal opportunities at the time of recruitment as well as during the course of employment irrespective of caste, creed, gender, race, religion, disability or sexual orientation.
  • Businesses should not use child labour, forced labour or any form of involuntary labour, paid or unpaid.
  • Businesses should take cognizance of the work-life balance of its employees, especially that of women.
  • Businesses should provide facilities for the well-being of its employees including those with special needs. They should ensure timely payment of fair living wages to meet basic needs and economic security of the employees. Businesses should provide a workplace environment that is safe, hygienic humane, and which upholds the dignity of the employees. Business should communicate this provision to their employees and train them on a regular basis.
  • Businesses should ensure continuous skill and competence upgrading of all employees by providing access to necessary learning opportunities, on an equal and non-discriminatory basis. They should promote employee morale and career development through enlightened human resource interventions.
  • Businesses should create systems and practices to ensure a harassment free workplace where employees feel safe and secure in discharging their responsibilities.
  1. Principle 4- Stakeholder Engagement. Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized.
  • Businesses should systematically identify their stakeholders, understand their concerns, define purpose and scope of engagement, and commit to engaging with them.
  • Businesses should acknowledge, assume responsibility and be transparent about the impact of their policies, decisions, product & services and associated operations on the stakeholders.
  • Businesses should give special attention to stakeholders in areas that are underdeveloped.
  • Businesses should resolve differences with stakeholders in a just, fair and equitable manner
  1. Principle 5- Human Rights. Business should respect and promote human rights.
  • Businesses should understand the human rights content of the Constitution of India, national laws and policies and the content of International Bill of Human Rights. Businesses should appreciate that human rights are inherent, universal, indivisible and interdependent in nature.
  • Businesses should integrate respect for human rights in management systems, in particular through assessing and managing human rights impacts of operations, and ensuring all individuals impacted by the business have access to grievance mechanisms.
  • Businesses should recognize and respect the human rights of all relevant stakeholders and groups within and beyond the workplace, including that of communities, consumers and vulnerable and marginalized groups.
  • Businesses should, within their sphere of influence, promote the awareness and realization of human rights across their value chain.
  • Businesses should not be complicit with human rights abuses by a third party.
  1. Principle 6- Environment Protection. Businesses should respect, protect, and make efforts to restore the environment.
  • Businesses should utilize natural and man-made resources in an optimal and responsible manner and ensure the sustainability of resources by reducing, reusing, recycling and managing waste.
  • Businesses should take measures to check and prevent pollution. They should assess the environmental damage and bear the cost of pollution abatement with due regard to public interest.
  • Businesses should ensure that benefits arising out of access and commercialization of biological and other natural resources and associated traditional knowledge are shared equitably.
  • Businesses should continuously seek to improve their environmental performance by adopting cleaner production methods, promoting use of energy efficient and environment friendly technologies and use of renewable energy.
  • Businesses should develop Environment Management Systems (EMS) and contingency plans and processes that help them in preventing, mitigating and controlling environmental damages and disasters, which may be caused due to their operations or that of a member of its value chain.
  • Businesses should report their environmental performance, including the assessment of potential environmental risks associated with their operations, to the stakeholders in a fair and transparent manner.
  • Businesses should proactively persuade and support its value chain to adopt this principle.
  1. Principle 7- Policy Advocacy. Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.
  • Businesses, while pursuing policy advocacy, must ensure that their advocacy positions are consistent with the Principles and Core Elements contained in these Guidelines.
  • To the extent possible, businesses should utilize the trade and industry chambers and associations and other such collective platforms to undertake such policy advocacy.
  1. Principle 8- Inclusive Growth and Equitable Development. Businesses should support inclusive growth and equitable development.
  • Businesses should understand their impact on social and economic development, and respond through appropriate action to minimize the negative impacts.
  • Businesses should innovate and invest in products, technologies and processes that promote the well-being of society.
  • Businesses should make efforts to complement and support the development priorities at local and national levels, and assure appropriate resettlement and rehabilitation of communities who have been displaced owing to their business operations.
  • Businesses operating in regions that are underdeveloped should be especially sensitive to local concerns.
  1. Principle 9 – Customer Value. Businesses should engage with and provide value to their customers and consumers in a responsible manner.
  • Businesses, while serving the needs of their customers, should take into account the overall well-being of the customers and that of society.
  • Businesses should ensure that they do not restrict the freedom of choice and free competition in any manner while designing, promoting and selling their products.
  • Businesses should disclose all information truthfully and factually, through labelling and other means, including the risks to the individual, to society and to the planet from the use of the products, so that the customers can exercise their freedom to consume in a responsible manner. Where required, businesses should also educate their customers on the safe and responsible usage of their products and services.
  • Businesses should promote and advertise their products in ways that do not mislead or confuse the consumers or violate any of the principles in these Guidelines.
  • Businesses should exercise due care and caution while providing goods and services that result in over exploitation of natural resources or lead to excessive conspicuous consumption.
  • Businesses should provide adequate grievance handling mechanisms to address customer concerns and feedback.

These guidelines are a refinement of the CSR Voluntary Guidelines, 2009 and also provide for a structured format for the Business Responsibility Reports requiring certain specific disclosures, demonstrating the steps taken by companies to implement the said principles. Listed companies beyond the top 100 have also been encouraged by SEBI to voluntarily disclose information on their ESG performance in the BRR format. Infact, as a part of its corporate governance efforts, SEBI is now looking at expanding from the top 100 to top 500 listed companies the BRR requirement.

APPLICABILITY OF BRR

The applicability of the Business Responsibility Report to different categories of companies so far is as under:

CATEGORIES

APPLICABILITY

Business entities already preparing responsibility and sustainability reports based on internationally accepted reporting frameworks.

These entities may not prepare a separate report for the purpose of these guidelines but furnish the same to their stakeholders along with the details of the framework under which their BR report has been prepared and a mapping of the nine principles contained in these guidelines to the disclosures made in their BR reports.
Business entities that have chosen to adopt these guidelines completely or in part, but are not yet fully capacitated to prepare a comprehensive BR report. These entities may furnish a simple communication to their stakeholders indicating their commitment to adoption on these guidelines in full or in part, and basic details of the activities undertaken in pursuance to these guidelines. The communication may be in a free format and should be signed by the owner/Managing Director of the CEO of the entity.

Business entities that would like to prepare comprehensive reports after adopting these guidelines.

Disclosures in the BR report have been suggested based on certain parameters to facilitate these entities to demonstrate their adoption of these guidelines in letter and spirit.

SUGGESTED FRAMEWORK FOR BRR

A framework for Business Responsibility Reporting in the form of standard disclosure template has been put out by SEBI (click here) based on which companies which effectively contribute to the economic and social betterment of communities and the environment also report their performance in these areas. Apart from this, the CSR Report to be submitted by Indian companies satisfying certain criteria as a part of their annual report under Section 135 of Companies Act, 2013 and the CSR Rules, 2014 will also form a key input into the company’s Business Responsibility Report and Sustainability Report.

REFERENCE:

  1. SEBI, Business Responsibility Reports, Circular CIR/CFD/DIL/8/2012 at http://www.nseindia.com/content/equities/SEBI_Circ_13082012_3.pdf
  2. Ministry of Corporate Affairs, Government of India, National Voluntary Guidelines on Social, Environmental & Economic Responsibilities of Business at http://www.mca.gov.in/Ministry/latestnews/National_Voluntary_Guidelines_2011_12jul2011.pdf
  3. PTI, SEBI may soon make biz responsibility reports must for top 500 firms at http://www.firstpost.com/business/sebi-may-soon-make-biz-responsibility-reports-must-for-top-500-firms-2486100.html

Prescribed format for CSR Reports under Indian Company Law

CSR_logoThe Board of the Company is mandated to prepare a CSR Report under Section 134(3)(o) of the Companies Act, 2013. The Companies (CSR Policy) Rules, 2014 provide for the format for reporting CSR activities annually. The format for the annual report on CSR activities to be included in the Board’s report is as follows:

1. A brief outline of the company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs.

2. The Composition of the CSR Committee.

3. Average net profit of the company for the last three financial years

4. Prescribed CSR expenditure (two per cent, of the amount as in item 3 above

5. Details of CSR spent during the financial year

    (a) Total amount to be spent for the financial year:

    (b) Amount unspent, if any:

    (c) Manner in which the amount spent during the financial year is detailed below:

Picture1

6. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report.

7. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and policy of the company.

Picture1SOURCE:

1 COMPANY (CORPORATE SOCIAL RESPONSIBILITY POLICY) RULES, 2014 at http://www.mca.gov.in/Ministry/pdf/CompaniesActNotification2_2014.pdf

A Summary of the High Level Committee Recommendations for the Effective Implementation of the CSR Mandate

CSR_logo

In line with the national endeavor to include those sections of the society in the growth process, which had hitherto remained excluded from the mainstream of development, CSR was conceived as an instrument for integrating social, environmental and human development concerns in the entire value chain of corporate business in India.  The principle of “inclusive and equitable growth”, focused on encouraging business action on national development priorities including community development initiatives and strategic CSR based on the shared value concept, was subsequently translated into a mandatory provision of CSR in Section 135 of the Companies Act, 2013.  The CSR rules prescribe corporates to undertake CSR activities beyond their normal course of business or to say, adopt the philanthropic level of Carroll’s Pyramid of Corporate Social Responsibility.  As updated earlier,  owing to the genuine concerns about this new legislation , for which there is no parallel elsewhere in the world, a high level committee was appointed by the Government in February to suggest measures for the improved monitoring of the implementation of the CSR policies in India.  After 6 months of discourse, the panel has finally come out with its recommendations (http://www.mca.gov.in/Ministry/pdf/HLC_report_05102015.pdf) along with some issues that require a change in the law of CSR to remove the difficulties, ambiguities, and complexities.

The key points from the report are summarized as follows:

  1. All information relating to the implementation of CSR by companies including amount spent, activities undertaken, geographical areas covered etc., as reported by the Companies in their annual disclosures should be compiled by the MCA & placed in the public domain to facilitate research and provide useful feedback for policy formulation. This would take care of stakeholders’ queries including those pertaining to RTI applications, Parliamentary Questions related to macro level analysis or unit level company wise information on CSR.
  2. Action should not be taken against companies on the ground of non-compliance with CSR provisions of the Act at least for the initial two to three years- which according to the panel is going to be ‘a learning period’ for all stakeholders. Companies need to be provided some grace period for capacity building in the field. Explanation, duly approved by the Board of the Company for shortfall, if any, in the CSR expenditure vis-à-vis the mandatory 2% of the average net profits, however, has to be placed in the public domain. The existing provisions of the law do not empower the Government to go beyond this.
  3. The existing provisions of the Act/Rules like mandatory disclosures, accountability of the CSR Committee and the Board, provision for audit of the accounts of the company, etc provide sufficient safeguard against non-compliance. The Board of a company is both responsible and accountable for its CSR policy. An external monitoring agency is neither required nor desirable, as the companies are internally capable to undertake the exercise.
  4. CSR Policies and CSR expenditure of CPSUs are subject to the audit of the Comptroller & Auditor General (C&AG) of India. The existing mechanism of CAG audit as well as study by COPU seems to be sufficient to monitor CSR implementation by CPSUs. Further, the practice of signing MoU between CPSUs and the administrative Ministry is expected to put in place some monitoring mechanism, if required.
  5. All public goods as far as possible should be incorporated in the list of permissible CSR activities under Schedule VII and an omnibus clause should be provided to cover those that are left out. The inclusion of such a clause would take care of development concerns, needs and priorities that cannot be anticipated. CSR activities must be for larger public good and for any activity that serves public purpose and/or promotes the well-being of the people, with special attention to the needs of underprivileged.
  6. The ceiling of administrative overhead expenditure of companies under CSR should be increased from the present provision of 5% to 10% of the total CSR expenditure. This would require appropriate amendments to the relevant provisions of the Act/Rules. These costs should, however, not include expenditure incurred on capacity building of the implementation agencies.
  7. Corporate entities can be categorized into two groups- i)those with less than Rs. 5 crore spend per annum on CSR; and ii) others with CSR budget of Rs. 5 crore or more. While companies with CSR budget of Rs. 5 crore or more could be mandated to follow all the procedures/conditions laid down in the Act and Rules, those with less than Rs. 5 crore of CSR budget, need not take CSR programs in project/programme mode. Smaller companies should be allowed to take up any programme/activity covered under the omnibus provision of “Public Provision”. They can also pool funds with similar companies with CSR spend of less than Rs. 5 crores. This suggested threshold of Rs. 5 crore (in CSR expenditure) should be adjusted for inflation, using the GDP deflator or Wholesale Price Index (WPI) every three years, and this figure should be rounded off to the nearest crore.
  8. There should be uniformity in tax treatment for CSR expenditures on all eligible activities, even the Prime Minister’s National Relief Fund (PMNRF). Otherwise, there can be a temptation on the part of companies to direct at least a part and possibly a substantial part of their CSR budget to activities like the PMNRF to avail benefits, leading to distorted allocation of CSR funds across development sectors. The intent of the Act is to inculcate a sense of involvement and responsibility in the corporate sector for social development by utilizing not just their funds, but also their managerial skills. A Board’s decision should be guided by compelling community social needs instead of tax saving implications.
  9. Outsourcing of CSR services to Implementing Agencies attracts payment of Service Tax, whereas if the company enters into a MoU with the Implementing Agency, the contribution made is treated as grant, and, therefore, not liable for payment of Service Tax. This is an anomaly that needs to be corrected.
  10. “Carry forward” provision for unspent balances of CSR funds as applicable to government companies should be extended to private companies. However, there should be a sunset clause of 5 years, after which the unspent balance should be transferred to one of the funds listed in Schedule VII.
  11. Section 8 companies should be outside the purview of the CSR provisions of Companies Act, 2013. Further, the applicability of Section 135 to foreign companies should be reassessed. However, CSR provisions should be made applicable to profit making listed entities that are not incorporated under the Company Law on mutatis mutandis basis- either through amendments in their respective Statutes or as a mandatory condition under the listing agreement of SEBI.
  12. The definition of “Net Profit” under Section 135(1) and Section 135(5) requires clarification as does the scope of the expression “any financial year” in Section 135(1) by the Ministry of Corporate Affairs.
  13. It is not feasible to monetize and count employees contribution to CSR activities towards CSR spend of the company. It could become subjective, if not arbitrary in allocating cost of the employees’ time spent on CSR activities of the company.
  14. Companies have the requisite capacity and expertise to carry out due diligence of potential implementation agencies. Therefore, Government cannot and should not maintain any data bank of implementing agencies for undertaking CSR activities of companies. Undertaking due diligence of these agencies should squarely remain the responsibility of the Boards and their CSR committees.
  15. The Government should have no role to play in engaging external experts for monitoring the quality and efficacy of CSR expenditure of companies. The Boards/CSR Committees are sufficiently empowered to engage any external firm, if they so require.
  16. The opportunity to use the substantial funds generated to benefit the deserving poor and under-privileged sections of the society should not be missed. CSR resources should be ring-fenced by the CSR committees/Boards. All programs/projects should be approved by the Boards on the recommendations of their CSR Committees. Any changes to the programs/project should also be undertaken only with the approval of the Committee/Board. The provisions of the law/rules should be strengthened to ensure this.
  17. Annual awards should be set up- one each for the two categories of companies, large and small, to incentivize the corporates to implement CSR in right earnest.

The overall intent of the recommendations proposed by the high level committee as evident is to encourage companies to undertake CSR activities in the right spirit. The measures suggested pave way to an efficient corporate system/mechanism for ensuring accountability & effectiveness, provided they get adapted into the law. An ideal assessment of the qualitative and quantitative aspects of the CSR implementation, however, will only be possible once sufficient data is gathered in the next two or three years.

Mandatory CSR paves way for universal education in India

LogoOne of the significant indicators of social progress is education, which also plays a decisive role for a society to achieve self-sustainable and equal development. Universal Primary Education is identified among the eight most important aspects that concern human development in the Millennium Development Goals by the United Nations. An explicit standard of educational goals symbolizes a global recognition of education as a part of human rights and international development.

Education has a very important role to play in the development paradigm of any country. Beyond growth and other macroeconomic factors, it is education that is the foundation of society, its values, culture and progress. It is the most sustainable strategy to uplift individuals and communities from poverty, enabling an overall improvement in the quality of life. Moreover, it is the intellectual dimension of poverty. According to Global Partnership for Education, if all students in low income countries acquired just basic reading skills, it would uplift 171 million people out of poverty. Clearly, it is the single most potent tool to empower children and adults alike to participate actively in societal transformation.

In India, the education system is in a pitiable state and the widening knowledge gap is alarming. While initiatives such as the Sarva Shiksha Abhigyan (SSA) and the Right to Education (RTE) have been India’s response to this; considerable issues regarding quality of education, lack of learning, teacher quality, lack of accountability, irrelevant curriculum and pedagogy remain. Furthermore, educational opportunities for marginalized groups are still limited giving rise to discrimination. It is about time we give unfailing attention to address these challenges and attempt to eliminate all barriers for the social inclusion of disadvantaged groups- such as the poor and the disabled. Otherwise these issues will inarguably have serious consequences on the growth and development potential of the country.

In due recognition of the critical role of education in the development of any country, UNESCO has recommended that governments should spend 20 percent of their budget on education and that 20 percent of Official Development Assistance should go towards education initiatives. Globally, around 5% of the GDP is being spent on the education. However, despite education and development being consistently accorded a high priority in the five year plans in India, the estimated public expenditure on education has been a little above 3% of the GDP in the recent years. Compared to BRICS nations, India’s literacy rate is only 74% while that of these economies is equivalent to that of the developed world.

It has been well understood by now that government alone will not be able to succeed in achieving the objective of uplifting the downtrodden society through empowerment.  Globalization has driven the business world towards more responsibility for the sustainable development of society as well as other functions which have been traditionally held by governments and political institutions. Corporate Social Responsibility (CSR), particularly, has gathered prominence and become an important activity to businesses nationally and internationally. Involvement of companies, through structured and strategic corporate social responsibility (CSR) programs is the need of the hour as small changes in the way CSR budgets are spent can have a huge effect on the education sector and benefit millions.

One of the few countries in the world with a law for mandatory spend on CSR is India. The passing of Companies Act, 2013 in India provides the right opportunity for Indian companies to play an important role in the cause of quality education. It not only points out a way for companies to contribute to the well-being of the society but also gives them the opportunity to create a true competitive advantage and positive reputation for the business world. With a legal framework backing it, CSR in India has gone beyond charity and donations and has now become an integral part of the corporate strategy. Companies now have CSR teams that devise specific policies, strategies and goals for their CSR programs and set aside budgets to support them. These programs are based on clearly defined social philosophy and can range from an overall development of a community to supporting specific causes including the promotion of education and employment-enhancing vocational skills.

Several organizations in the profit domain are already working for the advancement of marginalized sections of the society through initiatives in education. The pioneer of CSR activities in the education field undertaken by the private companies are the Tatas. Tata Steel, for instance, spends nearly 5-7 percent of its net profits to work on its sustainability model of empowerment of community. It has influenced the integration of the tribals in the economy by propping up the education of tribal children and the youth of various ages at different stages in their academic career. Some of its distinguished programs include Project Akansha targeted at getting children from primitive tribal group mainstream children to formal schools; Project Sagyog targeted at assisting corporates to help tribal students develop their self-esteem and plan their future; Sakshar Samaj Program for functional literacy in adults; and Moodie Endowment for financial assistance to students pursuing professional courses. Tata Steel actively works towards promoting excellence in the schools by extending the Tata Business Excellence Model to create the Education Excellence Model.

Some of the other notable projects undertaken by Indian companies in the education sector include Project Unnati, Nanhi Kali and ADAPT program by Hindustan Petroleum Corporation Limited (HPCL), Reliance Power’s activities targeted at PAFs (Project Affected Families), Project Shiksha by Microsoft, Satya Bharti School Program by the Bharti Foundation and Future First by HSBC. Companies are not only focused at the increasing the pot available to education, but also improving the way the current pot is spent, so that social impact is maximized. The global education challenge demands an innovative approach, and corporations are getting adept at selecting and backing projects with new and experimental approaches.

CSR & EDUCATION IN INDIA- INITIATIVES & STRATEGIES

CSR in Education so far in India has mostly involved steps to promote education among local communities or society at large by building schools (built by a company free of cost or at a minimal cost to the company or society), scholarships (offered to underprivileged/meritorious students at various levels of education, for primary or higher studies), sponsorships (helping schools run efficiently by providing teaching aids, books, uniform, shoes, and bags), increasing access to education (supporting/building secondary schools in localities that do not have one; encouraging children to go to school by spreading awareness, helping or training teachers, providing infrastructure for the school; free transport facility), and higher education (setting up or supporting higher or technical education institutes like vocational training centers, engineering colleges, schools offering training in other fields such as management).

Other CSR practices for the education sector that are increasingly gaining popularity among specific industries include the promotion of computer illiteracy, establishment of gender equity by targeting girls from economically disadvantaged families for quality education, provision of toilets and maintenance of a clean and hygienic school environment, customization of programs designed to provide educational support to children with disabilities, provision of nourishment to students, psychological support to underprivileged students by providing motivational talks on leadership development, personality development,  establishment of training institute for teachers, libraries for rural school education of slum children and night schools for uneducated adults for empowerment of illiterate public in surrounding villages, tribal areas.

Awareness programs have been a significant part of CSR initiatives by companies with programs organized to spread awareness among the communities and the society at large about the importance of education and critical issues such as child labor, girl child, etc which hinder access to education. Taking this a step further, programs can target quality education as well as holistic development of underprivileged children in the rural parts of the country, designed to empower students to explore, question, reason and communicate effectively. Moreover, companies can actively get involved in providing academic support to the public education system, specially govt. schools as the role of academic support is extremely crucial in the development of curriculum and materials, training of teachers, research based knowledge generation, assessment and evaluation, academic monitoring of schools. One way to do this will be to adopt govt. schools as has been done by a private company recently in the Gautam Budh Nagar district of Noida, Uttar Pradesh. So far, 54 out of 470 schools in the district have been adopted by companies a part of their corporate social responsibility portfolio with the objective to provide quality education to the destitute children. The administration has had a critical role to play in this with the District Magistrate, N.P. Singh personally visiting several villages in the district to identify the problems and inviting corporate houses to adopt the schools and undertake initiatives to improve services accordingly. With 80% of India’s children studying in government schools, this is a commendable move towards ensuring quality education that can be replicated in other districts under the CSR mandate.

The virtualization of education in India, furthermore, has immense capacity to improve access to education of the down trodden people based at their hutments and enroll vast number of students. In a developing country like India marked by internal asymmetries, the potential of a digital India to spread education at all levels and to connect the people of different communities with diverse socio-cultural, linguistic, religious and ethnic background is enormous. Several companies can work on this together as this would entail massive investments and structured changes at various levels. Technology innovations can make it easy to distribute education contents to remote population, empowering them with knowledge that might change their life. Teachers can be trained in computers who can further educate students across the country to bridge the digital divide and supplement the overall development objectives

CSR can also be used to address the looming skill gaps in the country with nearly 90 million persons joining the workforce, but most of them lacking the requisite skills and the mindset for productive employment, or for generating incomes through self employment. Companies can make skill development a priority and train students in vocational schools to help them emerge as employable citizens and contribute towards community development.

As evident, companies can play a prominent role in innovating at the grass root level as such projects involve complicated administration and implementation which the corporate players are believed to be at a better position to understand through their high expertise in managerial processes. Shortage of financial support has always been a bottleneck for ensuring consistent access to education. However, mere involvement from a financial perspective to strengthen the education system in underprivileged areas is not enough.  For instance, a corporate funding the setting up of a school in a village is not translating itself automatically into a CSR product; unless teachers are recruited, adequate infrastructure is provided and literary improves. Setting up a special purpose vehicle, a corporate foundation, instead to explore alternative social sector agenda can offer better opportunities for product and process innovations. Working in education sector requires specific skills and knowledge. Companies can share its most valuable resources by involving their top management to provide the operation know-how in such projects. Community volunteering, thus, can be one of the most sincere forms of CSR whereby companies can encourage its employee through internal communications to actively participate in their initiatives and contribute their skills. This will help inculcate corporate philanthropy. At the same time, students, schools and the general public will benefit from the experience and expertise that corporations bring to the table..

CSR Models for the Education Sector

There are three models that have been adopted by different corporates time and again to carry out CSR activities in the field of education whereby the corporate has chosen to be a programme owner or a fund provider or an implementation partner:

  1. Corporates have conceptualized the initiative as well as implemented it on their own if not with a partner entity like a NGO
  2. Corporates have provided financial or material support to development initiatives in education run by NGOs, Govt. Institutions or other corporates
  3. Corporates have helped in designing and implementing development initiatives of third party initiatives of third party entities such as govt., other corporates and multilateral organizations.

The core strategy in all three models involves the following steps:

  • Identification of the area of intervention/involvement and the scope of work
  • Identification of the beneficiaries[Demographic Profile – location, sex, category, age, type of school supported)
  • Identification of the sources of fund to create a sustainable model (internal, external, donor engagement model)
  • Designing of an appropriate/dedicated team with the right organizational structure to run the initiative [Finalize organizational structure, Recruit key personnel, Recruit Local people/volunteers]
  • Identification of Key Stakeholders for the programs
  • Formulation of a strategic plan for the initiative [ Defining objectives, Resource Mapping, Awareness Programmers, Trainings for internal/external/NGO members]
  • Mechanism for Monitoring & Tracking Success [Financial Monitoring, Identification of KPOs, Impact Assessment at regular intervals, Internal Mechanisms to measure/report utilization of funds to the donors, Mechanisms/frequency of reporting to the donors involved, mechanisms for taking feedback from donors, Identification of templates/tools to be used to record report on initiatives]
  • Ensuring sustainability and replicability of model

For any of the abovementioned models to be successful, defining the program strategy prior to the implementation, clearly stating the objectives and the steps that need to be taken to achieve them, is of utmost importance. Advocacy, Sensitisation, Implementation and Monitoring and Evaluation of progress should form an integral and indispensable part of this overall strategy that will help the initiative gain acceptance from all stakeholders, ensuring a structured approach towards implementation. In the second model, particularly, identification of the right initiatives to support is crucial. This would require a thorough process of shortlisting select initiatives run by NGOs/Govt./Corporate running programmes having synergy with company’s CSR objectives, requiring select institutions to submit proposals, validating their credentials, speaking to references, visiting the program venue, shortlisting programmes to support, finalizing the level of involvement with the programme & finalizing the appropriate T & C.

An NGO-Corporate partnership is ideal as NGOs are more flexible in absorbing and utilizing resources internationally and process more up-to-date knowledge, credibility and human resources that are important for the operation of education-related projects. However, while NGOs have more information than companies, they lack the operational capacity, especially the financial resource, that can be supplemented by the companies.  Companies have to be advised on what area would create the best synergy between the company resources and the needs for education, to significantly optimize the overall CSR achievement. A stringent monitoring and tracking process can help such initiatives achieve large scale.

CHALLENGES

Challenges to implementing CSR in education primarily include integrating CSR with organizational values and practices, and lack of time and financial resources to follow CSR practices with CSR being viewed more as a means to manage regulatory impacts, reduce risks, and respond to stakeholder concerns. Therefore, it is of utmost importance to first establish a business case for CSR for the companies to commit and allocate resources to these practices. The key drivers for such as business case could essentially revolve progressive self-interest, social involvement, transparency, trust and increased public expectations of the business. It works to the advantage of the situation that companies are now discovering the importance of corporate image, corporate identity, corporate reputation and the use of CSR as a reputation and advantage building strategy.

Other challenges may include the difficulty and risk in implementing systemic initiatives mainly because of the lack of recognized implementation partners and technical experts, the difficulties associated with indirect impact, the long gestation period and time take to realize changes, and the misconception that these interventions are expensive. These complexities can be handled strategically by having dedicated teams looking after each and every aspect of the project implementation.

Companies can achieve more by acting in partnership with each other and with governments, NGOs and multilateral agencies such as the UN. To establish the ideal condition, different socially responsible companies can cooperate for the operation of educational CSR projects ensuring several players in a specific market instead of only a small number of companies. Moreover, the education community can be asked to intervene to articulate how innovations would be able to help them and align itself with companies’ interests. Companies can spend more, but without focusing on the impact of this spending, it is unlikely that several million more children will be able to pursue schooling for the first time. Their role should extend beyond direct provisioning to supporting innovation, providing technical assistance, and supporting governments in developing effective assessment systems.

The challenges in addressing the skill gaps are multi-dimensional and require cooperative efforts by all stakeholders. Nevertheless, the primary responsibility for providing the foundation for manpower development, for India’s emerging knowledge economy, must indisputably lie with the government.  Governments such as the Maharashtra Govt. have now introduced dedicated policies for the implementation of CSR initiatives associated with the school education. Setting up a ‘single window’ approach to facilitate and streamline the proposed CSR activities from the corporate sector at Mantralaya is one of the key provisions of such a policy, which has been notified by the government. Furthermore, as part of the policy, a state-level CSR committee, having secretary, school education and sports department, as its chairman, is proposed to be formed. Creating a framework for management and facilitation of school-related CSR activities, evaluating and approving requests for CSR activities by reviewing the need/issues as well as proposing plan, timelines and projected outcomes, and other relevant enablers in the School Education System and sharing best practices of successful CSR initiatives from within and outside of the state are some of the major roles the state-level committee is expected to carry out. In addition to a state-level committee, a CSR committee at the level of commissionerate and divisional authorities is also expected to facilitate and monitor the effective implementation of the policy. The CSR activities to be supported by the CSR Cell and various committees are broadly divided into three categories – infrastructure and school development institutes; student development and capability building of teachers; and school management and state institutes. The policy is expected to help in the desired implementation of the novel innovative ideas that the corporate houses have come out with for CSR activities in the field of education sector. Gujarat Government, on the other hand, has asked all its Public Sector Units (PSUs) to start atleast two modern schools matching education quality with top private schools in the backward areas of the state as their corporate social responsibility. The state education department is also willing to give a land for the school to the PSU in case it doesn’t have one and to also take the help of the newly formed CSR authority in the pursuance of the same.

CONCLUSION

CSR has never been more prominent on the corporate agenda than it is today. With Section 135 of the Companies Act 2013 making spending on CSR mandatory for qualifying companies, there is ample potential for the corporate sector to address the missing gaps in the education system. This is an opportunity for India Corp. to restructure the education system at all levels, i.e., elementary secondary and higher education. Furthermore, the considerable resources and pool of experience that the corporates bring to the table can go a long way in the effective implementation of the statutory right to education. What is required is strategic thinking from the companies, combined with a balanced approach wherein companies create a portfolio of CSR initiatives that balances high-risk, high-returns social programmes with low-risk, low-returns programmes. Moreover, the requirement for mandatory disclosure of CSR initiatives and expenditures ensures the company’s accountability to the society. All such disclosure, financial or otherwise can only improve corporate behavior.

A positive is that given the country’s young population and weak education system, a key focus area for CSR at about 75% of the companies is education. Companies in India are already spending substantial part of their sustainability budgets on education. According to a report published by the Varkey Foundation in partnership with the UNESCO, eight Indian companies in the Fortune Global 500 spent $81 million a year on CSR activities, out of which $ 15 million a year or 18 percent of the total expenditure was spent on education. A vast majority of education related CSR spend went to primary education 39 per cent, followed by secondary education 29 per cent, vocational education 14 per cent and spending on infrastructure 14 per cent. The promotion of education and employment-enhancing vocational skills were the two key focus areas for Indian companies, especially at the primary and secondary levels. The intent was both to improve access to education and improve quality of education.

While the company law lists multiple areas for social investment, companies should prioritize their CSR funds for education to address systemic barriers to education quality as investing in education promotes economic growth, leads to more stable societies, fosters healthy communities, and makes it easier to do business- all critical to India’s sustainable development. As long as businesses address the right needs, they have the ability to make a tremendous impact.  While I do not believe that there are any best practices for CSR, it is still worth looking at the successful initiatives already being run by the Corporates in the education sector that can be emulated to some extent if in conformity to the overall business strategy. Furthermore, policymakers could reward and incentivize corporate involvement at national as well as regional levels to, further, encourage such actions.

While CSR in India is still in a very nascent stage, with the spend slated to increase manifold, there is immense potential of corporates role in ensuring universal access to education. There is a scope for Indian businesses to create several pioneering models in CSR, driving innovation and productivity growth in the economy. The law on CSR in India has the potential to bring a revolution in the development of the economy provided the expenditures get a direction. Given that the educational needs are so urgent, it is more important than ever to ensure that we make better use of resources available as a consequence of this mandate.

Philanthropy should thus, be more strategically integrated into business models, ensuring that CSR activity is aligned with real needs in the education sector.

REFERENCES

  1. Neelmani Jaysawal & Mrs. Sudeshna Saha, Impact of CSR on Education & Healthcare of Underprivileged Sections of the Society,  Journal of Advances in Humanities,   Vol. 2, No. 2,  ISSN 2349-4379
  2. Geeta Mishra, Reflecting Responsible Initiatives for Successful CSR In  Context of Higher Education Institutions,  Journal of Business Management & Social Sciences Research (JBM&SSR),  Volume 2, No.6, June 2013,  ISSN No: 2319-5614
  3. Business Backs Education, Creating a baseline for Corporate CSR Spend on Global Education Initiatives, January 2015 at http://www.unesco.org/education/BBE-EPG-Report2015.pdf
  4. Abha Chopra, Shruti Marriya, Corporate Social Responsibility and Education in India, http://www.iie.chitkara.edu.in/pdf/Sample%20Paper%20IIE.pdf
  5. Rong, GAO, Education & Corporate Social Responsibility at hec.edu/Media/Files/FR/Social-Business…/Education-and-CSR/
  6. Tata Strategic Management Group, Best Practices of CSR in the field of Education in India at http://tsmg.com/reports/50-reports/466-best-practices-of-csr-in-the-field-of-education-in-india.html
  7. R Krishna Kumar, Are we really educating India? at http://www.thehindubusinessline.com/opinion/are-we-really-educating-india/article7036336.ece
  8. Priyanka Singh, CII UP chalks out synergetic way for corporate social responsibility at http://timesofindia.indiatimes.com/city/lucknow/CII-UP-chalks-out-synergetic-way-for-corporate-social-responsibility/articleshow/47483430.cms
  9. Saritha Rai, Corporate Social Responsibility activities serve as effective IT retention tool in India at http://www.techrepublic.com/article/corporate-social-responsibility-activities-serve-as-effective-it-retention-tool-in-india/
  10. The CSR Journal, CSR in Education: The Burning need for Innovations at http://thecsrjournal.in/csr-in-india-education/
  11. Patricia Mascarenhas, CSR can help an institution develop a competitive advantage at http://www.dnaindia.com/academy/report-csr-can-help-an-institution-develop-a-competitive-advantage-2068225
  12. The Economic Times, Eight Indian companies in Fortune 500 spend $81 million/year on CSR at http://articles.economictimes.indiatimes.com/2015-01-18/news/58200752_1_csr-eight-indian-companies-maharatna
  13. Kelvin Kalra, Accelerating Investing in Indian Education, Global Business Coalition for Education at http://gbc-education.org/accelerating-investment-in-indian-education/
  14. Mukul Asher & Vikram Sampat, Integrate higher education in CSR initiatives to mitigate skill gaps at http://www.dnaindia.com/money/report-integrate-higher-education-in-csr-initiatives-to-mitigate-skill-gaps-1219430
  15. Now, CSR policy for school education sector too at http://indianexpress.com/article/cities/pune/now-csr-policy-for-school-education-sector-too/
  16. Mark Camilleri, Re-conceiving CSR programmes for education at http://www.timesofmalta.com/articles/view/20150105/business-news/Re-conceiving-CSR-programmes-for-education.550689
  17. Anushree Parekh & Poorvaja Prakash, Why companies prefer CSR in education at http://www.thehindubusinessline.com/opinion/why-companies-prefer-csr-in-education/article7040552.ece
  18. Shreya Roy Chowdhury, RTE deadline coming up but universal primary education still not in sight at http://timesofindia.indiatimes.com/india/RTE-deadline-coming-up-but-universal-primary-education-still-not-in-sight/articleshow/46689787.cms
  19. Saumya Tewari, Jaitely slashes education, health spending at http://www.business-standard.com/budget/article/jaitley-slashes-education-health-spending-115030200569_1.html
  20. Purusharth Aradhak, 22 Noida schools adopted in CSR at http://timesofindia.indiatimes.com/city/noida/22-Noida-schools-adopted-in-CSR/articleshow/48602766.cms

 

Like it or not, the link between CSR & Marketing is undeniable

LogoLast week I completed my summer program on ‘Strategic Marketing’ at Imperial College Business School, London. One of the main reasons why I had opted for this course was infact, one of its modules on Business Sustainability, and my desire to explore the link between marketing and corporate social responsibility. Needless to say, I found this session, taught by Professor Colin Love, the most interesting, which was in essence a reassurance for me and my belief in the immense potential of having a 360 degree approach towards corporate sustainability in the future.

The primary stakeholder for a company is always the consumer. The rest of the stakeholders’ only care about the profit and the same is also not unfounded, considering profit is also an important component for a company to become and remain sustainable. Consequently, the objective has to be to build a brand awareness which has a value on the balance sheet, satisfying all stakeholders.

In 1994, John Elkington came up with the concept of Triple Bottom Line and advocated that the companies should prepare three different & separate bottom lines including profit account (classical financial reporting), people account (measure of social responsibility) and planet account (measure of environmental responsibility). A company producing a Triple Bottom Line is considered to have taken the account of the full cost involved in doing business. CSR has, further, been defined as a form of corporate self-regulation integrated into a business model with the CSR policy functioning as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of law, ethical standards, and international norms.

If a company is known to be green, ethical within a consumer group of 15-40, it’s a positive for the company in terms of brand value and can be termed as a ‘Green Benefit’ to it. As evidence suggests, an increase in sales, brand value and brand recognition will lead to an enhanced share value in the long term. [I was actually surprised at the number of people who confirmed that their purchase decisions were influenced by a company’s ethical behavior.]

Most often CSR gets attributed to marketing under PR, running the danger of being mistaken as just a PR exercise, window dressing or a greenwash. Here the marketing departments in coordination with the CSR teams have a major role to play. A CSR policy should be highlighted and communicated only when some work has already been done under it [For instance, recently the Mahindra Group met its CSR objective of constructing a targeted number of toilets in rural areas and communicated it on digital platforms]. Green-washing will only spoil the environment in which the company operates in, in terms of public relations and media. Thus, it becomes the responsibility of a marketing professional to prevent such damage to the brand by ensuring the communication of only the relevant information.

As evident by the CSR practices and trends, social responsibility has both a social component and a business component. A company practicing Triple Bottom Line also has to make money. There is growing evidence to suggest that ethical practices build sustainable businesses which are corporately responsible and the benefactors include the shareholders, staff, suppliers, the economy, the planet and the society. Corporate Responsibility has been recognized as the necessary cost of doing business which gives a company a distinctive position in the market. The business benefits to a company having a defined corporate-responsibility policy have been found to include- better brand reputation, better decisions for the business in the long term, attractiveness to potential & existing employees, meeting of ethical standards required by the customers, better relations with the regulators and lawmakers and higher revenue as compared to that in the absence of it.  The positive commercial reputation garnered, thus, also contributes to the HR reputation of a company and their ability to attract and retain employees. Citizenship responsibilities, a requirement for global companies, further, ensure positive social reputation through environmental stewardship, education, community projects and philanthropic ventures. While these may be difficult to define or measure, they are likely to feed commercial reputation of the company.

It’s no longer surprising that the trend is gradually shifting from corporate social responsibility to business sustainability. Corporations are now in a position to effectively control resources, technology and have global reach at the same time, ultimately controlling the motivation to achieve sustainability. Sustainable Development is, therefore, increasingly indicating a market in which the strong and successful accept their responsibilities, showing vision and leadership.

For managing sustainable business & corporate responsibility, communication of the business case is very important, bringing the topic of CSR communications to the forefront. Along with it, inter-firm initiatives, an understanding of benefits, quantification of tangible evidence, adoption of systems to include initiatives, disclosure, stakeholder involvement and an ever evolving business case/strategy are the key requirements of any successful sustainable business practice. The drivers of CSR, key issues, stakeholders, functions required to support the program, company systems/culture/organisation, HR, matrix management, and budgets and resources also have to be managed for an effective implementation of any CSR program. A way to do it, of course, is by setting up a CSR function as a department, educating and empowering the management to collectively manage the process (esp. the marketing & business communications dept.), and fostering ownership (for instance, by having bonus schemes that reward CSR initiatives pursued by employees). The secret to managing sustainability involves understanding the business case, what to do and how to do it. This has to be supplemented with the preparation of a culture of change, environmental management systems, measures and communication plans. What starts with small steps, mostly internal to the company will lead to huge leaps externally consisting of cleaner production/design, service synergies and industry symbiosis.

Corporate Responsibility is increasingly being given a very high priority nowadays. Some of the global priorities for the next 5 years are posed to include the environment, safer products, retirement benefits, health-care benefits, affordable products, human-rights standards, workplace conditions, job losses from outsourcing, privacy and data security, ethically produced products, investment in developing countries, ethical advertising & marketing, political influence of companies, executive pay and opposition to freer trade among others. Models of corporate sustainability will involve those across logistics, supply chain, operations, technologies, services, HRM, marketing and sales. For instance, to be able to say that everything a company purchases is “sustainably sourced” is a marketing masterstroke. Marketing and sustainability, hence, have to be made the two sides of the same coin with the objective – ‘You can do well by doing good.’

It is time to reinvent the role of business in society and in pursuance of it, reinvent the role of marketing.

Marketing CSR will, thus, be ‘marketing to real people by real people.’