Importance of Professionals in Corporate Social Responsibility – Fiinovation

The advent of corporate social responsibility (CSR) in India opened new avenues for employment for people belonging to the social development sector. The mandate under the Companies Act, 2013 made it a more focused area for the businesses which might look at CSR in a strategic manner. Hence, the effectiveness of CSR initiatives lies in the hands of CSR professionals who are well versed about the concept and can utilize the initiatives for benefiting the organization.

It has been observed that in most of the businesses, there is still no CSR department, rather it’s the Human Resource department or the senior management which takes care of such initiatives, that too because of mandatory compliance. When called to enquire regarding the CSR department, most of the times the calls are answered by the HR and not by the CSR committee members. This brings us to the question that, are the businesses really serious about giving back to the society or considers CSR as a tick-box exercise?

The presence of CSR professionals in the organization is definitely an indicator of the seriousness of the initiatives. There are several benefits attached to having a CSR professional within the organization. Not only it provides chances to improve the social return on investment, but also improves the communication of CSR initiatives to the stakeholders. As a brand, businesses look to increase their consumer base and market outreach. CSR definitely provides an opportunity to boost the brand value, and the CSR professionals do play a significant role in devising implementation strategies.

Globally, leading CSR professionals have moved one step ahead and are looking not just to initiate ‘give back’ projects, rather incorporate the concept of being a responsible organization across the value chain. They help the corporate communications department to put a number on the value that has been created through the CSR initiatives. It is always recommended to not to give the job of handling the CSR manager position to someone in the HR or any other department, so that there can be a complete analysis on the social return on investment.

With increasing competition among the businesses, CSR could be an innovative mechanism to differentiate a brand from its competitors. The increase in effectiveness of the CSR programmes due to the presence of CSR professionals is definitely a motivating factor for the socially responsible investors. It is also due to the increasing demand of CSR professionals in the businesses and business foundations that several b-schools have started offering degrees in CSR. It is expected that in the years to come, the businesses which doesn’t have CSR professionals will look to recruit them to optimize their social return on investments. Hence, for a CSR professional the future seems to be bright in terms of employment opportunities, but their definitely will be more pressure on them with greater responsibility towards the organization and society at large.

 

By Rahul Choudhury

Media & Communications, Fiinovation

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CSR Contributions – Is it a Burden for the Companies?

Despite global turmoil, India continues to emerge as one of the fastest growing investment destination in the world. The Indian government’s efforts towards ‘policy reforms’ and ‘ease of doing business’ are major steps directed to meet the demands of its citizens. Socio-economic growth of the nation is directly linked to profitability of businesses. Without growth, the domestic consumption is not likely to increase. This is one major reason for the businesses to invest their share of profits in activities that are aimed to benefit the marginalised sections of the society.

Although, Corporate Social Responsibility (CSR) is mandatory in India for businesses falling under the CSR ambit, yet the attitude of the Indian companies have not changed much. Businesses are mostly interested in earning profits even after realising that businesses can sustain only if communities prosper. Fiinovation, a global CSR consulting company suggests that companies who are mandated to contribute towards CSR are merely focusing on compliance, rather than impact of the initiative.

In such a situation, when there is not much visible impact, the companies tend to believe that funds have gone wasted. Hence, CSR becomes a burden for them.

It is understandable that while the CSR spending went up from Rs 8,330 crore in 2014-15 to Rs 9,882 crore in 2015-16, the utilization of funds and overall social outcomes have not been quantified or reported. As per experts, it is important for businesses to understand and measure the impact and return on investment of CSR initiatives. Research has also suggested that the rise in contributions by the larger businesses is related to partnership with implementation agencies, mainly CSOs for execution of the CSR programmes. It is noteworthy for the companies facing challenges in CSR to understand that partnership with CSOs help boost compliance of the law.

Effectiveness of the CSR programmes can also be determined through monitoring, evaluation and impact assessment studies. The companies must understand the purpose of CSR and actively engage in its implementation. It is not a matter of compliance, rather it’s about their survival. Companies should be looking to leverage the initiatives to build their brand image. Through CSR, the government is also trying to push the rural development agenda to spur economic growth. As per the Union Finance Minister Arun Jaitley, the CSR process which is perceived as burden by the businesses in India can help double the income of farmers. Hence, in this collective effort to eradicate poverty and boost socio-economic growth, businesses should play a pro-active role through collaborations with the civil society organisations.

 

By Rahul Choudhury

Media & Communications, Fiinovation

SMEs outshine big corporates with generous CSR Spend

A recently conducted research on 3,855 listed companies with the aim of studying their CSR spends and response towards the CSR mandate in fiscal year 2015. The report highlighted that around 1300 listed companies in India have met the mandatory 2% CSR spend in fiscal year 2015, during the second year of CSR implementation.

This year, SMEs have raised the bar with higher CSR spends as compared to the big corporations. Hence, it will not be exaggerating to term 2015 as year of SMEs in CSR. In fact, the companies with higher turnover lagged behind in meeting the 2% mandatory CSR compliance. Clearly, they are not short on altruistic, society-building motivation. This also reflects a broad-basing of CSR activity in India Inc,” Crisil said.

As per the Companies Act 2013, companies falling under the CSR ambit should either have the turnover of Rs 1,000 crore or net profit of Rs 5 crore to spend at least 2% of their average net profit in the preceding 3 financial years on CSR activities. 425 out of the 1024 companies surveyed were found to have turnover of Rs. 100 to Rs. 500 crore and 53% of them had spent the 2% or more of their net profit on CSR. 518 mid-sized companies with the turnover falling betwen Rs.500 crore to Rs.10,000 crore with 50% of them fulfilling the 2% spending requirement. However, in case of companies with turnover of over 10,000 crore or more, only 31% of the 81 companies either met or exceeded the CSR mandate. Many companies such as Tata Consultancy Services Ltd and HDFC Bank Ltd. even fell short of meeting the 2% target.

Mr. Ramraj Pai, President, Crisil Foundation, said, “Compliance towards CSR in fiscal 2015 seems to be inversely proportional to the size of the company; those with high turnover were short of the 2% mandatory spending.

Since SMEs contribute towards the development of Indian economy by providing employment to nearly 40% of the nation’s workforce and also contribute towards 45% to the manufacturing output, hence the larger CSR spend by them will pave the path towards holistic sustainable development as they employ a large chunk of employees from the rural and backward regions of India. The collaborative efforts in CSR domain by SMEs will not only help in upliftment of the weak and marginalized people but also prove highly beneficial for the companies by helping them in streamlining their business processes and managing their operational costs.

Considering this was the second year of implementation, the large corporations require considerable time and efforts to conceptualize CSR initiatives and implement the processes for maximizing the outcomes. But, the affirmative response of SMEs towards integrating CSR activities in their business reflects their long-term business vision and their concern towards the societal needs.

In nutshell, the size of SMEs doesn’t matter and they should engage in CSR activities both to avoid downside business risks and exploit the upside opportunities.

Manisha Bhatia

Media & Communications

Fiinovation

Five laws passed in the last decade that aimed at social welfare

  • Right To InformationRight to Information Act was passed on 12th May, 2006 giving access to the citizens to ask question and seek their answer from the Government records. The Act is now playing a crucial role in exposing corruption and ensuring the power of democracy. The act is now a part of our fundamental rights.
Right To Information Act

Right To Information Act

  • Right to Education Act – The Act came in to force on 1st April, 2010 ensuring that every child between the age of 6 to 14 in India gets free education. The RTE Act is the first legislation in the world that puts the responsibility of ensuring enrolment, attendance and completion on the Government.
Right to Education Act

Right to Education Act

  • The National Rural Employment Guarantee Act 2005 – The Act gave birth to the largest social security scheme and public welfare programme in the world, covering all the districts in the country. NREGA started with 200 districts and eventually covered other districts in the country in 2008, providing 100 day work to every unemployed. Now the Government is seeking to increase the day limit to 150.
The National Rural Employment Guarantee Act 2005

The National Rural Employment Guarantee Act 2005

  • Food Security Act 2013 – The aim of this Act was to provide subsidised food to nearly 1.2 billion people, thereby, ensuring the health of women and growth of children. Under the Public Distribution System, the target was set for covering 75 percent of the rural population and 50 percent of the urban population.
Food Security Act 2013

Food Security Act 2013

  • The Companies Act 2013 – The Companies Act 2013 made Corporate Social Responsibility (CSR) mandatory for companies. As a result, the participation of companies in the social welfare has increased.
The Companies Act 2013

The Companies Act 2013

Compiled by – Media Team

Fiinovation