Tuesday, 16 August 2016

CSR Can Contribute To Sustainability

Given the CSR requirements within the 2013 Companies Act, corporate India will be playing a more active role in addressing India’s social concerns in the coming years. While it is still too early to evaluate the utility of such a progressive law, it is clear that companies have the potential to be a major force for good. There are several important reasons for this.

Dr Ruth Shapiro 
First, of course, is the reality that 2 percent of after-tax income will now go towards certified CSR  activities. According to finance minister Arun Jaitley in a March 2016 Economic Times article, companies spent Rs 8,347.47 crore in the last year.  Those reading this newsletter and thus are probably in the social sector will know that a fair amount of these funds are being spent inefficiently—or even questionably. But it is clear that the bottom line is massive and will trickle through to increase the impact of many social delivery programs throughout India.

Second, companies do have a vested interest in contributing to clean, stable environments where they can find and keep well-educated and productive employees.  While there are examples of short-sighted companies that act contrary to this idea, many are interested in long-term health and sustainability and recognize the need to invest in a conducive operating environment.  We look to the extraordinary example set by Tata Sons, which lists its purpose as being “committed to improving the quality of life of the communities we serve.”

The third reason and the one that our Centre is particularly excited about is the role that companies can play to build capacity in the social delivery space. Social delivery organizations may be non-profits, but they need to think more like businesses.  To maximize their impact, they should be concerned with transparent accounting, financial forecasting, strategic planning, organizational management and development and a whole host of other skills that have traditionally been labeled as business skills.   These skills are in ample supply within the private sector.  What we need to do is establish systems that allow technology transfer from companies to social delivery organizations which will help to build capacity.  While illustrative examples of this type of partnership are in short supply, there are some that point the way forward.  Here are two examples, one in India and one in Malaysia.

Dilasa Sanstha has been working with farming communities in Vidarbha from the mid-1990s with the goal of helping farmers to be more productive and earn stable livelihoods. Several years ago, Dilasa entered into a strategic partnership with the Axis Bank Foundation (ABF).  ABF helped Dilasa set up funding mechanisms that expanded their ability to provide rural credit.  They also worked with them to strengthen its internal budgeting and accounting system, and supported the creation of a monitoring and evaluation system—for the first time, Dilasa could collect critical impact data on beneficiary income, household assets, migration level, education levels, diet, investment plans, and insurance policies. The partnership with ABF enabled Dilasa to operate at a much larger scale and help a great many more farmers and rural communities.

Another example of this kind comes from Malaysia.  Mercy Malaysia was created by a small group of doctors in Malaysia who wanted to help when natural disasters occurred such as the tsunami in Southeast Asia in 2005.  Mercy struggled with creating the systems necessary to be nimble and effective when responding to disasters in real time. They partnered with Khazanah Berhard, Malaysia’s sovereign wealth fund.  Khazanah helped Mercy develop management systems that help Mercy manage people and resources and deploy them efficiently to a disaster zone.  The partnership has helped Mercy become a serious and internationally acclaimed provider of disaster assistance around the world.

In both of these cases, the companies provided financial resources and technical resources.  They committed to the social delivery organizations for the longer term, developing the trust and the relationships necessary to make the partnerships really work.

I hope that over time, we see more examples of this type of partnership emanating from India. This will require leaders from the business and social sectors to think more deeply about how companies can contribute to social good in India, beyond the financial commitment required by the Companies Act.

By- Dr. Ruth Shapiro 

Dr. Ruth A Shapiro is the Chief Executive and Founder of the Centre for Asian Philanthropy and Society (CAPS).  CAPS is committed to increasing the quality and quantity of philanthropy and social investment in Asia.

CAP can guide you through your corporate social initiatives. Do contact us at connect@capindia.in

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