THE STATE OF CORPORATE SOCIAL RESPONSIBILITY IN INDIA

“We are similar in our work – there is something magical about the convergence with people halfway around the world. The issues you are dealing with are so similar to the ones we are going through.” Priya Naik, founder and CEO of Samhita Social Ventures in India, was addressing delegates to The Trialogue Business in Society Conference 2018 on corporate social responsibility (CSR) developments in India, where government introduced a CSR law in 2013.

Legislating CSR

India has the sixth-largest world economy, the largest youth workforce globally, and one-third of the world’s poorest people. The 2013 law was introduced to encourage companies with a net worth of $83 million or more, turnover of $160 million, or net profit of $830 000 to engage with government and civil society “to leverage their core strengths to improve how India functions,” requiring them to report a 2% profit after tax spend on CSR.

Ms Naik was encouraged by the fact that companies were now compelled to act as developmental stakeholders. Indian corporate boards now also have to discuss CSI four times annually. “The regulation has brought humanity into the boardroom – from social justice to gender equality and education. At least the conversation has begun.”

Businesses responded to the law in four ways:

  1. Those with existing CSR programmes continued and tried to align with regulations
  2. Companies that had been doing CSR for decades used the regulations to look at CSR more strategically
  3. There was confusion and little clarity about the regulations, which led to extreme risk aversion
  4. Some assumed that the regulations wouldn’t be implemented and would simply fall away.

Strategic thinking, governance and collaboration must shape the sector

An informal survey of 100 lawyers revealed that, while businesses did not support the regulation, they did support CSR, with one commenting that government was trying to ‘force something that should be spontaneous.’ If companies were left to be spontaneous in their actions, said Naik, then “$3.3bn would be spent by companies who have no idea about development, potentially distorting the benefits to civil society.” Naik recognised the need to be thoughtful, strategic and methodical about how companies were included.

By 2016, given two years of reporting, almost 19 000 companies contributed to CSR, with the top 10 accounting for a third of spend. Like South Africa, key sectors included education, healthcare and rural development.

“The bulk of Indian expenditure, however, went into infrastructure such as building school toilets. This was a response to government calls for action – education and sanitation – without considering the larger picture such as water and waste disposal,” said Ms Naik.

Samhita has played a key role in bringing corporates, government and related organisations together, so that issues are aligned and children have the opportunity for holistic development. “Indian CSR has transitioned from crazy cheque writing, to much larger, strategic thinking.”

Ms Naik outlined four key, current trends in Indian CSR:

  1. Strategic CSR: Companies are moving towards more strategic, systematic and differentiated CSR initiatives, with a growing focus on flagship programmes
  2. Governance: Companies are strengthening their own governance capabilities, with some setting up their own foundations
  3. Collaboration: There is increasing appetite for collaboration with other companies, government, foundations and social enterprises – and investing in innovation through these partnerships
  4. Execution: Companies are slowly building up their own CSR teams, but finding professional talent remains a concern.

Three key challenges remain:

  1. Fragmented decision-making: Companies face systemic knowledge gaps at every stage of the CSR life cycle, and there is an absence of common governance frameworks, benchmarks, standards and best practice
  2. Mismatch of expectations: Stakeholders, brought together by the law, are still working in silos and sometimes at cross purposes. Smaller, local non-profits have been unable to access opportunities
  3. Absence of enablers: The CSI ecosystem currently lacks relevant intermediaries and enablers, which are necessary for bridging gaps and ensuring cohesive and strategic decision-making.

Tech underpins new wave of Indian CSR

“The CSI ecosystem in India is chaotic, preventing stakeholders from accessing information, partners and resources. Law and accounting firms advise companies, trying to ensure they create a legal environment where companies feel comfortable.” For example, most companies allocate funds to sanitation, but are not spending all their budgets as they are unsure who to give funding to. An already complex situation is exacerbated by India’s caste system, with the lowest caste responsible for cleaning toilets. There are also diverse stakeholders, such as Unilever with hand washing and toilet cleaning products; engineering companies involved in embedding water and sanitation infrastructure; and financial institutions.

“(However), tech-enabled collaboration successfully brings together diverse players across the ecosystem in a single place. Samhita’s GoodCSR platform eases implementation, monitoring, evaluation and reporting. We want to co-create standards for technology and CSR excellence to ensure transparency, best practice, deepen scale and impact, build accountability, increase efficacy and efficiency.”

Ms Naik said this tech platform enabled them to disseminate knowledge and report to multiple stakeholders. “We want to create common templates – showing outcomes, inputs and impact ‒ with numerous organisations at different levels of capability and understanding, to ensure common compliance. 

“The role of technology is critical. If we lose sight of how technology is going to disrupt matters over the next few years, we will be in a lot of trouble.

“We want a meaningful conversation to help everyone. We have learnt a lot here (in South Africa) and are looking forward to working together.”

 

DOWNLOAD PRESENTATION

 

Image © Brett Eloff

2018-06-14T14:27:19+00:00 June 7th, 2018|Business in Society 2018|