Corporate Social Responsibility has been a buzz word in the corporate world for a few years now. A lot of companies are seriously trying to incorporate socially driven aspects to their businesses and that includes central public sector units that are in the hundreds in India. And while I am all for socially driven projects, it seems to be that Corporate Social Responsibility is a highly misunderstood term.
With the current regulations in India that mandate 2% of company profits to be deployed in CSR initiatives (for companies with profits of over $1mn), the management teams of various companies are getting countless proposals for socially driven projects from NGOs and social enterprises.
One would think they’d be tough to sort through, but that’s just another misconception. CSR by nature is meant to be related to the operations of a company in a very intimate way. An electronics company may be doing a great job by investing in educational initiatives, but such a program is not appropriate for its business. Instead, it could focus on projects involving introduction of solar lamps in tribal villages of India. With a project that is inherently in line with a company’s business, not only does the company leverage existing resources successfully but is also able to use its Corporate Social Responsibility initiatives to add true value to its business through brand development and sometimes even extension into markets that were previously untapped.
No CSR initiative should be undertaken only to “rid” the company of dollars due to regulation. Instead, it should be designed to create value for the company and tracked against metrics defined well in advance of taking a CSR initiative on. It’s an important step to create value for the company and the country, and when the metrics are well designed, it allows for local partners in initiatives to have aligned incentives.
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