Komal Sinha shares her insight into how the mandate is performing, the challenges it has created for corporates, and how they should respond.
3 years into CSR compliance under the Companies Act 2013, how has it performed?
The Act is really starting to have an effect on Indian companies’ commitment to CSR. In the past year alone, a recent report indicated a 25% growth in expenditure on CSR by the top 100 listed firms. However, to meet the Indian government’s desired social change targets, there is still work to be done.
What are the key challenges companies have been facing when implementing CSR programmes?
One of the biggest challenges for corporates has been finding the right trusted implementation partner, to effectively deploy funds address the root of the problem for target communities and effectively measure project impacts. Today 62% of businesses are working with an implementation agency to spend their CSR budget. There are over 100,000 implementation agencies in India, but only a few of these have the relevant experience – so it is hardly surprising therefore, that selecting a credible and experienced partner to implement a programme from end to end which aligns with your business strategy has been a daunting task.
How should a company identify the best project and area for their business?
A good project is scalable, sustainable in long term and addresses the needs of the communities on ground. To ensure these three objectives are met, a corporate should focus on the following:
- Identify programme impacts that resonate with the corporate’s own business objectives.
- Identify the right partners that have expertise in setting up projects to deliver stated impacts
- Identify the needs of the target communities, ideally through a partner, before rolling out a programme to ensure that the end users are benefitted through the programme.
What should companies look for when selecting the right partner?
In my opinion the critical factors to consider when finding a good partner are:
- Credibility in terms of expertise in implementing long term, end to end programmes with systems in place for impact assessment as well as the connection with the communities on ground. Many corporates have come to ClimateCare because of our extensive experience and ability to implement scalable and sustainable programmes from end to end that maximize social and environmental return on investment.
- Capability to implement a programme starting with a needs assessment of the target community, baseline assessment, deployment of financial models that are scalable and sustainable, period review, monitoring and controls with the knowledge and ability to apply globally approved benchmarks for measuring and reporting impacts and social return on investment. This is the approach ClimateCare applies to every programme we implement.
What are the current CSR trends and have you seen any noticeable changes?
Our experience with programmes and partners on ground, as well as recent reports suggest the most noteworthy trends and changes to be:
- Education and skill development continue to attract the most CSR spend followed by poverty alleviation, water, health and sanitation and environment sustainability.
- There is a skewed geographic distribution of spend – understandably companies want to support projects in their neighbouring areas. However, this is a missed opportunity, as widening the geographical range to where there is significantly greater need for social investment can make much greater impact.
- Largest CSR spenders continue to be banking and financial services, IT/ITES, Energy, metal and mining sectors.
Are companies measuring and reporting the impacts from their programmes?
We are seeing more companies placing emphasis on impact assessment as opposed to only compliance and implement, but there are still gaps in the robustness and value of the assessment measurements taken. Companies are still focused on reporting “outputs”, for example, number of schools provided with safe water. A much more valuable measurement is the long-term effectiveness of a project.
An example would be ClimateCare’s Safe Water for Schools programme where we not only measure the number of schools provided with drinking water, but go a step further to report the lives improved from the programme – by the litres of safe water provided, increased awareness amongst students of safe water practices and improved health, leading to improved attendance in schools.
What would your advice be to corporates?
- Take a strategic approach and make CSR add value to your business – CSR spend presents an opportunity to add value to your business while addressing critical social problems. For example, a beverage company, working with tea growers in its own supply chain, could provide access to clean cooking and off-grid energy solutions, improving the household income, health and access to education for the farmers and their families and building resilience in the company’s critical supply chain.
- Find the right partner – Due diligence should focus not just on an implementation partner’s credibility but also their competency and expertise in implementing a programme that is scalable, measurable and has a strong community connection.
- Consider impact assessment a game changer for CSR – I believe companies will soon realise that a programme cannot be successful unless impacts on the ground are measured effectively.
- Treat the CSR mandate as a guide not a rule set in stone – Moving away from only compliance to investing in projects that bring real self-sustaining impacts for communities, allowing programmes to continue after the corporate support ends.
Get in touch to see how ClimateCare can help you design and implement a robust and measurable CSR programme, that brings value to your business.