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Home Corporate Social Responsibility

Corporate social responsibility (CSR) mandatory Impact

CSR shouldn’t just be an option. It’s an answer. Mandatory CSR imparts a responsibility on a company to make a change for the better rather than for profit.

India CSR by India CSR
April 15, 2022
in Corporate Social Responsibility
Reading Time: 5 mins read
Photo: India CSR

Photo: India CSR

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As India stands at the forefront of change through its CSR initiative, let’s take a look at what we can learn from successful initiatives around the country that are making impactful CSR contributions, especially in rural and community development. As India is the first country in the world to make corporate social responsibility (CSR) mandatory, it has become the epicentre and focal point for change. India is now the country to watch out for, successfully making waves for the future of what conscious business can mean globally.

Although CSR isn’t a new concept, with companies as far back as the 1800s linked to inciting societal change and community engagement to bolster business, it isn’t something that we’ve all mastered just yet. Today, just about every large to medium-sized business around the world has a CSR structure in place, no matter their location. Even small companies are focusing more and more on their means to give back to the community and the society surrounding their business.

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During the COP26 Summit on Climate Change, Prime Minister Modi committed India to a target of net-zero emissions by the year 2070. With the shorter-term goal of tripling the use of renewable energy and greatly reducing India’s carbon emissions by 2030, mandatory CSR initiatives can greatly help India reach these milestones.

True impact with real purpose happens when companies like yours focus their CSR strategies to align and grasp shared values between the company’s mission and their consumer’s values.

For example, if you’re a company with a strong focus on equal opportunities and inclusion, a CSR strategy focused on women’s empowerment would holistically tie your values with your impact initiatives. Similarly, if you are a company that seeks to employ workers in rural, less developed areas, a CSR strategy focused on rural development and support would be a balanced choice.

Recent statistics have shown that companies are moving more and more from funding to strategically implementing, monitoring and evaluating their CSR initiatives to make sure they meet both key characteristics. This is helping to continually connect them to the core values of the business they offer while making sure their impact initiatives are solving a problem at its root.

Having a solid CSR strategy in place that holistically fits your company’s mission, vision and services will not only help drive customer loyalty and your sales bottom line, but it will also have an ultimate knock-on effect helping your company attract exceptional employees who share your values and vision and are motivated to grow with you and your initiatives. With all this combined, your CSR strategy can catapult your overall brand value across the board.

Generally, there are two ways an Indian company approaches CSR – through activities or via a funds/contribution strategy.

As one of the most important strategic mindsets for growing a company through CSR, we know that a company’s CSR strategy should connect and align with the company’s goals and niche. However, in previous years, CSR trends in India have seen a growing number of companies
target a couple of specific focus areas.

Apart from that, all forms of CSR initiatives should be implemented in strategic and systematic ways. Only when a company implements its initiatives in a sustainable manner, in which local communities can maintain their initiatives without the supervision of the company, can a CSR project be seen as truly successful.

According to National CSR Data Portal, between 2015 and 2020, CSR strategies and spending on rural development have increased by more than double. In 2015, 645 companies contributed towards schemes focused on rural development, while in 2020, that number had risen to 1538 with contributions across the country reaching 60,433.44 INR Lakh, according to the Ministry of Corporate Affairs.

How a company contributes to rural development varies greatly. However, all rural development schemes can help to reduce and eradicate poverty divides through increased access to education, technology, or the internet, or by creating loan and empowerment schemes that enable those living in rural areas to fund and begin their ventures. We showcase several examples further in this guide.

Data CSR Portal says, gender equality and women’s empowerment have also risen significantly between 2015 and 2020, as seen in the reported spending from companies throughout the country (according to the Ministry of Corporate Affairs).

Such women’s empowerment schemes have helped women, both rurally or in a city environment, by providing education, self-help courses, access to means that allow them to upskill and progress in their careers, etc.

They also focus on medical care, shelter, or other forms of help to those in need of it most with a goal of long-term, sustainable progress rather than hand-to-mouth, quick-fix schemes.

The impact of CSR on Business

Better brand recognition Positive business reputation Better financial performance Greater ability to attract talent and retain staff. Increased sales and customer loyalty Operational costs saving Organisational growth Easier access to capital.

Brand value recognition

CSR translates the company’s values into actionable initiatives on a local level. It proves the realness of the business values and validates the company’s mission. Where branding gives a company a face, CSR gives a company a heart. It helps people relate to the business as they feel connected to what the company is seen to care about. This recognition can evoke feelings within consumers that strengthen their loyalty to a
brand.

Customer loyalty

Customer loyalty grows from an emotional connection from a person to a brand. As the economy changes and conscious millennials create a large share of the market, CSR is vital for companies to stay ahead of the game, proving that their company is conscious, too. Consumers are prepared to choose a more expensive shop that stands up for the issues they believe in, rather than a store that is half the price but has zero CSR initiatives.

Employee Engagement

CSR is the third most important driver of employee engagement overall concerning engagement and retention. When an employee feels connected to a company’s CSR, they will give more to the initiatives, push for further change, and work with the company rather than as they share a similar view, interest, and initiative.

The Social impact of CSR

CSR has the power to change, improve and even eradicate so many common issues faced by communities in India, especially within rural development. Sixty-seven percent of India’s total population resides in rural villages around the country, and most of these communities lack basic amenities and infrastructure. With that in mind, the CSR agenda and task for nation-building and development are colossal. However, the sheer scale of what can be possible moving forward through continued impactful CSR is, as of yet, difficult to determine. This is primarily because the laws for mandatory CSR are so new. However, there have been significant leaps in the right direction for rural development and other aspects of our society in just a couple of years alone.

According to the recent CSR Report; Poverty Alleviation, Healthcare & WASH; Education & Skills; and Rural Development emerged as the focused thematic areas which jointly cover 70% of India’s total CSR fund. In addition to encouraging CSR projects, India’s government has focused efforts on improving sanitation, specifically in rural areas, by establishing the Swachh Bharat Mission, and installing over 100 million toilets across rural India to maintain universal sanitation coverage.

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India CSR is the largest media on CSR and sustainability offering diverse content across multisectoral issues on business responsibility. It covers Sustainable Development, Corporate Social Responsibility (CSR), Sustainability, and related issues in India. Founded in 2009, the organisation aspires to become a globally admired media that offers valuable information to its readers through responsible reporting.

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