Communicating CSR Effectively –A study of 23 Indian Companies in Eastern India.
By Vijay Kapur & Enakshi Sengupta
The concept of ‘corporate social responsibility’ (CSR) in its modern day concept started gaining ground in the last 15 years. Corporate misbehaviour or scandals were partly responsible for this growing consciousness. The Enron and Arthur Anderson scandal, Shell’s Brent Spar case and others led to major scepticism and decrease of trust in corporations.
• Companies revealed a very low CSR score.
• CSR in most companies are altruistic in nature.
• CSR did not lead to any value creation.
• CSR is not embedded into the core business strategy.
• CSR communication does not confirm to any guidelines.
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Introduction: The Changing Landscape of Corporate Power and Accountability
On one hand the century witnessed the growing power of the corporation and a market caught up in the whirlwind of rapid transition due to privatization, liberalization and globalization. On the other hand we have issues related to accountability and transparency posed by stakeholders of these corporations. With the growth of social media platforms, the flow of information is almost constant and immediate and every move of the corporation is on public display almost instantaneously.
International Standards and Shifts in Corporate Behavior
In this era of heightened social expectations there are a number of international bodies who have set standards of communication for corporations. In Europe alone the corporate environment is experiencing a gradual shift from implicit to explicit corporate behaviour which is ushering in new challenges as well as opportunities for corporations as to how to communicate their CSR activities (Matten & Moon 2004). In India there has been a paradigm shift towards explicit CSR which demands greater visibility with a voluntary approach along with self-interest driven policies and strategies that are perceived by the company’s stakeholders as meaningful. Beckman et. al (2006) agree that the ‘silent strategy’ once practiced by companies are giving way to CSR and are becoming a part of a company’s communication strategy needed to gain a competitive advantage.
Challenges in Corporate Communication: Scrutiny and Questioning of Motives
Corporate motives are being increasingly questioned and come under scrutiny from activists, critical journalists and consumer groups who test the validity of corporate claims (Morsing 2006). A large number of corporates are joining the battle of attention. Corporations have a hard task ahead of trying to prove to their stakeholders and sceptic audience that they are as good as they claim.
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The Evolution of Corporate Responsibility: Multiple Stakeholder Approach
Most of the research scholars in the field of CSR agree to the multiple stakeholder approach becoming a defining characteristic of corporate responsibility in the 21st century (Elkington 2001). Similarly academicians and researchers also agree to the integrated approach to CSR into its corporate vision, values, strategies and organization culture. Corporations will act in a more socially responsible manner if they engage in dialogue with their stakeholders. Interaction and repeated dialogue enhances the understanding and appreciation of the actor’s concern (Campbell 2007).
Strategic CSR Communication: Legitimacy and Reputation Management
In recent years CSR communication has become an inherent part of the corporate communication strategy. Researchers in this field have unveiled two basic motives for companies to communicate their CSR strategy. The main two benefits of strategic CSR communication are to gain ‘corporate legitimacy’ or to enhance ‘corporate reputation’. Strategic legitimacy management relies heavily on the communication between the organization and its various stakeholders.
Corporate Reputation and its Link to CSR
“Corporate reputation consists of a multi-dimensional construct that reflects the unique dimension on which individual stakeholders base their judgement of their corporate performance” (Fombrun2002). A good reputation of a company has a strategic value and the key ingredients of a good reputation lie in its visibility, transparency, distinctiveness, consistency and authenticity.
CSR in India: Current Status and Challenges
The impact of corporate brands is arguable closely linked to CSR and corporations depend upon the support and approval it receives from its stakeholders for their activities (Schultz 2005). The necessity for a holistic approach towards reputation management in the context of corporate social responsibility has been emphasized by scholars in this field.
National Voluntary Guidelines 2011: A Regulatory Framework for CSR Disclosure
The National Voluntary Guidelines 2011 released by the Ministry of Corporate Affairs, India was set up as part of the multi-stakeholder platform on CSR making it mandatory for companies to disclose their CSR projects.
Challenges in Realizing the Full Potential of CSR in India
Although the journey has begun but CSR in India is yet to be realized in its full potential. “Individual and collaborative initiatives continue to be dominated by self-assertion rather than accountability” (Dasgupta A. 2008). There is certainly no dearth of innovative CSR activities and projects, but what is missing, are definite goals, embedding of a CSR culture, practice and metrics for evaluating their social impact in improving the plight of many.
CSR Activities in Private Sector Companies in Kolkata: A Case Study
The codification of CSR activities remains highly descriptive and self-praising in nature, lacking the recording of actual facts and figures which can be measured vis-à-vis the money spent on these activities. India’s markets continue to exhibit negative externalities and free riders where cost for destruction and degradation of environment and community is not accounted for which ultimately leads to socio-economic degeneration.
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Gap Analysis and Low CSR Scores: Findings and Implications
To find out how well this mandate of disclosing CSR activities is accepted by Indian companies the authors chose to study 23 companies belonging to private sector companies in Kolkata, India. These companies operate mainly in the manufacturing or heavy engineering sector.
The nature of their business may often result in polluting the atmosphere or displacement of inhabitants. The websites of the companies was studied in detail and other relevant documents found online. A Gap Analysis tool in the form of a score card was developed by the author along with her colleague having 46 criteria which highlighted areas such as stakeholder engagement, performance and compliance, management systems and procedure, scope and boundaries of CSR reporting, targets and achievements and assurance of the report writing. Scores were given in the denomination of ‘1’ or ‘0’ depending upon the information available.
Most of the companies revealed a very low CSR score, the average being 6-7 out of 46. The declaration made in the websites on CSR was inadequate and did not reveal much about the CSR health of the company. Most of the activities were altruistic in nature without generating any value creation towards the bottom line growth of the companies. None of these companies have embedded CSR in their core business strategy. They are yet to realize the role of stakeholders for their business and often choose to ignore them in communicating their CSR activities. The websites are outdated and the information available is often a couple of years old.
The booklet depicting CSR activities in a few companies were not written under any global guidelines and resemble picture albums glorifying un-coordinated philanthropic activities.
Recommendations for Improving CSR Communication and Integration
In order to make their CSR activities more strategic in nature companies are required to embed CSR in their core business strategy and to use the framework laid down by Ministry of Corporate Affairs, Govt. Of India, National Voluntary Guidelines 2011 or the framework suggested by Global Reporting Initiatives (GRI) to disclose their CSR activities through a well written Sustainability Report.
Future Research Opportunities: Assessing Cultural Dimensions in CSR
The research provides further scope of assessing the cultural dimensions of corporations engaging in CSR, their definition of CSR, their motives for engaging in CSR and how they plan to communicate CSR to their stakeholders in the future.
About the author
Vijay Kapur & Enakshi Sengupta – Executive Directors – Kohana – A Dedicated CSR Consultancy. They are regular contributor to INDIACSR.
