As India marks a decade of mandatory CSR, an expert discusses its evolution and future trajectory.
India’s CSR landmark legislation has spurred significant growth in corporate giving and social impact initiatives. As we look ahead, it’s crucial to assess the progress made, identify challenges, and envision the future of CSR in India.
As we commemorate the 10th anniversary of the mandatory Corporate Social Responsibility (CSR) mandate in India, it’s an opportune moment to reflect on the transformative journey of corporate philanthropy. The introduction of the CSR mandate under the Companies Act of 2013 marked a paradigm shift, not only increasing the volume of corporate contributions but also refining the approach to sustainable and strategic community engagement. With a decade of insights and outcomes to evaluate, this interview seeks to delve into the evolution, impact, and future trajectory of CSR initiatives, through the expert lens of Arun Arora, Director of Chetak Foundation, a frontrunner in corporate-driven social initiatives.
Evolution and Impact
Q1. How has the CSR landscape in India evolved over the past decade? What are some of the key milestones and achievements?
Answer: The Corporate Social Responsibility (CSR) landscape in India has undergone significant evolution over the past decade, driven by the mandatory CSR provision introduced in the Companies Act, 2013. Key milestones and achievements include:
1. Mandatory CSR Provision: The Companies Act, 2013 made it mandatory for certain companies to allocate at least 2% of their average net profits over the preceding three years towards CSR initiatives. This provision has led to a substantial surge in CSR spending and a shift from traditional philanthropy to more structured and strategic approaches.
2. Increased CSR Spending: The mandatory CSR provision has instilled a culture of social responsibility and sustainability within businesses. Many companies have surpassed CSR expenditure expectations, with notable increases in spending in sectors such as education, healthcare, and environmental sustainability.
3. Strategic and Sustainable Approach: The CSR landscape has transitioned from mere philanthropy to a more strategic and sustainable approach, with companies adopting innovative methods such as partnerships with NGOs, collaborations with government agencies, and engagement with local communities.
4. Focus on Sustainable Development: CSR initiatives have expanded to address pressing societal challenges, including education and skill development programs for underprivileged youth, healthcare initiatives in rural areas, sanitation campaigns, and renewable energy projects.
5. Integration of ESG Principles: The incorporation of Environmental, Social, and Governance (ESG) principles has further emphasized a growing focus on sustainability and climate action among Indian corporations.
6. Collaboration and Partnerships: Collaboration and partnerships have become crucial in maximizing the impact of CSR initiatives, fostering synergies and driving collective action to address multifaceted societal challenges.
7. Improved Transparency and Accountability: Stringent impact measurement and reporting practices have bolstered transparency and accountability in CSR endeavours, driving positive societal change and fostering sustainable development.
8. Innovative Technologies: The use of advanced data analytics tools, blockchain technology, and artificial intelligence (AI) algorithms has enhanced the effectiveness and transparency of CSR initiatives, enabling real-time assessment and agile adjustments to strategies.
9. Focus on Diversity, Equality, and Inclusion: CSR initiatives are increasingly directed towards fostering diversity, equality, and inclusion within the corporate sector, contributing to social equity and cohesion in India.
10. Long-term Commitments and Measurable Outcomes: Emerging trends such as deep-impact investing and social innovation underscore a shift towards projects with long-term commitments and measurable social or environmental outcomes, reflecting a maturing CSR ecosystem in India.
These developments signify a positive trajectory towards a more inclusive, equitable, and environmentally sustainable future driven by corporate responsibility and philanthropy in India.
For instance, at Chetak Foundation, we believe in collaboration and are closely working with UNICEF, Visionspring and many corporates including Hero Motorcycles & Scooters, GMR Delhi International Airport, JCB, JBM and many others for our social and ESG outreach.
Q 2. What has been the impact of mandatory CSR on businesses, NGOs, and communities?
Answer: The impact of mandatory Corporate Social Responsibility (CSR) on businesses, NGOs, and communities in India has been significant. Here are some key indicators:
Businesses
1. Increased CSR Spending: Mandatory CSR provisions have led to a substantial increase in CSR spending by Indian companies. According to the Ministry of Corporate Affairs, Indian businesses spent nearly INR968 billion (US$13 billion) on 141,752 CSR projects from 2016–17 to 2020–21.
2. Positive Impact on Financial Performance: Research suggests that mandatory CSR investments have a positive influence on a firm’s performance, particularly in terms of financial performance-related parameters such as profitability, cash holding, cost of capital, and market valuation.
3. Competitive Advantage: CSR strategy is seen as a means to build or enhance firm-specific advantages, such as understanding consumer perception and purchase intentions, increasing brand awareness, and strengthening market image.
4. Improved Governance and Transparency: Mandatory CSR reporting has made corporate governance and reporting guidelines more stringent, leading to improved transparency and reduced instances of earnings manipulation.
NGOs
1. Increased Collaboration: Mandatory CSR has led to increased collaboration between businesses and NGOs, fostering synergies and driving collective action to address societal challenges.
2. Strategic Partnerships: NGOs are now more likely to engage in strategic partnerships with businesses, leveraging their resources and expertise to amplify social impact.
Communities
1. Improved Social Impact: Mandatory CSR has led to a significant increase in CSR projects addressing various social issues, such as education, healthcare, and environmental sustainability.
2. Increased Focus on Sustainability: The mandatory CSR provision has shifted the focus from traditional philanthropy to more sustainable and strategic approaches, addressing pressing societal challenges.
3. Enhanced Community Engagement: Businesses are now more likely to engage with local communities, fostering long-term relationships and contributing to social equity and cohesion.
Overall, the mandatory CSR provision in India has had a profound impact on businesses, NGOs, and communities, driving positive social change and fostering sustainable development.
At Chetak Logistics, we have identified underprivileged truck drivers and the prime beneficiaries and we work on social interventions to improve their health, safety and education of their children.
Q3. Have there been any unintended consequences or challenges associated with the current CSR framework?
Answer: Yes, there have been several unintended consequences and challenges associated with the current CSR framework in India. Some of these include:
1. Perception of CSR as Compliance Obligation: The mandatory CSR regulations have led to a perception that CSR initiatives are mere compliance obligations rather than genuine commitments to social responsibility. This perception can dilute the effectiveness of CSR endeavours and diminish their impact on communities.
2. Inequitable Distribution of CSR Funding: The uneven distribution of corporate-NGO partnerships, where larger and more established NGOs often receive a disproportionate share of CSR funding and projects can marginalize smaller NGOs and local initiatives, impeding the equitable allocation of resources.
3. Limited Reach to Underserved Areas: CSR initiatives are often limited to areas where corporations have a geographical presence, rather than being directed towards underdeveloped rural and remote areas, which can lead to inequitable access to CSR benefits.
4. Inadequate Monitoring and Reporting: There have been instances of inadequate monitoring and inconsistent reporting practices, raising concerns about the misuse of CSR funds and undermining the effectiveness of CSR initiatives.
5. Financial Strain on Smaller Enterprises: Smaller enterprises may struggle to meet mandatory CSR spending requirements, leading to financial strain and diverting resources from other critical areas.
6. Accountability and Transparency Gaps: The current CSR framework lacks robust accountability and transparency mechanisms, which can lead to a lack of trust in CSR initiatives and undermine their credibility.
These challenges highlight the need for regulatory oversight, strategic CSR approaches, and a focus on inclusive and sustainable development to maximize the positive outcomes of CSR initiatives in India.
At Chetak Foundation, we work with an innovative model, wherein there is no monitory exchange with our partners. We believe in both partners pooling in resources to implement the social interventions, together, to address some of the challenges mentioned above.
Emerging Trends and Opportunities
Q 4. What are some emerging trends in CSR that are likely to shape the future of corporate giving in India?
Answer: Here are some key emerging trends in Corporate Social Responsibility (CSR) that are likely to shape the future of corporate giving in India:
1. Shift from philanthropy to strategic CSR: CSR in India has evolved from being just about charitable donations to a more strategic approach that aligns with the company’s business objectives and creates shared value for the company and society.
2. Increased focus on sustainability and environmental initiatives: Companies are increasingly focusing on “going green” through initiatives like renewable energy, energy efficiency, and sustainable supply chains.
3. Emphasis on digital inclusion and diversity management: Corporations are investing in programs that promote digital skills training and accessibility for underserved communities, as well as workplace diversity and inclusion.
4. Adoption of advanced technologies: Businesses are leveraging technologies like blockchain and cloud computing to bring more transparency and accountability to their CSR efforts, such as in supply chain management and impact reporting.
5. Shift towards employee engagement and impact investing: Companies are engaging employees more actively in CSR initiatives and making impact investments that align with their social and environmental goals.
6. Localization of CSR initiatives: Corporates are tailoring their CSR programs to address local community needs rather than a one-size-fits-all approach.
7. Increased CSR spending: Since the mandatory CSR provision in 2014, corporate India’s CSR spending has increased significantly, reaching over $1 billion in 2018.
In summary, the future of corporate giving in India is likely to be shaped by a more strategic, sustainable, and technology-driven approach to CSR that creates measurable social and environmental impact.
At Chetak Group, our CSR is an extended strategic intervention that aligns with company’s objectives and UN SDSs.
Q 5. How can technology be leveraged to enhance the effectiveness and transparency of CSR initiatives?
Answer: Technology can be leveraged to enhance the effectiveness and transparency of Corporate Social Responsibility (CSR) initiatives in several ways:
1. Efficiency and Resource Optimization: Technology streamlines the monitoring process, reducing administrative burden and manual efforts. This allows companies to focus on more strategic and impactful activities.
2. Data Analytics and Insights: Digital platforms and data analytics enable businesses to gather real-time insights into their operations, supply chains, and customer feedback. This helps identify areas of improvement and prioritize sustainable practices.
3. Transparency and Accountability: Technology fosters greater collaboration and communication between companies and the communities they serve. Digital media and social networking platforms allow for more transparent reporting and sharing of CSR initiatives, helping build trust and credibility with consumers.
4. Digital Inclusion and Empowerment: Technology empowers social impact through digital inclusion. Companies can engage with stakeholders more effectively, respond to concerns in real-time, and provide greater transparency through photographs and geographical tagging of projects.
5. Supply Chain Transparency and Ethical Sourcing: Technology helps ensure fair labour practices and ethical sourcing of materials by integrating advanced technologies like artificial intelligence and blockchain for traceability and accountability.
6. Impact Assessment and Measurement: Technology enables the quantification of social impact through mechanisms that capture qualitative measures, such as community empowerment and sustainable development goals.
7. Collaboration and Partnerships: Technology platforms can facilitate collaboration between companies and non-profits to address global challenges, ensuring that CSR initiatives are more effective and impactful.
8. Innovative Solutions and Simplified Processes: Technology simplifies CSR program planning, execution, and monitoring, making it easier for companies to manage their CSR initiatives and achieve their desired objectives.
9. Data-Driven Decision Making: Technology provides comprehensive and relevant data points about CSR programs, enabling companies to strategize and optimize their CSR expenditure more effectively.
10. Transparency and Accountability in Reporting: Technology ensures that all stakeholders are on the same page, providing transparency in implementation and ensuring that CSR programs are executed efficiently and effectively.
By leveraging these technological advancements, companies can enhance the effectiveness and transparency of their CSR initiatives, ultimately driving positive social and environmental change.
We use technology to work on need assessment to impact assessment, the entire gamut of CSR cycle.
Q 6. What role can collaboration and partnerships play in maximizing the impact of CSR?
Answer: Collaboration and partnerships can play a crucial role in maximizing the impact of corporate social responsibility (CSR). By working together with other organizations, businesses can leverage their collective strengths, resources, and expertise to address complex social and environmental challenges. Here are some ways in which collaboration and partnerships can enhance the impact of CSR:
1. Shared Goals and Values: Collaboration enables businesses to align their values and goals with those of their partners, fostering a shared sense of purpose and trust. This alignment can lead to more effective and sustainable CSR initiatives.
2. Resource Sharing and Expertise: Partnerships allow businesses to pool their resources, expertise, and knowledge to tackle specific social and environmental issues. For example, a multinational corporation can partner with a conservation NGO to launch a reforestation project, combining their resources and expertise to achieve a common goal.
3. Increased Reach and Impact: Collaboration can amplify the positive impact of CSR efforts by expanding the reach and scope of projects. For instance, a technology company can partner with a non-profit organization focused on education to develop an innovative digital learning platform that reaches underserved communities.
4. Improved Transparency and Accountability: Partnerships can enhance transparency and accountability by providing a platform for stakeholders to share their opinions, ideas, and concerns. This open dialogue can help identify areas for improvement and ensure that CSR initiatives are effective and sustainable.
5. Innovation and Creativity: Collaboration can foster a culture of innovation and creativity, generating new ideas and solutions that address social and environmental challenges. For example, a business can partner with a university to co-create new products that address unmet needs in the medical device sector.
As shared earlier, we closely work with various partners, to build upon our respective strengths and areas of specialisation. This has helped us implement various CSR projects across India.
6. Social and Environmental Impact: Partnerships can drive social and environmental impact by ensuring ethical sourcing, fair labour practices, and sustainable production. For instance, companies can partner with suppliers to improve transparency and reduce environmental impact in their supply chains.
7. Measuring Impact: Collaboration can also facilitate the measurement and reporting of CSR impacts. By leveraging methods and tools such as logic models, businesses can assess and communicate the outcomes and value of their CSR partnerships, ensuring that their efforts are effective and sustainable.
Overall, collaboration and partnerships are essential components of effective CSR strategies, as they enable businesses to maximize their social and environmental impact while fostering long-term relationships with stakeholders.
Focus Areas and Strategies
Q 7. What are some key areas where CSR can make a significant contribution to India’s development goals?
Answer: Corporate Social Responsibility (CSR) can make significant contributions to India’s development goals in several key areas:
1. Education for All (SDG 4): CSR initiatives focused on education can align with SDG 4, ensuring inclusive and equitable quality education. This includes supporting initiatives such as scholarships, infrastructure development, and teacher training.
2. Healthcare and Sanitation (SDG 3): CSR projects in healthcare and sanitation can contribute to SDG 3, ensuring healthy lives and promoting well-being for all. This includes initiatives such as healthcare services, sanitation infrastructure development, and health education.
3. Clean Energy and Climate Action (SDG 7 and 13): Companies investing in renewable energy, energy efficiency, and climate action can align with SDG 7 and 13, promoting sustainable energy and combating climate change.
4. Rural Development (SDG 1, 2, 3, 4, and 9): CSR initiatives focused on rural development can contribute to multiple SDGs, including poverty reduction, quality education, and economic growth. This includes projects such as rural infrastructure development, skill development, and community empowerment.
5. Environmental Conservation (SDG 14 and 15): CSR projects focused on environmental conservation, such as conserving and sustainably using oceans and marine resources, can align with SDG 14 and 15.
6. Inclusive and Sustainable Industrialization (SDG 9 and 11): CSR initiatives promoting inclusive and sustainable industrialization can contribute to SDG 9 and 11, ensuring sustainable industrialization and making cities and human settlements inclusive and sustainable.
7. Poverty Reduction and Economic Growth (SDG 1 and 8): CSR projects focused on poverty reduction and economic growth can align with SDG 1 and 8, promoting economic growth and full and productive employment.
8. Gender Equality and Empowerment (SDG 5): CSR initiatives promoting gender equality and empowering women and girls can contribute to SDG 5, achieving gender equality and empowering all women and girls.
9.Access to Justice and Inclusive Institutions (SDG 16): CSR projects promoting access to justice and inclusive institutions can align with SDG 16, promoting peaceful and inclusive societies and providing access to justice for all.
These areas highlight the significant role CSR can play in contributing to India’s development goals, aligning with the United Nations’ Sustainable Development Goals (SDGs) and supporting the country’s national development priorities.
At Chetak Foundation we work on SDG goals no 1, 3, 4 and 5 along with our partners.
Q 8. How can companies ensure their CSR initiatives are aligned with the needs of communities and contribute to sustainable development?
Answer: Companies can ensure their Corporate Social Responsibility (CSR) initiatives are aligned with the needs of communities and contribute to sustainable development by following these steps:
1. Understand the SDGs: Familiarize yourself with the United Nations’ Sustainable Development Goals (SDGs), which provide a comprehensive framework for addressing global challenges. This helps companies identify areas where their CSR initiatives can have the most significant impact.
2. Conduct Stakeholder Engagement: Engage with local communities, NGOs, and government bodies to understand their needs and priorities. This helps companies tailor their CSR initiatives to address specific challenges and create meaningful impact.
3. Integrate CSR with SDGs: Align CSR initiatives with specific SDGs, ensuring that they address social, economic, and environmental dimensions of sustainability. This approach fosters a holistic and impactful approach to societal challenges.
4. Collaborate with Stakeholders: Form partnerships with governments, NGOs, academia, and other stakeholders to pool resources and expertise for maximum impact. This collective effort helps achieve the SDGs more effectively.
5. Transparent Reporting and Impact Measurement: Transparently report on how CSR initiatives align with specific SDGs and measure their impact through measurable metrics. This enhances accountability and helps assess progress toward SDGs.
6. Innovative Solutions and Technology: Leverage technology to improve resource efficiency, promote renewable energy, and enhance supply chain transparency. This contributes to SDG achievement and drives innovation for social and environmental progress.
7. Community-Centric Approaches: Engage with local communities to understand their needs and empower them to be part of sustainable development efforts. This includes initiatives focused on education, skill development, and healthcare.
By following these steps, companies can ensure their CSR initiatives are aligned with community needs and contribute to sustainable development, ultimately creating a more equitable and sustainable future for all.
We have aligned Chetak’s CSR goals with company’s goals as well as UN SDGs in order to have sustainable CSR interventions.
Q 9. What are some best practices for measuring and reporting the impact of CSR activities?
Answer: To measure and report the impact of CSR activities effectively, several best practices can be followed:
Define Clear Objectives
– Define specific, measurable, achievable, relevant, and time-bound (SMART) objectives for your CSR initiatives.
– Ensure these objectives align with your company’s core values, mission, and strategy, as well as the expectations and needs of your stakeholders.
Choose Relevant Indicators
– Select indicators that reflect the performance, results, or effects of your CSR initiatives.
– These indicators can be categorized into input, output, and outcome measures, such as resources invested, immediate products or services, and long-term impacts.
Align with SDGs
– Use the United Nations’ Sustainable Development Goals (SDGs) as benchmarks to guide your CSR initiatives and communication.
– This helps ensure that your CSR efforts are comprehensive and contribute to addressing global social and environmental challenges.
Utilize ESG Metrics
– Consider Environment, Social, and Governance (ESG) metrics to measure your CSR performance.
– These metrics provide a triple bottom line framework for evaluating your company’s impact on the environment, society, and governance.
Engage Stakeholders
– Involve stakeholders in the measurement and reporting process to enhance transparency and ensure a comprehensive understanding of your CSR impact.
– This includes internal stakeholders such as employees and executives, as well as external stakeholders like the community and investors.
Utilize Technology and Data Analytics
– Leverage technology and data analytics to collect and analyse accurate and real-time data for analysis.
– This helps strengthen the impact measurement and reporting process.
Continuously Learn and Improve
– Regularly assess and refine your CSR initiatives based on the insights gained from impact measurement.
– This ensures that your CSR efforts remain effective and aligned with your company’s goals and stakeholder expectations.
By following these best practices, we can effectively measure and report the impact of our CSR activities, demonstrating our commitment to social and environmental responsibility and enhancing our reputation among stakeholders.
Looking Ahead
Q 10. What are your hopes and expectations for the future of CSR in India? What needs to be done to ensure its continued growth and effectiveness?
Answer: The future of Corporate Social Responsibility (CSR) in India holds significant promise, with an expected shift from compliance-driven activities to initiatives that create shared value. To ensure its continued growth and effectiveness, several key factors need to be addressed:
1. Merging Purpose with Profit: Companies should identify social and environmental challenges and integrate them into their core business strategies to create long-term value for all stakeholders.
2. Impact-Driven Approach: CSR initiatives should focus on measurable impact and robust impact assessment methodologies to ensure that they effectively address critical social needs.
3. Multi-Stakeholder Collaboration: Businesses, government agencies, NGOs, and social entrepreneurs must collaborate to foster knowledge sharing, joint advocacy efforts, and the scaling of successful models to achieve widespread and lasting societal change.
4. Technology Integration: Technology can enhance the effectiveness and transparency of CSR initiatives by streamlining processes, ensuring stakeholder engagement, and providing deeper insights into community needs.
5. Alignment with UN Sustainable Development Goals (SDGs): CSR initiatives should align with the UN SDGs to address global challenges and contribute to long-term value.
6. Standardized Metrics for Impact Measurement: Clear and standardized metrics are necessary to assess the impact of CSR initiatives and ensure accountability.
7. Increased Focus on Sustainability and Climate Action: CSR spending is expected to increase significantly in sectors related to climate action, renewable energy, and technology-driven solutions, reflecting the growing importance of sustainable development.
8. Strategic Partnerships and Collaborations: Partnerships between businesses, NGOs, and communities are crucial for scaling successful models and achieving greater impact.
By addressing these factors, CSR in India can continue to evolve and play a pivotal role in shaping a more sustainable, equitable, and inclusive future for the nation.
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Arun Arora – A Communication and Development Sector Veteran
Arun Arora, Director – of Strategy, Communications, CSR and ESG Mavyn (Chetak Logistics) and Head of Chetak Foundation, is a Mechanical Engineer with an MBA and additional qualifications in Hotel Management, Journalism and Mass Communications.
He has over 37 years of experience in Communications, Policy, Advocacy, Reputation Management, CSR, ESG, Sustainability, Education and Communication training.
Arun is an author and a communication, CSR, ESG and Sustainability coach.
He loves sharing his learning. As a visiting faculty member at prestigious institutions and universities, he conducts unique modules in communication, CSR, ESG, Sustainability social and spiritual modules.
He was fortunate to have worked as Head of Communications with prestigious organisations like Escorts, Maruti Suzuki, GMR, JSPL, GVK, Cairn Oil & Gas and Vedanta.
He is fond of writing. He introduced Outlook Lounge, India’s first Airport Magazine, with Outlook group. He is the author of the book, “The Power of Reading,” and a biographical book, JKS – The Logistics Man of India, a rags to riches biography of Foundation of Chetak Group and he also contributes to various newspapers and magazines.
He was adjudged Power Brand Hall of Fame, ‘Most Dynamic Corporate Communication Professional’ in 2011, Indian PR Icon in 2013, inducted into the PR Hall of Fame by PRCI in 2015 and ranked among the top ten corporate communications professions (Reputation Today) in 2016. Arun was listed amongst the top 100 PR professionals in Reputation Today Listing in 2017 and again in Exchange for Media ratings in 2019. He was a jury member for the prestigious BM Munjal Business Excellence Awards 2019. He won PRSI’s National Leadership Award 2020 (Feb 2021), the PRCI Communicator of the Year Award in 2022 and the Mahatma Award for leadership in CSR, Sustainability and Social Impact in 2022. He is a Jury Member at Exchange for Media’s 30 under 30 Award, 2023.
(India CSR)
