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Transforming India: The CSR Opportunity

Samhita launched a landmark report on corporate social responsibility (CSR) supported by The Rockefeller Foundation, on the 2nd of August, 2016 at the National Stock Exchange. To read the full report click here.

This study was conducted to ascertain the current state of play of CSR, key challenges and opportunities and the ‘calls-to- action’ that can make the vision of the act a reality. For the event Nishith Desai Associates also created a booklet on FAQs about Section 135 of the Companies Act 2013, available here.

Here are a few highlights and recommendations from the report

1. Companies and social organisations have an optimistic view of the law

  • Companies believe that they can make a meaningful contribution to the development sector through CSR
  • Social organisations see it as an opportunity to develop strategic partnerships with companies that enable them to improve their operational efficiency, in addition to securing funding

 

2. More clarity in the law around strategic CSR can drive sustainable, impactful initiatives

  • Companies are hesitant to adopt strategic approaches and align CSR with business objectives, due to the ambiguity of the law regarding the intersection of business and CSR
  • 52% of companies surveyed aspire to adopt a strategic approach to CSR. However, less than 20% indicated that business objectives such as access to new markets or risk mitigation influenced CSR in their companies
  • If the government can clarify what will not be construed as regular business, which is currently disallowed for CSR, the impact of companies’ efforts can be far higher. Companies feel that this will allow them to use their competencies to drive sustainability and innovation in the sector

 

3. Impact measurement and shared understanding of impact are critical

  • There is lack of clear and common understanding of impact
  • Many companies and social organisations tend to confuse between outputs, outcomes and impact
  • Both companies and social organizations reported capability and resource challenges in measuring impact
  • Enablers in the ecosystem, especially intermediaries and foundations, can help establish a common understanding of impact, tools and standards for measurement across the CSR lifecycle

 

4. Address knowledge gaps as a priority

  • There are gaps in knowledge and information across the CSR lifecycle
  • Companies (26%) require information about credible and effective implementation partners
  • Companies (25%) also require cause-specific knowledge
  • Social organisations seek access to corporate opportunities
  • Intermediaries, foundations, academics and companies with a longer CSR history can all contribute to sharing and compiling knowledge and support creation of evidence-based research

 

5. 5% for capacity building is not enough!

  • The surveys brought out the need for building capacity across stakeholder groups
  • Most social organisations face constraints when it comes to delivering outcomes at a certain level of quality or in scaling-up operations
  • At the companies’ end, there is a need to understand the on-ground realities, explore ways to leverage their core resources and approach NGOs as partners by supporting their capacity building
  • However, the CSR Rules provide for only 5% of the budget being allowed for this – which clearly needs to be reviewed

 

6. Collaboration is essential for greater impact 

  • There is recognition that it is difficult for one entity to make a significant and systemic impact
  • A collaborative approach with different stakeholders bringing their respective competencies and strengths to the table, can create greater impact
  • Experiences elsewhere suggest that a neutral ‘backbone organization’, which puts together the architecture for collaboration and guides the strategy and implementation of activities, is usually a crucial factor

 

7. Roles of stakeholders are changing

  • Roles of traditional donors such as philanthropists, grant-making organisations, and aid agencies are shifting from direct execution and aid-based models to offering technical expertise and facilitating multi-stakeholder collaborations
  • Foundations are investing in building blocks across the CSR ecosystem, something that companies may not be able to invest in but require for their interventions to succeed
  • The emergence of social sector intermediaries is another positive outcome of the law
  • They will not just provide the necessary hand-holding to guide companies towards impact but also become the backbone for large scale collaborative initiatives