While India’s new Company Act 2013 was enacted in April last year, making it mandatory for companies to spend 2% of their profits on Corporate Social Responsibility (CSR), industry experts maintain that it should not be looked at as a mere obligation or punishment, but more as a ‘business driver’.
Jaideep Shergill, co-founder of brand consultancy firm Pitchfork Partners, says, “At this point, a large part is still chequebook CSR as a large number of companies don’t have a separate sustainability or CSR department. It is mainly the finance guys who take charge of these initiatives, but now the scenario is changing. The trigger isn’t only the bill passed by the government, but there is now a new world order. People are asking questions and they want to work with a company that makes a difference.”
Giving the example of PCS Technology, a major Indian IT company that hires thousands of people a year, he said their employment numbers increased mainly because they offered young, new employees the opportunity to take up any cause with an NGO of their choice which would be funded by the organization for an entire month. “As undergraduates, those kids were very excited and eager to work with PCS because they would get the chance to make a difference. Things have started changing now and it’s mainly because we are now at a tipping point which will cascade into what we call purpose driven marketing or branding,” says Shergill.
While earlier, priority was given mainly to investors and then customers, these business humanizers, as they refer to themselves, say that brands now have to be able to relate to the millennials first before stakeholders, which is putting pressure on companies. Joyshree Reinelt, co-founder of CSR consultancy Innate Motion, says, “Companies have started hiring for positions like head of sustainability, which didn’t exist before. We have this whole idea that business needs to hold on to a belief that drives people and we feel that the concept of generosity pays. It is so innate to us as human beings. We all want to give back but somehow there’s a conflict because we are taught that businesses need to generate profits. However, now there is a paradigm shift - though it may sound contradictory - that generosity pays. One can generate profit and serve the masses and planet at the same time.”
They further assert that millennials who are born in a world of abundance, have a different mindset and want to give back to society and identify better with brands that stand for a certain cause. “The whole ethic of doing good to the lower economic strata and at the same time having a profit is going to be the new world order. Consumers want to be proactive by joining and contributing for a cause. More brands need to adopt a cause and encourage these ‘prosumers’ to join by buying their products and hence making a difference to someone’s life,” says Subodh Deshpande, partner of Innate Motion.
With digital world consumers becoming more demanding of brands, they are under intense scrutiny and need to be sure that what they stand for also resonates with the consumers. Another good example is the Lifebuoy Handwashing campaign to reduce cases of diarrhoea among children where handwash sachets were sold to make it more economical for people from the lower income background.
“CSR is usually seen as a profit reducer or obligation to do more good and that it’s not going to reflect in results. The shift will take place when more companies start to integrate CSR initiatives with their brand’s purpose,” explains Reinelt. “For example in the luxury cars space, all have German engineering, state of the art technology... but what makes them different is the cultural identity they stand for. These ‘prosumers’ are procreators of this cultural identity and if we don’t recognize that, we will be left behind.”
After working in 35 countries, she maintains that even in the Western world, this concept has not progressed as very few companies are actually executing it. In India, there are companies like Amul, which is an aggregation of farmers. “Big corporations like Lifebuoy and Amul are good examples that businesses can also do social good while reaping profits,” adds Deshpande.
In a tie-up with Innate Motion, Pitchfork Partners recently hosted industry experts to discuss the role of CSR and how philanthropy can be an effective business driver for big corporations.