Guest Article: Changing face of CSR in India

Corporates in India need to safeguard the future of the country & their businesses through environmental & social investment, writes Puja Marwaha, CEO, CRY

e4m by Puja Marwaha
Updated: Mar 6, 2012 7:46 AM
Guest Article: Changing face of CSR in India

India has traditionally had a long-standing heritage of ‘giving back’ to society. Through our cultural traditions, social interactions and economic transactions, we as a nation have always acknowledged the importance of investing in the future.

Some of India’s oldest corporate houses and business families have had a legacy of investing in social development long before the concept of CSR or Corporate Social Responsibility was known. Yet, these initiatives were largely philanthropic in nature, generally within the realm of charity and donations, and governed by the issues considered most pressing to the members of the families, and those closest to their hearts.

However, corporate social investment across the world has since evolved; from purely philanthropic spending, it is now a strategy-based approach designed to bring about holistic change that impacts stakeholders, the environment and the business itself.

This shift in the nature of corporate social responsibility, however, is yet to manifest itself within the corporate sector in India. The KPMG India Corporate Responsibility Survey 2011 shows that only 16 per cent of the top 100 listed firms have a corporate responsibility strategy in place, as compared to 73 per cent of their 250 global counterparts. Furthermore, the key drivers of corporate responsibility in Indian companies tend to revolve around ethical considerations and aim to strengthen the brand, as opposed to economic considerations, which drive corporate responsibility investments globally.

In 1997, John Elkington, an authority on CSR and sustainability, proposed to measure an organisation’s success by using the concept of ‘Triple Bottom Line’. The concept uses three criteria to assess an organisation’s success – social, ecological and economic; in short – people, planet and profit.

Today, Triple Bottom Line is extensively used as a measure of CSR across the world. Guided by efforts to balance economic, social and environmental sustainability, most CSR strategies tend to avoid philanthropy as it does not help build on the skills of the local people. Instead, the focus is on community-based development as it leads to better sustainable development.

Creating Shared Value
So why are these new, strategy-based CSR policies so relevant for India? Why, in a country that spends crores of rupees each year on development initiatives, does the corporate sector need to invest in social development? The answer lies in a concept called Creating Shared Value, which is gaining popularity across the globe. The theory underlines the interdependence between corporate success and social welfare; successful businesses require a healthy, educated workforce, sustainable resources and an adept government – in short, a thriving society – to compete effectively within the global market.

It is this thriving society that CSR in India can help create. Without it, we can neither sustain nor expand our economic growth and successes. And on that front, we still have a long way to go.

New Bottom Billion
In October last year, researcher Andy Sumner made an interesting observation about the characteristics of global poverty. In a report entitled ‘Global Poverty and the New Bottom Billion’, Sumner claimed that popular understanding of global poverty was based on the false premise that poor people live in only poor countries. In fact, 950 million poor people – whom he termed as the ‘new bottom billion’, live in middle income countries.

Nowhere is it more true than in India – a country that exhibits how extensive poverty can coexist with accelerated growth. Over a third of the world’s poor now live in India even as the country registered a GDP of Rs 4,877,842 crore in 2010-2011.

It is an interesting phenomenon in developing countries where, along with rapid economic growth, wealth is concentrated into fewer hands. Simply put, the rich get richer while the poor get poorer. Brazil, China and, of course, India are testament to this. Children are the most vulnerable within these situations, as their voices are rarely heard. They are the most effected by reduced family livelihoods and disrupted community life.

In this new, globalised economy, as inequalities continue to rise and resources like water, land, minerals and trained manpower become increasingly scarce, sustainability is the key to success. Thus corporate organisations in India today need to safeguard the future of the country and their businesses through environmental, ethical and social investment.

In the six decades since India’s independence, the key concerns related to human development remain the same – poverty, illiteracy, hunger and exclusion. What has changed, however, is the ability of the private sector to make a lasting change for the better. The challenge is to be able to optimally harness this towards sustaining a better future.

(Puja Marwaha is CEO of CRY – Child Rights and You. Child Rights and You (formerly known as Child Relief and You) is an Indian NGO that believes in every child’s right to a childhood – to live, learn, grow and play.)

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