The CSR Economy

Today, there is increased realization that engaging with social causes facilitates sustainable development and benefits all stakeholders in multi-dimensional ways

 

Indian business has a rich tradition of working towards social development and engaging with the community. Development initiatives have been taken across different sectors like education, healthcare, agriculture, and rural development, among others, for many years. Today, there is increased realization that engaging with social causes facilitates sustainable development and benefits all stakeholders in multi-dimensional ways.

 

The recent changes in the Companies Act mandating a 2 per cent spend towards Corporate Social Responsibility (CSR) are providing a new impetus to the social sector. There are early signs of a rapidly transforming eco-system in the development sector and the emergence of a new CSR economy. It is expected that the new CSR eco-system will positively support the overall economic growth of the country.

 

One of the main changes being felt is the adoption of a more focused approach to development, with the emphasis on achieving tangible outcomes. Companies are investing increased management time and attention to ensure better delivery and implementation. The social sector has also been responding with enthusiasm, and both qualitative and quantitative improvements can be expected as the new systems stabilize and grow.

 

Analysis by different agencies estimates that the overall size of the CSR economy can be anywhere between ` 15 – 20 thousand crore per annum. This has the potential to act as a catalyst and support the programs of the Government in different social sectors. Information analyzed for Bombay Stock Exchange (BSE)-listed companies (~ 1200) indicates that over ` 6400 crore was invested by the corporate sector towards CSR in the financial year 2014 –15. Considering the fact that there are over 16,000 registered companies, the actual spend is likely to be significantly higher.

 

Available data suggests that the main areas where corporates have engaged are towards health and sanitation (` 1700 crore), education and skill development (` 1800 crore), environment (` 650 crore), rural development (` 650 crore) and integrated development programs (` 600 crore). Some of the other sectors where initiatives have been taken include water management, gender equality, national heritage, sports development, armed forces and veterans, and technology incubation funds. This indicates the wide canvass across which the programs are being undertaken and underlines the potential benefits that can accrue to society through sustained action over a period of time.

 

CSR has the potential to impact supply chains, markets and employment across various sectors. A look at some of the emerging trends points to possible outcomes:

 

Education and Skill Development

Programs in education encompass the construction and improvement of academic facilities, support to meritorious children, promoting continuing education for girls, teacher-training programs, etc. Skill Development initiatives are spread over different sectors and include both technical and soft skills. Education programs cover both K+12 school education and higher education, with special focus on facilities in rural areas.

 

Meaningful job creation is the most critical need in the country today. Concerted action in education and skills development can provide the requisite skills for this.

 

With education seen as one of the highest priority areas for CSR, it is expected that there will be a qualitative improvement in the number of students continuing their education, along with a reduction in dropout rates. Initiatives on skill development would likewise lead to meaningful improvement in the employability of youth in the country. As the growth momentum in the economy picks up, a better and improved pipeline of employable youth can be expected to participate in economic activity through gainful employment. Focus on soft skills and livelihood training should further improve the quality of human resource, and create a robust job market. Quality improvement is also expected through the focus on enriching content, and better teacher training.

 

Healthcare and Sanitation

Programs in this sector include health camps, construction of medical facilities, building toilets, providing safe drinking water, and similar initiatives.

 

Inspired by the national missions of Swacch Bharat and Swachh Vidyalaya, health and sanitation has been a major thrust area for both the Government and the corporate sector, and considerable investments have been made in toilet construction in rural areas and in public schools.

 

The creation of hygienic facilities has a positive multiplier effect. With sharp focus on working with students and the community, there is a growing awareness about sanitation and its benefits. This is leading to better attendance in schools, particularly of girl children, who have traditionally been deprived of such facilities. Concerns of sexual abuse of women due to open defecation are also getting addressed. Early trends indicate a positive impact through the greater involvement of different stakeholders. NGOs and other civil organizations are playing a major role in these initiatives, and are catalyzing the adoption of health and hygiene practices.

 

Along with the already-established mid-day meal programs, it is hoped that the endemic problem of high drop rates after primary school level can be mitigated. One can also expect a reduction in medical costs and availability of better medical services, especially for the under-privileged sections of society.

 

Agriculture and Rural Development

Ensuring a vibrant and economically viable agriculture sector is critical for food security, the well-being of the population, and the development of the farmers. Agriculture has been a focus area for many corporates with programs centred around yield improvement, better agricultural practices, market linkages, creation of farmer producer groups, wasteland farming, horticulture, and the production of pulses.

 

Rural development programs tend to focus on the creation and maintenance of infrastructure, road repairs, provision of hand pumps, and other much-needed facilities in rural areas. With the active engagement and involvement of local communities, there is now increased awareness and ownership of these facilities, which is making these initiatives more sustainable. Partnership with local governments is also helping in identifying and prioritizing projects to reach out to the most neglected areas.

 

Programs in agriculture are primarily aimed at building sustainability in the farming profession and enhancing income opportunities for the farmers. It is expected that continued efforts in this area can contribute to a significant improvement in the agri-value chain, better farmer practices, higher farmer incomes, and overall food security.

 

Environment Protection

Programs being pursued in the environment space revolve around waste management, industrial pollution, civic amenities, bio-solutions and bio-diversity.

 

Sustainable development requires a balanced approach between growth and protection of the environment and ecology. Growth with adequate safeguards is the optimum balance needed to ensure equitable growth. CSR provides an opportunity to create meaningful programs in this area and ensure sustainability.

 

Greater markets can be created for bio-products, leading to new product applications and better practices. Embedded technologies for environment management reduce the overall costs to the economy. Better quality of air and water would facilitate an overall better quality of life for the people in the country.

 

Water

It is often said that ‘wars will be fought over water in the future.’ The availability of clean, abundant water is one of the key priorities for policy makers all over the world.

 

Several Indian companies are engaged in water management programs oriented towards improving the quality of potable water, and water conservation across domestic use, agriculture and industry.

 

CSR initiatives have the potential to actively act as a bridge between state-level programs and communities for better overall water management.

 

To conclude, one of the positive outcomes of CSR practice in the initial phase has been the development of collaborative models amongst corporates, civil organizations and the Government. There is a distinct trend of resources and competencies being pooled together, leading to bigger and more impactful programs and their efficient execution.

 

As the overall environment for CSR programs develops over the years, with more sustained result-oriented efforts, one expects that the new CSR economy will open up further avenues for innovation in supply chain, markets and employment.

 

A focused approach towards CSR is also helping build expertise in different sectors, with the active participation of NGOs.

 

Corporate India is enthused with the early results and is fully committed to greater participation and engagement with society. At DCM Shriram, we ensure that our work in the CSR space has a meaningful impact on the lives of the communities we engage with. We bring the same level of professional competencies to our CSR activities as we do to our business operations. Our interventions range from preventive healthcare by constructing toilets, to projects for soil health improvement, and from providing skills to unemployed youth to development of quality infrastructure for education.

 

With all stakeholders working together, one can look forward to better, healthier and safer communities.

 

The article is an excerpt from the CII Foundation book ‘The Privilege of Responsibility: Perspectives from Corporate India’. The book has contributions from eminent industry leaders who have shared their thought leadership on themes of development, CSR and philanthropy.

 

The book covers issues ranging from the Trusteeship Model, Philanthropy & CSR as the sustainable way to SDGs, CSR economy & Creating Premium by Creating Value. The eminent authors, who are also the Trustees of CII Foundation Board (2015-16), have shared their outlook on corporate responsibility towards society, governing factors, the economy & business strategy of CSR, and the future of CSR in the country.

 

The book was brought out in April 2016 to commemorate five years of CII Foundation. CII Foundation, a trust set up by CII in 2011, works with member companies towards CSR implementation by channelizing efforts towards designing, developing and managing customized and high impact development projects. Know more on CII Foundation at www.ciifoundation.in

 

This article is penned down by Mr Ajay S Sriram, Past President, CII & Chairman and Senior Managing Director of DCM Shriram Ltd.

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