Economic drag blows lid off CSR tokenism

(July 22, 2008)


New Delhi: For businesses giving back to society, an economic slowdown and rising prices may actually help separate the chaff of token gestures from the grain of coherent, integrated strategies.

“Where there is no structure or strategy, there is bound to be some effect by an economic slowdown,” says Tanya Mahajan of Karmayog, a Mumbai-based non-profit organization that tracks corporate social responsibility, or CSR, programmes.

“It will show the difference between companies that have internalized CSR as part of their business, and those that are doing it as an external, separate activity.”

Last year, Karmayog compiled social responsibility ratings of the 500 largest Indian companies, terming the results “extremely disappointing.” No company made it into the highest level of the ratings, and only four companies achieved its second-highest rating.

“Many companies are only making token gestures in tangential ways such as donations to charitable trusts or NGOs and sponsorship of events,” the Karmayog report said.

Vikas Goswami, head of CSR at Microsoft Corp. (India) Pvt. Ltd, who has earlier worked on social responsibility both as an academic and a consultant, dismisses the idea of CSR as a dole, defining it instead as a strategy that can bring tangible business benefits.

Microsoft’s flagship CSR programme, Project Jyoti, was launched in 2004, and the company had invested Rs37.5 crore in the initiative as of December 2007.

Social good need not be separate from a profit motive, agrees Jayanth Vincent, communications director at the NGO World Vision India. “We work with Eureka Forbes Ltd, which makes water filters available to poor communities at a reduced price,” Vincent said.

A community group purchases the filter, and then recoups the cost by charging members a nominal fee per use. “So there is a flow of funds back to the company, but the poor also benefit,” Vincent says, “that kind of situation is a win-win.”

Beyond differentiating between the two flavours of CSR initiatives, the slowdown has not affected the energy and funds that companies have been devoting to their activities.

“With our corporate partners, no proposals have been turned down for this reason,” Vincent says. But funding is often allocated early in the year, and Vincent addes that the impact of the slowdown would become evident only during strategy sessions next year.

This funding is also a relatively minor proportion of corporate budgets, says Sandip Nayak, senior manager at the Smile Foundation, a New Delhi-based non-profit that works with over 80 companies.

Karmayog recommends that companies spend a minimum of 0.2% of their income on CSR every year. Tata Steel Ltd, one of the four highest-placed companies in its ratings, has spent an average of 2% of revenues in the past 14 years.

“The volume of funds (invested) in CSR haven’t been impacted by a slowdown as yet,” Nayak said. “If companies still want to actively engage in CSR, the slowdown or inflation are not stopping them from doing so.”–Economic-drag-blows-lid-off-CSR-tokenism.html