Challenges Faced By Latent CSR Practices And How To Deal With Them

Although early examples of Corporate Social Responsibility (CSR) began to emerge in other parts of the world around 1960s, the concept, even after five decades, is still in its infancy in India. As a consequence of the Indian government’s move to regulate and mandate CSR, the amount of funds involved in CSR activities has witnessed exponential growth. A recent news report by IANS is a testimony to this fact. According to this study, India is the only country with a legislated CSR and is equipped with a spending threshold of up to $2.5 billion (Rs. 15,000 crores).

But despite the rapid influx and availability of massive funding, CSR is yet to generate the right response from the target demographic or getting the expected goodwill from the general population. This basically means that corporate social activities need to reorient to fulfil the very purpose they were supposed to serve.

What could be the challenges faced to implement CSR activities in India?

Here’s an overview of common CSR practices in the country and how they can be modified for success.

The Present System: Where Are The Companies Going Wrong?

In order for any organisation to carry out CSR activities successfully they need to begin with developing the right infrastructure. CSR needs to be Board initiative. It should be recognised as a strategic initiative. This needs to be engrained in the DNA of the organisation.

CSR needs be driven and supervised by individuals with relevant on-field knowledge and experience in strategizing and executing successful programs. While few major conglomerates in India like the TATA Group and Reliance Industries have set up a robust system to handle their CSR activities, a majority of the mid-to-high revenue companies have failed to understand the basic requirements that go into making their CSR projects a success.

For starters, these companies usually shift the responsibilities to their HR department, which is usually not equipped to handle and carry out CSR operations.

Other reasons why such programs have gaps include:

  1. CSR activities are primarily carried out through head-office initiatives which fail to garner enough support from all the involved parties. There are cases where various departments go head-to-head over the ownership of these projects, and spend a lot of time debating the mobilisation of funds, thereby throwing the whole process into disarray.
  1. CSR is usually run with a core team holding the cards and making executive decisions. The problem with this is that in a lot of cases the individuals at the helm don’t have the experience or skills to take the right decisions. Under such cases, the CSR executives lose grip on the exact scenario they are serving, which could lead to failure.

The Future: How Can This Challenge be resolved?

The solution to the problems faced by a majority of the organisations when it comes to building effective CSR strategies is relatively simple. Essentially, companies need to integrate external stakeholder engagement with the way they strategise their operations and run their overall business.

The reasoning behind this is quite simple. The success of a company is directly proportional to its relationship with the external factors tied to it (customers, employees, vendors, lenders, community, regulators etc.).

The decisions made in the boardrooms of each company affect the relationship and the way people perceive the establishment on a whole. This is why external engagement should be taken into account every time a company takes a particular decision.

To sum it up, a company’s good relationship with its varied stakeholders, and not adopt practice of only maximising returns to only one stakeholder – “The Shareholder”. Instead, every company needs to adapt and make these things achievable by placing these factors into the core of its decision-making processes. The only way to connect all the dots is to make integrated external engagement (IEE) through a thoughtfully designed strategy and if necessary with the help of CSR consultancy firms.

References:

  • http://www.environmental-watch.com/2014/06/27/can-environmentally-sustainable-business-practices-inform-csr/
  • http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/beyond-corporate-social-responsibility-integrated-external-engagement