The CSR Companies Act of 2013 brought the importance of social responsibility of business to the forefront by mandating Corporate Social Responsibility (CSR) spends. It propelled the private sector to develop a CSR policy, have a rigorous implementation plan, and address key socio-economic needs of communities they operate within.
The amended CSR rules of 2021 require that any corporations now view CSR activities in a more scientific way, investing in impact assessment studies of their CSR projects for enhanced social impact. This showcases a positive approach to moving beyond philanthropy and integrating the idea of ‘shared value creation’ among businesses in India.
There are considerable benefits attached to implementing CSR programmes. Two main benefits of CSR activities include building a strong brand recall and improving the profitability of the business through strategic CSR investments.
Two Important Benefits of Corporate Social Investments
1. Good-will and Brand Recall
The increasing affluence of people has increased consumer choice and selectivity. Globalisation has made media and the internet, among other things, more accessible. Information is also more easily available. There has been an increase in corporations that take social, human rights, and environmental issues into consideration in light of the Covid-19 pandemic. Customers and stakeholders are increasingly aware and cognisant of corporations who are taking necessary measures to contribute to the fight towards Covid-19.
Private sector organisations can experience a range of benefits like increased sales and marketing share, strengthened brand position, enhanced corporate image and clout, increased ability to attract, motivate, and retain employees, decreased operating costs, and increased appeal to investors and financial analysts from taking a positive ethical stance. In times of crises, people appreciate the efforts of those who help, will remember the companies which sacrifice their short-term gains and value their commitment to social responsibility
2. Business Sustainability
CSR is built on the basic premise that businesses operate in society and society needs these businesses, i.e. there is a mutual benefit. For a business to be successful in the long term, it has to create value, not only for its shareholders but also for society. It is not philanthropy or an add-on but a fundamental part of its business strategy, involving principles of social responsibility and ethics. It is argued that for the survival of the firm, to gain legitimacy in areas of operation, and to avoid conflict, businesses need to play an important role in the development of the people they impact. Instead of resorting to easier options of discharging their CSR obligations like contributing to designated funds, corporates must first strive to professionalise their CSR teams, forge new partnerships with Non-Governmental Organisations (NGOs), and work with the district administrations to deploy their CSR funds most effectively. This will lead to strengthening organisational successes and profitability.
Companies need a framework to identify, assess, and manage the social impacts that are within their control and sphere of responsibility. Many social enterprises, especially non-profits, and small businesses struggle with such expertise.
Social impact consultants at 4th Wheel play an important role in supporting organisations to deliver social impact in a scalable and sustainable manner. Our service offerings span strategic programme design, capacity building of programme teams for effective implementation, and impact evaluation studies for evidence-based decision making.
