Sunday, February 24, 2019

Corporate should use CSR Budget Wisely and not to cheat People, Planet & Societies

While Corporate Social Responsibility is a tool to achieve Sustainability, many Corporate at times, use this as a moral tool in an attempt to cover up for their inferior product or services. This approach is for sure going to erode the good work done by the CSR department and will tarnish the image of the organisation in the long run.

I would here like to highlight an article written by Mathew Lien wherein he has argued on how reputed companies likes Volkswagen have manipulated pollution levels of its cars by designing "DEFEAT" software to fool both regulators and customers. Mathew states that while the German car giant was engulfed in all this wrong doings, on the contrary, its annual report was fully packed with lovely stories describing projects which Volkswagen ha backed and charities it supported. Also, Volkswagen was globally ranked as the 11th best company for its CSR work. Mathew says "CSR has become a Racket and a dangerous one. It allows companies to parade their virtue and look good while internal standards are allowed to slip. Infact, the Social Responsibility of companies is very simple - to make good products, to honour their contacts and to pay their staff and suppliers on time. Everything else is just a SMOKESCREEN".

While there were some initial disturbances at Volkswagen including the removal of its Chief Executive (who was later reinstated) on the emission scandal, it remains to be seen what happens to the fate of Corporate Social Responsibility at Volkswagen going forward. Whether Volkswagen will diligently work on the CSR projects and be considered as a Progressive, Inclusive & Caring Corporate or continue to believe in a CSR smokescreen, is something which would very clearly decide the future of the German Giant and its perception in the world.

The myopic view of organisations for making financial gains is simply not worth pursuing as the eyewash practices on CSR will certainly not be sustainable and such corporate would be exposed soon. We have examples of many companies to refer, which once used to be in the 'Fortune 500 List' but, are no where appearing in the list now. The reason is simple - mere ignorance of the CSR tool to achieve sustainable progress towards People, Planet & Society. The Mantra is simple - Corporates need to imbibe in their core strategy the concept of not just Financial Returns but also Social Return (SROI) to remain Relevant & Sustainable.




Tuesday, February 19, 2019

'CSR impacts the Top & Bottom Lines of the Corporate'

CSR in recent times has evolved as a subject. We know that the very purpose of Business (Corporate) is to do business and make money. It is very important to understand that Corporate Social Responsibility (CSR) is the tool to develop business many folds as it creates a 'Wow' effect in the minds of the stakeholders and if the stakeholders are happy, the shareholders are automatically happy.

Today, Business has a more deep impact on People, Planet & Society but, the irony is ,whether it is the People or the Planet or the Society, it views Business with suspicion. Infact, Government at times, view Business with suspicion. Thus, it becomes a very important duty of the Business to come Clean, Credible and Ethical and by and large make the Business a 'Good Corporate Citizen'

The benefits of being a good corporate citizen is undoubtedly many. It indeed helps in better valuation of the business and its product & services thereby giving momentum to the entire Product Life Cycle of the business and thus, the Top Line as well as the Bottom Line of the Business improve. It thus, become imperative that Business look towards Financial Returns along-with Social Returns

CSR which is an important tool, typically revolves around 4 important Pillars which are - Market Place (the Customers), Workplace (which are the employees), Environment in particular and Society in general. These pillars are more from understanding the CSR as a concept and obviously there would be tools and research to analyse the CSR needs of a different Corporate and industries and accordingly prescribe the best fit CSR strategy for them.

I believe, it is extremely important to note and not to confuse CSR with Philanthropy. At times, Corporate are engaged in Philanthropy (and that's actually good to do) but, Philanthropy and charity are not at all CSR or form a part of the CSR budget. CSR if ignored, can paralyze the business completely. 
Example : a beverage company digging up underground water in a village for it bottling plant and in return spend some money on education of underprivileged children (near or far from the bottling plant site). While the spend on education in an example of Philanthropy, it is certainly not CSR as it has neglected the Environment & Society at large.  

Since, every business is different and with the kind of CSR budget which it has, it makes a conscious call to divide it among the 4 aforesaid pillars - Market Place, Workplace, Environment & Society. For example, the CSR spend of an Airline company on Workplace will be different from that of a Mining or an FMCG Company as the nature of businesses are different. Infact, the airline company would like to spend more on its employees and environment as compared to an FMCG company which would like to spend more on Market place. 

To conclude, I would like to say that Corporate must take CSR forward with High Spirits and involve the Top Management in defining the CSR Strategy, its budget and the areas (related to business) to spend the CSR money so that, it has a positive impact on the business and the business is viewed with Credibility.