A decade of CSR in India — how impactful and transformative was the journey

My initial stance was sceptical. I thought that qualities like benevolence, empathy, and a commitment to upliftment shouldn’t be mandated as many will exploit loopholes in the system. However, a discussion with one of the policy makers transformed my perspective.

 

“Focus on the additional contributions from new organisations that will adopt CSR in compliance with the law. There’s no need to be concerned with those who don’t, as they were never part of the system,” she said.

 

In the years following the implementation of this mandate, there was a remarkable increase in resources allocated for development initiatives. The fund pool expanded from a modest ₹13,000 crore in 2014-2015 to an estimated ₹50,000 crore by 2020 — a threefold increase, and is projected to surpass ₹75,000 crore by 2024, marking a fivefold growth since the mandate’s inception.

 

More significantly, the mandate underscored that development isn’t solely a governmental responsibility but also a corporate responsibility. 

 

 

The legislation offered a structure, with a list of eligible activities and guidelines, enabling companies to address a broad spectrum of issues through their CSR initiatives. Even companies previously engaged in instinctive charity as a means of contributing to societal well-being, now led the way with a more tactical approach. They began identifying and addressing areas of development that align with the nation’s goals. This broader vision of Corporate Responsibility, aimed at creating a business environment that is both people and planet-friendly, is further facilitating a generation of socially responsible profit.

 

The new model also served as a blueprint and inspired other companies that were initially unsure about how to adapt to the new law.  As the tangible benefits of integrating corporate responsibility into their business practices became apparent, a wider array of corporations, encompassing even small and medium-sized enterprises, complied with Section 135 of the Companies Act 2013. Thus, the top-down approach began showing promising signs of success. 

 

 

The transformation was organic. Corporates, typically adept at establishing structured processes and enhancing efficiency, brought these strengths to their CSR efforts. The legislation spurred collaborations between the private sector, government agencies, NGOs, trade associations, and local communities, thereby augmenting government initiatives and amplifying sustainable development.

 

In the past, corporations often sought guidance from NGOs in the realm of social responsibility. Over time, this relationship evolved into a more reciprocal partnership. Businesses now contribute their expertise through innovative solutions, such as technology, data management, and analysis, among other tools.

 

Meanwhile, implementing partners leverage their on-the-ground presence to the data provided to enhance outreach, broaden awareness, improve program execution, and ultimately drive more sustainable outcomes. This synergy among stakeholders was further anchored by the adoption of the UN Sustainable Development Goals, which resulted in unique approaches towards collective goals with the aim of leaving no one behind. 

 

This shift towards systemic change cemented the transition from intuitive charity to strategic community initiatives and philanthropic investment laying the foundation for two key contemporary trends —Deep-Impact investing and Social Innovation.

 

In recent years companies are increasingly engaging in projects only after taking the time to understand the root cause of the issue and co-create unique solutions with a long-term commitment.  Deep impact initiatives may also offer financial returns alongside delivering tangible social or environmental results, while being centred on the Social Return on Investment (SROI). 

 

It’s heartening to note the transformation of the social development landscape where promoters and High Net Worth Individuals (HNIs) are committed to inter-generational change on social subjects of their choice despite long periods required for sustained results. 

 

 

The dynamic growth of social innovation in India is another trend that merits attention. This expansion encompasses a variety of activities at multiple levels, including a surge in startups focused on social change and an increase in sector-specific research.  According to a 2020 Invest India report, India is home to over 400 social impact startups.

 

Additionally, the development of innovative financing models like impact investment, blended finance, and the social stock exchange, recently announced by SEBI, is further transforming the funding landscape for social projects. These models merge traditional investment approaches with a focus on social equity/inclusion, drawing in a diverse group of stakeholders, including philanthropists, entrepreneurs, and investors, all contributing to a more impactful social sector ecosystem in India.

 

A decade after the CSR mandate, we find ourselves on the cusp of another major shift; the integration of Environmental, Social, and Governance (ESG) principles, especially in the context of the visible consequences of climate change. Recent studies indicate that 23% of Indian companies have increased their investment in environmental projects, aligning with India’s goal of achieving ‘net-zero’ by 2070.

 

It is safe to conclude that corporate responsibility, philanthropic ventures, and ESG norms have gained wider acceptance amongst Indian corporates, and are today a pivotal force in the country’s journey towards a sustainable and equitable future.

 

 

 

NOTE – This article was originally published in cnbctv18 and can be viewed here