CEO Blog 14: SE Potential to promote CSR Impact
16 June 2020
“The old thinking was that if you make money you can do this positive social and environmental ‘stuff’ – but in reality, the true philosophy of sustainability is the interdependence. It’s not about charity; it is about the fact that if you do the right things in the community, the community will do the right things for you. If you do the right things for the environment, you will have a stronger business so that you can make more money.”
As part of CSR, there are growing calls for business to adopt a wider range of social and environmental responsibilities however some argue that CSR has expanded to the provision of the kind of services that used to be offered by governments and community organizations including the function of guarding and enabling citizen’s rights. Companies along with other stakeholders including the government are engaged in addressing one of humankind’s greatest challenges this century and that is to ensure sustainable, just, and balanced development.
Corporates worldwide engaged in delivering social responsibility envision:
Addressing the development needs of billions of people, enabling education and economic empowerment, particularly of women, and developing radically more eco-efficient solutions, lifestyles, and behaviour;
Incorporating the cost of externalities, starting with carbon, ecosystem services, and water; Halving carbon emissions worldwide, providing universal access to low-carbon mobility;
Doubling agricultural output without increasing the amount of land or water used; Halting deforestation and increasing yields from planted forests; Delivering basic services and improvement in the use of resources and materials
Inclusion of Corporate Social Responsibility as part of the Companies Act 2013 was an epoch movement in the history of India. Despite the traditional approach inherent and widely prevalent in India Inc. about doing social good through writing cheques, giving large donations, constructing community assets, sponsoring education; the new way of an organized approach to creating impact through CSR is popular. Well, for the established businesses it may be difficult to get engaged with social impact in a way that the new companies can do; select a cause, serve the cause, promote the cause and build a brand. But, over a while, these challenges will fade away and all corporates whether young or more mature will need to engage in doing social good. The tricky thing is that there is no one-size-fits-all roadmap for implementing CSR.
In the past, CSR has also taken steps to improve livelihoods among communities they work with.
In the upcoming years, funds will be available for CSR activities but the key issue is how to channelize funds to solve social problems in a long-term sustainable approach keeping India’s vast geography in mind. The future lies in innovation and its implementation to tackle upcoming challenges; it is high time to institutionalize CSR innovation through research, knowledge sharing, and collaboration among all possible stakeholders. India Inc. must work towards promoting entrepreneurship among the young generation and working as a pressure group through their work to influence public policy-making in India.
Social entrepreneurs are going to be way forward for CSR initiatives. Companies are looking at creating shared value and not just pure philanthropy. Social entrepreneurs can play an active role where they can work on solving social issues but in a financially sustainable manner and corporates can partner with them either as an impact investor, becoming their consumer, supplier, or playing a role in enhancing the use of technology.
SSE India’s experience of working with social entrepreneurs in the last four years has witnessed many innovative business models emerging in the social enterprise ecosystem. Some of them are:
In the field of agriculture, many aggregators collecting cash crops and staples from smallholder farmers to supply large, top of the supply chain buyers. These enterprises also provide additional services like training to farmers, credit, storage, and transport facilities all aimed at improving yields and farmers’ income.
Companies organizing and upgrading informal retail operations and working with vendors to sell socially beneficial products such as clean water, healthcare goods, and other daily consumables.
Skill Development & Vocational schools providing high-quality training to a range of individuals, including the very poor, enhancing employability helping them obtain internships, work experience, and jobs.
Provision of non-financial services through mobile devices, including medical and healthcare services and other information services supporting government initiatives to reach the poorest communities in difficult to reach areas.
We have seen an upsurge in market-based solutions and their contribution to the economy of significant importance that needs the attention of every one mainly the government and private sector. We also recognize that many such initiatives struggle to break even or operate with thin margins; some of them are overhyped or not understood by the ecosystem. Corporates can bring their strength to support these social entrepreneurs in overcoming the above-highlighted challenges and acting as an enabler of such solutions. It is also noted that for many big companies serving low-income customers is a relatively low priority, which they often attend to through traditional ‘corporate social responsibility’ (CSR) initiatives tending to undertake feel-good factor activities and provision of free utilities. CSR must come forward to identify the potential for entrepreneurial solutions to solve problems that they may target through the traditional CSR approach, this will have a game-changing contribution to impact through the use of CSR money.
C. K. Prahalad’s influential book, The Fortune at the Bottom of the Pyramid (2004), highlighted the potential of low-income markets for large corporations – the billions of people living in poverty, in aggregate representing $5 trillion economies in purchasing power. Since 2004, many big companies have investigated serving or engaging the bottom of the pyramid although relatively few participate in the market. The major obstacle is imperative for organizations to develop wholly new business models appropriate for this market, and here social enterprises become the best option to partner with such large companies due to their reach to the communities (many of these initiatives are community-led and community-owned), ability to engage in customer behaviour change and understanding of broken markets.
CSRs can engage in identifying social enterprises, build their capacity, and promote them by:
Build a component of identifying entrepreneurship potential while they undertake baseline studies, participatory appraisals to explore the needs of communities, create area maps as part of designing CSR programmes
Offer entrepreneurship programmes (learning & capacity building) for enhancing the potential for community-led & community-owned enterprises
Offer start-up capital (grant) for such enterprises and technical assistance for fledgeling enterprises
Tie funding to causes which have entrepreneurial solutions participating – for example, provision of safe water must be supported by partnering with social enterprises that offer clean water
Provide patient capital to social enterprises, offer more debt than equity. Grants are essential but innovative methods of grant-giving like ‘Match Trading’ must be promoted
These are only some of the ways and not a comprehensive and strategic list of must-do ideas for CSRs to engage with social entrepreneurs. However, School for Social Entrepreneurs India’s work with early idea-stage social entrepreneurs is now maturing and is experiencing greater achievements of the social entrepreneurs we supported in 2016-17. One thing is clear that in the beginning, many such ideas appear as ‘good-to-do’ activity, but if the entrepreneur is focused and passionate, the business model is sound, communities are at the centre of such solutions, these enterprises can achieve self-sufficiency thus weaning it from dependence on investors and donors, operate near the scale, thereby reaching enough people to make an impact on poverty rates.
We invite CSR to just not ‘give’ but ‘invest’;
come forward, engage, and empower social entrepreneurs