It is the beginning of the new financial year and CSR managers across the country now will look at the year gone-by and conduct impact measurement of the projects executed throughout the year. Now is also the right time to revisit the projects, realign and make new beginnings for the new year ahead.
New CSR Amendments and a stringent framework
The new CSR Amendments that were released early this year create a more stringent regulatory framework and place more responsibility on the board and the CSR Committee. To comply with this new framework, it is important now for CSR managers and company secretaries to preserve detailed records of committee meetings, fund allocations and project execution by implementation partners. The new framework also lays emphasis on impact assessment and requires those companies that spend a minimum CSR Amount of INR 10 crore and more to conduct impact assessment through an independent agency.
Typically, companies want CSR to reap business benefits, however, it is important to remember that this places an unfair burden on CSR.
The foremost objective of CSR projects should be to align with business purpose and values. While aligning with business purpose, the CSR Projects will also mitigate risks and enhance reputation of the brand. The two underlying principles for a good CSR programme are coherent CSR strategies and a water-tight logic that connects all its CSR Activities.
Drafting a CSR Policy and Vision
It is also important for the top-most executive of an organisation to be a part of the CSR team and lead the team to fulfil its CSR vision. A coherent CSR strategy and vision is to be laid out by the top executive of the company fully backed by research and in consultation with the board and CSR committee. It would also help to consult key stakeholders of the organisation while laying down a CSR Policy and Strategy. Stakeholders usually include employees, customers, investors, regulators, and communities.
Philanthropy or programmes that create long-term value and impact?
If you look at large companies with large revenues and CSR outlays, you will see that they are entirely focused on philanthropic activities where large donations are directly made for community welfare and development. Other companies have CSR projects that are focused on improving operational effectiveness that include optimising resource use, reduce waste and emissions etc.
The third and yet another popular type of CSR project involve integrating CSR into the business model. These well-thought-out programmes not only build value for the brand but also can be directly linked to revenue and sales impact while also creating an impact to the society.
CSR needs to be implemented like a well-oiled machinery, right from drafting a CSR Policy, crafting CSR Programmes, execution of programmes with help of implementing programmes and most importantly developing metrics to gauge performance. Performance of CSR projects therefore need to be driven with a sense that it may also include non-financial metrics like volunteering hours, economic impact to beneficiaries and community impact. Course corrections and corrective measures are called for when the overall benefit from the annual CSR programme does not match the expectations.
Brand purpose, CSR and sustainability efforts need to marry each other to have a harmonising impact on the brand. CSR team structures need to be built to achieve this coherence and shared value. Companies that operate with best CSR practices will find that their CSR programmes are aligned with business purpose, the values that are close to the company’s stakeholders, and importantly addressed the needs of the communities in which they operate.
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