With the New Year, arrives a sea of recommended changes and trends to watch in the coming year. The waves of which, as tall they are to read on paper, generally come with a multitude of challenges. The most pressing challenge is effective implementation. The resolution of said challenges result in the full social participation of an organization.
With the launch of the CSR Laws in India, a clear distinction popped between the companies who had a game plan of how to handle it and the others were clueless and helpless. Many of them are unfortunately in the helpless category. NSE, the country’s largest stock exchange, reported last month that only 14 NIFTY companies met the criteria of spending 2% of its Net Profit on CSR.
The above revelation shouldn’t surprise anyone. We at Sustainable Square would rather alter the way companies view social investments and sustainability to fit the long term needs of the business. Balanced Scorecard (BSC) Model is one such methodology to commit itself in the right direction. Balanced Scorecard throws perspective into the required functional aspects required of a roadmap. Each specified area helps in building focus on Critical Success Factors (CSF). Accordingly, we address the major challenge of implementation faced by companies through building a common-sensical and executable approach of BSC.
Let’s see how this could potentially change the way your CSR and sustainability activities are better structured.
Accountability, Governance and Ethics
A1. Sustainability a business imperative, consciously elevated by the government, with the introduction of the CSR Laws. They have lucidly put the onus on companies to effectively execute and manage this practice.
A2. Considering the impacts of social and environmental aspects on their business. Deploying efficient measures to merge these risks into the mainstream business strategy.
Learning and Awareness
B1. The rising prominence of sustainability has led to companies looking for employees with entirely different skill-set which earlier were not considered relevant for conducting business – the rise of a Socially and Sustainability Conscious Employee. This acumen augments businesses drive ethical practices internally to begin with, such as creating corruption-free workplace and offering a ready platform to deliver on the company’s CSR agenda.
B2. The rise of CSR has widened awareness of what companies are doing right under CSR. Companies with multi-regional presence are now beginning to invest into training their employees in different locations on how to contribute to the implementation of the company’s CSR plan, monitoring of progress and efficient data capturing process.
C1. The increased significance of Indian contingents at climate change conferences, the Paris Climate Conference, translates into greater public private partnerships in implementation of sustainable sources of energy and waste management. Proactively, it makes stronger sense to align programs with State or Central government needs to have a greater impact on goals.
C2. Greater involvements of sector councils and industry associations are elevating best practices along regulations especially within Banking Federations, Chemical Council and other council bodies. Such bodies have overtime taken up deployment of sustainability practices within the companies operating in the sector.
D1. Implementation and upgradation of technology to optimise processes and aid social data collection and monitoring of CSR progress.
D2. Greater integration of monitoring and evaluation into CSR activities. This will enforce better progress reports while providing a good tool for accountability of funds spent on CSR activities.
E1. Greater awareness towards the 6 Capital involved in any Sustainable Model – Financial, Intellectual, Manufactured, Social and Relationship, Human and Natural. Firms need to begin building and executing plans on reducing negative business impacts over the long haul. This will result in more number of organisations investing to strengthen areas where impact can be measured. Such initiatives can range from adoption of renewable energy sources, waste management to protection of ecological balance.
E2. CSR operations are seen adopting a High Impact Investment methodology, maximum population impacted with least required investments. This will rationalise the way operations are funded and the kind of activities that are undertaken. Choice between action plans becomes easier with clarity on this aspect.
E3. In the recent past, there were certain achievements in strategic alignment of private businesses to national and state objectives. This is expected to improve more so with every passing year. State governments are seen actively interacting with private businesses in achieving desired impact directed towards vulnerable businesses and population alike. (Maharashtra Govt.)
F1. Building strategic partnerships with the objective of creating shared values. Creating lasting connections with its consumers by addressing the need of the society while conducting its own business. This would also help recognise similar efforts in the region and streamline or consolidate the activities, rather than duplication of efforts. Business coalitions will help in strengthening the impact and upscale it.
F2. Projects implemented with the communities have greater longevity, greater impact and higher ownership, in comparison to projects which are delivered to the doorstep of communities without dialogue or participation. Companies are depending on their CSR departments to develop this rapport with the community for effective project implementation as well as building an exit plan for the planned project.
Transparency and Disclosures
G1. Greater regulatory framework around sustainability and social based reporting, adoptability of reporting mechanism such as GRI will provide a wider audience for the operations conducted by the organisation, while addressing the need of publishing Business Responsibility Report (BRR).
G2. Improvements in overall quality of sustainability reporting, for e.g. report in 2-3 Page Summary, Customised Web Version of the Annual/Bi-Annual/Quarterly Performance snapshots-digital friendly (sharing in social media and accessing through mobile). This, while making themselves a benchmark for the region, will also help in creating a more impactful and meaningful report.
G3. Given the high scrutiny nature of business, every move is analysed for cause and effect. Generating reports on impact creation by social projects will help in building awareness of how the business is creating value for the society. SROI is an example of an effective tool in portraying qualitative and quantitative impacts of a program to society.
Sustainability Roadmap for Businesses in India
BSC highlighted the focus areas in general for A Sustainable Business in India. With the below shown Table 1.1, we demonstrate the CSFs- core competences and core business areas, companies should focus to deliver fruitful sustainability outcomes. The BSC structure of setting CSFs comprehensively builds a robust Road Map and help identify possible issues and intended outputs.
Having addressed how to build a robust roadmap, we will now look at possible areas of implementation. We selectively focused on Social and Environmental investments given its due significance in India.
Among our Social Investment recommendations, we focus the MSME sector as a vital area of development, given the scale of operations that exist within the unorganised sector. There are two angles to build a successful MSME sector, the financial aspect – currently covered by schemes such as MUDRA, and the skill-set requirements of this sector. Investments within this sector have the potential to have multi-fold impacts on Job Creation, Skill Development, Social Uplift of vulnerable communities and finally building a strong Upstream supply chain for large manufacturing sector. Investment into technological incubators as part of a firm’s CSR strategy is definitely an area we see a lot of potential and promise for the coming year. Companies can utilise the product offering of start-ups to promote sustainability through collaboration. To further emphasise the emergence of Start-Up in India, the new government scheme Startup India is a definite wait and watch. The other areas of social impact are definitely in the areas of sanitation and primary education. These initiatives have seen corporate involvement in the past year and will continue to build on that momentum in future.
Environmental investments are generally plagued with complexities which affect the identification of a right business case for such investments. Let us try and simplify this to an extent. The areas of change that we have considered are backed primarily by policy and secondarily by the fact that India is a manufacturing hub. Given the direction pursued by India at the Climate Convention held at Paris, the projected contribution of India will have to be backed by stronger policies on energy utilisation as well as strong environmental protection policies.
Currently we would look at Waste Management and Alternative Energy Sources are two viable themes for sustainable businesses in India. Biodiversity and Ecological Balance protection are areas which need constant interventions by businesses especially given the stigma attached to businesses on environment. The longer term impacts of such interventions can only by positive from viewpoints of costs and resource management.
With each progressive year, CSR and sustainable development go through transformations making it more inclusive, innovative and effective. The right thought process should be for businesses to more towards becoming Socially Progressive as a principle rather than adopting Corporate Social Responsibility themes. We envision and commit to see businesses progressively transforming sustainability and leading by example for peers within their respective industries.