Corporate social responsibility in India: Trends and implications for internal communications

Giving back to the communities we live in is not just good for your corporate reputation; it can also engage employees and build your employer brand. Aniisu K. Verghese reports from India.

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Corporate social responsibility (CSR) has come a long way in India from funding projects to appeal to communities to empowering employees to co-create a sustainable future.

Very often when asked about the most noteworthy contributions made by Indian organization the name of the Tata Group, a prominent business house in the country, would probably be mentioned. Incidentally, the Tata Group is credited for introducing ‘social responsibility’ among corporate houses in the country. A study of organizations involved in CSR work in India ranked Tata Group first among the list of well established firms making a difference to the communities around them. What is interesting to note is that most programs were aimed at people living near the organization or related to the industry in which the company operated in. Public perception and brand recall were among the reasons for organizations to invest in social giving.

A strong case for corporate social responsibility

Today, corporate social responsibility has become an integral part of not just how business establishments operate but even multinationals, private and public players engage with the communities. Retaining staff is viewed as a challenge and many organizations view corporate social responsibility as a tool to retain people. The opportunities to demonstrate leadership skills beyond work, the ability to interact with multiple stakeholders and the power of making a tangible difference to society are some of the ways in which organizations position CSR initiatives at work.

The benefits also far outweigh the investments organizations need to make for corporate social responsibility. According to Reputation Institute’s 2012 study of consumers in 15 countries – the 2012 – Global CSR RepTrak™ 100, of the 7 dimensions that drive reputation, 3 fall in the CSR category.

Citizenship (company is a good corporate citizen), governance (organization is responsibly run) and workplace (appealing for employees, who are treated right) determine 42% of peoples’ willingness to trust, admire, and support you. The numbers are also telling. The study reports that a 5% point increase in a CSR rating translates to a 9.1% spike in the number of people who can vouch for an organization, an area barely understood and acted upon.

Likewise, good deeds of an organization can improve employee perception and directly impacts organizational commitment. In a study by the Center for Creative Leadership, the authors also discovered that irrespective of their age most employees expect the same things at work and are committed to their organizations for the same reasons. In other words, employees demonstrate similar commitments to CSR irrespective of which generation they belong to. In an internal study among staff, Cognizant, a large IT firm discovered that their volunteers gained immensely from the experience and indicated a higher sense of purpose and performance.

Opportunities for giving back

There are many factors that can be seen as opportunities for corporate social responsibility initiatives in India. India is poised to have a demographic advantage of having a fifth of the world’s working age population. Half of India’s population is living in poverty and there is a dire need for programs that not just save lives but empower people with means of livelihood. Numerous health concerns plague the nation. 42% of India’s children below the age of three are malnourished, which is greater than the statistics of sub-Saharan African region. India is ranked 3rd highest among countries with a high rate of HIV-infected persons and approximately 1.72 million children die each year before turning one. These pressing issues can be addressed if effort is channelized in a timely manner.

Likewise, India has had numerous natural disasters like earthquakes and tsunamis destroying lives and land. By tapping technology organizations can find novel ways to pre-empt and reduce the impact of such calamities. For example, Tata Consultancy Services created an early warning system that provides scientists with information at their fingertips and alerts to warn of potential disasters.

Challenges and implications

However, the penetration of corporate social responsibility initiatives is low in India. There is more impetus now with the Indian Government passing the New Companies Bill that mandates for companies to spend 2% of their net profit towards socially responsible programs. This is expected to grow the corpus of funds available to an estimated Rs 120 billion to improve community giving exercises and allows for the government to monitor, albeit subtly, if companies are spending right. However, the mandatory clause has raised questions about the intentions and the debate continues if such oversight by the government is really warranted.

A study of the corporate social responsibility practices among the top 500 companies in India showed that only less than half reported their programs or spends. Most made token gestures and their activities were spread thin. Transparency is also missing with few discussing their processes and modes of funding. Programs usually tended to cover community development, training, education, compliance, employee health and safety and employment.

Karmayog, the CSR think-tank which undertook the study discovered that in 2010 only a marginal percentage of companies ranked level 4 (a sustained level of CSR reporting and activity). They ranked companies based on levels – 0 (with no activity and reporting) to 5 (the highest form of CSR programs) on four criteria: the social indicators tracked by the company, the innovativeness in CSR on a 5 point scale, linkage of CSR initiatives to business, and focus area of CSR in each company.

Nearly 77 % of the Indian companies reported corporate or employee volunteering although none had formal procedures in place. Dedicated departments in most organizations are looking into much more than just funding or getting involved in one-time projects. While the government is making attempts to encourage social giving through tax benefits (employees can now include charity donations and avail tax exemptions under Indian income tax laws) it isn’t enough to make a lasting impact.

A study by KPMG in India reported that among the themes that corporates committed to own environment garnered the most attention while topics such as women empowerment and poverty alleviation which are the need of the hour found few takers. Incidentally, a low percentage of corporate houses engaged in programs that directed effort for employees, the public and neighboring communities. This contradicts the national volunteering guidelines established by the Indian government’s Ministry of Corporate Affairs which spells out that the well-being of employees needs to be a priority.

Trends and internal communications strategies

Based on studies that report on CSR programming and practices in India here are some trends that will share the future of this function.

1. Social media enabling change

Social media is changing how responsible giving programs involve consumers and employees in newer and wide reaching ways.

With India home to the 2nd largest number of Facebook users it is no surprise to see organizations tap into the power of collective thinking, wisdom and collaboration to generate powerful messages and connect people to brands. A social media campaign called ‘PowerLight a Village’ by Garnier Men involves fans to electrify villages and improve lives. Another campaign by Lifebuoy aims to reduce child mortality and get consumers to connect to the brand beyond the product. By using ‘likes’, shares and comments as currency to drive social change companies are hoping to take action to levels beyond the comfort of payroll deduction and checkbook philanthropy.

In a Citizenship and Communities survey by Havas Worldwide, India had 40% of the global sample believing that social media has made them more influential/powerful. Of the sample, a third already leveraged use social media to change the world for the better, and 42 percent expect to use it more in the future to promote worthy causes. This trend indicates that consumers are no more waiting for leaders or governments to initiate change but are taking things in their own hands.

2. Rise of the ‘internal social activist’

The NASSCOM Foundation’s report – Catalyzing Change 2013 – points to greater awareness among employees about the value and impact of social action that organizations take. Instead of being passive we are seeing the rise of the ‘responsible citizen’ who champions issues and encourages wide reaching changes by tapping resources within an organization.

Vodafone in India has a program called World of Difference where employees spend five weeks with NGOs the organization supports in locations throughout the country. Such engagements spur employees to consult and demonstrate their leadership skills in areas they are passionate about.

3. Tracking the carbon footprint of our actions and partners

India is currently the world’s fourth largest carbon dioxide polluter accounting for about 7% of the world’s emissions. However, with an annual growth of 7.5% it is causing alarm globally. Even though the country has committed to reduce its footprint by taking on alternative energy and other measures every event and activity that organizations conduct will be scrutinized a whole lot more. I believe there will be greater emphasis by individuals to take up the cause in ways they can – beginning with the neighborhood.

4. More discipline and focus for CSR

Karmayog’s study throws up an interesting trend – over the last few years they have seen that CSR is getting more specialized and focused and embedded with the activities of the organization such as HR, governance, management, accounting etc.

According to the Reputation Institute’s 2012 CSR RepTrak™ 100 Study many of the world’s 100 most reputable companies aren’t able to demonstrate the value of the investments in Corporate Social Responsibility (CSR) initiatives and 50-60% consumers are unsure of their intentions, investment and work. Their role in harnessing ‘green teams’ that sprout within organizations and drive volunteering will be crucial to the success of an organization’s corporate social responsibility outreach.

5. Greater ownership for the corporate social responsibility function within corporate communications teams

According to a Communications Leadership Council study, corporate communications teams which manage corporate social responsibility increased by 57% in 2012, from 37% in 2007. This is an indication of the focus and attention organizations are investing in this area. My sense is that dedicated resources with deep skills in corporate social responsibility programming, social media and employee engagement taking on larger responsibilities within organizations.

In summary, while organizations strive in India to make their CSR programming more inclusive, realistic and aligns with business goals they also can do a lot more to articulate their purpose better, engage employees through communications and report progress and impact more. I believe the opportunities to do greater good exists. Organizations need to be more mindful of their investments, be transparent, build platforms for employees and stakeholders to engage more and conduct sustainable campaigns that deliver long term results.