The CSR Companies Act of 2013 brought the importance of social responsibility of business to the forefront by mandating Corporate Social Responsibility spends. It propelled the private sector to develop a CSR policy, have a rigorous plan for implementation and address key socio-economic needs of communities they operate within.
The amended CSR rules of 2021 require that any corporations now view CSR activities in a more scientific way, investing in impact assessment studies of their CSR projects for enhanced social impact. This showcases a positive approach to moving beyond philanthropy and integrating the idea of ‘shared value creation’ among businesses in India.
There are considerable benefits attached to implementing Corporate Social Responsibility (CSR) programs. Two main benefits of CSR activities include building a strong brand recall and improving the profitability of the business through strategic corporate social responsibility investments.
2 Important Benefits of Corporate Social Investments
1. Good-will and Brand Recall
The increasing affluence of people has increased consumer choice and selectivity. Globalisation has made media and internet, among other things, more accessible and information is more easily available. There has been an increase in corporations to take social, human rights and environment issues into consideration in light of the pandemic. Customers and stakeholders are increasingly aware and cognisant of corporations who are taking necessary measures to contribute in the fight towards Covid-19.
Private sector organisations can experience a range of benefits like increased sales and marketing share, strengthened brand position, enhanced corporate image and clout, increased ability to attract, motivate, and retain employees, decreased operating costs and increased appeal to investors and financial analysts from taking a positive ethical stance. In times of crisis, people appreciate the efforts of those who help and will remember the companies which sacrifice their short-term gains in order to value their commitment to social responsibility
2. Business Sustainability
The meaning of CSR has the basic premise that businesses operate in society and society needs these businesses, i.e.: there is mutual benefit. For a business to be successful in the long term it has to create value, not only for its shareholders but also for society. It is not philanthropy or an add-on but a fundamental part of its business strategy, involving principles of social responsibility and ethics. It is argued that for the survival of the firm, to gain legitimacy in areas of operation and to avoid conflict, business need to play an important role in the development of the people it impacts. Instead of resorting to easier options of discharging their CSR obligations, like contributing to designated funds, corporates must first strive to professionalise their CSR teams, forge new partnerships with NGOs and work with the district administrations to deploy their CSR funds in the most effective manner. This will lead to strengthening organisational successes and profitability in these strange times.
Companies need a framework to identify, assess and manage social impacts that are within their control and sphere of responsibility. Many social enterprises, especially non-profits, and small businesses struggle with such expertise.
Social impact consultants at 4th Wheel play an important role to support organisations in delivering social impact in a scalable and sustainable manner. Our service offerings span strategic program design, capacity building of program teams for effective implementation and impact evaluation studies for evidence-based decision making.