Modify law, encourage innovation

There is no alignment of CSR with the business strategy and activities are managed on ad-hoc basis

Kartikeya Kompella | October 29, 2015




How do you evaluate a year of mandatory CSR? Should you look at the levels of compliance because laws needed to be complied with? Alternatively, should you look at its impact because any business action should be evaluated in terms of its impact?

Frankly, it’s difficult to tell. A quick look at the websites of companies indicates that while many are now mentioning their CSR there’s not a lot of transparency in terms of what CSR these companies are doing. This does not mean that they don’t write about their CSR. Some websites offer reams of information without saying much and there are others which are brief.

If one tries to interpret, it seems that companies are complying but not necessarily embracing the concept, given the way that many companies have not looked at focusing on CSR. A lot of companies have CSR committees but the implementation rests with someone whose core function is not CSR.

While this could be because their CSR budgets are not substantial enough to require a CSR department, a reading of the companies’ websites also indicates that there is no alignment of CSR with business strategy. Ad-hoc activities managed by an ad-hoc team pretty much summarises the approach.

As long as the majority of corporates don’t embrace the concept of CSR, the nation will lose out the benefits of corporate ingenuity working hard for society. The money will be spent and society will benefit somewhat but the lack of intent will rob the entire initiative of impact.
It’s a pity because some of the great minds that have used inspiration, innovation and hard work to build giant businesses are not even considering how to use CSR to further their business. If anything indicates the state of CSR then this does.

The stipulation that CSR must not be used for marketing was to prevent misuse of the CSR spends. George Bernard Shaw’s famous quote, “The road to hell is paved with good intentions”, seems appropriate in this context. The desire to prevent misuse overrode the opportunity to get marketers to tap into consumers’ growing desire for brands to support causes.

Surveys after survey has indicated that consumers want brands to be more socially responsible and brands started looking at this seriously too. P&G’s Shiksha and Horlicks’s Ahaar Abhiyan were campaigns that successfully tapped into this sentiment.

Instead of encouraging more companies to spend on supporting causes and regulating these spends to make sure that companies that do cause branding genuinely do good, the law clamps down on business ingenuity.

It’s a fair guess that neither of the above mentioned companies are using the CSR budget for running their campaigns. This means having independent CSR initiatives and independent cause branding initiatives. It’s unlikely that most companies will be open to two separate investments in society, so it’s likely that only the mandated approach will prevail. 

Asking companies to work on something that is not business is unnatural. In the absence of a means of making the most of the situation then they lose interest in the game.

The ambiguity of what constitutes ‘marketing’ continues to keep companies away from trying to push the envelope on their CSR initiatives.
Of course, companies can align their CSR with their supply chain and derive some business benefit but these benefits will not be significant as compared to aligning CSR with their brand.

The fact that companies who were interested in building a business case for their CSR are now looking at ad-hoc philanthropy shows that the discussion has regressed.

Even if things change later, companies will find that having committed to a certain direction of CSR it will be difficult for them to change direction. The sooner the law is amended to allow companies to do CSR in a manner that works for society and brand the better for both. n

Kompella is the founder of Purposeful Brands, author of ‘Building Brands Building Meaning’ and the editor/co-author of ‘The Definitive Book of Branding’.


kartik@purposefulbrands.in

(The column appears in the October 16-31, 2015 issue)

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