Posted on

How CSR can Make a Difference in Healthcare

The healthcare sector in India is one of the largest and fastest growing industries in India. In 2017, the industry stood at US$ 61.79 billion, and by 2023, it is expected to double by US$ 132.84 billion. Yet, the Indian healthcare sector is in an ailing condition, as a majority of the investments do not reach the population that is in dire need. The problem in India is, private hospitals provide excellent care but are beyond the reach of most people. And public hospitals are affordable but are overcrowded and lacks responsiveness. While the government seems to be doing a lot by allocating a larger budget yearly, it is still far cry from what the country actually needs. In fact, India spends less than 2% of its GDP on healthcare, 1.4% to be exact, making it one of the lowest investors in the sector globally. This is where investments from private sectors as Corporate Social Responsibility (CSR) in healthcare can make a big difference to society at large. What’s the current trend in CSR for healthcare in India? While healthcare does receive a significant amount of funds from the corporations, much of it is focused on health camps and building hospitals or upkeeping its facilities. All these solutions are merely temporary patches. The country needs solutions that will eradicate some of the fundamental problems. 1. Imbalance in infrastructure and population ration Given the growing population of the country, the current infrastructure is greatly imbalanced. To the point that the doctor-patient ratio in India is 1:1700. This is dangerously low. Major investments in India primarily focused on urban centres while in rural areas are left with a bare minimum. Under its ‘Comprehensive Healthcare Initiatives’, the NHPC Limited has been providing medical facilities, qualified doctors and medical attendants, in many rural areas of Assam. They also actively partner with government agencies in bringing awareness regarding many diseases. 2. Rural areas need more doctors Besides infrastructure, the country is short of doctors, particularly in rural areas. While many companies are working in improving in this area, there still a huge gap that needs to be filled. People in rural areas need access to quality healthcare and the government can provide incentives to doctors to spend time in rural/remote areas and take healthcare where it is desperately needed. Hindustan Petroleum Corporation Limited runs ‘Project Dhanwantari’ across the country. Through this project, they provide basic medical needs for people in remote rural areas by door-to-door with Mobile Medical Vans (MMVs). 3. Contribution to medical insurance Quality healthcare for many is unaffordable in India. Rather than offering assistance with one-time or temporary treatments, companies could rather offer health insurance in a brand agnostic way, or tie up with pharma companies and provide cheaper medicines. 4. Focus more on mental illness Support and awareness for mental illness are almost unheard of in rural areas. While the government offers very little support, many organizations like Infosys, TCS, and IDFC are taking up this cause slowly and even those are focused on urban areas only. There is a lot that organizations can do to make quality healthcare available to all. There is a lot of money and a lot of intent too. All we need is proper channelling. 5. Reaching the unreachable India is a country with more than 60% of the population living in rural areas and a low level of health facilities. Many villagers are forced to travel hundreds of kilometres to access basic medical treatments and follow up check-ups. In this case, telemedicine can be a great way to help these communities get the best treatment or diagnosis possible. Parimal Enterprise, a pharma company, has taken up telemedicine as their corporate social responsibility to help the poor and rural households in remote areas. With their initiative like Dox-in-Box, Piramal’s telemedicine projects help people in remote areas access trained doctors. They have set up over 44 telehealth centres across the country, many in partnership with state governments. And help provide relevant information, screenings and follow-ups to patients. 6. Quality healthcare to remote areas Rural healthcare is one of the biggest challenges the Health Ministry of India is facing. Though the government implementing a lot of policies and programs in trying to reach out to remote places, the effectiveness of these programs is questionable. Wockhardt Foundation’s MOBILE1000 initiative is one program that has been spearheading in this area.  Their aim is to provide free primary healthcare to poor Indians in rural India. With a fully equipped Mobile Health Van, an MBBS doctor and medicines providing ADCR (Awareness, Diagnosis, Cure, and Referral), they have helped over 171.47 lakh patients in different villages across the country. 7. Make India more healthy India is known for having one of the largest populations of undernourished children in the world. So much so that even basic human rights are denied to millions, leading to stunted growth. Corporate houses can channelise their CSR fund towards building a healthy nation. Dabur India’s ‘Nutrition Program’ is aimed at eradicating hunger, poverty and malnutrition through provision of food, nutrition supplement, clothes etc. Through this program, they have partnered with various government agencies and NGOs to supplement the nutrition needs of the poor and needy. Health is a responsibility for one and all. For a country to be prosperous it requires its citizen to be in a healthy condition and think beyond basic survival. While the government is working on many projects, and a helpful hand from the corporate houses can make a huge difference.
Posted on

CSR in Education and the Challenges India Inc is Facing

Since the time India got its independence, the government of India has taken great strides in improving the quality of education in the past 40 to 50 years. But, despite decades of reforms and government initiatives, a big chunk of the population remains uneducated. For reasons like lack of quality education, proper facilities, teacher quality, irrelevant curriculum, and pedagogy. This is where India Inc can step in and help close the gap. In fact, after implementation of the Section 135 of the Companies Act 2013, many organizations have indeed played their part. Corporate leaders have come to realize that the resources spent on education are bound to impact social equity. As a result, education has taken the lion’s share of their funding in their corporate social responsibility (CSR). According to an analysis conducted by CSRBOX, over 88% companies in India invested CSR fund in one or more education projects. In fact, for the year 2019, 613 companies contributed to CSR through 8501 projects and a consolidated spending of INR 12143.77 Cr. Although official reports for the year 2020 is yet to come out, the CSR spending will surely top 2019. For instance, Infosys alone has spent nearly Rs 360 Crore as part of its Corporate Social Responsibility programs in the years 2019-20. While the numbers may seem big, there are still many persisting challenges and issues the country is facing. Persisting challenges in education Given the size of India’s population, there are simply too many hurdles for anyone to solve. That’s why the corporates need to understand India’s education landscape, so they can target their spending accordingly. While many organizations are focusing on larger issues like basic infrastructure, free education and health & nutrition, there are still other issues that need to be addressed.  1. Improving quality and adequacy of teachers Oftentimes, even if there is sufficient infrastructure, there is a shortage of qualified teachers who are ready to take up the job. Due to this, quality education still eludes most school-children. Few organizations have taken up this responsibility, yet this is one space where more can focus their CSR activity. Companies like Tata Teleservices has done its best in providing education to students from the underprivileged community in government schools. Ther teacher training programs have enhanced the quality of education in many government schools across the country. 2. Assessment of student achievement Many CSR projects offer initial stage support, however, what is required is a long-term assessment of students’ achievements. A system of understanding their needs and offering them support to improve themselves is relatively low. Tech Mahindra is one company that has an extensive portfolio of CSR in just education. Their initiative like ARISE (All Round Improvement in School Education) are long-term school improvement programmes, in partnership with local governments and partner organisations. They have also adopted more than sixty schools across India and is working with 18 partners to turn them around completely into model schools of excellence.   3. Lack of maintenance The CSR funds are usually spent on improving the basic infrastructure and amenities. However, there is a lack of continued maintenance, and due to that any development towards infrastructure only seems like a cosmetic change at best.  4. Lack of consensus on implementation Lack of consensus is one of the main issues that local agencies face regarding CSR projects. This often results in duplication of activities by one or more corporates, which takes on a competitive spirit rather than a collaborative approach.   These are just a few areas of interventions that require immediate attention that corporates can focus their CSR on education. However, India Inc. has not forgotten that access to quality education is fundamental to the growth of India, and they are opening many windows of possibilities, where there were none. But with the right guidance and partnerships with government and other local agencies, they being to close the gap efficiently.  
Posted on

CSR DURING COVID-19

Corporate Social Responsibility (not necessarily the mandatory 2% spend under the Companies Act) plays a very vital role now more than ever. With the rampant spread of the Coronavirus, much like the spread that knows no borders or divisions, businesses   are demanded to show loyalty to every stakeholder . Identifying with CSR-equipped business  – The ‘Was’ and ‘Is’ Was- What earlier proved to be good for business  was to meet the altruistic needs of goals that were worthy, to a society that was mostly working towards combining all the business and social goals. Is- While 2020 started off good, COVID-19 happened. So what IS, is a very different scenario that has to face long term and short term challenges created by this epidemic that leaves no business unaffected. Which is where learning the benefits of CSR plays a vital role now more than ever.

CSR starts at home

While we focus on catering to our consumers, it is easy to let our staff slip our minds. But, CSR during COVID-19 demands a newer approach where employees benefit too. Start off by ensuring your employees’ safety and security, allowing them flexibility and lesser job-related stress. Extending your helping hand to ensure their mental safety as well is crucial too.   To keep your employees comfortable and ready-for-work in an environment that is new to both entities is by listening to them, just as you’d listen to your customers.   Support small business and give them a leg up. This will be a bucket of its own under CSR as across the nation, there are so many small businesses that have already been shut down and some of which have been capsized due to tumultuous waters. Some businesses are somehow managing to hold on and it takes good CSR to lift them up with the necessary funds that will keep them afloat. Companies like Intuit have joined hands with Indian Fundraising organisations like Milaap to help uplift small businesses who suffer the worst hit. While milaap has constantly been working to help individual communities and businesses in the past as well, the COVID-19 situation has given the organisation fuel to help fight the pandemic. On the other hand, The Embassy Group of Companies brought together a consortium of companies to help support students facing SSLC exams. Many companies have contributed what they can in similar ways to uplift our society, understanding the need of the hour and realising their social responsibility.     So what are the key takeaways?
  1. Support mental wellness and consider that the highest priority to maintain good relations with your employees.
  2. Provide financial security and try not to lose out on valuable additions to the organisations.
  3. Give small business a leg up and keep them afloat.

CSR and Brand sensitivity during tough times

While it is important to self-promote and stay in the minds of people, it is also important to keep sensitivity in mind. People wouldn’t want to see you market your brand/business during these times whatever it be. So how do you find the balance?   Humanizing brands during a period of major dislocation   While It is important to let the world know what you are up against and how you are facing it, it is also important for us as people and as brands to address others with humanity, empathy and financial assistance to whoever needs it the most.   Stick to communicating about CSR via a single platform   Brands that blow their own horns are not the reassurance people are looking for. While the world falls apart, it doesn’t stand well to brand without humanity. Which is why branding about your socially responsible activities should be kept to the minimum and done with empathy, reminding people what we stand for during the most devastating change in the ways of the world. It is important to comfort them, yet remind them of the implications and the sustainable solutions.

What is the biggest takeaway from COVID-19?

REASSURANCE. The public feels like they are in safe hands when there is any form of reassurance. When someone reads a simple article about how a man fed the strays or fended for the downtrodden during a plight will uplift their spirit. But what comes with reassurance from a buisness  of any size, is BRAND LOYALTY. And thus CSR can work on multiple levels for business of different sizes now more than ever.   Continue being patient, continue being a socially responsible business. And that means more than fulfilling the statutory obligations.
Posted on

Innovative Finance For The Development Sector

 

                             

Innovative finance for the development sector

International development is primarily based on two major shifts in the world today. The first being the increase in collaboration between the public and the private sector, and a need to focus on developmental programs to achieve the United Nations – Sustainable Development Goals (SDG).   The diverse frameworks for innovative finance are designed to aid the traditional international flow of resources like funds, foreign direct investments and remittances, to name a few. The macro layer of goals is to de-risk human lives & environment by raising living standards, protect the environment and eliminate poverty.   Innovative finance is about defining standards and establishing different mechanisms to increase participation in the sector. There are a variety of financial instruments and assets like securities, derivatives, results-based financing, voluntary or compulsory contributions. The idea is to create ways in which different sectors can contribute with an increased purpose.   A successful innovative financing system can help mitigate risks related to market failures, create political momentum to generate more revenue and resources for the development sector. The allocation of risks goes to institutions that are better equipped to bear those. Apart from mobilization of resources, innovative fundraising approaches are also appearing to align with the current goals of innovative finance.   Following are the core drivers of growth in the sector:

                                 

 

1. Increase in use of established financial instruments

Instruments and existing risk frameworks like green bonds will help attract new participants like pension funds and institutional investors. The proceeds of these towards development goals will create a new approach in understanding more effective and impactful use of these funds.    

2. Expansion into new markets through replicity

Replicable approaches to expand into new markets will lead to improving the scale of innovative finance. For instance, the International development community has been experimenting with performance-based contracts. While these kinds of approaches at present don’t attract institutional investors, they are however potential opportunities for them to adopt to as these start to show success.    

3. Creation of new financing products

Introducing new financing products is critical for evolving the methods and the process. While it won’t create momentum for a large term in the beginning, but opportunities for the early adopters in the process, validating the products that are successful. These can be then taken forward to continue and mature into imperative assets in the future.   As we see the world gearing up towards the United Nations Sustainable Development Goals (SDGs), these drivers of growth will be even more useful. While at one end, there is political uprising across the globe towards nationalistic values, on the other hand, there is an equally critical voice against it. This sure has created a disturbance in the equilibrium in the world, where the idea of sustainability comes in to establish balance, with an equal passion.   In the coming years, business and governments are forcefully working towards harnessing all possible sources of financing to address economic, social, and environmental challenges. While this requires immense financial resources, it also needs smart approaches to allow collaborations with all kinds of stakeholders involved. This would help in creating solutions that solve problems for everyone in the chain.    
Posted on

CSR : Sustainable Development Goals Linkage – A MATCH WITH A CAUSE

  Source: sustainabledevelopment.un.org

Sustainable Development Goals – For the People and the Planet

The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. Endorsed by all 193 United Nations Member States in 2015, the 2030 Agenda and its Sustainable Development Goals focus global efforts and attention on 17 pressing issues. These 17 Goals build on the successes of the Millennium Development Goals including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. Reaching these goals is essential, and it needs distributed and equitable participation from various stakeholders that have an impact on the world and know the functions, be it from notable industries, non-profit sector, government bodies or mere individuals. However on the other hand for- profit industries, create a significant and much more concrete impact on economy, environment and culture, making them the core participants to perform responsibilities aligned with the SDGs.  

Corporate Social Responsibility (CSR)

CSR was introduced in The Companies Act mandating certain class of companies to spend 2% of the profits on defined social sector projects. This was intended to utilize the private sector expertise in designing, managing & measuring impacts which would impact society. The role that was primarily performed by the State & Non Profit sector was sought to be professionalized by the involvement of the corporate sector participation. This has brought into focus Responsible profits, Sustainable business practices and good corporate citizenship. This has also enabled changes in social enterprises, venture philanthropy and the way funding to the Non- profit is being channelized. Fact: Environment, Sustainability & Governance are currently the buzzwords in Corporate India.

SDGs and the Private Sector

United Nations has been instrumental in delegating the appropriate roles that non-profits, academic institutions and the private sectors need to play in realising the goals of SDG. These three entities were essentially taken in consideration when SDGs were being designed and adopted. The 2030 agenda has given the private sector a significant role to play. In many countries, the engagement of the private sector in the SDG implementation is part of official policies. Governments and the UN are striving for increased commitment of the private sector to finance the implementation of SDGs. Governments are also influencing corporates to bring about systemic changes in their business strategies to incorporate social and environmental awareness.    

Why Linking CSR work to SDGs is essential?

Let’s get to the point. The SDGs are imperative to bringing about substantial changes in our global scenarios, impacting individuals. Organisations, institutions and individuals at different levels are responsible for the contribution they make to meet these goals. India has been one of the few countries to mandate CSR to select corporates. The threshold limit of Rs. 50 million in profits has ensured that not only the large corporates include responsibility initiatives, but also the growing number of medium & small corporates. An analysis of  the CSR interventions areas reveals close linkages with SDGs. In fact, a single area chosen for CSR program could impact outcomes in multiple SDG goals. Education could impact outcomes in SDGs relating to Education, Gender Equality, Decent Work & Economic Growth, Reduced inequality etc. A study of 218 companies by IIM Udaipur and Futurescape indicates that the companies are gradually incorporating SDGs into their responsible business actions. Around 35% companies at the aggregate level reported that they have mapped their goals with SDGs but only 30% shared their mapping. Of the 218 companies, 60 companies have mapped their responsible business actions to SDGs. Nine of the top 10 companies mapped their goals with SDGs. The leading sectors are IT, Telecom and Energy where majority companies have mapped. In order to aggregate the outcomes and the impact it becomes imperative that all stakeholders collate the results and efforts in order to present the consolidated results. The government has a system in place to capture the data. However as SDG’s and CSR are also being impacted by efforts of the private sector, it is necessary to put in a framework which will facilitate credibility in any such linking and reporting. We at Vardaan Advisors Pvt Ltd ( www.vardaan.co) seek to assist in linking the CSR activities of an organisation to these SDGs which in turn will provide the strategic inputs to plan, map & undertake focused interventions resulting in better impact and  ensure a better social return on investment, at the same time enabling the nation to meet the Sustainable Development Goals.
Posted on

How Purpose-driven Businesses can be Profitable too

There was a time when it was believed that the sole purpose of a business is to make money. That belief ensured that all actions that businesses take are constrained by the focus on short term profitability and delivering shareholder returns. Businesses that had additional purpose outside profitability were seen with a degree of scepticism and were commonly grouped with NGOs and social enterprises. However, that is changing now as profit with purpose is set to become the norm. More than ever before, businesses are under pressure to have a meaningful purpose for the business and communicate it with their customers and the society in general. So, what is driving this change? According to 2018 Edelman Trust Barometer, 64 percent of people globally expect CEOs to lead on social change rather than waiting for government directions. Overall trust in business at 52% is higher than the trust in government at 43 percent. Even the younger generation which is set to redefine the consumption story are posing questions to CEOs about the purpose of their business. According to Deloitte’s Global Millennial Survey 2019, only 55 percent of millennials said that business has a positive impact on society, down from 61 percent in 2018. Why purpose matters and it’s connection with profitability Consumers are becoming more selective today about the companies that they buy products or services from. They are no longer just buying a product or service, but are buying into a company’s purpose. Accenture Strategy’s 2018 global survey of nearly 30,000 consumers found that 62 percent of customers want companies to take stand on current and broadly relevant issues like sustainability, transparency or fair employment practices. CEOs of large and small companies have started to pay attention now. We have seen the rise of the B Corporation movement for businesses that balance purpose and profit. Certified B Corporations are legally required to consider the impact of their decisions on their workers, customers, suppliers, community and the environment. While it might seem aspirational to be a socially conscious business, one question that CEOs often have is whether it makes good business sense. According to the popular book “Built to Last”, a group of visionary companies between 1926 and 1990 – those guided by a purpose beyond money – returned six times more to shareholders than profit-driven competitors. There are several reasons why this is true. Customers are likely to stick with companies and become ambassadors for companies that live by a purpose and communicate it clearly. Companies that are centred around a purpose are also employee friendly which makes it easier for them to attract and retain the best talent. Such companies also tend to give their employees a greater financial stake in the organization which leads to better financial outcomes. Purpose-driven companies are also conscious of their environmental footprint and are the preferred choice of consumers who prefer environmentally friendly products. Lastly, in a dynamic market as a company grows, they enter new markets, acquire companies, and divests businesses. Purpose and values which are at the core of the company’s identity can serve as a glue for the sub-businesses and guide the organization while exploring new avenues. What purpose should be and should not be Most companies in spite of having good intentions get their purpose wrong. They wrongly approach it as a one-time CSR program or philanthropy event supported by a PR campaign with the intention of letting their customers know that they are doing their bit for the society. Like it or not, modern corporations command a lot of resources and the actions they take impact the lives of their customers, employees and their partners on whom they depend. For purpose-driven businesses, society and the people who are associated with the business are not an afterthought but are fundamental to their purpose. While defining a purpose for the corporation, good corporate leaders seek to balance the broader societal interest with financial logic. The actions that they undertake are grounded in societal interests, irrespective of whether they are directly linked to the core functions of the business.  So, instead of launching a pompous CSR program or throw in a few environmentally friendly policies, ask yourself some hard questions. What problem does my organization seeks to solve? How do we make people’s lives better? How can I get my customers and other stakeholders to be part of the purpose? How is the sustainability of my Company related or contributing to the sustainability of the mankind itself? Once you have a purpose that is shared by your customers and employees, you can take the relationship from merely transactional to a life-long one. It’s time for CEOs to take a lead on change rather than wait for government intervention – after all purpose means good business. Hope this article provides an understand why a purpose-driven business is a necessity in today’s world. At Vardaan, we offer Business Responsibility Consultancy services through which you can seek guidance for crafting your organization’s purpose and aligning your organization to this purpose.
Posted on

Mandatory 2% CSR Spend – The Current Scenario

Corporate Social Responsibility or CSR is a way to ensure that companies conduct their business in an ethical way. It shows a company’s commitment towards the community and environment while being accountable to its employee, stakeholders and public. According to a KPMG survey, among the largest 250 companies in the world, 92% produced a CSR report in 2015. India has taken it one step further than any country. With the enactment of the Companies Act in 2013, India became the first country to make CSR mandatory. It mandates a CSR spend on 2% of average net profits for all companies meeting specified financial thresholds. Companies are finding that being socially responsible and treating their stakeholders well makes good business sense and leads to strong financial performance. Consumers and employees are more likely to stick with companies that adopt sustainable practices. So, why has this movement that depended solely on voluntary activity is being mandated through legal rules? The government intervention is primarily because of problems such as companies taking advantage of CSR benefits without actually spending, greenwashing to appear environmentally friendly, and false disclosures. So, how has India fared with its push for mandatory CSR spend? Let’s have a look. State of CSR Spending in India Spending on CSR by India’s largest firms stood at Rs. 7,563.30 crore (around $1 billion) in the financial year that ended in March 2018, according to a survey by KPMG India. This was 47% higher than what it was in 2014 when the company act was enacted and companies now are spending more than the prescribed 2%. In 2018, the average amount spent on CSR stood at Rs. 81 crores, up 9% from 2016. This indicates that although it is legally mandated, large companies are proactively spending on CSR. Companies in the energy and power sector were the top CSR spenders followed by Banking and Financial Services Industry and IT Consulting. Two sectors that have received over 50% of all CSR spend in the last financial year were education and healthcare followed by rural areas and environment-related causes. Positive trends in mandatory CSR spends: It can be observed that the mandatory CSR push has led to many positive outcomes. Firstly, before the legislation many small and a few large companies made little or no investments in social development which has changed now. Additionally, the focus on being socially responsible has pushed companies to relook at their overall vision and policies and how their activities impact the society as a whole. The increase in adherence by large companies can be attributed to their improved ability to surmount the challenge of large-scale interventions and use of implementing agencies such as NGOs. As per CRISIL CSR Yearbook, an analysis of 4,887 companies listed on the Bombay Stock Exchange, 84% of companies with over 10,000 crores in sales and 67% with 500-10,000 crores in sales used implementing agencies.  This has resulted in increased efficiency of  implementing agencies, mainly the NPOs and helping in creating high impact social organistions. Interventions by Corporates through the mandatory CSR spends has also helped in mitigating conflicts amongst the business stakeholders. The human side of dealing with various societal issues and challenges are now being addressed by the business, This can have a huge win-win results on all sides. Shortcomings of mandatory CSR Spending Legislation According to CRISIL CSR Yearbook, only one-third of the companies met the criteria stipulated in the Companies Act. As per CSR requirements, the amount required to be spent by 1,019 listed companies was Rs. 9,669 crores in 2017. While companies had decided to spend Rs. 9,936 crores, the final CSR expenditure by these companies was Rs. 9,034 crores. The reasons cited for the underspend by companies included inability to identify the right projects, right organizations to partner with or right in-house team for implementation. The high CSR spending on education and healthcare means that other socially important areas such as child mortality and eradicating hunger and poverty are ignored. There is also the issue about geography-based equity. While industrialized states with large corporate presence such as Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Tamilnadu top the list of highest CSR expenditure, the most backward districts of India receive little in terms of CSR spend. Indian laws related to CSR are also quite vague which also means that they are open for interpretation. For example, a number of companies transfer CSR funds to government programmes such as Prime Minister’s Relief Fund. This ends up becoming a one-time cheque signing exercise rather than proactive engagement with the community. Another issue has been non-compliance by firms primarily due to poor understanding of social needs of the society and lack of implementation capacity or expertise. In 2018, the government sanctioned prosecution proceedings against 284 companies for not fulfilling CSR expenditure norms. A key shortcoming noticed is that while CSR funds are being made available to the projects, not much attention is being paid to earmark funds exclusively for the orgnaisation building of the implementing agencies. Taking care of this crucial aspect will go  along way in creating huge impact. In summary, the last few years of mandating CSR has seen active participation, particularly from large corporates. But there are several issues such as lack of clarity on rules, working models and information about collaboration opportunities which if addressed can lead to better participation. If you are a firm that is looking to comply with CSR Spending and need an implementation partner, just give us a shout out.
Posted on

Will Social Stock Exchange really benefit India’s Social Sector?

On July 5, 2019, India’s Finance Minister Nirmala Sitharaman announced that the government plans to create a Social Stock Exchange (SSE) where social enterprises and voluntary organisations can raise capital from impact investors. Sitharaman explained the decision using the following words “It is time to take our capital markets closer to the masses and meet various social welfare objectives related to inclusive growth and financial inclusion”. While the finer details of this decision are yet pending, industry experts have welcomed this decision. This is certainly a big and bold step in a country where income inequality and fast economic growth go hand in hand. So, what does this announcement means for India’s social enterprises and what are some of the positives and concerns about it. Background of Impact Investing Impact Investing is about investing in companies, organisations and funds with the intention of generating a measurable, beneficial social or environmental impact alongside a financial return. The difference between a regular stock exchange and social stock exchange is that the latter seeks to invest in social enterprises, which are essentially revenue-generating businesses but with a twist. For social enterprises, the primary objective is to achieve a social objective such as providing affordable healthcare or sustainable energy solutions. Don’t confuse social enterprises with charities. Charities too have a social mission, but depend solely on charities. While generating profits is essential for the sustenance of a social enterprise, it is not the primary objective. Social Enterprises can be highly profitable as well, but instead of distributing their profits to stakeholders they reinvest the profits in their social programmes. For example, ERC Eye Care is a social enterprise that provides inclusive and affordable eye for all by offering eye care services and consulting at Rs. 50 and optical frames starting at Rs. 99. Impact investors such as Ennovent Impact Investment Holding, Ankur Capital, Beyond Capital Fund and angel investor Sadeesh Raghavan have invested an undisclosed amount in the firm. India has been at the forefront on impact investing and is expected to grow to $6 to $8 billion in 2025, according to a McKinsey study. Started in 2001 with the launch of Aavishkar, India’s first for-profit fund, impact investments have generated an IRR of 11% for $4.5 billion in investments between 2010 and 2016 according to the same study. Amul is the best-known example of an impact enterprise with revenues of over $5 billion. Impact Measurement and Management is critical for Impact Investors. According to a Global Impact Investing Network (GIIN) survey, over 90% of respondents reported performance in line with or exceeding both their impact and their financial expectations. About two-thirds of respondents principally target market-rate returns (66%), and the remaining third are split between those targeting returns closer to market rate (19%) and those targeting returns closer to capital preservation (15%). Impact of Social Stock Exchange on Impact Investments The proposed Social Stock Exchange will be an electronic platform where investors can buy shares of listed social enterprises with a social mission aligned to investor’s interests. The exchange will likely be regulated by Securities and Exchange Board of India (SEBI). In a country where access to funds is a big problem for social enterprises and NGOs, this announcement is a welcome move. In recent years, Indian governments have launched a crackdown on foreign funding of not-for-profit organisations which has resulted in massive decline in the fund flow for this sector. Foreign investments are considered as a way to meddle in Indian affairs and hamper growth by successive governments. With a Social Stock Exchange (SSE), social enterprises would have a new source of financing for their social projects, while giving India the opportunity to highlight independence from foreign investments and bolster the newly acquired superpower status. A common platform can make it easy for social enterprises to access capital in an inexpensive way, while making it easy for impact investors to discover worthwhile investment opportunities and also exit them easily. SSE will also ensure standardisation as listing on SSE will provide a stamp of quality and reduces the need for due diligence for investors. An exchange will also promote healthy competition between social enterprises and the best of the lot will attract more investments. Thoughts about SSE First and most important, the government has to clearly define what kind of organisations will fall in the ambit of the exchange. It is unclear whether the exchange will only be for profitable social enterprises and micro-finance companies or for registered or unregistered non-profits as well. The success of the exchange will largely depend on the framework and processes that will be used to decide which companies can list on the platform. It is also an open question whether social enterprises are equipped to comply with the regulations that come with being a listed entity. Most social enterprises are not good at maintaining records and the use of technology to track their finances is also limited. This could impact the organization’s ability to absorb such large funds and government will have to provide preparatory assistance to such firms before listing them on the exchange. Social Enterprises will also have to build processes and systems to track the use of funds raised and also report their performance periodically. They also need to build an objective way to measure and evaluate impact which is validated by external auditors. Government might also have to relax compliance requirements for NGOs. At the same time, government needs to build enough checks and balances to ensure that the exchange is not used as a conduit to convert black money to white money. It is expected that developments bonds and other bonds like Impact Bonds etc will also be listed herein. The exchange should give a fillip to this much needed instrument which can have a multiplier effect in the social sector. Another hitherto ignored category of donors – the individuals across the length & breadth of the country can pool their resources akin to the mutual fund concept. This will enable small contributions which can then be channelled to impact investments. Social Mutual Funds can play a significant part in the development sector. Entities listed on the Social Stock Exchange will henceforth be able to attract and retain talented and experienced professionals which in turn will create world class organisations delivering high impact and ensuring sustainability. Global SSE Examples Many SSEs have emerged globally in the recent years. Brazil was the first country to setup an SSE in 2013 and many countries have followed suit. Singapore’s Impact Investment Exchange which was setup in 2013 boasts of US$126 million capital unlocked. UK’s Social Stock Exchange has helped their member companies collectively raise £400 million. Canada has its own SVX platform which has helped mobilise $100 million in impact capital for the 100 plus ventures in their programs. Therefore, a number of countries have successful examples of SSEs and India has an opportunity to build one in the South Asia region. But, the success of such SSE depends on the framework and processes that the government puts in place so that the mainstream financial community has enough confidence in making impact investments.
Posted on

The Significance Of Monitoring CSR Initiatives With A CSR Impact Report

With the updation of the Companies Act in 2013, corporates functioning within India had to make many alterations and additions to their business policies. The mandate on CSR activities was one such addition. While most companies have now aligned themselves with the burgeoning CSR market, there remains a major gap in analysing the impact of their initiatives. Let’s take a look at why it’s absolutely imperative for companies to have a fool-proof impact report system to get the most out of their CSR projects. Why A CSR Impact Report Is Required? Companies are more than willing to fund NGOs and launch CSR initiatives of their own, as they can not only create lasting change in society, but also solidify their goodwill in the market. They are investing parts of their profits directly in sectors like health, education, energy, environment, women and children welfare, and disaster management. In the attempt to spend on their CSR activities, companies are actually losing sight of the main issue—the impact of their CSR fund spends. In the end what matters the most is the impact they have on society. A Social Impact Assessment (SIA) or a CSR Assessment can help a company analyse the relevance and impact of its CSR projects. It also helps companies understand whether the right mechanisms to achieve the objectives were used, and finally, if all the goals set at the beginning of the program were met. Current CSR Funding Scenario In India Many companies end up investing a lot of money in different sectors without thinking about the long term effects of the same. For example, suppose a company built a school in a remote village of India. However, the school never opened due to a lack of teachers. While the intent was right, the company didn’t spend more resources on actually ensuring that the structure they built became a center for learning. Doing a thorough background study and speculating on the future are thus important considerations before launching a CSR initiative. How To Create Impact With CSR Funding? It’s important to tap into local resources and make the community of the target area a part of the development projects. It’s equally important to make them aware of any changes that would alter their future for the better. For instance, companies can offer HYV (high-yielding variety) seeds to the farmers of a village for a better yield. However, it would be impactful only if the farmers were taught about the care and conditions required to grow these crops. A great way to measure the impact of CSR funding is by setting up a ‘Monitoring Committee’. This committee would ensure that everything is perfect, right from the planning of the initiative to its maintenance. Periodic visits to the project site and routine reviews would eliminate any flaws or issues. A CSR Assessment or CSR Impact Report, thus, is crucial to any CSR project and should include the ideas and feedback of all the stakeholders. This report should be reviewed on a regular basis and any changes should be documented so that the project implementation team is well aware of it. Independent Assessments: Third party assessment is another thing that the corporates can consider. This would help in proper evaluation of the company’s initiatives and the impact they have on society as a whole. An unbiased and independent organisation would always be a better judge of their CSR initiatives than an internal team. A third-party observer would not only look after the expenditure, but also deliver proper feedback ensuring the money is not spent in vain, and that company brings substantial changes to society.   Social Return on Investments (SROI) Going a step ahead would be to undertake the social return on the amounts invested towards the various initiatives, projects & intervention. One needs to evaluate the SROI ratio for Intervention program to understand that for every rupee invested what is the social value created.  Companies like Hindustan Unilever, Jindal Stainless Steel and Ambuja Cements, amongst others have published SROI Reports.   Image References: https://upload.wikimedia.org/wikipedia/commons/4/46/Primary_Laos.jpg https://upload.wikimedia.org/wikipedia/commons/thumb/6/63/Elementary_School.jpg/1280px-Elementary_School.jpg
Posted on

CSR Report: Key Factors And Presentation

Businesses small and large, private and public, are observing significant progress executing corporate social responsibility (CSR) strategies & initiatives into their structures; however, their endeavours do not end at that point. The more successful companies generate a CSR report illustrating their drives. These reports can be unique and flexible, just like the institutions they represent and should express the vision, corporate values, and culture. Why A Company Should Produce A CSR Report?
  • To benchmark an organization’s operations and result, in society and the environment, in line to know where and how they can advance.
  • To convince stakeholders that a company is financing environmental and community stewardship. 
Key Elements CEO’s Letter The first section of the report is often a letter from the CEO. These letters are important because they give readers a strong sense of the degree of the company’s commitment to CSR programs. Letters that address specific CSR challenges, accomplishments from the previous year and goals for the next, the resources used to make a certain CSR program work – these topics can give readers a better idea of the company’s initiatives. Focus More On The Future And Less On Past Success The point of a CSR report is to explain and exhibit how business was handled in the past so a company can frame a plan to do better in the future.  While sharing the progress of CSR strategy is good, dwelling on the past CSR achievements can lessen the focus on future goals. A report without definite goals for the next year is a boat with no compass.  Being clear about the future helps the stakeholders and the company measure the success of that plan. Transparency & Acceptance goes a long way How can an automobile company talk about social responsibility? Within reason, they should talk about everything, not just the information the company feels comfortable sharing. Many are aware that corporate social responsibility is the ride, not the destination, and thus, being truthful with your readers can go a long way. This can be accomplished with a simple statement like: “We are giving a valuable service that helps people with XYZ and while we acknowledge that the consumption and the creation of our service do have consequences on the environment, we are looking at techniques to reduce our negative impact.” Avoiding a foreseeable negative press Centre the report on responsible workplace conditions and sustainable practices as opposed to generosity.  How a company makes a profit than what it does with its profit, is what CSR is all about.  If a company talks about its CSR efforts on the contributions it made and overlooks its toxic child labour practices and chemical pollution, the media will have a blast. Authenticity is paramount Try to incorporate support and testimonials by third-parties: shareholders, consumers, charitable organizations – what others say about carries greater importance than what you speak about yourself. Data credibility & facts The public and the stakeholders want to see transparency in the company’s efforts and mission, so be honest. That transparency can intensify credibility and reputation, thus changing critics into supporters and supporters into advocates. Back claims with statistics and legitimate sources of data. Manage risks, build trust, explain operational methods and promote stakeholder involvement. Presenting A CSR report The intended audience of these reports include employees, customers, media, suppliers, NGO’s and government representatives. To maximize the effectiveness of this, the information strategy should be planned early in the report development process. Include case studies. This will humanise the report and connect with the readers. Approaches That Can Deliver Benefits While Presenting A CSR Report: Aligning CSR reports with the company’s broader stakeholder engagement like investor relation meetings and distribution of annual reports. Providing data to decide what mode of engagement is best suited to reaching a target audience, i.e mail outs, annual general meetings, press releases, websites, mailing and advertising.   Having read this, you should have no trouble whipping up your next CSR report and subsequent presentation. At Vardaan, we guide companies draft impactful CSR reports, sustainability reports  that caters to the above best practices among other strategies.   Image References: https://pixabay.com/en/environmental-protection-environment-683437/ https://commons.wikimedia.org/wiki/File:Kids_in_Rishikesh,_India.jpg