SMEs, It’s Your Turn To Give Back To Society

The Indian Government has embraced the policy of Corporate Social Responsibility in the Companies Act of 2013. The inclusion of several new policies and and provisions has changed the face of Indian corporates. This is a remarkable choice that has put India in the same league as countries such as Norway, Mauritius, and Sweden, who all have vigorous rules for industries on CSR. The only area where India lags behind is that of CSR for smaller businesses—the Companies Act 2013 does not apply to Small and Medium-sized Enterprises (SME), which happen to be major economic drivers in India.

SME CSR work

Corporate social responsibility is a concept that is normally associated with large companies and is is seen as a chance to give back to the society. The concept was once used by high-profile companies with enough media attention and money to build and uphold a strong brand image in the public eye. These days CSR initiatives have become important for SMEs as well. To understand why it is necessary for SMEs, it is best to understand the meaning and need for Corporate Social Responsibility.

What is CSR?

Corporate Social Responsibility generally refers to the obligations that the company has to the society. CSR has no definition as such, but the EU stresses that CSR is a voluntary action and is done as a part of the company beyond the law requirements. A company engaged in CSR purposely include the public interest into the working of the organisation. These organisations have a bottom, line of satisfying people, their profit, and the planet.

Why Are SMEs Effective At CSR?

India’s economy runs on the tiny, but infinitely numerous, contributions of small and medium-sized enterprises. These SMEs employ over 40% of India’s population and contribute to over 45% of the country’s manufacturing output. SMEs provide millions of jobs even to low-skill level workers. The country has over 1.3 million SMEs, who collectively account for 40% of India’s total exports. Small and medium-sized enterprises usually identify closely with the town or region that they are set up in. They have a wider reach across local communities and are spread over a larger area, thus giving them more grassroots influence than larger enterprises, geographically at least. SMEs can easily adapt to their local settings, have a clear understanding of the problems in the area and have access to local resources, making them highly suitable for CSR work.

Companies like Jaipur Rugs Co. Pvt. Ltd. do their bit for the community by conducting Educational programs for illiterate artisans and village community members. They also hold health check camps in villages for the poor and help unemployed artists with jobs. This kind of work is possible as the company intimately knows the problems their locality faces.

How To Inject CSR In SMEs

SMEs need to understand that CSR does not only involve the spending of money. Instead, it works best when an innate part of the brand. However, to reach that level SMEs must first educate themselves on what corporate social responsibility really means. One way to do this is through UN’s unique UNIDO programmes. They have a Triple Bottom Line (TBL) approach, which is popularly known as the 3 Ps—People, Planet, and Profit—to help companies address sustainable development. It has proven to be a simple learning technique for SMEs in developing countries and help companies with their performance for social, environmental, and economic norms. These programmes also help SMEs understand that profit alone is not enough to make a company successful.

Rewards For CSR Work

To promote CSR work in SMEs, associations such as ASSOCHAM, Businessworld, and FICCI hold award ceremonies to reward and appreciate these companies. These award ceremonies promote CSR practices within SMEs. Elin Appliances Pvt. Ltd. and Jaipur Rugs Co. Pvt. Ltd., NTTF Industries Pvt. Ltd., Smart Aqua Technologies Pvt. Ltd., and Vajja Technologies Pvt. Ltd. were awarded the SMEs and innovation categories at the Businessworld FICCI- SEDF CSR 2010 Awards. Elin Appliances were also awarded at the ASSOCHAM CSR 2011 Awards for their remarkable “Go Green” campaign, where they planted trees in their locality. They also organised health check-up drives in New Delhi, earning them respect in the community and a good reputation among corporates.

India’s growing economy and aspiring middle-class shows that it is time that more SMEs begin to change themselves to do what they can for the society and environment and to make India a better place for the future. SMEs must remember that they can only grow while the society and environment around them are balanced. And CSR activities that help organisations create a positive impact in their locality will help boost their brand equity as well.