The Significance Of Monitoring CSR Initiatives With A CSR Impact ReportAnil Birla | April 4, 2019
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.
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.