Corporate Social Responsibility has long been under the radar of criticism, especially in my home country, India, for being a farcical marketing gimmick for companies, that is largely ineffective and low-impact. Often without having the in-house expertise on how to optimize funds for highest social development impact, companies have been known to carry out projects of the nature of distributing t-shirts and watches to children in low-income schools with the company logo, one day or short time volunteer engagements that have no lasting impact.
A corporate has to balance their business goals with the social development they commit to. But is there a way to achieve both?
This question becomes even more important as India recently passed the 2% CSR Law, under which every company has to reinvest 2% of their annual profits in social development. With limited expertise in the field, low understanding to communities and their needs, but rising expectations and accountability to demonstrate social development, here are three ways for companies to balance their business and social goals and make lasting social impact:
- What’s good for the community, is good for the business– CSR projects should ensure that the social development they are working towards feeds into their business model.
For example, Chipotle invested their CSR funds into climate change mitigation activities, because they realized that it was getting difficult for them to source fresh ingredients for their business, especially avocados for guacamole, because of global warming. So mitigating climate change would make it easier for them to acquire ingredients to make their business grow.
- Serve your customers – CSR projects of corporates should be geared towards empowering and improving the circumstances of their customers, or potential customers.
For example, Visa’s CSR projects are focused on lifting people out of poverty and bringing them into the formal banking system, thereby increasing their own customer base and growing their business.
- Serve the sector – in spite of the business competition of corporates, which spills on to their CSR work, the entire CSR sector will multiply it’s impact when CSR projects create resources for the whole sector to use.
One way of doing this is to publish reports on impact evaluation, best practices and so on, that everyone can read and learn from.