Amid the COVID-19 (coronavirus) outbreak, the Ministry of Corporate Affairs informed India Inc that organization which will donate funds to battle/combat Covid 19 pandemic will be considered valid under CSR activities. Funds may be spent on various activities related to COVID-19 such as promotion of healthcare, distribution of food, payment of medical bills of poor, preventive healthcare and sanitation, and disaster management. 

Ratan Tata, Chairman Tata Trusts and Chairman Emeritus Tata Sons, pledged Rs 500 crore to protect and empower all affected communities. The money will be spent on personal protective equipment for medical personnel, respiratory systems for treating increasing cases, testing kits to increase per capita testing, setting up modular treatment facilities for infected patients and knowledge management and training of health workers and the general public.

Ambuja Cements and ACC, both part of Swiss cement major LafargeHolcim group, have collectively contributed ₹3.3 crore to three NGOs to support daily-wagers, migrant labour, slum-dwellers and homeless stranded across the country on account of the lockdown. Ambuja Cement and ACC are support Goonj, an NGO on the forefront of disaster relief with expertise in material management; and Praja Foundation and Mumbai Roti Bank, who are working with labourers and daily wage workers who have lost their livelihood on account of the country-wide lockdown to protect against the coronavirus. Together, these organisations are carrying out multi-pronged containment and relief efforts that require immediate attention across the country.

India is struggling with its worst public health crisis. In times like these, collaborative models are required more and are effective in both containment of the disease and support for those whose livelihood and even survival is at risk. Public health services, politically neglected for decades in most Indian states, have proven their irreplaceable value during this crisis. Although despised by the rich and middle classes, they are shouldering the lion’s share of not just preventive and outreach services but also clinical care. Nearly 80%-90% of critical Covid-19 cases were being treated by public health services. States with robust public health systems like Kerala have been far more successful in containing Covid-19, compared to richer states like Maharashtra and Gujarat, which have under-staffed public health systems. Most corporates gave their contributions to these NGOs who were delivering at grass-root relief measures.

State-run Coal India Ltd said it has contributed ₹221 crore to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM Cares) to fight against the coronavirus pandemic. Employees of CIL voluntarily contributed one day’s salary, which amounted to ₹ 61 crore, and the miner donated an amount of ₹160 crore from its corporate social responsibility corpus to the ‘PM Cares Fund’. Despite several challenges during the crisis period, the subsidiaries of the Maharatna PSU produced coal. The Maharatna PSU has set a 710 million tonne production target in the current fiscal even though there is a concern over demand. 

The CSR arm called ‘SBI Foundation’, of State Bank of India (SBI), committed ₹ 30 crore to implement various COVID-19 relief measures across the country. The fund will be utilised for providing food to the needy, for consolidating healthcare infrastructure, capacity building of healthcare workers and research on coronavirus-related projects along with the Indian Institute of Science (IISc). To implement these initiatives, SBI Foundation set up a new flagship programme on health theme which included distribution of ventilators and personal protective equipment to hospitals and supply of 10,000 freshly cooked meals daily at four centres.

The lockdown crippled the economy for more than seven months which sparked exceptional distress; it turned the so-called lower middle class into the new poor class of the society. Teachers in unaided private schools, office assistants, data entry operators, salespersons, receptionists, beauticians, entertainment industry support workers those who run small mobile phone service and repair shops and other service providers who fall in ₹5,000 to ₹15,000 monthly income group were the badly hit. They grappled to survive. While the nation paid attention to the socially poor and the migrant workers who are faced the brunt of lockdown, we hardly paid any attention to lower middle class families with meagre income due to the society’s lopsided priorities.

The lower middle class is always caught in a dilemma as their dignity holds them back from extending their hands to seek aid. The focus of all aid programmes of both the government and NGOs is people who are traditionally perceived poor and who are indeed poor but the lower middle class, who are also in dire need of assistance are left out.

Anand Mahindra, Chairman, Mahindra Group was among the first corporate leaders to come out with clear commitments. He said that his group will begin work to use existing manufacturing facilities to make ventilators to combat Coronavirus. From converting existing manufacturing plants to make ventilators to giving free fuel to emergency vehicles, Mahindra Group announced a slew of initiatives to help combat the crisis over the coronavirus epidemic. Anand Mahindra said he will donate 100% of his salary to create a fund to help small businesses and self-employed people who are expected to be impacted the most due to the outbreak. He also urged our businesses to also set aside contributions for those who are the hardest hit in their ecosystem.

The Godrej Group announced that it is earmarking a fund of Rs 50 crore for community support and relief initiatives in India. This was an initial spending and the corporate said that it hopes to supplement it over time. It has been buying and supplying medical equipment and protective supplies for the Brihanmumbai Municipal Corporation (BMC). As a part of the initiative, the group has donated Rs 5 crore to the BMC, donated 115 hospital beds to Maharashtra government hospitals and helped set up a 75-bed quarantine centre at the Seven Hills Hospital in Mumbai. Moreover, it has supported the free distribution of 1 million packets of Godrej Protekt Mr. Magic powder-to-liquid hand wash in Maharashtra through partnership with the BMC and Thane Municipal Corporation (TMC), partnered with communities linked to their CSR programmes to support 1.12 lakh beneficiaries across 8 states with hand wash, sanitizers and soap, donated sanitizers to the Mumbai police force, begun ramping up capacity to meet the demand for soap, hand wash and sanitizers and initiated outreach through various networks and hand wash education programmes.

As a part of its Corporate Social Responsibility initiatives, Bosch Group in India immediately donated ₹ five crore to PM CARES Fund and pledged additional Rs 45 crore for various community welfare initiatives, the company said in a statement. Bosch India started various welfare initiatives to help the underprivileged. The company supplied cooked meals from its kitchen in Bidadi plant and through the Art of Living Foundation to about 4,000 migrant workers and other needy individuals, on a daily basis.

ICICI Group announced that it is committed ₹ 100 crore to support the nation in its fight against the COVID-19 outbreak. Of this, the Group pledges to contribute ₹ 80 crore to the ‘PM Cares Fund’ and ₹ 20 crore to state governments and local authorities in their efforts to battle the pandemic. The sum of ₹ 100 crore is being contributed by ICICI Bank and all its subsidiaries.

ReNew Power, India’s largest Independent Power Producer in the renewable energy space, ₹ 20 crore to the central and state governments to aid efforts aimed at combating the Covid-19 pandemic. The company’s endeavour was fixed on helping communities impacted by the lockdown and to bolster the health infrastructure to tackle the pandemic. Sumant Sinha, the Managing Director of ReNew in one of his interviews said that his company believes in helping equip the hospitals and their staff with the right medical equipment will strengthen local efforts in tackling this emergency. The company worked across its sites in Gujarat, Rajasthan, Andhra Pradesh, Karnataka, Tamil Nadu, Telangana, Madhya Pradesh and Maharashtra and cover around 140 villages. Additionally, ReNew is adopted a village in Haryana, where around 350 vulnerable households were provided with dry ration and hygiene kits.

In 1963, the free-market philosopher Milton Friedman described corporate social responsibility as “fundamentally subversive”, writing that corporate responsibility is the pursuit to be carried out by individual organizations for understanding the uncontrolled markets. The tough times showed that businesses do not exist in a vacuum but are part of the society and talking to and learning from the people is part and parcel of organizations. 

Several examples show direct connections between growth and environmental degradation; China logged over 75 million hectares of forests in the last decades of the past century. Expectedly, in 1997, severe drought caused by the drying of the Yellow River affected people and industries in northern China. The following year flash floods in the Yangtze caused damages worth $30 billion. The Chinese government concluded that deforestation was behind these events and it has banned logging.

Some countries prohibit the import of goods which cause ecological damage. For example, the US has banned the import of shrimp harvested without turtle excluder devise because of its concern for the endangered sea turtles. In 1994, the WTO intervened to address member concerns regarding the import of shrimps and its impact on turtles.. This became known as the Shrimp and Turtle case. The ruling was adopted on November 6, 1998. However, Malaysia persisted in their complaint and initiated DSU Article 21.5 proceedings against the U.S. in 2001, but the U.S. prevailed in those hearings.

Developing countries are affected by the relocation of polluting industries from the developed areas. Similarly, several products which are banned in the developed nations are marketed in the under developed world. Environmental integrity is crucial for a developing nation such as India and must be guarded under all circumstances. In the last couple of years acute water shortage has forced companies to shut down. Frequent incidences of droughts and floods have also caused incalculable financial losses. Over 2,000 Himalayan glaciers have reportedly melted in the past few decades causing floods and climatic changes.

The dumping of nuclear and hazardous wastes in developing countries and the shifting of polluting industries to the developing countries impose heavy social costs. In August 2006, the cargo ship Probo Koala discharged 500 tons of toxic waste in city Abidjan, West Africa killing 17 people and poisoning thousands more. In 1988 thousands of barrels of hazardous waste disguised as building materials were discovered in the village of Koko in Nigeria. Several barrels were unsealed causing leakage and serious health effects to the residents. The exploitation of the natural resources of the developing countries to satisfy the global demand also often causes ecological problems. African nations have long been at the center of incidents involving hazardous waste dumping.

When the multinationals exploit the under developed countries by using polluting technologies, they must be severely punished.  When we don’t care for the environment, it destroys the mankind and living beings unbelievably. Environmental CSR aims to reduce damaging effects of the business processes. The CSR activities focus on energy use, water use, waste management, recycling, emissions etc. At times, developed nations raise environmental issues as a trade barrier rather than for genuine reasons.

The debate has intensified in recent years on the connection between trade and the environment, and the role the WTO is important in promoting environmental friendly trade. Vital concerns of those who have raised a roar of the environment issues in the WTO have a valid reason because of circumstances where trade and the pursuit of trade liberalization have had harmful environmental effects. Also, trade can have adverse consequences on the environment when property rights in environmental resources are ill defined or prices do not reflect scarcity.

When the ordinance of NAFTA expansion to Peru was passed in 2007, alert citizens and a host of environment groups warned that the Peru FTA (free Trade Agreement) would incentivize a massive sell-off of the sensitive Peruvian Amazon rainforest to oil and gas companies. Such situations result in the abuse of scarce environmental resources and degradation, which worsens through trade. Some of the pollution can be purely local, such as a polluting water bodies because of chemical waste from local factories, or noise pollution due to factories etc. Other pollution can have global repercussions, for example, the excessive emission of greenhouse gases, the destruction of rainforests, and so on.

An added fact to consider here is if some countries have low environmental standards, big businesses are likely to shift production of environment-intensive or highly polluting products to so called pollution havens. Worse trade induced competitive pressure force countries to lower their environmental and health standards. Women working in Cambodian factories supplying some of the world’s best-known sportswear brands are suffering from repeated mass fainting due to excess heat and pathetic working conditions. The factory owners have not properly invested in safety of work environment and are paying very low wages to the workers. Also, short-term contracts are a root cause of job insecurity; workers cannot refuse overtime, because they are insecure about their contract renewal.

A positive point to note in International Trade is that some nations have extremely high quantities of raw materials, which they are unable to use domestically. For example, Australia has the most iron ore reserves out of any nation in the world, at 35 billion metric tons. Venezuela has the largest oil reserves, with 297.6 billion barrels. With freer trade, Australia sells easily its excess iron ore and Venezuela sells oil to other nations, and takes advantage of their material surplus to benefit their economy.

Organizations like Unilever, IKEA, IBM and Adobe have the most comprehensive corporate social responsibility programs.

A study was carried on by Reputation Institute (RI) in 170,000 companies from 15 countries to find out how customers perceive governance of the companies from whom they buy brands and services. It was found that consumers prefer companies who work towards achievement of a social cause. Also, how companies treat their employees matters consumers’ impression about a company. RI is a global business consulting firm that helps big organizations to build their credibility with their people force. The result of the study was that the world watches organizations closely on their CSR theme. People are concerned whether organizations think of CSR as just a giveaway, or are they really concerned. Consumers watch organizations closely whether they treat their employees respectfully, how ethical they are in operations, and whether the company respects the ecosystem. Consumers prefer companies marketing brand with a cause.

Businesses have to handle societal changes by recognizing its magnitude in effect of its responsibilities for the future of civilization. Businesses do not exist in vacuum. Social responsibility has become increasingly important for companies over the last several years. Whether it is by empowering women, serving the environment, trying to end poverty, towards the cause of education, towards improving healthcare facilities etc. We are seeing more and more companies incorporating social responsibility into their overall business strategy. The social issues may be local, national, or global, but a concern for the health and wellness of others in society cannot be ignored.

For aligning the cause of the CSR, organizations need to match their brand with a cause. A strong alignment between organizational brand’s goals and the cause it wishes to support is very critical to the success of its CSR initiative. If the match is poor, the CSR programme ends up confusing consumers and it makes them feel disconnected. It sometimes even results into the brand’s values slowly falling off the radar. If companies want to look at how to get good value from investing in CSR they should look at aligning it with their brand.

A strong brand offers many different business benefits ranging from the ease of acquiring good talent at reasonable costs and often earning customer loyalty in enhancing their business. All these benefits translate into improving the brand equity. The Coca-Cola Company’s global commitment is to enable the economic empowerment of 5 million women entrepreneurs across the company’s value chain by 2020. It has given facelift to brand Coca-Cola.

An easy way to ensure that CSR matches the company’s vision is to check if there is a logical tie between operations of business and the cause. For instance, Lifebuoy soap and hand wash aims to improve health through better hygiene. This daily use product helps prevent disease and improve people’s health and well-being; ultimately, helping to save lives. HUL’s this product enjoys a robust market share. In another example, two divisions of ITC namely foods and greeting, gifting and stationery work with a strong CSR message. On purchase of Aashirwad, Sunfeast or Kitchens of India products, consumers invariably support issues such as water conservation and tree plantation. How does this happen? A percentage of the sales proceeds get channelized into these areas. Similarly, the sale of ITCs Expressions Greeting Cards helps the cause of SOS Villages that look after orphan children in India. Again, on the purchase of ITC’s Classmate notebooks, Re 1 is donated for the cause of rural development and children’s education.

P&G has been championing the cause of gender equality both inside and outside the company. P&G will expand its supplier development and sourcing from women owned businesses across the world. This imitative of P&G has given boost to millions of women in world.  In India, P&G hires 50% women into entry level management roles and they get promoted in their next assessments at the same progression as men. P&G was the also the first consumer goods company with a license to employ women in Kingdom of Saudi Arabia.  It employs 15% women managers in KSA across all commercial divisions including HR, Finance, Operations and IT.

Engage employees in CSR: Global consumers expect companies to do more than make a profit, but also operate responsibly to address social and environmental issues. For developing an authentic CSR programme it is important for organizations to engage their employees in the formation of ideas process. This is helpful in boosting employee engagement and thus helping retention. Some employees at American Express Corporation initiated CSR with the issue of restoration of Statue of Liberty. American Express is known for their smart marketing ideas.

Connect with consumers: Consumers like companies that make the world a better place. Today’s millennials (generation Y) are 66 percent more likely to buy from a company that not just sells a quality product but also gives back to society. Companies use social media platforms to create awareness for an effective cause and for attracting donations. It’s been observed when companies are not honest to their cause and not regular in their efforts, consumers overlook their products.

Partner with other organizations: Partnering with organizations for the CSR cause enhances the achievements of organizations especially when CSR is aligned with the brand’s vision and goals. It is the fastest way to generate more results and goodwill. However, it requires a clear intent and budget in mind to make it work. The process of choosing an NGO partner typically involves a screening process. This includes a credibility test, a field visit, and background checks. It also requires regular assessment from the NGO.

Gradually, organizations all over world are aligning their brand to a worthy cause.

Greenwashing is a phrase used in advertising to describe initiatives taken by organizations to preserve the environment, this they do to improve their public image. The term is in use since 1960s but became famous in 1990s when environmental awareness became a movement across the world. Organizations struggle to get public attention and customer’s mind share; pretending to be environment friendly is one such attention seeking measure.

One of the huge corporations Royal Dutch Shell has been frequently accused and penalised for its greenwashing campaigns. It’s most famous ad campaign -“Don’t throw anything away- there is no away” highlights the claim of growing flora and fauna out of CO2 emissions but it was found to be misleading and heavily criticized. In January 2017, a UK High Court ruled out a claim against Dutch Shell’s Nigerian subsidiary’s oil spill in which two Niger Delta communities were shattered completely. The Court’s order clearly showcased robbing of justice and allowing the UK multinational to commit abuses overseas with impunity. Law is indeed blind.

Another example is of General Motors; it wanted to promote its production and development of fuel-efficient vehicles. In 2007, General Motors launched its “Gas-Friendly to Gas-Free” campaign, attempting to reframe the company as environmentally progressive. Regardless of its effort, General Motors continued to be the leading producer of gas-guzzler automobiles. The campaign highlighted its ways of greening the automobile industry: increasing fuel efficiency, producing vehicles that can run on E85 ethanol, developing hybrids, plug-in hybrids and fuel cells. The pretence went on while still heavily producing gas-guzzling vehicles.

Greenwashing is a spin of corporate social responsibility (CSR) in declaring itself to promoting environmentally friendly policies whereas in reality, the company does not live up to the commitment. Companies keep making unsubstantiated or misleading claim about the environmental benefits of its products, services, technology and strategic practices. It’s in fact an eye wash.

In 2013, Revlon campaigned for breast cancer awareness and raising funds for patients of breast cancer. During the campaign, it got accused of using chemicals linked to cancer in its cosmetics; the company called the charges “false and defamatory.” But, later, Revlon went on to publish its ingredients policy and was declared as one of the environmental friendly working groups. The company reformulated some products to eliminate certain chemicals of concern; long-chain parabens and DMDM Hydantoin and Quaternium-15, which release tiny amounts of formaldehyde. Revlon later communicated that they their campaign of breast cancer was genuine and eliminating the harmful chemicals from the production process was well under way before it began talking about the Breast Cancer Fund.

Today, when people are well informed about side effects products and services due to social media impact, the transparency matters. In fact transparency is the foundation of Corporate Governance.

In 2013, Asia Pulp & Paper committed to halt deforestation under its Forest Conservation Policy. Prior to this, APP and its pulpwood suppliers had a history of almost 30 years of deforestation, destruction of wildlife habitat, peat drainage and conflicts with local communities related to the acquisition of land for wood harvesting and pulpwood plantation development in Sumatra and Kalimantan, Indonesia. The Forest Stewardship Council (FSC) announced its decision to suspend APP’s illegal activities in the forests; APP remains the first among a very small number of the most controversial companies in the world FSC has disassociated from. In August 2018, FSC gave an order to APP to align and put in place its corporate structure aligned with measures to put a full stop to its alleged unacceptable forest management activities including its suppliers.

Throughout the 1990s, Nike was targeted by labor activists and anti-globalization forces for allowing its suppliers in poor countries to abuse and exploit workers. In the beginning, Nike said it couldn’t be responsible for conditions in factories it didn’t own. Protests and media reports proliferated. In 1996, Life magazine published a story headlined “Six Cents an Hour” with a photo of a Pakistani boy sewing Nike soccer balls. Though it was slow in coming, Nike eventually set up an extensive and expensive system for monitoring and remedying factory conditions in its supply chain and the rest of the footwear and apparel industry followed in its footsteps.

In essence, greenwashing involves incorrectly conveying to consumers that a given product, service, company or institution cares for the environment. As consumers become more eco-conscious, organizations are buckling up numerous stories going greater lengths to present themselves as environmentally friendly. Some companies make inflated and absurd claims, others resort to blatant lies.

But, let’s understand that there is a growing concern about environmental safety worldwide. There are tools to safeguard the environment and a consensus is made on easing the production of environmentally-friendly products. To make the use of these tools more efficiently, companies have adopted corporate governance principles that are not only put into practice in the higher ranks of organisations, but are also spread among small and medium scale organizations and are closely monitored by government agencies. Workplace safety, correct work procedures, worksite analysis, hazard prevention and control has become crucial.

Globalization has created cross border alliances paving way for more opportunities but it also has put stringent rules and regulations for human and environmental protection. Adding environmental management to their internal policies is a must for organizations. Companies must conform and endorse to legislation by investing more in clean technologies and merchandise that cause lowering pollution. Greenwashing is a temporary measure which might help organizations for a while, in long run, it just doesn’t work.

On 23^rd May 2017, the Tata Trusts had organized a session on “Transforming World: The Role of Business in Society” the speaker was Michael Porter. One of my friends Ms. Debsmita Pani who works for Tata Trusts invited me for the session. And, for me this was a propitious occasion, after all hearing Prof. Porter speaking in person is an exceptional opportunity.

Prof. Porter’s talk was focused on CSR. He feels why should companies turn to NGOs and governments to solve society’s major problems? It is time for business organizations to address societal needs and challenges through creating shared values, in which a company prepares a business model addressing a social cause which will augment their profits. Because when business solves an external problem, it makes a profit and in return the action lets that solution grow. The shared value concept enhances corporate policies and practices add to the competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which the company sells and operates.

Prof. Porter emphasized that profit involving shared value enables society to advance and companies to grow faster. When corporates incorporate societal issues into strategy and operations major transformations take place. He gave examples of the Fortune 500 companies ‘change the world list of 2016’.

GlaxoSmithKline ranks at number one in the 2016 list. GSK has made a calculated bet on intellectual property leniency in poor nations; it releases drugs from patent protection by lowering their prices. Though it lowers their revenues a bit, but GSK says it doesn’t lose money in any market where it operates. Over the time the approach builds goodwill and a strong market presence around the globe.

IDE Technologies, which is considered a leader in desalination technologies, turns salt water into fresh water. The Israeli company supplies 70% of the tiny Middle Eastern country’s potable water. Its largest local plant, located just south of Tel Aviv, produces 165 million gallons of freshwater daily. Though privately held, IDE also builds and operates some of the biggest desalination plants in about 40 other countries, including Mexico, Chile and China.

General Electric (GE) launched its massive renewable business strategy called ‘Ecomagination’ which in fact GE’s growth strategy to enhance resource productivity and reduce environmental impact at a global scale through commercial solutions for their customers and through their operations. They started their strategy with a pledge to generate power worth $20 billion in annual revenue from green products.

The 2016 list has only two Indian companies in it – Cipla and Godrej Group of Companies. According to Prof. Porter, India is land of opportunities and sky is the limit for Indian organizations to start profitable ventures related to societal problems such as climate change, water management, education, healthcare, rural upliftment etc. Business managers need an approach of engaging with the external environment with an eye of expanding business through finding solutions to some pressing problems. Organizations need to look at how good they are at external engagement: they should answer questions such as – can they innovate something to do better externally, whether they are ready internally to begin on a cause, and how to march ahead. Business organizations are not monolithic entities, but organizations governed and lead by individuals and anchored in the societies in which they conduct their businesses. Corporate social responsibility schemes reflect the human side of organizations.

India is the first country in the world to make the corporates shell out from their annual revenue to charity from April 2014. There are many areas in which they can invest. The major problems are hunger, poverty, healthcare and education. A survey by accountancy firm KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% in previous two years.  A smaller proportion has gone further. According to an Economic Times investigation, corporates are allegedly deceiving the system by giving donations to charitable foundations that later return the monies minus a commission.

So rooting CSR through the business is not all that great idea at the moment; how much to give and how much to expect in return is a question for most companies. Prof. Porter’s idea of ‘’creating shared values through CSR’’ is profound and has a lot of depth. There are many examples doing great work through sharing values with external environment. After all, being socially good is more profitable for a business.

In 1963, Milton Friedman – an American Economist and Statistician also known as the free-market philosopher described corporate social responsibility as “fundamentally subversive”, writing that corporate responsibility is the pursuit of personage interest of an organization to survive in an uncontrolled market. He also said that firms do not exist in vacuum.

Organization will grow bigger and stronger in proportion with the rise of community standards.  Stakeholders are increasingly demanding information regarding an organization’s environmental, social and economic impact on society. Inclusive growth is a multidimensional concept that needs considerable commitment from business organizations. Theoretical and empirical analysis indicates that firms can strategically engage in socially responsible activities to increase private profits. While a firm gets noticed for its social efforts, the firm can obtain additional benefits such as enhancing the firm’s reputation and the ability to generate profits by differentiating its product, the ability to attract more highly qualified personnel or the ability to extract a premium for its products.

In India around Rs 22,000 crore is expected to be poured into the social sector from 2015 onwards as Indian business houses ramp up CSR funding. Under the Companies Act, 2013, which stipulates companies with a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or a net profit of Rs 5 crore to spend at least 2% of their average net profits made over three preceding years on CSR programes.

Many organizations are staring at the inadequacy of the CSR initiatives they had been flaunting over the years. Till now, many companies kept postponing their CSR funding. After an initial phase of indifference and, later, even sly attempts by a few at gaming the rules  fitting in what they are doing currently as CSR or looking for loopholes to avoid doing what they ought to be doing, companies are now preparing for a new era or a new genre of CSR interventions. On the flipside, the mandatory interventions of government will spoil scene – companies which used to spend much more on CSR may now get away spending less; this is just a thought.

At the moment, CSR or corporate social responsibility is an ever hotter topic. The Economist Intelligence Unit finds CSR becoming rising corporate agenda not only in the US, UK and China but globally. Everyone has an opinion on it. It is a hot topic in Commerce and Management lectures.

CSR has a big role to play in enhancing corporate image. A research conducted by McKinsey found that 95 per cent of CEOs felt that society has elevated expectations from businesses in regards to social responsibilities today than five years back. Consumers prefer buying products and services from companies supporting worthy social cause. CSR has multidimensional effects on a firm’s existence in society.

Risk Management: Commitment in CSR activities help organizations to manage emerging social risks which at times emerge as an offshoot of their operational activities; when the weather is bad, and when things go wrong corporate can influence the perception of people at large in society. Corporate usually get clean chit from the consumers, community, regulators, employees and the suppliers.

Brand Positioning: Consumers usually like to get associated with a company, which is ethical and has a positive image; many companies are becoming innovative while contributing to social cause. P&G’s CSR program ‘Shiksha’ is an integral part of their global philanthropy program. It is based on of the theme ‘Live, Learn and Thrive’. Shiksha has helped 2,80,000 underprivileged children access education. The programe is built and supported over 140 schools across India in partnership with many NGOs. The advertisements of P&G state that when P&G products are bought, some portion of the price paid for it goes into their Shikha initiative.

CSR increases ability to attract, motivate and retain employees: CSR helps companies to attract good employees. With Gen Y (called also millennial) making up more of the modern workforce, it is becomes important to pay attention to what they think about an organization. Research has found that 88 per cent of Gen Y (children born between the years 1980 to 2000) chose employers based on strong CSR values; it also showed that 86 per cent would consider leaving if the company’s CSR values no longer met their expectations. Business schools, like New York University’s Stern Business School, added courses related to CSR to keep up with their students’ rising demand. The Gen Y is known as responsible corporate citizen with sensitivity towards social and environmental issues. Therefore, a good corporate image helps employees and communities assist the corporate in achieving its Vision and Mission, as they all feel alike and contribute towards a common goal. According to Forbes, the 10 companies that are best at CSR are Microsoft, Google, Walt Disney, BMW, Apple, Daimler (Mercedes-Benz), Volkswagen, Sony, Colagte Palmolive and Lego. All of these firms attract young and enthusiastic workforce.

Investors like investing in these firms: There are many financial institutions globally, which have made it part of their policy to study the CSR activities of the company before investing. M&A decisions are also taken after consideration of CSR and Sustainability activities, even if it makes perfect economic sense for the investors.

CSR Boosts Corporate Image: It allows the company to have certain respect in the society among its stakeholders. Companies that implement CSR, like Unilever with its sustainable living plan, have enjoyed increased growth and profits. I would love to quote here how TNT has used its core business to help people in disasters. Through its CSR programe which is established at its Amsterdam headquarters, 50 designated employees are always on call to intervene anywhere in the world at 48 hours’ notice. The programme was established based on the company’s strong internal culture that places an emphasis on giving back to society. Due to their access to transportation and logistics, the cause became an easy fit. Employees have responded to over two dozen emergencies, including the Asian tsunami in 2004, since its inception.

A survey was recently conducted by Reputation Institute which is a global research institute for carrying surveys and research. Their surveys enable business leaders to take more confident business decisions that build and protect the business image globally. Reputation Institute recently conducted a CSR pulse survey globally, which found that CSR was responsible for more than 40 per cent of a company’s reputation and 42 per cent of people based their feelings about a company on the firm’s CSR. About 31 per cent of global consumers believe businesses should change the way they operate to align with social and environmental needs.

Another study shows that nine out of 10 consumers want companies to go beyond the minimum standards required by law to operate responsibly and address issues. 53 per cent of workers think that they like to contribute to a job which can make an impact on social wellbeing. And, such a job makes them happier. About 35 per cent would even take a pay cut to work for a company committed to CSR. Another study found that the more actively a company pursues worthy environmental and social efforts, the more engaged its employees are.

So that is a strong indication that CSR is not simply a superficial matter, but has a solid impact on consumers, employees and communities. There is a concrete rise in awareness of CSR and real demand for it. Greater than any strategy, CSR can give business a competitive advantage while also making positive changes to the community and the environment.