Sustainable CSR Is the Way Forward In the Post-COVID World
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In the post-COVID world, corporate social responsibility (CSR) goals and implementation ideas would need to be recalibrated with the emerging ‘New Normal’ of businesses. The COVID-19 period can be a good time to restart, rework the entire approach towards CSR, both in terms of its constituents and the policies that govern it to better align all CSR activities with the real needs of the people.
Realign CSR with the real needs
In the post-COVID years, the total CSR spend, thus also the mandatory 2 per cent outgo by large companies, are likely to shrink significantly due to the impact of the pandemic-led disruptions on their revenues and profitability. Hence, the projects, and NGOs which are not self–sustaining and depend solely on CSR funds of companies will most likely cease to exist. Businesses, therefore, will need to engage in self-sustainable social projects for a long-term impact. They will also need to choose the cause of the CSR projects more judiciously with a differentiated approach to rural and urban projects, but keeping the broader national agenda in sight.
Rather than mere infusion of funds, there should be a business case for all CSR projects that are undertaken with possibilities of return on investments. Giving out donations as philanthropy is neither impactful for the businesses or to the cause as it’s not sustaining CSR. Instead, CSR funds should strive to create employment, entrepreneurship and ownership within the communities they are implemented in. Whether it is water, irrigation or healthcare, every aspect of CSR will need participation from the villagers, and only then there will be ownership for such projects. There are many companies who will be willing to help entrepreneurs develop new businesses.
To cite an example, during the COVID-19 led lockdown, much of the farmers’ produce across the country was spoilt as it couldn’t be sold to the markets directly as per the current farm rules. This could have been avoided if CSR policies were planned well.
CSR policies need to be tweaked
The greater purpose of CSR is to upgrade villages, bring opportunity and develop the rural economy. There are certain policies which also need to be rethought to achieve this. Moreover, with the current stress on getting more and more foreign companies to India and making the country a manufacturing hub, updating certain laws have become a pressing need.
For example laws such as the Minimum Wages Act prevent skill development at the grassroots even while the government’s aim is to skill people. Only if minimum wages are linked with minimum education or minimum skill, there will be some incentive for people to learn. Currently, there is a serious shortcoming in quality of output in every way because we have not attached quality to delivery. If CSR funds are used to skill up and train people to meet the needs of the manufacturing sector, then a skill-linked wage system will encourage more people to upgrade.
Need for plug and play Incubation Labs
Further, CSR funds are currently allowed to be allotted only to government incubators. This rule also needs to change and CSR funds should not be stopped from going to other incubators as long as the national agenda is taken care of. If an idea can be converted into commercially viable businesses, they are innovative and destructive, impactful, cost effective and well-validated, then corporates should be allowed to use their CSR funds to incubate such new businesses which will promote entrepreneurship.
Just like plug-and-play IT infrastructure, there is also a need for plug-and-play incubation labs, which can come out of the CSR funds. Due to COVID-related financial stress, some companies may be feeling the need to let go of some of their employees. Instead of resorting to lay-offs, if companies were allowed to place their people, who are well trained, at such incubation centres then they can help in enhancing these centres.
Further, to sustain CSR activities in the post COVID period, businesses should be allowed to contribute in both kind and cash to fulfil their CSR mandate.
Under the current framework, social projects where monetary investments have been made are deemed as CSR but any contribution in kind isn’t considered as a CSR investment. This distinction should not be there and businesses must be allowed to contribute in kind, like for healthcare infrastructure needs, etc., which may in fact be a cheaper and more effective way to create a difference in rural areas.
Conclusion: rules to allow only sustainable CSR
Going forward in the years after the pandemic curve flattens out, jobs will become scarcer. India will need to have more entrepreneurs and leveraging CSR to train and handhold entrepreneurs is an excellent way to achieve this goal. The initial funding for a new business can come from corporates, but running it and taking ownership of the start-up should be the job of the entrepreneur.
In addition, rather than mere infusion of funds, there should be a business case for all CSR projects that are undertaken by companies with possibilities of return on investments. The first rule to achieve this objective is to view CSR programs as a business model with a break-even roadmap. Once the project starts showing returns, it should be important to ensure that the money is turned around from that project and put back to another new project.
Henceforth, such sustainable ideas need to be allowed as a rule for making CSR projects more relevant and impactful for the long-term.