Companies are keen to see the best results for the money spent and to monitor the impact of their efforts
As the second year of implementation of Corporate Social Responsibility (CSR) Rules, enters its last quarter, analysts and consultants suggest some changes in the approach companies should take in implementing their social initiatives.
In the first year of implementation (FY15), there was much back and forth between companies, industry associations and the government on the lack of clarity in the CSR Rules.
But with some challenges addressed and recommendations being made to review certain parts of the rules by the high-level committee headed by Anil Baijal, former Union home secretary, it is hoped that CSR will go beyond announcements.
While the corpus may not be as large as initially estimated, the companies complying with the law are keen to see the best results for the money spent and are looking to closely monitor and consolidate activities started last year rather than just expanding the geographical area covered.
Here is a look at five changes that we think will be visible after the FY16 CSR results start coming in:
Impact assessment
FY15, being the first year, was about compliance. This year is likely to see companies working towards establishing systems and assessing the impact of their CSR expenditure.
“The involvement of boards has led to increased accountability and ultimately efficient internal systems, especially where external auditors are called upon to assess internal systems and conduct rigorous impact assessment,” said Abhay Gupte, senior director of Deloitte India’s Enterprise Risk Services (ERS) function.
Increased government involvement
As seen by the end of 2015 itself, more state governments, nodal ministries such as the ministry of skill development, the department of drinking water and sanitation, the ministry of rural development as well as municipalities are working towards finding a way to channel CSR funds. The state of Gujarat and Maharashtra officially have set up CSR facilitation centres and other states have announced similar initiatives.
“Increased involvement of governments is a result of the realisation that CSR needs to be collective and in collaboration,” said Jatin Dhall, vice-president SEED, a CSR consultancy.
Going the tech way
Since companies want to be aware of how every rupee of their CSR money is being used, tools like mobile apps which collect data will be used more in the coming year. Abhishek Humbad, founder of Next Gen, a CSR consultancy, said that the use of technology is a natural progression for the sector especially given that boards are involved in CSR and are liable. So far technology has mostly been adopted by large companies but now smaller companies have adopted technology in a big way to lower their overheads and use their CSR capital better, he added.
Swachh Bharat to skill development
FY15 was the year of Swachh Bharat. Many firms dedicated funds to building toilets. But experts believe FY16 will be the year of skill development, job creation and livelihoods, and focus on financial inclusion projects.
The government has also made skills and job creation its top priority with its Make in India, Skill India and Digital India drives. Given that firms have more expertise in this area, more will take this up as their CSR initiative in the coming year, said Gayathri Vasudevan, founder of LabourNet, a non-profit organisation.
The sustainability push
In the first year of the implementation of the CSR rules, a number of large firms have come forward with presentations and views that CSR only addresses the social aspect of responsible business and has taken away the focus from the sustainability of business. A more holistic approach is needed to create real impact or resolve any of the social ills.
“Those who understand the importance of sustainability have been working on it and will continue to do more in the coming years,” said Sudhir Singh, executive director, CSR Compliance, PwC India, a consultancy firm.
This article was taken from here.