Partnerships Key To Success In CSR

PPP, an acronym that gained favour in government services and business ventures in Bengal in the mid-1990s, re-emerged on Thursday but in a new avatar. At a symposium to explore opportunities to collaborate on corporate social responsibility, US consul general in Kolkata Helen LaFave called for private-private partnerships (PPP) to maximize the gain from CSR funds. The traditional definition of PPP is public-private partnership in which the government and one or more private sector firms join hand to create a business or service.

“The new corporate legislation in India creates exciting opportunities to tap the power of partnership, not only between USAID and Indian companies and NGOs but among Indian entities themselves,” LaFave said, kicking off an exciting panel discussion before a packed house at the Bengal Chamber for Commerce & Industry. This is the third such seminar following the ones at Mumbai and Hyderabad.

Elaborating on the power of partnerships, USAID India deputy mission director Kathryn Stevens pointed out that though USAID’s resources had shrunk, it was really not about money but about leveraging one another’s strengths to do more for society.

Social responsibility, SREI Equipment Finance joint managing director Sunil Kanoria felt, needed to come from within. “It is ingrained in Indian culture. The vedas and puranas talk of giving a tenth of earnings back to society. When I got into business, there was account called ‘dharmada’ or donation. So I inculcated the spirit of giving. CSR may be a law today but it has to come from within and be sustainable to make a difference,” he said, calling for self-involvement in the social activity and not just cheque book CSR. WWF-India climate change adaptation head Anurag Danda cited several examples of working with both the government and corporates to create sustainable interventions or development strategies for people in the Sunderbans.

“CSR works only if all stakeholders have a shared vision. There’s a thin line between the passion that an NGO partner brings in and irrationality. It is difficult for some corporate partners to handle this kind of passion unless they share the vision,” said Danda.

It was the realization that 85 rich men in the world had assets equalling that of 3.5 billion people that led to ITC embarking on its CSR path with a vision to create a more equitable society in the country.

“India has 17% of the world population but 4% of water and 1% forest cover. ITC being an agricultural company had encountered the fact that climate change is here and now. The activities that range from e-choupal to watershed projects and social forestry touches 40,000 villages and provide livelihood to 7 million people,” said ITC vice-president Nazeeb Arif, adding that a shared vision with 70-odd NGOs had made it possible.

Century Plyboards president (marketing) Anoop Hoon felt the old adage ‘charity begins at home’ still holds true and that one could embark to do good to others only after sensitizing employees within the organization. “Once you build a culture of CSR within, there is a multiplier effect. Practice internal CSR and create champions who can then take up CSR projects for the company,” he said.

Amway vice-president (east) Diptarag Bhattacharjee stressed on the need to engage with society. The American company that actually got into CSR in 1996 before it actually began doing business in India two years later has been working extensively with the visually impaired.

“We believe CSR is just not philanthropy; it does not mean that we donate some books, give some scholarship or organize a day’s meal and we are through with our responsibilities. CSR is not just giving the fish but providing them the fishing rod. Our aim had always been to engage with focused groups and develop some sustainable projects for them,” Bhattacharjee said.

[THE TIMES OF INDIA]

Unilever Lifebuoy Campaign Reduces Diarrhoea from 36% to 5%

Unilever’s health soap Lifebuoy has announced the results of its ‘Help A Child Reach 5’ handwashing programmes launched in Thesgora, India, noting an overwhelming drop in the incidence of diarrhoea: from 36% to 5%[1].

The decrease in diarrhoea in this village – known for having one of the highest rates in India of this deadly yet preventable disease – was observed over the period of Lifebuoy’s intervention in an independent evaluation of 1485 households with children aged below 12 years, conducted by Nielsen in September 2013.

Lifebuoy’s ‘Help A Child Reach 5’ campaign aims to eradicate preventable deaths from diseases like diarrhoea through teaching lifesaving handwashing habits. The campaign was launched with an award winning film ”Gondappa” (www.youtube.com/helpachildreach5) and handwashing initiatives in Thesgora, a village in Madhya Pradesh.

The results achieved show that handwashing programmes have significant positive impact on both the handwashing behaviours and the health of a community. Lifebuoy’s handwashing programmes are now being rolled out to villages across 14 countries (Bangladesh, Brazil, Egypt, Ghana, India, Indonesia, Kenya, Malaysia, Nigeria, Pakistan, South Africa, Sudan, Uganda and Vietnam) and scaled up in India to reach 45 million people.

This adds to the ambitious goal of Unilever to help more than a billion people improve their hygiene habits by 2015. On 28 April this year, the Unilever Sustainable Living Report 2013 will be published, and it will confirm that Unilever has reached around 303 million people through its programmes of handwashing, safe drinking water, oral health and self-esteem.

Unilever’s health soap brand, Lifebuoy, puts its social purpose at the heart of its innovation and engagement with consumers. The Lifebuoy’s handwashing programmes are not only helping to change habits to combat disease – expert studies have shown that washing hands with soap at critical moments during the day can dramatically cut the incidence of life-threatening diseases like diarrhoea. They are also driving volume growth in key markets. Lifebuoy has achieved three years of double-digit growth to become the world’s number one anti-bacterial brand.

Samir Singh, Lifebuoy’s Global Brand Vice President, explains, “Lifebuoy’s ‘Help A Child Reach 5’ campaign has demonstrated excellent results in Thesgora and we will now be scaling up this campaign globally. To date, Lifebuoy has impacted the handwashing behaviours of 183 million people in 14 countries and the results of our efforts so far prove that when a social mission is embedded into a successful brand’s core values, significant and indeed lifesaving change can happen fast.”

Worldwide, one child dies from diarrhoea or pneumonia every 15 seconds, amounting to 2.1 million deaths each year. Handwashing with soap is the most cost-effective way to prevent child deaths and contribute to Millennium Development Goal 4 (MDG4) towards reducing child mortality. Put simply, the simple but lifesaving act of handwashing with soap could help many more children reach the age of five.

More than 2.5 billion people still lack effective sanitation, good hygiene and safe drinking water. Tackling these issues can achieve a big impact on the diseases that cause ill health and cost lives. To achieve better health outcomes and lower costs Unilever will try to address all three together. Unilever has leading brands – Lifebuoy, Pureit and Domestos – that can make a difference in these three areas.

Next to the 183 million people reached by Lifebuoy’s handwashing programmes, Pureit is providing safe drinking water to 55 million people. Both brands have worked closely with others such as PSI, a Unilever Foundation partner. Domestos and the Unilever Foundation are partnering with UNICEF to scale up its Community Approaches to Total Sanitation programme.

For more information, visit Facebook.com/Lifebuoy.

India now only country with legislated CSR with spending threshold of Rs 15,000 Cr

With the implementation of the new company law from April 1, India has become the only country in the world with legislated corporate social responsibility (CSR) and a spending threshold of up to $2.5 billion (Rs 15,000 crore). 

The new law mandates that all companies, including foreign firms, with a minimum net worth of Rs.500 crore, turnover of Rs.1,000 crore and net profit of at least Rs.5 crore, spend at least two percent of their profit on CSR. 

According to industry estimates, around 8,000 companies will fall into the ambit of the CSR provisions and this would translate into an estimated CSR spend of $1.95 billion to $2.44 billion. With higher economic growth and increase in companies profits, this mandatory spending will go up. 

"India is the only country that has made legislation for CSR spending," Sai Venkateshwaran, partner and head of accounting advisory services at KPMG India, told IANS (Indo Asian News Service). 

He said the new law would lead to a significant increase in spending by companies on CSR activities. 

"Many big companies have been actively engaged in the CSR activities, but the number is low. The new law will lead to a significant increase in the numbers," said Venkateshwaran, adding the mandated spending would be in the range of Rs.10,000 crore to Rs.15,000 crore annually. 

Sidharth Birla, president of industry body FICCI, said the businesses by and large welcome the new legislation. However, some issues continue to trouble that need to be addressed by the regulator. 

"This is an evolutionary concept and will gradually evolve over a period of time. Industry is therefore anxious on the implementation of this new provision," Birla told IANS. 

The new Companies Act 2013 that came into effect from April 1, 2014, replaced six-decade old legislation Companies Act 1956. CSR has been made mandatory under the new regulation and there are provisions of penalties, in case of failure.

Venkateshwaran said the industries' concerns about the new legislation were largely related to taxation and limit on activities that fall under the ambit of CSR. 

Birla also shared a similar view and said: "The biggest concern of Industry is with respect to the impact of CSR contribution from a tax deductibility point of view." 

"Industry hopes that the ministry of finance will find it fit to ensure CSR spend remains tax-deductible, more so since this spend is an integral cost of responsible business," he said. 

Under the current income tax law, the CSR spending cannot be treated as expenditure. It will be part of profit and attract taxes. 

As per the current law, unless expenditure is in the course of the business of the company, the same is disallowed and the question may arise as to whether CSR expenditure is incurred in the course of the business of the company or not. Therefore, the CSR Rules could lead to substantial expenses being disallowed in course of tax assessments. 

"Unless the Income Tax law is also changed simultaneously, this could lead to years of protracted litigation and disputes," said Birla. 

[ - Gyanendra Kumar Keshri] [Economic Times]

Utilise CSR for Social Change

Starting tomorrow (1st April 2014), an estimated 16,000 companies will finally have to start discharging their corporate social responsibility (CSR) as per the new Companies Act, 2013. If most companies actually comply with the requirement of spending 2% of their profits on CSR, an estimated Rs20,000 crore and substantial expertise will flow to the social sector.

This tidal wave is both an opportunity and a challenge. Clearly, the funding will be of immense help given the ocean of needs in India. However, there is also a high risk of money being misspent and stolen. India has nearly three million NGOs. However, many are fraudulent and even many genuine NGOs do not have the capacity to absorb substantial funds.

On the flip side, the vast majority of companies, even otherwise-sophisticated and well-intentioned ones with a long tradition of philanthropy, do not have much of a clue about how to put their money and talent to good use. They often confuse CSR with charity and end up practicing “chequebook philanthropy” — which is simply writing cheques for random requests without any real strategy and, therefore, with very little sustainable impact. Unfortunately, many other companies are busy finding all the loopholes that will enable them to evade their responsibility.

Given this backdrop, how do you approach CSR sensibly?

First, it’s important to realise that CSR isn’t just about compliance with a new Act. It is strategic. Done well, CSR contributes to building corporate reputation and trust. This is critical because trust in businesses is very low, and people are disgusted with corrupt business practices and crony capitalism.

CSR is also a fantastic way of engaging employees. There is a growing desire among educated people to “give back” to society, and a company’s social initiatives are an excellent outlet for this desire.

Working on tough social challenges is also a good way of rounding out rising leaders, and companies that develop a reputation for doing well and doing good are able to better attract talent. Finally, CSR projects can be an important source of innovation.

Microsoft’s work in digital literacy has not only helped nearly 40 million children, it has also inspired product innovations such as Multipoint Server that enables many children to concurrently share a single PC.

Similarly, Hindustan Unilever’s work in rural markets has resulted in the Shaktiamma rural distribution model that today drives 10% or more of the company’s revenues.

Second, it is critical to have the right leadership for your CSR work. The new Act specifies that a company must set up a board committee to oversee CSR with at least one independent director on it.

This is mandatory, but insufficient. You also need to appoint a credible leader who will help shape your CSR strategy, evangelize this to employees, build external partnerships and communicate the impact being created. This cannot be accomplished by a junior manager tucked away deep in the HR department. It has to be a capable leader, well regarded in the organisation and with ready access to the CEO and senior leaders of the company.
It is equally important to pick the areas of focus for your CSR work. Investing in vocational training or literacy in communities around the company’s facilities is an obvious area.

Picking areas adjacent to your core business has great merit because these have the greatest potential to sustain. So, if you are Nestle or ITC, initiatives that help farmers is natural.

However, there are a number of desperately underfunded and important areas that are important to consider, for instance, support for performing arts or support for NGOs that are working on human rights or governance. This is a uniquely opportune time to imaginatively create a portfolio of areas where you want to have impact.

The most important thing, though, is to graduate from chequebook philanthropy to impact investing. Your company is going to be spending 2% of its pretax profits. This is a big deal and needs to be approached with the rigour of a venture capitalist. You need to have a disciplined approach with clear criteria for making grants to the most deserving non-profits.

Mutual expectations and impact metrics must be documented in a simple but stringent MoU. There must be a good process for involving employees to work with each grantee to help build capacity in specific areas like finance, IT or marketing.

Finally, there must be a disciplined annual review of each grantee as well as the whole portfolio that drives necessary course correction.

Instead of seeing CSR as an onerous imposition and a 2% tax, see it instead as a 2% investment in building corporate reputation, employee engagement and innovation. Real CSR not only renews the implicit licence to operate given by society to your company, it helps create a functioning society that we can all live in.

[ - Ravi Venkatesan, former chairman of Microsoft India, chairman of Social Venture Partners India] [Economic times]