Reasons for Frail CSR Implementation

By Harsha Mukherjee

In todays date, CSR or Responsible business is a widely accepted concept & is rigorously practiced by MNCs, TNCs & PSUs present across the globe. Have you ever wondered how active are the MSMEs in the field of CSR & why do they lag far behind the big giants or moreso even in large scale companies have we been successful in whole hearted implementation of CSR?

Let us take the case of India, one of the fastest growing emerging country. There are about 30 million MSME in India & 12 million people are expected to join the bandwagon. According to the SME development chamber of India, the contribution of MSME towards the GDP of India was 17% in 2011 & is expected to increase upto 22% in 2012. With such huge burgeon market the CSR quotient is still close to nadir. Lets jot down a few reasons:

In India, we still pursue CSR as a chequebook philanthropy to a large scale rather than responsible business. Note the point that even the GOI have released Reporting Guidelines not as Social Responsibility but as “Responsible Business”.

The other reason is the diversity of the subject which we need to condense. Pondering over the thought I realize that CSR should be standardized for every industrial sector with a variable quotient of culture, society & other constraints. This would give a set basis for each industry to follow & thereby ease the formation of metrics to compare CSR initiatives. Thus we can keep a fixed consonent “R” & variable “S” & the metrics formulation of CSR for every country we can measure as follows:

CSR = R_(Industry)  + micro(S_{common social factors})

R – Industry Specific & S – Social factors of the country to be addressed

For example, in Russia:

CSR = R_{extractive industry} + micro(S_{common social factors})

R_{extractive industry} - Fixed metrics in the extractive industry to be followed across the globe such as; environment, labor laws, health benefits et al. They are the primary metrics to be addressed by the entire Industry. They are the factors within the confinement of the industry and in this case extractive industry.

S_{common social factors} - Variable metrics like socio-economic conditions, conflict issues, et al. These are the external factors beyond the reach of the industry.

This can be applied to both leading factors of CSR which is extensively researched by Bob Pojaski & lagging factors as we all know are reporting indicators like GRI, BSC AAA1000, ISO14000, etc.

The other reason I think of is the paucity of positive CSR knowledge spillover by large scale companies. It is the onus of these companies to train & enlighten the domestic market about the subject.

The exiguity of consumers demanding CSR from corporates further perturbs the the companies to pursue CSR proactively. This is largely due to sheer ignorance of the stakeholders or the “convenient attitude” in which they would buy the service close to them or “discount attitude” where price is a factor of choice. Absence of incentives further weakens MSMEs to build strong CSR framework. Lack of CSR professionals accentuates the issue.

Although all the above reasons play an active role for the aversion from the topic, the crucial reason is the lack of definition of the subject.

Let us not only speak about following transparency & accountability by CSR in the corporate but also dissect & imply the same on CSR & form certain norms for the upcoming geners to follow.

(Harsha Mukherjee can be reached at harsha@indiacsr.in)

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Posted by indiacsr on Apr 6 2012. Filed under Columnists. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.