Do companies walk the talk on investing in communities?2 min read . Updated: 26 Feb 2018, 12:48 AM IST
The third edition of IRBI 2017 report reveals that community development remains a significant thrust area for businesses for their social development projects, but a closer look reveals many shortcomings
New Delhi: Long before India’s corporate social responsibility (CSR) law took effect, community development remained at the centre of philanthropic work for many companies.
The third edition of India Responsible Business Index (IRBI) 2017 report reveals that community development remains a significant thrust area for businesses for their social development projects. A closer evaluation, however, suggests absence of application on key aspects of community engagement such as addressing the policy commitment towards backward or marginalized sections, or ensuring the interest of stakeholders is respected.
The IRBI index ranks the top 100 BSE-listed companies on their performance on five parameters—inclusive supply chain, community as stakeholders, community development, employee dignity and human rights and non-discrimination at the workplace.
On community development, 96 of the top 100-BSE listed companies explicitly identified thrust areas for their projects. While 95 corporations detailed mechanisms for implementing CSR project as part of their CSR policy, as many as 94 businesses have detailed mechanisms for monitoring the implementation of projects.
According to IRBI, community development is the best performing element. Vijaya Balaji, chief executive of Mumbai-based consulting firm Social Lens, says there is a willingness and interest among corporate entities to undertake such community development work that are meaningful and sustainable, “and not just for the purpose of fulfilling the CSR bill requirement."
For instance, ITC Ltd has sought a grassroots-level empowerment through creation and strengthening of community-based organizations (CBO), which participate in field level planning, contribute towards work and oversee execution. “Given the vital role that these institutions (CBOs) play in ensuring long-term sustainability of the interventions, considerable time and resources are allocated for regular training and capacity building of the members through technical inputs, financial literacy, project management and awareness on government programmes," says Ashesh Ambasta, executive vice-president and head (social investments) at ITC, which ranks second on the IRBI’s community development parameter.
ICICI Bank Ltd focused much of its CSR programmes on rural communities, and considers the socio-economic development of villages as a key driver to growth. “If their (community) participation in the growth of the country is not enabled, the potential demographic dividend may be lost," said a spokesperson ICICI Bank, which ranks third on the community development index. Oil India Limited ranks first on this index.
IRBI says there is limited disclosure when it comes to having systems in place for engaging with the community during planning of CSR programmes. Only 15 companies have a mechanism for conducting needs assessment before planning a CSR project, while not a single company disclosed having stakeholder consultations while formulating their policy. Balaji of Social Lens, however, says that there is no lack of recognition for need assessment. Most CSR-funded non-governmental organizations (NGOs) are waking up to the need of impact measurement not just for an extension of funding cycles, but because they themselves are keen to understand the extent of impact.
When it comes to the “community as business as stakeholder" element, the index reflects a different picture of how companies fare on protecting the interests of communities or their responsiveness towards stakeholders. The report marks it as the worst performing element.
Only 50 companies are said to recognize the need for impact assessment, while just nine companies as part of policy commitment recognize the negative impacts of their business activity. Moreover, only three companies have committed to the principle of free, prior and informed consent as part of their policy related to resettlement and rehabilitation (R&R) while 13 companies committed to respecting local culture and systems as part of their policy commitment.