Formulating Csr Strategy

Formulating Csr Strategy

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By Ranjan Mohapatra & Loni Bora

CSR strategy has to be integrated with the business strategy, to be effective and contribute  to corporate bottom-line of any company , while  adding value to social and environmental bottom lines. This integration at the strategic level can facilitate the involvement of corporate leaders in CSR activities.  However, this process of CSR strategy formulation integrating with business strategy demands CSR strategy formulating team to have in-depth knowledge about , a)  corporate functions, processes , , b) strategy formulation and c) social  , environmental problems in India. This essentially demands senior corporate professionals with insight in to development sector operations. But, it is not very common to find professionals with this profile in large numbers. Therefore, the professionals active today in CSR space are mostly drawn from Social Systems  with middle management level exposure with limited exposure  to Corporate Processes and Strategy Formulation , which is generally a senior and top management level activity.

This gap in required knowledge and available knowledge is affecting the quantity and quality of CSR strategy formulation in India.  This is also the reason for most of CSR activities in India being non-strategic and ad-hoc with limited benefit to businesses.

Therefore, there is an urgent need of more  and more professionals with required knowledge and exposure to join CSR practice.

The business value of CSR or sustainability strategy parallel  to the business value of marketing strategy, which depends on its quality. But the challenge is; how does a company ensure that its CSR strategy creates business value and benefits business? This is a real challenge as, compared to marketing and advertising domains, CSR is new and emerging domain and stake holders have relatively poor understanding of the issues.
Let’s, therefore, compare CSR, a lesser understood and fast evolving domain with Advertising an age old domain of knowledge and practice and a major force since mid-19th century. The parameters of comparison below will clarify the parallel and comparable status of CSR with Advertising in terms of its potential impact on business, though not understood.

COMPARISON of CSR with ADVERTISING
(as a DOMAIN of KNOWLEDGE & PRACTICE):

 

 

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1. AD Budget vs CSR  Budget 

The advertising domain is strongly linked to Advertising Budget in comparison to CSR domain is linked to CSR Budget.  When there is a trend  of Ad Budget being a percentage of Sales  Budget  and  influenced by the stage of the brand life cycle and brand strategy at a given point of time. CSR Budgets in India are generally influenced by mandatory CSR law , except few exceptions like the TATAs.

2. Brand Image vs Corporate Image 

Ad Budget  is earmarked for promotion of building Corporate image  and Brand Image, while CSR  budget, though earmarked for social development  projects has a  profound positive impact on corporate and product brand image . Brand images are influenced when CSR   implemented in congruence with the Brand Strategy; corporate or product.

3.Media Selection vs CSR Activity Selection

A major activity in Advertising planning is selection of media like, TV, Print, Radio, Outdoor etc , which can be compared with  the Activity selection in CSR  planning and management  like, Education , Health, Livelihood etc  as listed in Schedule-VII  under Section 135 of Companies Act 2013 for India .

4. USP (Unique Selling Proposition)   for advertising Strategy building vs.  CSR Strategy Building 

This comparison   is the catch , as the Advertising  Planning and Strategy is an established body of knowledge and practice  with thousands of  Advertising Agencies   serving  millions of companies all over the world  , CSR domain is yet to evolve to a level of maturity  in India, where CSR   Strategy making process  will decide a theme or  a desired  image to be created through the CSR  activities . 

Here is the difference, to be bridged in coming times:

Till now, CSR is at the level of Ad-hoc Charity  in India, where CSR   budget is spent on whatever is the demand of communities around.  When the products are designed and   marketed not always to satisfy the demands or wants of consumers, why do the CSR planners address only the “wants” and the “demands” of communities, and not the “needs” of communities, which the community may not know or realize.  For example, a tribal community may demand “Employment “around their community, which may be on the top end of their demand. But if “ Solar Energy   “ is provided, many other   wants and demands of the community can be addressed  along with employment generation.
A general demand for communities center around tangibles like, infrastructure for education and health, roads   etc ; facilities which can improve their conditions in short run. 

But, the programs which can improve the quality of life of communities in the long run, like 

  • Researching and generating awareness about the ancient knowledge systems and  educating the communities  on ancient knowledge  and 
  • Researching to find innovative solutions to present day problems and potential problems waiting to emerge with a futuristic view.  Governments generally fail to plan for development with a pro-active approach. 

The corporate culture is generally proactive and businesses have to be pro-active to survive. The businesses can apply their futuristic approach to social development challenges, to supplement the role of governments.

This is a possibility, where a company is in a stage of Transformative CSR, ahead of Strategic CSR.

Above lines clearly, indicate that the CSR strategy formulation depends on the stage of evolution of CSR in a given company.

As per the working paper (12-088)   by    Kash Rangan, Lisa A. Chase & Sohel Karim , April 2005 by Harvard Business School , the stage of CSR in a company may be profiled in three  stages as given below.

 Shared Value Concept appropriate for Industry Leaders:

Nowadays, one of the dominant paradigms of CSR is concept of creating “shared value”.  The role of business, according to this model, is to create value for its shareholders but in such a way that it also creates value for society, manifesting itself as a win-win proposition.

Civil society advocates question corporations’ fundamental motivations for CSR, asserting that corporate programs to fund social and environmental programs are nothing more than public relations campaigns to boost their brand reputations, often disproportionately to the effort itself.

This dismissal of CSR resides in a fundamental distrust of a corporation’s legitimate intentions to do anything more than increase its profits. This viewpoint is founded on stark delineations between the spheres of responsibility and influence of government, civil society, and the business sector. Further exacerbating attacks from the left and the right is the utter lack of metrics to evaluate the efficacy of CSR programs. For a sector driven and evaluated by its measurement of financial returns and investments, the lack of any agreed-upon measures to quantify the social or environmental return of money spent on CSR seems to run counter to corporate ethos.

Against this contentious background, the idea of creating shared value has found appeal. The heart of the concept rests on the ability of a company to create private value for itself, which in turn creates public value for society. 

And indeed there are examples of companies that have accomplished this goal. Cisco’s establishment of Cisco Academies to train networking personnel is often held up as an example of “shared value.” Nestle and its development of Milk Districts in China, India and Pakistan is another oft-cited example, and there are many more.

In spite of its appeal, however, there is a fundamental problem with the shared value idea. The tension between business goals and social/environmental goals cannot be wished away with the hope of co-creating private and public value. By its very nature, substantive public value creation requires investing corporate resources for a payoff that is both distant and uncertain. This makes shared value very much a top-down concept. Only the CEO or the executive committee will have the authority to conceive and sanction such initiatives. Yet the reality is that most CSR functions in companies are staffed by managers who are in middle or Junior level , rank below the top management level. 

As for the  CEOs, given the pressures of business and meeting their “numbers,” shared value is naturally not at the top of their agenda, except for a handful of committed CEOs. The examples of Cisco and Nestle reveal   that the  concept is appropriate for industry  leaders  only and as a result improvements they make to the societal infrastructure are also likely to benefit them disproportionately. 

Smaller Company and Shared Value:

It would not be economically worthwhile, however, for a smaller player to do what the market leaders have done for fear of competitors taking a free-ride on their public investments. 

Alternative to Shared Value Concept:

Attempting to unify diverse CSR initiatives under a shared value framework does not reflect the reality of CSR practice for a majority of businesses. CSR executives oversee a variety of social initiatives that may or may not directly contribute to a company’s business goals. His/her role then is to achieve the difficult task of reconciling the various programs, quantifying their benefits, or at least sketching a logical connection to the business, and securing the support of his or her business line counterparts. However, this role when performed well would lead to the development of a CSR strategy for the company.

EVERY COMPANY NEEDS A CSR STRATEGY

Today, the question before companies is not whether to engage in CSR, but what the best way forward is for crafting CSR programs that reflect a company’s business values, while addressing social, humanitarian and environmental challenges. The fundamental problem with CSR practice is that companies usually don’t have a CSR strategy, but rather numerous disparate CSR programs and initiatives in an ad-hoc manner. This leads to wastage of financial and organizational resources, which could have added values to the business if utilized as a part of a strategy.

Every corporation should have a CSR strategy that guides all program design and execution that may   include philanthropic giving, supply chain, “cause” marketing, and system-level initiatives.

SITUATION ANALYSIS FOR STRATEGY FORMULATION:

However, every strategy needs to fit into the situation the CSR process of the company is in. Therefore situation analysis becomes the key.  For situation analysis, there is a need for a framework   or defined stage of situation.

In the CSR context , there may be three broadly possible  situations / stages in a company, for which strategies can be  developed.

Evaluating and classifying CSR practice within these three situations accommodates the wide range of activities business leaders describe as CSR and provides a framework to formulate a comprehensive CSR strategy   for the company.  The three STAGES are not water-tight compartments, but part of a process of evolution.

STAGES of CSR PRACTICE:

Broadly, there are three stages of CSR practice   as stated below.

a) Stage-1 : Charity / Corporate Philanthropy

In this first  stage,  the CSR activities are primarily motivated by charitable instincts, even though they may have potential business benefits.  

b) Stage-2 : Reengineering the Value Chain  with Triple Bottom Line  Orientation

In this stage, CSR activities include activities those intended to benefit the company’s bottom line, as well as the environmental or social  bottom lines /  impacts of one or more of their value chain partners, including the supply chain, distribution channels, or production operations.

c) Stage-3 : Transformative CSR  / Transforming the Eco-System

In Stage-3,  CSR activities aim at fundamentally changing the business’s ecosystem.   This transformation is intended to enhance the company’s long-term business position, but frequently entails short -terms risks in order to create societal value.

If we compare the five stages of CSR practice CSR VISION discussed in October, 2016 issue  , the five stages can be easily compared with and fitted  into the three stages presented above.  The Defensive and Charitable CSR can be placed in Stage-1 of Adhoc Charity , the Promotional CSR & Strategic CSR can be placed in stage-2  with bottom line orientation and   the Transformative / Systemic CSR may be placed in Stage-3

We may develop framework for the three stages / situations in which companies practice CSR.  Ideally, the company should maximize its CSR effectiveness within the stage or stages it is in and devises a coherent strategy for its CSR programs.

The types of CSR activities / programs a company adopts should be determined by its core competencies and institutional capacity, and its ability to excel in either philanthropic, value chain or transformative ecosystem CSR efforts. 

Stage  1: Charity  / Corporate Philanthropy
The first CSR stage focuses on philanthropy, either in the form of direct funding to non-profit and community service organizations, employee community service projects, or in-kind donations of products and services to nonprofits and underserved populations. Corporate philanthropy may be characterized as the “soul” of a company, expressing the social and environmental priorities of its founders, executive management and employees, exclusive of any profit or direct benefit to the company. Within this Stage, a business engages in CSR because it is a good thing to do, motivate by the logic that since the corporation is an integral part of society it has an obligation to contribute to community needs. While it may be challenging for corporate leaders to make a coherent argument for how philanthropic activities contribute to a company’s business strategy, in general, these activities enhance a firm’s reputation in the local community and provide a degree of insulation from unanticipated risks.

Philanthropic funding is frequently provided directly or through corporate foundations that exist separately from the corporate entity. The Coca-Cola Company (Coca-Cola), for example, contributes $88.1 million annually to a variety of environmental, educational and humanitarian organizations through The Coca-Cola Company and The Coca-Cola Foundation. Other examples of in-kind giving include IBM’s computer donations through its global KidSmart Early Learning program and Microsoft’s donation of almost $300 million in software products to nongovernmental organizations (NGOs) across the globe.

These types of philanthropic giving tend to reflect a corporation’s core competencies and business priorities.
As corporate philanthropy evolves, it may become more strategic and integrate more closely with a company’s business priorities. In strategic corporate philanthropy initiatives, funding for social or environmental programs reflects a corporation’s philanthropic priorities as an extension of its business interests. Examples include PNC’s “Grow Up Great” early childhood education program and Goldman Sachs’ “10,000 Women” initiative to train and support women entrepreneurs in developing countries. Both CSR efforts are a direct expression of the companies’ respective business strategies. With $100 million in funding over a five-year period, “Grow Up Great” provides critical school readiness resources to underserved populations where PNC operates, in turn creating stronger communities, potential future employees and PNC brand loyalty. 

Furthermore, by integrating “Grow Up Great” into its management training and employee volunteer programs, PNC has created a broad corporate commitment to the initiative. “Grow Up Great” also represents the company’s CSR strategy of focusing a multitude of philanthropic and community service projects throughout numerous business units behind one cause in order to have a more significant social impact.

In fact, philanthropic CSR ventures are typically considered a necessary cost of doing business to fulfill the corporation’s charitable giving priorities. 

 stage 1: the company is motivated to undertake its CSR initiatives for reasons only very loosely connected to its business strategy. 

Stage 2: Reengineering the Value Chain
The priority in this stage of CSR is increasing business opportunities and profitability, while also creating social and environmental benefits, by improving operational effectiveness throughout the value chain be it upstream in the supply chain or downstream in the distribution chain. Corporations, particularly in the U.S., recognize the business value of innovating new manufacturing and technology solutions that reduce operating costs while mitigating environmental impacts. Initiatives in this CSR domain are typically managed or co-managed by an operational manager on the supply side or a marketing manager on the demand side of the value chain, reflecting the focus on enhancing operational efficiency and/or building revenue. Unlike philanthropic giving, which is evaluated by its social and environmental return, initiatives in the second CSR domain are predicated on their ability to improve the corporate bottom line while simultaneously returning social value. 

The most comprehensive CSR strategies in this domain seek to reengineer a corporation’s entire value chain, including natural resource extraction and sourcing, manufacturing, shipping and product delivery. 

CASE-1 : Nike has established a Code of Conduct governing its entire production supply chain, including the factories with which it contracts to manufacture its products. The company’s code includes requirements that employees are compensated fairly, are not exposed to a dangerous or environmentally unhealthy working environment, and are treated ethically in the workplace. Nike has simultaneously launched an initiative to reduce the negative environmental impact of its entire supply chain, from materials sourcing to manufacturing, assembly and shipping. In similar fashion, Gap, Inc. launched a comprehensive “stakeholder engagement” campaign in 1999 to address highly publicized exploitive labor practices in its manufacturing facilities, some of which also produced goods for Nike.

CASE-2 : Bimbo Bakery’s comprehensive CSR programs to meet social welfare needs of its nearly 100,000 workforces and a similar number of small retailers. This family-owned Mexican bakery, the largest in the Americas and a leader in the global market, provides free education services for its employees to complete their high school curriculum, and supplementary medical care to cover the gaps in what is offered through their government health plan. It also provides financial assistance for their dependent’s health care. It has pioneered a unique microfinance program to help its small retailers tide over working capital shortages and has even added programs to finance their small capital additions. It has committed to using biodegradable packaging, reducing carbon emissions, water and energy use, and solid waste throughout its productions systems. The provision of health and micro-financing services have improved employee performance and retention and strengthened Bimbo’s distribution chain, which relies on small-scale retail store owners consistently operating well-stocked attractive storefronts. Bimbo’s broad social and environmental CSR initiatives are contributing to a loyal and committed workforce and a robust supply chain that can support company expansion, increase brand loyalty and ensure a well-educated and healthy workforce for its production facilities and distribution channels. 

In contrast to philanthropic CSR programs, CSR enterprises in the second domain have the potential for much more pervasive social and environmental benefits than programs in the first domain, since they are implemented throughout the company’s value chain. The logic of the CSR programs’ impact on the corporation’s bottom line is much clearer with supply chain initiatives.
Examples include ethically or socially responsibly sourced products such as fair-trade coffee, conflict-free precious stones, sustainable farming, and fishing. 

Consumers have demonstrated their willingness to reward such companies by paying 5 to 8 percent more for their products, illustrating that businesses with a strong ethical relationship to their customer base can successfully capitalize on mutually beneficial CSR initiatives. In addition to the subjective value for consumers of a company’s CSR programs, which may be demonstrated by their perceptions of the company and brand loyalty, corporations can realize a measurable financial reward as well.

Stage 3: Transforming the Ecosystem
The third CSR domain refers to wide scale and disruptive change to a corporation’s business model that puts the priority first on crafting a solution to a societal problem, which would then lead to financial returns in the longer run. This is a fundamental departure from the incremental and self -interesting change of Stage 2 initiatives that are focused primarily on increasing profits  in short run. In this third stage, the company attempts to create societal value by significantly addressing a critical social or environmental need that is within its business reach, but that may not return immediate business profits. 

Within this third domain, the corporation creates a radically new ecosystem solution that may be outside its core business interests, and that is fundamentally disruptive to the existing value chain. CSR efforts in this domain are not incremental or cautious but require strategic risk-taking and a focus on long-range rather than short-term economic gains.

For this reason, third domain CSR is most effectively undertaken by companies who have scale, diversified product lines, and significant financial resources to absorb the uncertainties of a delayed financial payoff. Initiatives in the Stage-3 CSR domain are typically led by a company’s CEO or senior management, who can spearhead long-range business strategies that require broad change throughout the organization.

For example, Interface’s groundbreaking strategy to remake the company’s entire supply chain, manufacturing, sales and distributions models required founder Ray Anderson’s hands-on involvement to be successful. Without the assurance of the company’s highest ranking executive, Interface’s employees would likely not have been committed to and engaged in executing Anderson’s vision.

Stage 4. initiatives recognize that traditional divisions between the government, corporate and non-profit sectors are ineffective in solving global environmental and social challenges. Devising global solutions to environmental and social threats, including climate change, freshwater degradation and biodiversity loss, global hunger and poverty, requires collaboration between corporate, governmental and NGO interests. 

It requires strong leadership from a stakeholder who can potentially influence a diverse range of interests. Large corporations, particularly those operating and selling products globally, have a unique ability to craft comprehensive solutions by harnessing their multiple spheres of influence and extensive market reach, both on the supply chain side and customer demand side. 

General Electric is leading a comprehensive initiative to address global warming and climate change by transforming the United States’ automobile transportation system to reduce CO2 emissions and petroleum-based fuel consumption from passenger automobiles. The GE transportation solution includes electric vehicle (EV) charging stations, electrical grid improvements, investments in component technologies, and a robust EV production system. GE’s endeavor, if successful, has the potential to reduce CO2 emissions and petroleum-based fuel consumption by fundamentally changing the U.S. automobile transportation ecosystem. It will potentially also increase GE’s long-term profitability, given its engagement in many aspects of renewable energy production, energy delivery, EV production and EV charging supply chain. As yet the company has not profited from its EV solution, demonstrating that in this third CSR domain, corporations need to be willing to defer short-term profits to produce environmental and social benefits. It’s unclear whether the company remains committed to its investment in the transformational EV solution, even as Jeffrey Immelt, GE’s CEO, has championed the program as imperative for the company’s leadership in solving global climate change. The company’s WattStation EV pedestal charging unit, the core of its EV product line, was scheduled to ship late in 2011, but the product hadn’t shipped Till 2012.  Time will tell whether GE’s foray into stage 3 CSR has been successful.

This is the foundation of a global CSR ethos, in which corporations are driven to repay their social, humanitarian and environmental debts incurred through generating economic returns. 

Numerous collaborative venues have been established to address the environmental and social impacts of agricultural development, with a goal of achieving sustainable agriculture production. 

As the world’s largest industry, agriculture has a significant and pervasive global environmental impact, accounting for approximately 70 percent of human freshwater use, and resulting in severe biodiversity loss through land-clearing, habitat conversion, and water and soil contamination. Sustainability advocates describe initiatives to address these global impacts as “sustainability networks,” which are often spearheaded by CSO activists working to effect change in agricultural production through corporate collaboration.

For example, the Better Sugarcane Initiative (BSI), along with agricultural roundtables on coffee and fruit, is working to establish internationally accepted standards for environmentally sustainable sugarcane production, as well as to improve the economic and social impacts of sugar growing and refining. The BSI standards dictate, for example, that after 2008 sugarcane cannot be grown in high-value conservation areas that environmental conservation organizations have targeted as critical global ecosystems. 

In India, companies may think of similar initiative for controlling pollution in Delhi and north India due to burning of hay in Punjab , Haryana etc.

HOW TO FORMULATE CSR STRATEGY
The process of formulating CSR strategy involves the three basic steps including Assessment   (Information Gathering), Analysis and Strategy Formulation.
 
Step: 1 : ASSESSMENT (may be called Auditing ) : 
In this phase, the company or the CSR expert needs to assess the status,

a) CSR Profile b) Corporate / Business Profile and c) state of Social and Environmental challenges around the business eco-system.

Under the CSR Profile, the parameters on which information need be collected include, CSR Plan and strategy if any, Profile of CSR programs, their management process and impact made on the ground. Under the Corporate / Business Profile , the areas need be focused include Business Strategy  ( Corporate & Product ) , Business Processes / Supply Chain , Status of Allied functions to CSR including HR, Corporate Communication / PR, Advertising etc. 

Under the Social and Environmental challenges, the focus need be to identify potential CSR projects which can effectively address prioritized social and environmental challenges.

Step-2 : ANALYSIS:

This is the most crucial phase, which will lay the foundation for strategy formulation. Under this phase of analysis, focus will be on;

a) To assess the compatibility of   existing business processes with existing CSR programs with respect to  the presence of win-win arrangement .

b) To identify better project opportunities to increase value for corporate, social and environmental bottom lines.

c)    To assess ;

• the level of process integration between business and management processes ,the CSR processes including the level of integration and engagement between, CSR and HR, Corporate Communication and Advertising & Brand Communication  and

• the level of strategy integration between CSR Strategy with Corporate Strategy and Product / Brand strategies 

d) Prepare  a summary report on the outcome of the analysis .

Step-3 : CSR STRATEGY formulation:

Based on the Analysis Report, the strategy formulation becomes simple based on the following guidelines.

1. Strategy Congruence:
a. Corporate Level : Corporate / Business Profile including its strengths and weaknesses , core competencies, Corporate Strategy , Brand Strategy and CSR Strategy need be congruent  at the corporate level 
b. Functional Level : At the functional level, CSR strategy need be congruent with HR strategy, Corp. Communication  Strategy , advertising Strategy etc 
c. CSR Strategy formulation  can be the outcome of above congruence analysis process.

2. CSR Programme Design : Social &  Environmental Need fit :
Based on the CSR strategy and direction formulated based on the above step , the CSR programs can be decided following best social and environmental fit , matching with the core competencies of the company and the prioritized need of the social and environmental systems around.

The stage of business and Core competencies will influence the decision about staying in stage-1 2 or 3.

Ambuja Cements Limited, an Indian mining company with majority holding by Holcim, illustrates an extractive industry that is aggressively using the editing process to evolve from Stage 2 to Stage 3 CSR. By setting an organizational goal to be “net positive” throughout its production operations, Ambuja is blazing a truly innovative path that internalizes societal and community needs and expectations in its business planning. To become net positive in its water use, the company launched a water resource management initiative for its surrounding community far beyond what was legally required. For example at its Ambujanagar mine site, the scarcity of water in the local community was a significant challenge for local residents, particularly in agricultural production, the economic mainstay of most rural families.

The area’s villages situated 15 to 20 kilometers from the coastline suffered from salinity ingress, in which fresh water in aquifers mixes with saline water, making it unfit for drinking water or irrigation. Local rivers were typically dry by winter, as well as the ponds they supplied. Ambuja constructed a series of check dams on the rivers and percolation wells in ponds and riverbeds to increase their water capacity. Water bodies, including the rivers, huge tidal regulators and village ponds were interlinked to divert surface runoff from upstream water bodies. As a result, water recharge has increased and reduced the salinity of the water, while ground water has increased significantly to a level not present for three decades. The company has also established goals to become net negative in plastic consumption, which is used primarily for cement packaging. By burning discarded waste plastic for energy production in its kilns, the company is achieving increased levels of alternative (to fossil) fuel consumption as well as offsetting its plastic consumption. The company’s sustainability strategy aims to give back more than it takes from the environment and to clean more than it pollutes as part of its manufacturing operations, exemplifying the progression from aggressive Stage 2 initiatives to transformative ecosystem change.

THE CHALLENGES OF FORMULATING CSR STRATEGY

The challenges in formulating CSR strategy is in the state of CSR practice in today in different parts of the world.  

1.    Limited  focus on stage-3 :
For example, in a Harvard Study, out of  50 CSR managers, who attended an executive education program in 2011, reported 168 significant CSR initiatives at their respective companies roughly divided 40 percent in Stage 1, 40 percent in Stage 2, and 20 percent in Stage 3. As might be expected, the motivation for the program and the expected benefits that their companies hoped to derive were very different in the three CSR Stages.  

2.    Limited CEO  commitment: 
Top-level corporate leadership is imperative to communicate throughout the organization the literal or intrinsic value of CSR programs for the corporation and to reinforce the importance of the entire corporation remaining committed to programs that involve both short-term and long-term rewards and risks.
In addition to its budgetary role, executive leadership’s critical role is to create an enabling environment for a continuous process of CSR auditing, editing and development, in which true business transformation can occur.

But, cutting across all industries and position of a company in the industry, the CEO commitment for CSR is not guaranteed. No CSR strategy can work, if CEO is not on the Driver’s Seat.  We have a serious problem here, which can be vouched for, based our experience and research.

The CSR function, however, needs to be headed by a person who has senior management rank and holds the position of his/her primary responsibility. It is not uncommon for CSR offices to be headed by managers who split their time between CSR and other corporate responsibilities, such as the head of Human Resources or Operations. Many surveys all over the world have established that CSR managers and executives hold multiple responsibilities along with CSR and spend  an average of only about 35 percent of their time on managing and administering CSR programs.

3. CSR Organisation and Systems & Processes :
CSR being a function with potential to add value to the corporate like all other functions, need to have a CSR Organisation team along with complete systems and processes integrated with the main business processes.

The CSR Head need be an independent full-time position as  a part of board of management , having access to the CEO and having input to the development of the company’s business strategy. Even if CSR is not integrated into the core business planning, it still is critical enough to merit a strategic role, because through its implementation a company reveals how it interacts with its stakeholders. 

How a company practices CSR ultimately reflects its values and its relationship to the society it inhabits and upon which it depends. CSR is here to stay, and every company needs a cohesive, integrated CSR strategy that plays on its core strengths and institutional capacity. By strategically managing its CSR initiatives, every corporation can maximize its benefits to society and the environment, create societal value and fulfill the motivations of its many stakeholders.

4. Extensive and Intensive Knowledge Requirement: 
The real challenge is the huge gap in the  industry about the knowledge requirement for formulating CSR Strategy , which broadly covers all corporate systems including , Strategy  Formulation, Supply Chain Management, Functions like, HR, Corporate Communication, Marketing & Advertising etc. , along with the entire Social Sector including all different development domains  including Education, Health, Livelihoods etc  and Environment Sector including all its domains like, Air, Water, Solid Waste etc.

However, out of the two sectors, the knowledge of Corporate Sector need be stronger than Social Sector, simple because the Strategy has to be by the Corporate.

Exposure to all the above areas is a rare possibility as the availability of CSR Courses with above content is rare and the professional who join CSR, they come with more passion rather than expertise. Thus, there is a need of more and more senior corporate professionals to join CSR practice to do justice to the domain.
The above pages clearly confirm that among all the challenges, the un- availability of integrated knowledge on Corporate & Social Systems is the most critical challenge facing CSR domain today.

It gives an immense pleasure to share with the reads that VISION CONSULTING, our consulting wing which acted as the intellectual partner of Government of India since beginning of CSR era. It impressed upon government of India to work towards making CSR part of a corporate strategy rather than stay in the periphery of the corporate processes as an adhoc charity.

The first conference organised by VISION CONSULTING in collaboration with Government of India, Department of Public Enterprises in February 2010 was on the theme of Adhoc charity to strategic CSR.

About the author

CSR VISION
CSR VISION is India’s ( probably world’s ) first monthly magazine in print devoted to CSR and Sustainable Development for bringing together all stakeholders of SUSTAINABLE DEVELOPMENT at a global and local levels and act as a platform for promoting strategic CSR and sustainable development practices through dissemination of information and knowledge.