India's 2% Solution

A friend I worked with in advertising and I were chatting on Facebook. She's working on a couple of projects in India, one of them is an incubator for social innovation that she's been trying to launch. She was telling me she's a little closer because of a new bill enforcing CSR.

Every country has their own distinct culture of corporate responsiblity and philanthropy that generally has its roots in government policy and regulation. India has had a policy of companies investing 2% of their profits into CSR. In February, it moved from a suggestion to a bill.

Some quick online research into Indian sources revealed:

• That the move is seen with distrust by the corporate world of government intervention. J.J. Irani, the former director of Tata Sons, says, “People will find ways to skirt anything that is mandated.”
• Companies don't want to be made to give their profits "to charity."
• A philanthropic organization described it as "mandated corporate social responsibility."

It could be seen as a buisiness opportunity, rather than a punishment. From the government's interest, it's a sustainable way of supporting the social structure of a country that's in an economic boom. For corporate interests, it opens up opportunities for companies experienced in CSR, with proven results of corporate responsibility building brand reputation and bottom line growth, to demonstrate success and lead by example. I expect that the companies in India who have global presence will be the first to know how to build engaged CR strategies that will bring value to both the community and the company.

Update on Wednesday, February 29, 2012 at 9:13AM by Brenda

Here's a teaching moment: my 'quick research' involved two India-based blogs commenting on CSR that, on reflection, seem to be referencing each other, not journalism sources. In fact, the bill is up for discussion in parliament but there is such strong corporate resistance, it seems unlikely to pass. It gets almost no coverage from Reuters, who does have a presence in India.

Additionally, CSR is loosely defined in India. Many sources I read, mostly from a year ago, equated CSR with 'giving to charity,' rather than an investment in a company's future.

I thank my well-travelled friend for reading my post and correcting me.

Corporate responsibility engagement

KPMG's International Corporate Responsibility Reporting Survey published in late 2011 tracks 3,400 leading companies from 34 countries, looking at trends that are happening worldwide. It found that reporting had increased worldwide, as brands realize that corporate responsibility "drives innovation and promotes learning, which helps companies grow their business and increase their organization’s value." 

What they found was that corporate responsibility (also referred to as CSR and sustainability) reporting uncovers new opportunities for business improvement and brings enhanced financial value to companies, though there's still room for improvement. Data shows that charting countries by level of process maturity and quality of communications, Europe leads in overall engagement, while Asia generally underperforms in both process and communications. Canada and the U.S. showed to over-communicate on their corporate responsiblity to their actual process maturity.

Reading through the report focusing on building business through brand building and engagement, shows that North American companies need to engage with corporate responsiblity as part of how they operate, being clear that it's not about feeling good about something or using it as a marketing message but creating impact that drives business goals.

Social media can help develop engagement for companies who have corporate resonsibility agendas, but have a tough time making them relevant. Social media brings the kind of transparency and engagement that makes brands more responsive and responsible. It can encourage employee engagement, which has been found to be key to making any CR program effective. It can be effective for showcasing thought leadership in companies, allowing employees as well as the public to see what a company's doing.

Corporate responsiblity used to be shown in annual reports and stand alone reports. While that reporting is still relevant to shareholders, regulators and other corporate stakeholders, companies are finding they need to do more to build reputation and enhance their brands. Social media offers a genuine and responsive message that can complement press releases and marketing. Social media can bring the C-suite and thought leaders within companies closer to the public, offering the kind of transparency and presence that builds trust and has a positive impact on a brand.

Because of social media's impact, companies that blend corporate responsibility strategies with brand and social media/communications strategies can result in more effective engagement internally and outside the company.