Research Paper: TRACING THE GAP BETWEEN CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES AND COMMUNITY NEEDS

 

INTRODUCTION

According to World Bank (2002), Corporate Social Responsibility (CSR) is a process of managing the cost and benefits of business activity to both internal (workers, shareholders, investors) and external (institutions of public governance, community members, civil society groups, other enterprises) stakeholders.

United Nations Industrial Development Organization has defined CSR as “a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives, while at the same time addressing the expectations of shareholders and stakeholders.”

From this definition it can be seen that CSR is primarily dealt by the management of companies. Any scope for involvement of communities is snatched at the very basic level. The second point in the definition shows that CSR is related deeply to business operations and interaction with stakeholders. Thus, while making and implementing CSR policies, companies are guided by their business operations and stakeholders. They cannot engage in such kind of activities which will be against the interests of those with whom they deal or any of their stakeholders. Though the ones for whom policies are made also are the stakeholders, yet their interests cannot be the primary ones for the companies owing to their business goals. Therefore, a gap is formed between the needs of the people and the CSR activities of the companies.

The objective of the paper is to look at the reasons and consequences of least or no engagement of people of communities for which the law has been formulated. While making CSR policies only management personnel of the companies are included who often fail to empathize with the needs of the communities. Thus a gap develops between the CSR policies of the companies in implementing this law and the needs of the communities to whom the law was targeted. Companies have their own issues and priorities because of which they are also bound and cannot address all the community needs. Therefore, this paper will also focus on the perspectives of the companies and the challenges that they face in integrating community needs in their CSR initiatives. Lastly, an attempt will be made to suggest certain measures to bridge the gaps.

In this context, it is important to mention here that the paper will mainly focus on Indian companies and their interventions in urban communities in terms of CSR policies. Though every community is unique in itself, urban Indian communities have certain common issues which need to be addressed. In this paper, attempt has been made to find out the extent to which such urban community needs are being fulfilled by the CSR interventions.

While talking about communities it is important to understand what kind of communities are being talked about. Since this paper focuses on the interventions of companies in urban areas and the observations are based on Delhi, it is evident that only urban communities have been focused over here. While talking of urban areas, those communities will be focused which in spite of being in urban areas, are underprivileged and lack certain basic amenities of life. These include JJ clusters, slums, resettlement colonies, etc.

While talking about CSR policy of any company, it is important to have an idea what all constitutes the policies that guide the interventions. Policy includes somewhat the following things:

• Objectives

• Stakeholders

• Established procedure for selecting area of intervention

• Budget and expenditure

• Planning

• Implementation

• Composition of CSR team

• Monitoring and evaluation

• Display of CSR activities on website

---

METHODOLOGY

This paper is based upon review of secondary data on communities and CSR. This has included primarily review of secondary data of CSR companies, reading CSR policies and understanding the stakeholders. The second part of the paper deals with the matters regarding CSR that inspire companies to choose certain fields of work and how the implementation of those projects do not always lead to addressing community needs. To understand this aspect also, secondary sources have been helpful. The final part of the paper deals with bridging the gap between the CSR initiatives and the community needs. This has been done based upon the practical exposure of the authors while engaging with urban communities and CSR departments of companies.

In this paper, secondary data has been used because it is not feasible to participate in CSR policy making of several companies to have first-hand experience, because companies usually allot this work to staff of the companies. Moreover, many companies do not even allow outsiders to have a look at their CSR policies. Therefore, the authors of this paper had to depend mostly on the information provided on the websites of the companies. However, given the scope of this paper, such information was adequate in understanding the intervention of the companies. These were then critically evaluated by the authors to understand the level of contribution of the companies in fulfilling the felt needs of the communities. Other secondary literature guided the authors in understanding the process of formulating such interventions and the factors that influence companies in planning or implementing intervention projects.

REVIEW OF LITERATURE

There is ample literature showing that CSR in India is mainly a profit-making activity and community needs are not given priority. Even if CSR is seriously taken up by companies, it is thought to be beneficial to the companies in some way or the other.

Along these lines, Seema G. Sharma, in her article titled Corporate Social Responsibility in India: An Overview has written that due to globalization, companies have taken up multi-stakeholder approach. Though the companies still claim to have the aim of community development, in mainstream business strategy companies try to engage financial stakeholders, employees and community. Only such an approach will ensure sustainable development performance. Companies are taking up this approach because they believe that ‘Triple Bottom Line or Triple P – people, planet and profit’ is the key to success in today’s world. Therefore, people are hopeful that companies will take up responsible approach towards communities.

It is important for companies to take up the approach of community development because it will not only result in branding of the company but also the companies have resources which if not used for such purposes will lead to lower levels of progress affecting the success of the corporation.

The author has written: “Adoption of these practices is critical to the businesses because business cannot survive, let alone succeed, in a society that fails. Moreover, public acceptance of the operations of any business, particularly in an alien society, often determines the success of the corporation; and acceptance will come only when the company in question is seen as having empathy for the aspirations and values of the society in which it functions. Investors now often consider the social performance of the company when making investment decisions. They do not want to put their money...” into the operations of a corporation that is neglecting its social responsibility. Hence, the social report card of the corporation has become an important factor in attracting potential investors. Additionally, even though the public expectations in India of the corporations might seem excessive at first... These expectations are in no way unreasonable or unjustified because the socio-economic condition of India is such that CSR in India has considerable potential for improving corporate environmental and social conduct…” (Sharma, 2009)

In an article titled ‘Integrating CSR Initiatives in Business: An Organizing Framework’ (2011) Yuan et al. have written about the possible ways in which value of CSR investment is maximized. They have written that the requirements of external fit can then be matched with the societal demands. Thus, this article takes a perspective whereby CSR will be of benefit to the companies and its needs are primary to the need of the communities. Therefore, it has stressed upon ‘adding CSR initiatives to extant business activities’. (Wenlong Yuan, 2011)

Similarly, in an article ‘Corporate Social Responsibility in India’ a study has been presented based on primary data collected from 17 business houses which also shows that the interests of the companies guide them in their CSR initiatives. In the study Seema Sharma found that firms use CSR initiatives as part of their ‘image repertoire’. CSR is also used as a profit-making aspect. The initiatives are shaped at the head office and launched. There is no engagement of the people of the communities. The initiatives were not sustainable and were in cash or kind. (Sharma, 2011)

Even those who think that CSR is not linked to profitability, they do not provide a strong standpoint in this regard. Carroll et al. have conducted a study and presented the findings in an article titled ‘An Empirical Examination of the Relationship between Corporate Social Responsibility and Profitability’. In the study they found that there is no link between profitability and CSR. However, they have concluded stating, “Perhaps this issue, whether or not corporate social responsibility is related to profitability, will never be completely resolved.” (Carroll et al., 1985)

Again in the Indian context, CSR initiatives have been found to be profit-oriented. In the article ‘CSR—A Business Opportunity’ Sanjeev Gupta and Nidhi Sharma have written that CSR is emerging as a ‘hard commercial factor’ linked to profits and brand value. Therefore, it has become a priority for corporate houses in the face of new challenges and opportunities. Taking care of employees, communities and environment ensure profitability. Business principles are to be applied for sharper and focused interventions to raise performance by innovation. (Sharma & Gupta, 2009)

In an article ‘Successful Examples of Corporate Social Responsibility’ (2009) Amita V. Joseph has written that CSR is a value and a strategy to ensure sustainability of business. The preferable step taken by companies is to give away financial resources to NGOs, organizations or charities. The author has also written, “Company that undertakes activities aimed at communities (be they philanthropic, social investment or commercial initiatives) but does not comply with ethical business practice cannot be termed socially responsible.” (Joseph, 2009)

Therefore, the key lies in the basic approach of the companies. Just as in the articles we could see differences in approaches towards CSR, in a book ‘The Debate over Corporate Social Responsibility’ edited by Steve May et al., there are a combination of write-ups. It has been written by the editors that it will be a mistake to paint all corporations with the same brush. This will result in failure to recognize the differences in their goals, structures, practices and so on. This is a very important perspective because only if the differences in approaches are seen among companies, they can have role models from among themselves and no outside guidance to make CSR initiatives sustainable will sound irrelevant to the companies.

Having gone through the existing literatures, this paper aims to focus on the scenario of non-engagement of people in CSR initiatives. This is based on the literature available and the experiences of the authors. Then possible reasons for which companies are unable to engage people’s perspectives have been focused to add on to the existing literature. At the end, effort has been made to come up with some possible intervention strategies to address such problems.

CSR INTERVENTIONS: of the people company, by the people company, for the people company

There is a need to understand how starting from framing the CSR policies to implementation of projects, there is no engagement of people which result in the gap between CSR initiatives and the needs of the communities. “It is the senior management that decides the budget and the nature of initiatives that would be taken up under CSR… The decisions are then implemented independent of engaging the stakeholders. Their interventions are based on the area of interest of their senior management.” (Sharma, 2011)

When it comes to development or empowerment, most of the companies tend to avoid delving into the needs of the communities. They prefer to abide by the international standards and in this context, companies stick to Millennium Development Goals given by United Nations. This is because companies believe that it refers to most of the pressing problems that the world is facing. Millennium Development Goals include eradication of extreme poverty and hunger, achievement of primary education, promoting gender equality and empower women, reducing child mortality, improvement of maternal health, combating HIV/AIDS, malaria and other diseases, ensuring environmental sustainability and developing global partnership for development.

It can be seen that most of the companies have the above-mentioned areas of intervention. Some of these might be same as that of Indian urban community needs. But it is important to understand the context. Often companies frame intervention policies on these issues, but these interventions fail to address the real problems in the communities. Therefore, the issues persist in spite of the CSR interventions and expenditure of funds. Therefore, engagement of community people becomes very important. For example, a Delhi-based gas company took up the project of constructing toilets in schools via an implementing partner who had written in the proposal that this will address the issue of school drop-out up to a certain extent. However, on interacting with the students it was found that it was never the lack of toilets that caused much problem. Rather it was the issues regarding cleanliness and hygiene that needed to be addressed.

The origin of this problem can be traced back to the approach of the companies. While dispensing the services as a part of CSR intervention, companies often have the feeling that they are giving ‘favour’ to the stakeholders. Most of the companies have a philanthropic approach (Sharma, 2011). With this approach, naturally, the attitude will emerge that the community people are at the receiving end and should be ‘grateful’ and contented with whatever they are receiving. In such a case, companies have the attitude that they can provide whatever is feasible to the companies and the people will either way benefit from those as they are ‘poor’ and any sort of help will be helpful for them. On the contrary, if the companies have a rights-based approach, they will feel that it is the right of the stakeholders to receive the services. Accordingly, the companies will try to find out the needs of the stakeholders and on the basis of that they will plan the intervention.

For example, if companies feel that it is the right of the people of the communities to have proper sanitation facilities, they will try to find out what are the contextual needs as per sanitation is concerned. In the course of it, companies might get to know that regular supply of water in toilets is the need and then it can take care of mechanisms to ensure regular water supply. Whereas, if the company had the approach that they would provide aid to the stakeholders then they would build toilets and think that these would address the issue of sanitation. It depends upon the perspective of the companies which eventually determine how much gap will exist between their interventions and community needs.

WHY CANNOT COMPANIES ENGAGE PEOPLE?

Companies have a certain pattern of working which inhibits them from incorporating people’s opinions while making interventions. Often even if they are willing to engage people’s perspective, they fail to do so due to several reasons. Some of these have been discussed below.

The basic approach of companies: The foremost important among these are promotion of the company’s name. As Milton Friedman rightly said, “the business of business is business”. Thus companies give preference to only those activities which are aimed at branding of the company in some way or the other. This can be seen in several studies that have been conducted. Therefore, companies have to focus on profit-oriented interventions rather than on people-oriented projects. However, Martin R. Moser is of the opinion that there is nothing wrong in seeking profit in CSR activities. To quote him: “One might argue that a company should not seek profit in a situation where social well-being is at stake, but this is clearly a personal choice.” (Moser, Feb. 1986)

Nowadays, companies incorporate multi-stakeholder approach in their business strategies including employees, financial stakeholders and community. “Though corporate philanthropy and community development still remain a strong aspect of India's CSR, globalization has led to the emergence of the multi-stakeholder approach. Under such an approach, companies are responsible for all stakeholders, a term that includes employees and both community and financial stakeholders. This approach requires that CSR be integrated into a sustainable business strategy.” (Sharma S. G., 2009) There obviously communities come at the last in the priority list as these do not contribute financially to the companies.

Non-cooperation of government bodies: Often when companies approach with certain projects, they get inhibited by government bodies. They are stopped on the grounds that work is already being done in this field or this intervention is not necessary. Before companies could reach out to people, these government officials become barriers in knowing the true needs or situation of the communities. This happens because the government bodies feel that the company’s intervention will give the impact that government is not efficient in developmental works. Therefore, outside agencies are intervening. To stop this defamation, the government officials do not encourage CSR activities. Moreover, they have an inherent belief that companies do not have the aim to empower people or to bring about changes in their lives. It is only for their branding and ‘show-off’ that they take up such projects. People even go to extent of saying that companies take up projects, click photos and go away. Therefore, this formidable attitude develops.

Once one IAS officer of Gutermuth Nagar shared that he did not allow a corporate company to provide water cooler to a school because he believed that it was not required for that school, benches were more important at that time. Moreover, he thought that the company was not catering to the needs of the people, rather it is ‘donating’ water cooler for clicking photographs. He told the company that the government is doing better job by providing benches to all the schools in the area. This attitude is often seen among government officials who consider corporate to be their competitors in this field and the latter’s initiatives are looked at by the former as pointing out the lack in the initiatives taken by the government agencies. Thus, they always try to inhibit the companies by trying to portray that they are already taking care of the area and no outside intervention is required. In order to do this, they either impose legal provisions on companies or say that there is no need of the project that the company is proposing regardless of the needs of the communities.

Companies do not want to engage social workers: Corporate companies have certain types of work patterns. These include swift planning and implementation, immediate result of interventions, profit-oriented approach and so on. They even give stress to income-generating activities as that is their primary aim. Therefore, they do not have the scope to provide time and in-depth interventions that are required for ensuring social well-being. Due to their inherent approach towards work, corporate companies feel that CSR is being imposed upon them. To shrug off this burden, they do not want to hire social workers or maintain a proper CSR department. Often the CSR activities are taken care of by other departments of the company. Therefore, they take up implementing partners which are mostly NGOs.

Due to lack of a proper CSR department or presence of social workers, monitoring and evaluation of the projects also do not have the perspective of finding out whether the needs of the communities are being fulfilled or not. For example, in a company which operates CSR activities by the corporate communications department, when the people went for monitoring the toilets being made by the company at schools, the people checked the quality of sand, thickness of walls, diameters of pipes, etc. However, when a social work trainee was included by them in the monitoring process, she could find out the importance of toilets in the scenario. From her assessment it could be understood how much the toilets were needed and what change those would bring about. However, for that the social work trainee had to spend a considerable amount of time with the people which was much more than required for monitoring the construction materials.

Companies cannot always afford to devote so much time for social responsibility. They also apprehend that appointing social workers will delay the work and will take a lot of time for in-depth interventions and their nature of interventions will bring the corporate officers out of their comfort zones. Therefore, they tend to avoid employing social workers within their office setting which eventually results in maintaining the corporate attitude towards CSR interventions thereby failing to associate with people’s needs.

 

Fault in the law: Schedule VII of the Companies Act, 2013 describes the areas of intervention for the companies as a part of their CSR initiatives. It covers almost all possible areas of social work intervention. Based on this law, companies make intervention plans. However, the law does not force companies to empower people. Its inherent approach is that intervention up to any extent in any of these fields will bring substantial change in the lives of the people. Therefore, companies also do not have any obligation or legal binding to ensure that their interventions bring empowerment in the lives of people. The areas like contribution to environment, architecture, sports, technology, can be helpful from the perspective of development. But it is doubtful up to what extent the communities feel that these things are priority in their lives. Other aspects also like Prime Minister’s Relief Fund and new additions to the law: contribution to ‘Swachh Bharat Kosh’ and ‘Clean Ganga Fund’ also do not figure in the priority list of the communities. However, it is easy for companies to spend money in those activities. Therefore most of the companies will tend to contribute in these areas rather than on the areas which address the felt needs of the communities. For example, an NGO provides free students from low-income families to crack entrance tests of engineering colleges. After the students pass out, they have good income packages and as a result help their families economically and raise their standards of living. But this NGO depends fully on CSR funds. One of its funding companies backed off this year because they find it easier to contribute to Swachh Bharat Kosh and also have vested interests in doing so. If the contribution of the company towards society is gauged, earlier by funding this NGO, it was ensuring brighter future of several families. But due to provision in the law, they preferred to change their area of intervention. Moreover, companies often feel that since no indemnification for not undertaking CSR activity except giving reason in written, many companies do not feel convinced to engage in CSR initiatives. This shows how the law also enhances the attitude of the companies which eventually result in widening gap between their interventions and needs of the communities.

Nature of company: By nature of company, it is meant that the nature of goods and services that the company provides. These also affect the extent of engagement of people in the company. The companies which produce harmful materials often find it difficult to get implementing agencies for its projects. In most cases the implementing agencies are NGOs and at times social workers also. When the company produces goods and services that harm people, such implementing agencies feel that companies are trying to cover up the ‘ill deeds’ or the harm that they cause to society. Therefore they do not agree readily to support them in their CSR initiatives. As a result, even if companies are willing to incorporate the social perspective, they are inhibited. Deborah Doane has given an example in this regard in a write-up titled ‘Good Intentions-Bad Outcomes? The Broken Promise of CSR Reporting’. The example is of British Aerospace where she has written that it is trying to be the world’s most responsible arms manufacturer by taking up exemplary environmental initiatives—for example, reducing harmful chemicals on guns. Doane’s comments upon this by saying “This isn’t just silly; it’s absurd” (Richardson, 2004). Such is usually the attitude towards the companies which produce harmful goods and services. Social responsibility being taken up by them is looked at skeptically and often considered to be meaningless.

Responsibility as a burden: Last, but not the least, the attitude of companies develops from a basic human approach. We all as humans have the tendency to claim for rights but when it comes to responsibility, people take a back step. Since social wellbeing of stakeholders has been ‘imposed’ on companies as a responsibility that they should take up, companies treat it as a burden and try to deal with it in the easiest and most convenient way possible. This depends a lot on their moral obligation and the price paid for not engaging in CSR activities is only public shaming. Therefore companies tend to either shrug off this responsibility or shift shoulders or even if they take up the responsibility, they do not willfully try to find out the needs of the people. This becomes the starting point from which companies begin to deviate from needs of communities.

CERTAIN SUGGESTIONS BASED ON OBSERVATIONS

The above-mentioned points have been based on secondary data and field observations. Accordingly, certain points have been discussed below suggesting certain steps that can be taken up to increase participation of communities so that the initiatives taken up by companies can address the needs of the communities in a better way. Such steps will also be beneficial for the companies because good CSR practices eventually result in increasing their profitability. These suggestions are based on field experiences of working in CSR department of a company and also working with NGOs that are implementing partners of CSR projects of companies.

1. It might not be feasible to engage people from the communities to formulate policies. Moreover, policies are more related to the company’s needs than that of the stakeholders. But a social worker can be engaged in the process of formulating policies as these people are more experienced in terms of working at field and working among people. Therefore they will be able to empathize more with the community needs and will be able to suggest framing of policies in a way which does not go against the interests of the companies or the communities and can also lead to empowerment of people at the same time. Often policies that are formulated involve people from the departments other than CSR. These are often people of MBA backgrounds. They are not trained to have that approach towards policy making. Thus, often community needs are not addressed. Therefore, one of the most important steps to be taken in this regard can be ensuring CSR departments in the companies and considering those to be assets and not burden.

2. While planning interventions at particular communities, it is advisable that people from the community should be involved. Very few companies engage local people when it comes to implementation of policies. Even if they do, that is not adequate. Their engagement is very important at the level of planning. They are the ones who live in such conditions. They have the lived experiences and therefore no one can be better than them in suggesting what is best for them. Moreover, when the people feel that they are at the receiving end, they do not feel connected to the interventions. and have the attitude of grabbing as much as possible from the goods and services being provided rather than making the process sustainable. Initially, leaders' or elderly members can be involved to whom people listen and with their involvement people will feel that they are being represented. Gradually they will start linking up with the interventions.

3. It is important to understand the felt needs of the community so that the companies can cater to such needs. For finding out such needs, a baseline need assessment survey can be made compulsory. For these professionals who either have experience or knowledge can be involved. Without this understanding, the interventions made may be of some use to the communities yet would not address the basic requirements that they feel is needed and unless the basic requirements are met, people will not be able to develop however facilities are provided just like a hungry child will not be able to concentrate on education.

4. To ensure that people engage in the projects it is important that companies should carry out the project over a long period of time. With time more and more people will get to know about it and longtime engagement will make
   people feel that the company is genuinely interested in their wellbeing. Thus, they will begin to cooperate on their own. Therefore, it should be ensured that the interventions made should be sustainable. It should be sustainable also in the sense that the interventions should not be such that after the company ceases to take care of it, it will perish. It should be made self-sustaining in terms of all possible kinds of resources. The most important aspect of making the projects self-sustainable is involvement of people who can carry forward the projects even after the company withdraws. In such a manner by making every project sustainable, companies can take on intervention areas and then shift to other focus areas. This can be within the same place in different aspects or by taking up different regions. Such kind of approach will also ensure empowerment of
   people. Companies will support till the problem is solved while at the same time making the people capable of helping themselves without any outside intervention. In this manner, their interventions will not only be driving each and every community towards empowerment but also will be able to cover more and more areas.

5. Last, but not the least, most of the time people are not aware of the interventions of the communities as it is not feasible for them to go through the websites of the companies to find out which companies are working upon that area for CSR projects. Therefore, there should be other
   mechanisms for reaching out to people. Communities should be made aware of the initiatives so that they not only can avail the benefits of the projects but also can engage in bringing about change within their own communities. They will be able to contribute in a way which will improve the nature of engagements.

CONCLUSION

Given the nature of work that corporate companies take up, it is challenging for them to address the needs of communities. However, it is not completely impossible. It is the determination which matters. If any company becomes

determined to address community needs then there are measures that can be taken up to overcome the hurdles. There are even examples of such companies. Therefore, sensitizing the companies is more important. Mere law is not adequate for the purpose.

---

References:

1. Carroll, et al. (1985). An Empirical Examination of the Relationship between Corporate Social Responsibility and The Academy of Management Journal, Vol. 28, No. 2, 446-463.

2. Joseph, A. V. (2009). Successful Examples of Corporate Social Responsibility. Indian Journal of Industrial Relations, Vol. 44, No. 3, JSTOR, 402-409.

3. May, S. (2007). The Debate Over Corporate Social Responsibility. New York: Oxford University Press.

4. Mehra, M. (2006). Who's Who in CSR in India - A Resource Guide 2006. Kolkata: Centre for Social Markets.

5. Moser, M. R. (Feb. 1986). A Framework for Analyzing Corporate Social Responsibility. Journal of Business Ethics, Vol. 5, No. 1, JSTOR, pp. 69-72.

6. Richardson, A. H. (2004). The Triple Bottom Line. London: Earthscan.

7. Sharma. (2011). Corporate Social Responsibility in India. Indian Journal of Industrial Relations, Vol. 46, No. 4, JSTOR, 637-649.

8. Sharma, N., & Gupta, S. (2009). CSR - A Business Opportunity. Indian Journal of Industrial Relations, Vol. 44, No. 3, JSTOR, 396-401.

9. Sharma, S. G. (2009). Corporate Social Responsibility in India: An Overview. The International Lawyer, Vol. 43, No. 4, 1515-1533.

10. Wenlong Yuan, et al. (2011, June). Integrating CSR Initiatives in Business: An Organizing Framework. Journal of Business Ethics, Vol. 101, No. 1, Published by: Springer, JSTOR, pp. 75-92.

---

  

-SIMANT SHANKAR BHARTI

M.A. Social Work

University of Delhi

-SUTANUKA SARKAR

M.A. Social Work

University of Delhi

Older Post