Corporate Social Responsibility and the way forward
Today every major company has a CSR policy and not having one is near blasphemy. Corporate activism and popular issues like climate change have pushed CSR to be a standard cost of carrying out business. Although major companies have adopted the CSR policy, many still see it as superficial spending towards “compliance”. As a result, the recent downturn is being seen as a threat to the CSR industry, which is perceived as an avoidable luxury.
In light of this development, companies are rethinking their CSR strategy and are now partnering with NGOs, the government, other companies and even competitors. But one of the most promising developments has been the advent of social entrepreneurship into the gambit of CSR. This promises to create disruptive change, one which pushes CSR from merely being satisficing in nature to something which is ingrained in a company’s strategy.
The Piramal Foundation, the CSR arm of the Piramal group is a shining example. Their mission statement lucidly puts the point across – “Our method is based on a belief that talented young people, challenged to address some of our country’s most common development issues, will find innovative solutions that are relevant, cost-effective, and applicable to the nation at large.” Accordingly, Piramal has built a repertoire of for-profit social enterprises tackling issues from rural health to the supply of drinking water. Among them, Piramal e-Swasthya (erstwhile Mobile Medics) stands out.
Kavikrut, an HBS alumnus, founded Mobile Medics right out of college. As he puts it – “Lack of existing solutions, a grave challenge, a good business plan, and a seed fund led me to take the plunge. I spent about 2 years at Mobile Medics where we treated 2,000 patients across 12 villages.” This zeal and attachment is typically seen in a social entrepreneur which, as per the Ashoka Foundation, is a loose term for “ambitious and persistent people tackling major social issues and offering new ideas for wide-scale change.”
When Mobile Medics wanted to scale up it saw Piramal’s umbrella a perfect place to be under. It saw synergies which led to the absorption of the Mobile Medics team to start eSwasthya. Such synergies helped Piramal not only in effective CSR but also in extending Piramal Health’s competence to the large rural Indian health market.
Unlike traditional CSR, which often lies on the fringes in large companies, involvement with social entrepreneurs brings greater focus. By involving people who in many cases have used their own money and time on projects brings measurable results and financial rigor in social investments. Therefore, we now see huge money being poured by companies into social enterprises through their CSR arms.
It is inevitable that this entrepreneurial approach of tacking social issues will shake the existing “philanthropic” CSR model. However, till now social enterprises have generated more hype than meaningful change. It may pave the way for hybrid business models in the future, but for the time being the corporate behemoths are the ones who can make a significant difference. As in the case of Piramal and Mobile Medics, established companies will collaborate or absorb successful social ventures to further their goals. If we extrapolate this trend, we reach an important academic theory – Corporate Social Entrepreneurship (CSE).
CSE is a process aimed at enabling business to develop more advance and powerful forms of CSR. It makes CSR an integral part of a company’s strategy. A former CEO of Starbucks puts it elegantly, “Aligning self-interest to social responsibility is the most powerful way to sustaining a company’s success.”
CSE requires corporations to have an entrepreneurial culture where cross functional teams harness synergies across various stakeholders. ITC’s e-choupal is a powerful example of how a social initiative has become core to a corporate strategy which links business and society. e-choupal empowers small farmers by removing middlemen in the Indian agricultural markets by leveraging the internet.
Such examples where entrepreneurial activity is supported in a corporate setting are increasing. Further, we can see that the demand for entrepreneurial talent has increased, who are being empowered and given clear goals consistent with the firm’s values which are crucial in advancing CSR.
The transformation of CSR to CSE, if realized, would mean that social values would no longer be viewed as an accessory, but as an important structural component of an organization. As CSE furthers the core objectives of corporations, it amounts to a paradigm shift in how business is done. Such a transformation will definitely be met with massive resistance. Furthermore, social betterment is an area where corporations’ competencies are doubtful. Changing values to look for such disruptive social innovations would enlarge the phase of transition.
However, Piramal and ITC have shown us that the challenges are surmountable. Also, it is increasingly becoming evident that socioeconomic value creation and synergistic partnerships are vital ingredients to a sustainable business today. Till the CSE dream is achieved, many more Kavikruts will partner with leading corporations to enrich the cusp of business and society.
Sachin Bhardwaj is a PGP 1 student at IIM Ahmedabad and a member of the Consult Club. He is passionate about the social sector and public policy. He holds a B.E. in Electrical and Electronics Engineering from BITS Pilani and has led rural development projects with the help of UNICEF in the past.