In the dynamic business world, filled with rapid technological changes and uncertain geopolitical scenarios – one constant thing is that the future belongs to those who keep an eye on the change, have an open mind and are agile to adapt.
With terms like triple bottom line, ESG, and sustainability co-existing and gaining popularity in domains like CSR and philanthropy, it won’t be wrong to say that the companies that will be able to navigate the space well will be those who will be able to integrate sustainability focus into the core of their business model. This is crucial since both socially conscious employees and consumers are demanding ethical practices and action towards being a good corporate citizen. This change can potentially lead corporations to go above and beyond ‘compliance’.
Indian companies have started to show a glimpse of the same. Between 2017 and 2022, there was a surge in CSR spending. Companies not only met the prescribed CSR amount by 2018, but they surpassed it.
Figure 1: Source – CSRBOX report 2022-23
Various industry reports and assessments indicate macro trends in the CSR space like increasing focus on Sustainability and Climate Change, DEI focus, Transparency in the supply chain, Technology usage in driving CSR and enhanced focus on quantifying impact, etc., all of which are great to know but don’t help the CSR managers take specific actions because each of these domains is pretty wide.
To explore what’s on the horizon as we enter 2024, the NuSocia Translational Research Centre (NTRC) team spoke to CSR experts nationally and internationally and has curated this focused list of trends in CSR. Each comes with a professional tip from NuSocia experts on leveraging the trend and being prepared to make an informed decision.
1. Shifts in funding towards water and carbon
From 2016-21, health and education have seen the highest contribution in CSR funding, steadily increasing over the years. However, as FY 21-22 approached and the pandemic subsided, Environment, Animal Welfare, and Conservation of Resources emerged as the new favorite. This shift comes at a crucial time with intensifying droughts and heavy air pollution in India as climate change worsens.
Figure 2: Source – Ministry of Corporate Affairs CSR Dashboard
This broad category showcases a rising interest towards investing in environmental endeavors. 2023 brought about multiple policy guidelines to help firms engage specifically in the water conservation and carbon markets. These include Niti Ayog’s Framework on Water Neutrality and the Department of Economic Affairs Framework on Sovereign Bonds and green credit guidelines to plan their future CSR initiatives.
NuSocia Pro Tip: Firms must be careful with CSR investments in the environment and conservation space, as many ESG targets will also overlap in water and carbon offsets. Within India, strict bifurcations don’t allow for the mixing of funds to achieve either CSR or ESG goals, and delicate strategies are required to ensure both CSR and ESG goals are reached.
2. Diversification in CSR partnerships
In 2009, voluntary CSR guidelines were introduced in India, and companies started cautiously adopting CSR strategies, with only 16% of companies setting CSR goals and performance indicators (KPMG, 2011). In 2014, the Government of India finally mandated a CSR act. However, there was a lack of monitoring and evaluation of the work, leading to gaps in implementation. Over the years, Corporate – NGO partnerships have grown. In 2022, amendments were brought into the CSR Act, bringing more transparency.
NuSocia Pro Tip: With the new amendments, firms must be careful in identifying the right partner NGOs. It is also important to diversify grassroots-level partnerships that support the company’s chosen cause. This allows risk mitigation and partnering with both large and small organizations, bringing in more diverse perspectives and voices from the community.
3. Need for impact assessments and third party agencies
The escalating need to assess the impact of corporate social responsibility (CSR) initiatives has led to specialized organizations dedicated to evaluating and documenting the outcomes of CSR projects. Particularly in India, regulatory mandates now require meticulous documentation of the social returns generated by CSR investments. CSR law in India mandates Impact Assessments for projects exceeding Rs. 1 crore, ensuring a comprehensive evaluation of how these initiatives influence communities and yield tangible outcomes.
However, despite this increased regulatory compliance, challenges persist within the landscape of Impact Assessment organizations. Problems such as a lack of baseline data, inadequate understanding of rural and cultural nuances, and a scarcity of proficient individuals in conducting impact assessments underscore the pressing need for robust Impact Assessment agencies equipped with tailored methodologies to capture the multifaceted impact of CSR initiatives accurately. Standardization in assessment processes and the formulation of data privacy-related rules specifically designed for assessments become crucial in addressing these challenges and advancing the efficacy of CSR impact evaluations.
NuSocia Pro Tip: Choose assessment partners who follow ethical practices of social research, comply with legal requirements, and possess technical capabilities to assess the results and impact of your project.
4. Rise in data validity & assurance and organizations that can manage this mandate
In 2023, the Government of India introduced mandatory Business Responsibility and Sustainability Reporting. In it, there is a requirement for an assurance review to be completed. Even for aggregated data from multiple reports, each report/data set must be individually assured. This was a radical ask in accountability, with firms needing to show which beneficiaries received said benefits and were directly impacted by the program. With boards needing to sign off on these reports, implementation agencies must take big steps towards creating transparent data processing practices and carefully documenting the implementation process and beneficiary data.
However, within the same year, the Data Protection Act of 2023 prohibited the collection of any personal data, putting implementation agencies in a catch-22 situation. The future is looking murky but it will favor organizations that will be able to navigate through data assurance and validity requirements while upholding data protection and privacy at all stages.
NuSocia Pro Tip: Firms must be extremely picky in choosing their implementation partners. They must follow correct data collection, processing and storage practices with a strong data privacy policy. Financial forensics and blockchain will be explored to ensure traceability and accountability. This opens up wide opportunities for companies and technologies to create innovative solutions for data capturing, assurance and anonymity simultaneously.
5. Preparing for the unpredictability of technology
The world knows that technological advancements and sectoral disruptions are only getting faster. The development sector and CSR is not immune to this either. Technological tools are incorporated in documentation, data assurance, and storage. Preparing for the unpredictable nature of technology in Corporate Social Responsibility (CSR) requires a proactive and comprehensive approach. Robust indicators and assessment systems are crucial to gauge technology sustainability and align operations with sustainable development goals, enabling responsiveness to technological shifts and societal expectations. For example, as AI becomes more prevalent, upskilling and vocational training CSR programs will need to be able to quickly integrate this to ensure that their beneficiaries don’t receive training that doesn’t quite match industry requirements.
NuSocia Pro Tip: Prioritizing research on sustainable technologies and their practical application will enable businesses to navigate technological advancements.
Conclusion
The future of CSR lies in strategic alignment, collaborative partnerships, compliance, and technological adaptation. Integrating learnings from crises like the pandemic, CSR strategies should emphasize resilience, long-term impact, and sustainable development goals. Sustainable technology application, impact assessments, and stakeholder collaborative synergy remain pivotal. CSR initiatives must remain adaptable, responsive, and aligned with evolving societal needs while leveraging innovative collaborations and technological advancements.
