CSR

CSR re-imagined: A tool for systemic change

The much pervasive business-as-usual model of implementing CSR programs and projects in Africa is a call for attention as CSR has been hugely mistaken for philanthropy and charity (with quite a number of them acknowledged from a privileged standpoint). Some organizations, for example, have been seen throwing money at the very problems they cause. A typical scenario would be an FMCG beverage company (using plastics and cans for packaging its product) implementing a CSR program at the local community level that focuses on plastics recycling and upcycling initiatives. Others have taken the route of rolling out a CSR program that isn’t as impactful to its target audience yet make an extensive PR about such a program. 

Additionally, there are other organizations that routinely engage in opportunity-led initiatives; CSR programs that are incidentally born out of social, environmental, or economic adversities but do not intrinsically align with the organization’s core business model. For example; giving out relief packages to socio-economically marginalized elderly people in rural communities at the climax of the COVID-19 pandemic, such initiatives in themselves are faultless but some organizations have solely capitalized on them in achieving its quarterly or annual CSR targets, the shortcomings of such initiatives are that organizations become inconsistent in their CSR delivery, thus making it difficult to track and measure impact as well as present appealing storytelling on their journey so far to the relevant stakeholders.

These subpar performances by businesses and organizations are symptomatic, and there are undoubtedly daunting causative factors to blame for such vicious circles. Some of the reasons why organizations haven’t yet stepped up their CSR game includes:

  1. Absence of internal CSR policies: One of the most glaring failures of organizations to efficiently carry out stellar CSR goals and objectives is the lack of CSR policies; a set of guidelines, dos, and don’ts that keep the relevant stakeholders in check while also ensuring they all contribute their quota as qualitatively and timely as possible. To incorporate, prioritize, and consistently implement CSR objectives, strategies, and projects, an organization must mindfully brainstorm and enact elaborate CSR policies – ones that are ambitious, relevant, realistic, attainable, enforceable, adaptable, inclusive, and endorsed by the relevant stakeholders and management group.
  2. Poor leadership: As with any organization, top-level executives and C-suites initiate strategy execution; thus, an organization’s inability to transform and carry out a bespoke CSR initiative is due to a lack of a diverse management team that is well informed about the risks and opportunities conferred upon their organization in becoming an integrated part of the society or community in which they are domiciled or operate in. A study by Mckinsey indicated that there is a statistically significant relationship between a diverse leadership team and better financial performance. Companies in the top quartile for gender diversity are 21% more likely to outperform the industry average compared to companies in the bottom quartile. For ethnic diversity, that number jumps to 33%. The case in point: Diversity and Inclusion allows for the execution of well-rounded, thoughtful, and all-encompassing CSR initiatives.

CSR-Diversity

Organizations that ‘get it’ are those that have carefully restructured their organizational hierarchy to accommodate new board members and professionals, such as;

  • Appointing an independent CSR committee whose sole duty bothers around crafting CSR strategies and implementing CSR policies.
  • Creating new departments such as an in-house CSR department where their ultimate function is to brainstorm and implement CSR initiatives, unconstrained.

3. Low budgeting/Poor financial performance: Some organizations that follow the business-as-usual model always set aside the smallest budget for their annual CSR initiatives. They lean into this practice for a variety of reasons, including, but not limited to, businesses facing a budget deficit for the fiscal year and thus, by default, unable to write sufficient cheques that will yield both long and short-term, measurable results. Second, many businesses have been found to be unaware of the value and return that a robust CSR program can provide, such as overall brand image improvement, lower employee turnover, customer loyalty, funding and partnership opportunities, and so on.

4. Poor Enforcement of CSR mandatory regulations: In Nigeria, there is the availability of a mandatory policy enacted by legislative bodies on the adoption of CSR by businesses and organizations, but what is missing is the apparent poor enforceability of these policies and regulations. As a result, many organizations operating in highly regulated sectors/industries, and vice versa, are frequently left to investigate CSR initiatives as they This has frequently resulted in defiance and negligence in the design and implementation of stellar CSR initiatives. Most of the time, these organizations fail to recognize that it is less about compliance risks and more about capturing the low-hanging fruit that is staring them in the face and which will inevitably turn out to be an organization’s moat. On April 1, 2014, India became the first country to legally mandate corporate social responsibility. The new rules in Section 135 of India’s Companies Act make it mandatory for companies of a certain turnover and profitability to spend two percent of their average net profit for the past three years on CSR. One thing is certain here; upholding such regulatory practices will be sure to generate a benchmarked, consistent and measurable CSR impact across businesses operating in India.

 

Now, an organization may not be able to significantly improve on its existing business-as-usual corporate social responsibility initiatives, but one thing it can do right is rewriting the templates. This will entail returning to its concept board to craft a purpose-driven mission statement, followed by identifying the conditions it believes must occur in order for their long-term goals to be met. This shifts the focus of initiatives from what you are doing to what you want to achieve and begins there. This is known as the Theory of Change (ToC). The ToC model also aids in the visualization of causal pathways by specifying what is required to achieve goals while articulating underlying assumptions that can be tested and measured. 

CSR-ToC

After carefully articulating the decision to create a cohesive CSR roadmap, let us take a deep dive into what an integrated, robust CSR model entails; the polar opposite of business as usual…

CSR has evolved to include all related concepts such as triple bottom line, corporate citizenship, strategic philanthropy, shared value, corporate sustainability, and business responsibility at this level, rather than just philanthropic activities such as donations, charity, and relief work. The WBCSD defines CSR as “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.”

Here’s a tripartite characteristic of a bespoke CSR. 

  • The CSR approach is holistic and integrated with the core business strategy for addressing the social, economic, and environmental impacts of businesses. 
  • CSR needs to address the well-being of all stakeholders and not just the company’s shareholders.
  • Philanthropic activities are only a part of CSR, which otherwise constitutes a much larger set of activities entailing strategic business benefits. 

Some of the benefits of a robust CSR program includes: 

  1. Communities provide the license to operate: Many organizations have begun to recognize that the ‘license to operate is no longer solely granted by governments, but also by communities impacted by a company’s business operations. As a result, a strong CSR program that meets the aspirations of these communities not only provides them with the license to operate but also allows them to keep the license, avoiding the “trust deficit.”
  2. Attracting and retaining employees: Several human resource studies have found a correlation between a company’s ability to attract, retain, and motivate employees and its CSR commitments. Interventions that encourage and enable employees to participate have been shown to boost employee morale and a sense of belonging to the organization.
  3. Communities as a supply chain: Certain innovative CSR initiatives are emerging in which companies have invested in improving community livelihood by incorporating them into their supply chain. This has benefited communities and raised their income levels, while also providing these businesses with an additional and secure supply chain.
  4. Enhancing corporate reputation: Companies that run effective CSR programs continue to benefit from the traditional benefits of generating goodwill, creating a positive image, and branding. Companies can use this to position themselves as responsible corporate citizens.

 

However, robust CSR initiatives are not a one-way street; they come with their own set of challenges that must be overcome at various stages of implementation and in dynamic situations. Some of the more common challenges that organizations face are as follows:

  1. Efficiency: A well-integrated CSR initiative is often capital intensive, so providing services at no or low cost to an organization’s target audience can be difficult. Furthermore, it is a difficult decision for an organization to compromise on the project by hiring low-cost staff, using low-cost materials, or limiting its reach to cater to a select few, as the case may be.
  2. Reach: Some capital-intensive CSR initiatives continue to struggle to reach the intended number of stakeholders for a variety of reasons, including inaccessible geographical landscapes, high illiteracy levels leading to poor adoption, language barriers, political or religious nuances.
  3. Sustainability: Many organizations struggle to create self-sustaining CSR projects that run smoothly without the need for external funding or charity. They quickly realized the level of difficulty involved in obtaining the necessary funding to scale their initiatives, so they set conditional benchmarks for their projects or, worse, abandon such projects when circumstances become overbearing.
  4. Scalability: Robust CSR projects will be forced to scale inadvertently. Scaling in the traditional sense would necessitate additional inputs such as increasing the number of employees and/or the size of physical infrastructures, or investing heavily in technology, both of which many organizations are naturally averse to.
  5. Unintended outcomes: A well-planned and implemented CSR initiative does not always hit a home run right away. Even if a detailed Theory of Change has been implemented, there will be bottlenecks, pitfalls, and obstacles along the way to fruition and impact. Some of these challenges may include a larger competitor replicating an organization’s CSR project model, project breakdown due to poor maintenance or overuse, regulatory hurdles, and external influences such as disease outbreaks, political instability, and climate change, among others.

 

Regardless of these daunting negative outcomes which can sometimes leave organizations with cold feet, robust CSR projects can build in resilience and leverage to emerge just as successful and impactful as intended…. if not more. The way forward

  1. Public-Private partnerships or PPP: Whether it is risk mitigation (physical, transition, or human risks), driving adoption rate, or achieving scalability and replicability of CSR initiatives, businesses and organizations of any size and region will struggle to sustain stellar CSR initiatives and achieve consistent impacts, and will thus require the government or its parastatals to meet them halfway in crossing these rubicons. 

Case study: Biocon, an Indian biotech company established a foundation – Biocon Foundation which provides primary health care centers and educational resources to empower under-served communities towards self-help, improved health, and in good time, a better standard of living. In 2009, they encountered heavy rainfalls and flooding in Northern Karnataka where they are domiciled, 250 villages were destroyed and cattle were lost in the flooding. The Karnataka government launched Aasare, a relocation, and rehabilitation scheme that would be implemented through a public-private partnership. Biocon, along with other companies, was invited to help rebuild villages at new locations. The location allotted to Biocon was Mangalgudda, in Bagalkot district – construction of the new homes began in 2009 as well. The government has already built a sub-center which has an auxiliary nurse midwife and a few beds for deliveries, and an ‘Anganwadi, while the Foundation built a community center for meetings and recreational activities for men and women; a space to start income-generating activities for women and a library for the children. The new village has been built about a kilometer away from the old one, so the community has not needed to relocate a great distance away. Given the dedicated partnership with the Government of Karnataka, Biocon Foundation has built 411 houses, which were allotted in December 2012, with ownership given to the new residents. 

2. Value chain collaborations: Some organizations have recognized that in order to successfully expand into new markets, stakeholder collaborations are essential. Implementing high-impact CSR programs across an organization’s value chain is a legitimate way to build trust, loyalty, and long-term relationships.

Case study: Unilever, a multinational corporation specializing in consumer goods has been able to access unserved customer bases by supporting local businesses that sold their products such as reskilling and up-skilling schemes, granting of loans, initiating educational reforms in communities, and heavily investing in environmental sustainability practices in these host countries. For example; By 2001 the Brantas River in East Java, Indonesia, had become so polluted that something had to be done. Poor industrial and domestic waste management practices along the river had led to a worrying decline in water quality. This was damaging biodiversity and harming the health of local villagers, many of whom work for Unilever Indonesia, whose operations are based in East Java. It also made it more expensive to supply drinking water to the factory. Unilever took the initiative to tackle the problem, working with others in the community. In the same year, Unilever set up the Clean Brantas Forum to clean up the river and turn it into a sustainable resource for local people. So Unilever ‘adopted’ four riverside villages, working with over 32,000 residents, local government officials, environmental groups, the university, and other industries to plan and implement a long-term solution. The result was an integrated program to improve sanitation, waste management, and local infrastructure while greening the surrounding areas, creating income-generating activities, and promoting environmental understanding. New roads and paths have been built on the river bank and greening and income-generating activities introduced, including the planting of morinda fruit trees and help for fish farmers, whose livelihoods have been protected as a result of the clean up of the river. Unilever is now approaching other industries in East Java to replicate the program and extend its benefits to other villages along the river. 

Such CSR impacts have been shown to improve community engagement (and thus customer loyalty), procurement strategies, and hiring practices in local markets.

CSR -Value Chain Collaboration

3. Prioritising impact over funding: One of the reasons organizations struggle to achieve scalability in their CSR projects and initiatives is that they put the cart before the horse; they seek sponsorships and funding without first laying a solid foundation for their CSR initiatives. Obviously, funding is an undeniable path to impact at scale, but the motivation for taking a step back to prioritize impact is one that propels an organization toward first redesigning its operational models and approaches to address the dynamic challenges listed above, and then incorporating this design into its CSR initiatives so that impact comes as naturally and seamlessly as possible. A well-crafted model will, without a doubt, scale through to achieve its intended effects with just the right amount of capital. There should be a paradigm shift at the management level that emphasizes the idea that scalability is achieved through proper planning and implementation, rather than the notion that scalability is achieved solely through access to funding opportunities. Organizational resilience is built at this level of perception, and it will typically translate into the development of long-lasting and impactful CSR projects and initiatives.

Case study: Throughout the last several decades, Bangladeshis have experienced a widespread outbreak of dark spots on their skin, which was later discovered to be caused by water poisoning – arsenic, to be specific – and this had invariably contaminated the aquifers to the point where digging more wells did not solve the problem.

A company, Drinkwell, co-founded by Minhaj Chowdhury developed an innovative, reusable arsenic filtration system. For Chowdhury, however, developing the breakthrough technology to filter arsenic was only half the battle. To create a new market for pure water that would serve Bangladeshis living in low-income communities was another, Drinkwell needed its solution to be simple, affordable, and accessible. Making that happen would require just as much, if not more, creativity than was needed to design the filter.

Drinkwell was able to achieve scalability by building out a product that by its very nature is cheap, simple to use, and highly adaptable. They were able to achieve this without external funding because it simply created job opportunities for the vast amount of people in Bangladesh seeking to eke out a living or make an extra income. It also invested heavily in building strategic networks and partners to help scale its innovation. Achieving such a feat also earned them government contracts (PPP) to further drive scalability. Drinkwell prioritized building a scalable business model over being reliant on funding to scale.

Outcome:

  • Sustainability & Efficiency: Drinkwell takes care of all the routine inspections and maintenance on the filtration systems and charges the entrepreneurs a small monthly fee.
  • Reach: Drinkwell creates and manufactures water filters before selling them to local entrepreneurs. These entrepreneurs then establish small businesses by erecting kiosks known as “water ATMs” and leveraging their networks to sell purified water to their communities at reasonable prices.
  • Likelihood of Success: Recognizing that complexity can be as much of a deterrent to customers as cost, Chowdhury did everything he could to simplify the process, including making the filters simple to use and incorporating a digital payment system in which customers deposit money onto reloadable cards, which they then swipe to dispense water.
  • Replicability: Drinkwell’s success has led it across the border into India, where it has earned government contacts to begin operations.
  • Scalability: Since launching in 2013, Drinkwell has opened more than 230water ATMs in Bangladesh and India, creating 340 local jobs and providing clean water to as many as 2,000 households. It aims to scale up to 500 water ATMs by 2022, then to 1,500 by 2024, enabling it to reach a million customers.

It’s past time for businesses and organizations (both nonprofit and for-profit) to consider a new approach to meeting their CSR goals and objectives.

When CSR is done correctly, it has one common theme: longevity for businesses and organizations, as well as shared prosperity for ALL stakeholders. Today, your organization has the ability to lead that change. It starts with establishing a target rather than a mirror—this will entail ceasing to reflect on what the organization is already doing and instead of articulating what the organization wants to be held accountable for.

Contact us for your Corporate Social Responsibility Design

 

About the Author

Benjamin Udokwu - Climatr

Benjamin Udokwu is an avid reader and researcher. He has keen interests in Systems practice that bothers on inclusivity and stakeholder engagements, he is also passionate about Circular economy, Lean strategy, Market-creating innovations. He is a Managing Partner at Climatr where he has amassed practical skills in systems engineering, business development, strategy and operations, corporate sustainability, and design thinking. He is stubbornly curious as against sticking to dogmatic patterns. He is here to build with you.

Fav quote: “Knowledge is knowing the right answer, Wisdom is asking the right questions”.

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