Philanthropy in Action: Reflecting on the Impact of Corporate Donations
The actions that businesses take to improve the communities they are a part of can have both advantages and disadvantages. While philanthropy might seem great on paper, the implementation roadblocks require us to measure where the funds are going and how they are being used to determine whether CSR is truly beneficial for society or not.
One of the key problems with corporate donations can be that it’s hard to identify which issues are essential. For example, especially when it comes to environmental impact, there are no specific guidelines that spell out how to identify the right environmental issues. More importantly, a company that is responsible for furthering climate change through its greenhouse gas emissions can get away with its environmentally harmful practices by donating to wildlife conservation efforts. CSR would benefit a lot by including within its framework the negative consequences of a company's actions rather than just focusing on overall monetary donations. Another problem with corporate donations is that they respond only to certain stakeholders. Therefore, popular consumer bases usually determine what kind of social and political causes companies give money to. If something isn’t on the news and won’t help bolster the company image, it can be easily ignored.
There exists a huge gap between the values of a company and its business processes. Most companies tend to carry out CSR activities without actively integrating the values of compassion, empathy and community development in their business models. This also results in a lack of focus on CSR-related activities. It usually involves merely making donations without adequate follow-ups on where the money went and how it was utilized. The quantitative aspects of corporate donations can be used to cover up the qualitative impacts.
What needs to be improved is operational effectiveness through an integration of economic responsibility as part of the company’s internal systems. For example, rather than seeing sustainability initiatives as merely programs that require donations, a more integrative approach would start from the company, reducing waste across the supply chain to lower production costs. This would not only benefit the organization but would ensure that the company is in alignment with the values it’s presenting to the public. Business assessment should automatically account for the social and cultural issues that the corporate donations seek to address. The company’s performance should be measured on the basis of not just profits but its ability to meet appropriate social and environmental results. For example, India’s Unilever employs single women in remote villages to sell its products, providing them with sustainable and long-term employment opportunities, rather than simply helping them through welfare schemes.
Sources:
https://15writers.com/sample-essays/the-impact-of-corporate-social-responsibility-csr-on-organisations-and-their-stakeholders/
https://www.hul.co.in/planet-and-society/case-studies/enhancing-livelihoods-through-project-shakti/
Shared Economies in the Post-COVID India
The shared economy was particularly affected by the COVID-19 pandemic because of public-distancing measures that made it harder for Peer-to-Peer services to operate effectively. Ride-sharing platforms and co-working spaces had to stop operations or reform their business models in order to meet this impending challenge. In the Indian context, the thriving sharing economy came to a halt because of the pandemic because people could no longer employ their personal assets for business purposes without also accruing health risks. For major companies like Swiggy, Zomato, Uber and Ola, the fall in consumer demand during the pandemic resulted in reduced profits and sales. But in post-covid India, the need for the sharing economy has bolstered the operations of these companies. What has particularly helped these companies has been the demographic shift in cities. With the pandemic coming to an end, more and more millennials are flocking back to cities in search of job opportunities. Due to inadequate resources, the sharing economy is the perfect solution for this demographic of consumers. The low operational costs allows such enterprises to keep their prices substantially low, making them the perfect fit for financially struggling millennials.
The need to reestablish and revamp essential global supply chain links has also bolstered Indian manufacturing hubs. The Indian manufacturing sector has seen massive gains in exports, touching close to 418 US dollars in the financial year 2021-2022, a rise of almost 44% from the previous year. What has specifically helped small scale businesses and manufacturers has been the government’s initiative to connect them to digital supply chains. Through digitisation processes, such companies were able to participate within the global supply chains, manufacturing essential goods for large-scale conglomerates.
India’s on-ground manufacturing processes were also substantially hit after the pandemic. Going back to normal would require that the reopening policies guarantee workplace healthcare protections, especially because adverse health-related issues will certainly reduce workforce efficiency. It’s also essential to resume economic activities because the lack of employment opportunities usually translates into a wider burden on the social safety net. What is needed is a granular and locally driven lockdown strategy that is able to contain the spread of the pandemic wherever it occurs without relying on national measures that adversely impact the economy. More importantly, the government must strengthen local health preparedness in order to respond quickly to any possible outbreak. It will also help if the government establishes key labor corridors to allow the sharing economy to function through selective measures that permit mobility for essential workers employed in such activities.
Sources:
https://www.ey.com/en_in/tax/economy-watch/why-india-is-gaining-clout-in-the-post-covid-universe
https://economictimes.indiatimes.com/news/economy/foreign-trade/india-exports-rise-to-record-high-of-usd-418-bn-in-fy22/articleshow/90623780.cms
Exploring Economic Responsibility in the Indian Context
India is the first country to mandate economic responsibility as part of the law through an amendment to the Companies Act, 2013. The Indian context can help us understand the impact that CSR can have on important growth and development measures such as gender equality, poverty and hunger. According to a recent survey, since 2018, Indian companies have spent close to 1 Billion US Dollars on CSR initiatives such as skill development, educational programs, environmental conservation efforts and healthcare measures. Since economic responsibility has been enshrined into the Indian business model, many companies have undertaken popular initiatives that have created positive social change. Some noticeable examples include:
Tata Group: The Tata conglomerate has actively launched many CSR initiatives that seek to alleviate poverty through community improvement programs. Specifically, Tata has been responsible for creating self-help groups that aid impoverished women in rural areas to find gainful employment through skill-based empowerment workshops, community development initiatives and welfare programs. This company has also contributed to the education sector by giving numerous scholarships, endowments and grants to underfunded institutions. They’ve also partnered with various NGOs to facilitate AIDS awareness campaigns, actively contributed to the country’s healthcare initiatives through immunization campaigns, and developed essential healthcare infrastructure like local clinics and hospitals in rural areas.
Ultratech Cement: Ultratech Cement is India’s biggest cement manufacturing company. They specifically focus on rural empowerment by working with a network of 407 villages to promote self-reliant employment while maintaining sustainable business practices. This company has carried out various family welfare programs, provided healthcare services, and built essential infrastructures such as schools, clinics and roads. They have also been responsible for operating various immunization campaigns, medical camps and water conservation programs. They even worked with the Government of India’s Swachh Bharat Abhiyan (Clean India Mission), to construct toilets, and run sanitization campaigns and cleanliness drives in 38 villages.
Mahindra and Mahindra: Established in 1954. India’s pioneer automobile manufacturer has been extremely active in promoting literacy through social and economic assistance programs that help low-income families access educational services. They also run an NGO called “Nanhi Kali” that helps empower young women by supporting their education through grants, scholarships and other-similar financial assistance measures. This initiative has helped empower children from low-income families by aiding them in not only becoming socially and financially independent but by also improving women’s nutritional statistics and lowering fertility rates. Their intervention at the grassroots level has improved the learning outcomes of almost 30,000 underprivileged children.
Finding Economic Synergy: Types of CSR
There are many different ways in which a company can give back to its community. CSR activities aren’t just limited to donations, they also involve other practices such as awareness campaigns and internal-company policy measures. In many cases, CSR usually involves companies partnering with NGOs and other charitable organizations to create an effective system of collaboration where they can use essential insights from people in the field to guide their decision-making process. CSR is all about formulating connections with the larger public. This is why CSR activities are usually determined by trends in public activism. Based on the needs of the public, CSR can usually be divided into four categories:
Ethical Responsibility: Ethical responsibility means that businesses must ensure that their policies and work measures are fair, just and equitable. Ethicality is a broad term and therefore, it can be hard to define what practices are covered under this category, but it generally implies that businesses must be responsible for their actions. The basic standard for ethicality demands that businesses continue to be transparent about their activities with their employees, stakeholders and customers. Companies are required to provide their employees with a discrimination-free environment, healthcare benefits and paid leaves. They must also follow fair hiring and firing policies while ensuring that their labour and compensation policies comply with the requisite legal measures. Carrying out routine supply-chain assessments to check for illegal practices like child labour, indentured servitude and exploitative wages is also part of the company’s ethical responsibility.
Philanthropic Responsibility: Philanthropic responsibility includes CSR measures that the company is required to undertake voluntarily. This can include programs that help alleviate social and cultural disadvantages in low-income neighbourhoods through donations, campaigns and resource distribution drives. The major goal of this responsibility is to push companies to actively work towards improving living standards.
Environmental Responsibility: Most business practices of production and manufacturing can be extremely detrimental to the health of the environment. The goal of environmental responsibility is to make companies more responsible for carbon emissions, environmental pollution and biodiversity loss. In the age of climate-change-related environmental devastation, it’s even more essential that companies employ environmentally-friendly activities.
Economic Responsibility: Companies are also responsible for ensuring an equitable distribution of resources within the economy to promote poverty alleviation and upward social mobility. This responsibility combines all the others to create a balanced approach that propels companies to give back to society. To be economically responsible implies that companies should prioritize community development over individual profits.
Shared Values: What is CSR?
Corporate Social Responsibility (CSR) is an economic model that regulates company policy and behaviours by ensuring that businesses remain accountable to the larger community that they draw their resources from. It is a way to make companies more conscious of the impact they have on the social, economic and cultural environment of the society they’re functioning. In many cases, it’s also a way for companies to offset the negative impact that their activities might have on a variety of stakeholders. By giving back to the public, businesses can help make sure that their practices are responsive to the ethical developments within the political sphere. CSR promotes the active involvement of companies in addressing cultural and social issues. In most cases, companies contribute to the greater public good by contributing some part of their profits towards charitable causes, volunteering efforts and philanthropic activities. CSR can take myriad forms depending on the industry and sector the company operates. The most significant advantage of CSR is that it turns companies into active citizens who aren’t removed from the social structures they serve. It forges a link between business management, employees and the public. It can also help employees feel that the company they’re working for is accountable, responsible and responsive to their concerns. It can even serve as a great benchmark for industry-wide practices. This is why large corporations usually feel the most pressure to respond to public concerns because their decisions can massively influence industry standards.
While in most cases CSR is merely limited to philanthropy, it can also extend beyond that. Recent changes in public demands have pushed companies to adopt more ethical, sustainable and moral business models and labour policies. This usually means that businesses are pushed to assess whether their supply chains are involved in unfair labour practices or environmentally harmful activities. For example, Starbucks promises 100% ethically sourced coffee, which means that it has actively worked to propagate fair employment conditions for all its workers across the distribution and sourcing system, and streamlined conservation efforts through the soil and habitat preservation measures. Most companies are motivated to participate in CSR-related activities due to the beliefs of their management/founders, compliance with government regulations or bolstering their company image. In a capitalist economy where competition determines profits, most businesses want to retain their customers by catering to their social well-being. By actively giving back to the public, companies can help humanize their operational systems. They can become active citizens who hold moral beliefs and values that guide their actions.
All Together: Models of Revenue Sharing
Implementing the right model is key to the success of any business. The purpose of a revenue sharing model is for a company to formulate what it’s going to sell, who will be the target audience and the cost of daily operations. It’s essential to factor in these concerns to ensure that the business continues to remain competitive and profitable. The question really is who will the company share its revenue with. This determines the stakeholders that are attached to the business economy engendered by the circulation of goods and services. Many companies try to include their employees and the larger public within the sphere of their economic circulation through certain measures such as employee-incentivization schemes, employee stock options, incentive-based promotional mechanisms for corporate partners and profit-sharing plans to promote supplier relations. The specific details of each revenue sharing model are different but it usually involves taking some part of company profits and earmarking them for certain stakeholders in order to motivate such actors to innovatively help the company. This is a great tool that companies can deploy to promote employee retention and loyalty. It also helps bolster partnerships with key stakeholders in the market and can help increase sales through incentive programs. One of the best examples of a revenue sharing scheme is companies contributing to employees’ 401k schemes. The scale can vary depending on the organizational size, for example, small-scale businesses might incentivize their employees by giving them a percentage of the commission made from a client they brought in. One of the things that need to be ensured when revenue-sharing models are put in place is that all the conditions in the contract are transparent and the concerned parties are informed about the relevant clauses that pertain to them.
Revenue-sharing can have many advantages and disadvantages. For one, it can help reduce operational costs and bolster risk management through strategic partnerships. If enough stakeholders come together to share revenues and losses, it can reduce the burden on any one partner to field all the risk. It can widen the portfolio and perspectives of the company through a diversification of the sources of funds. It also encourages the vetting of business decisions by multiple parties, which ensures that all measures are thoroughly scrutinized, analyzed and surveyed before being implemented. There are also some disadvantages that come with revenue-sharing models. It can be extremely short-sighted, especially because it encourages all the parties to focus on immediate profit maximization without focusing on long-term goals. The workload that is also associated with managing a diversity of viewpoints can make business decisions slower and hence, more inefficient.