Interview: Corporate Social Responsibility in the Indian Context

July 23, 2012 Posted by India Briefing Reading Time: 4 minutes

Jul. 23 – During an event covering corporate social responsibility (CSR) in India held by the Indo-French Chambers of Commerce on July 14, India Briefing (as a proud media partner for the event) conducted an interview with the head of CSR at Innovaid, Ms. Cristiana Peruzzo, on her views regarding CSR in the country. Below are her views.

Have you experienced or observed any differences between the CSR practices in Europe and India?
Peruzzo: I believe the main differences in CSR practices between Europe and India stem from a different approach to sustainability. While in many European countries, CSR is often used as a risk minimization tool to address consumers, shareholders and general societal expectations, in India a paternalistic approach prevails, which manifests through the creation of corporate foundations to fund social actions benefitting those communities in which the company operates. According to recent studies, 55 percent of large Indian companies have established foundations working mainly in the areas of education, health, and rural development. While this philanthropic approach may be judged disapprovingly in Europe, I feel it is essential in a country like India, where the government is struggling to meet the basic needs of the majority of its citizens.

In addition, some of the CSR drivers that are very effective in Europe are not quite present in India. I am specifically referring to the consumers demand for greener, more ethical products or the threat of a boycott, which tend to be relatively minimal in this country. Lacking these crucial drivers translates into a very challenging environment in which to hold companies accountable for the social and environmental impacts of operations in India.

What are the effective ways for businesses to implement CSR?
Peruzzo: I believe a strategic focus is the key. CSR is a long-term journey and each company has to find the right pace to assimilate sustainability in its operations. Many of our Indian corporate clients are starting their journey by implementing a more focused approach to their philanthropic efforts. Others are quite advanced and authentic in their commitment to sustainable practices and want to establish a CSR culture which is completely embedded in their business, or even in the main connotation of their brand.

The main advice I feel I should give all Indian CEOs is to look for the right focus for their business while ensuring at least a minimum baseline across key social and environmental indicators. A top-down approach is incredibly successful in India due to the fact that the majority of India Inc. functions on a family ownership model. As a result, if the founder or CEO has a genuine commitment to being a good corporate citizen, then the company is probably going to be an example of best practice in sustainability. In the case that a CEO and their upper management team are not truly sold on the importance of CSR, I think a CSR manager can still try to have a more focused approach and pick one CSR area and really work on that, rather than spreading resources thinly among a multitude of less sophisticated projects.

What are the top three challenges CSR is facing in the India business context?
Peruzzo: I am quite impressed by the tremendous progress which has taken place since my arrival in Mumbai in 2009. Only three years ago, CSR was not really understood outside of the sustainability inner circles, but nowadays the concept is reaching a much wider audience.

As I mentioned, CSR in India is still mainly centered around a philanthropic, somewhat paternalistic approach, championed by the older generations of business owners who are used to delegating the responsibility of the social, charitable arm of a company to often unprepared female family members. I am relieved to see that younger CEOs understand the strategic implications and business relevance of being a sustainable company. Many are starting to go beyond philanthropy by instead paying attention to their product quality and safety, in order to invest in raising the well-being of their employees as well as implementing cost advantageous CSR measures such as energy and water savings.

However, I see a challenge in the slow pace of this transition between the old management guard and the new one. Many of the social problems India is facing cannot really wait for a new generation of more responsible leaders and their more ethical governance.

The second challenge is probably the prevalence in corporate culture of “being and doing good anonymously” which dramatically impairs the efficacy of CSR advocacy among companies. I feel it is crucial that big companies set the example when it comes to transparency and materiality in their social and environmental communication or in inspiring Indians through the use of meaningful and substantial cause marketing campaigns.

Lastly, the lack of well-organized NGOs in remote and rural areas constitutes an additional challenge. Companies are often unable to partner with reliable NGOs that can assess and identify the real needs of the community and work collaboratively to ensure the successful implementation of CSR activities.

What do you think is the outlook for CSR in India?
Peruzzo: I feel the future of CSR in India is very much dependent on the passing of the New Companies Act. Urging large companies to invest 2 percent of their profit in CSR can push India Inc. to start considering its social and environmental impacts in a more strategic way. In addition, making CSR reporting mandatory will raise the bar for the way that Indian companies structure and implement their CSR discourse.

You can stay up to date with the latest business and investment trends across India by subscribing to The India Advantage, our complimentary update service featuring news, commentary, guides, and multimedia resources.