Sunday, February 27, 2011

Brand-building, CSR way

It is widely believed that, on February 28, the Finance Minister will not have too much to offer in his annual Budget speech. Frankly, it is not fair to expect too much either — we have a pretty low-tax regime, very reasonable duties, and, in an environment where the world is licking its wounds, we are in pretty decent shape.

But we understand that there could be one announcement in the budget session that could invoke strong sentiments: The mandatory carving out of at least 2 per cent of average net profit from corporate houses with revenues of Rs 1,000 crore or more, to be used for Corporate Social Responsibility (CSR) activities.

For the greater good

The World Business Council for Sustainable Development, a CEO-led global association of some 200 companies, defines CSR as “the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life”. This expectation has been triggered by the fact that the Ministry of Corporate Affairs recently accepted the recommendation of the Parliamentary Standing Committee on Finance to make this CSR contribution mandatory. Of course, it is corporate dharma to protest the moment the legislator wishes to tell them what to do with their money, but I believe the smart Corporate will see this as an opportunity to re-think its “Brand Positioning”.

Let's look at Jamshedpur as a case-study in CSR: A city created around a commercial enterprise, which is an oasis of exceptional governance in a state that is still seen as backward.

To me, this is smart CSR: To take into account every stakeholder in the business and contribute to their development and thus build a powerful business that can stand the test of time.

Businesses can find many CSR-brand opportunities in their own zone of operation. Let's take the example of a high school called SriVidya Kendra, in a little village, 8km from Cuddalore district headquarters in Tamil Nadu. Started by a retired government servant, it is run for the benefit of backward sections of society: The fee is Rs100 per annum.

Since it is functions under an asbestos sheet roof, the local government is threatening it with de-recognition unless it gets a concrete roof. Around a 10 km radius of this little school are some eight factories unaware of the struggle of this little school : What a brand-building opportunity is being missed by them! By providing just a crore of rupees they could have probably upgraded facilities at the school so that all their workmen and the villagers could benefit. Another example is Mumbai Mobile Creche: An organisation that puts up balwadis and provides meals to the children of construction workers at the construction site. What an opportunity for our many real-estate and infrastructure companies to not only use their CSR budget but also reduce accidents, reduce staff (mother) downtime and do wonders for their brand.

India provides a wealth of social opportunities to not only showcase one's brand but also build an immense amount of goodwill for the brand. With 480 million people below the poverty line, immense number of environmental issues, dearth of basic sanitation facilities and even lack of civic amenities , there is no end to brand properties waiting to be acquired.

Create real assets

However, there are a few pre-conditions to making CSR based brand-building a success. First, it can't be an extension of the marketing or PR department; it needs to be delinked and managed by creative and socially-interested people.

Second, local government machinery has to be sensitised towards clearing such projects without procedural delays. Third, the CSR budget must be used to create real assets and not merely sponsor high visibility activity like charity shows. It is advisable for each company to not only evolve a policy which is disclosed on their Web site, but also have a competent and committed team of internal workers who actively participate in implementing these initiatives.

For young entrepreneurs, here is an opportunity to start a creative agency that specialises in CSR or take up social work as a career and without starving!

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