While going through the CSR reporting in India, Survey Report 2013 by KPMG I stumbled upon a heading ‘Regulation drives reporting‘. This seems so true in the common scenario. The natural human behaviour is to react to a situation than to respond knowing fully well that it is the response that is going to achieve positive result vis-a-vis reaction. Can a CSR report generated out of reaction mitigate the risks that companies face due to social and environmental impact? I read an article where the writer had been asked to recommend 7 short reports (under 20 pages). We love reports which spare us the jargon and reflect the real picture.
Why report at all? Yes its required due to the new section 135 in Companies Act but it’s just a part of the existing Financial Report and one can do the to the point reporting to meet the legal requirement. The companies worldwide have been doing CSR reporting without any legal binding simply because it enhances the returns from their CSR efforts. The impact of a CSR project can be enhanced if it is reviewed periodically by stakeholders. To do that we need to have a CSR policy that envisages active stakeholders’ engagement. The new CSR regulation also envisages the companies to initiate the process by creating a committee which puts together a well thought CSR strategy. In words of Sun Tzu, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” The corporate sector has realised that along with traditional functions like marketing, branding, R&D etc., CSR is also a viable component of their overall business objective. The current reporting as is observed in the CSR Reporting Survey by KPMG 2013 merely indicates that the company is performing its social responsibility. There is a room for improvement so that CSR projects provide substantial benefits to all stakeholders and the business. It’s a win-win situation where the CSR can enhance impact for the society and profits for the business.
At present the reporting is higher of the positives and low of the negatives. Generally, the financial statements indicate the inflows and outflows and net result. Similarly the CSR reports should be made to reflect the efforts versus impact. Currently he CSR projects by the businesses are standalone activities without any linkages to the value chain of the business and fail to indicate the impact of the business on the social and environmental issues. To sum up the CSR reporting should use lessons from the financial reporting to develop a CSR reporting system to inform the stakeholders and yield better connect.
Ruchi is a CA who has carved out her niche in the area of process improvements and automations while working with companies like GE on various automation projects which have had an impact on reducing costs and impr
oving productivity. She has also worked on social impact projects related to education, career prospects of rural women.