Key drivers of Indian corporate social responsibility

Anuj Chande Anuj Chande

Our new research highlights the key factors behind more socially and environmentally sustainable business practices in India and around the world.

The impact of business on the economy, the environment and society receives ever-greater attention, with increasing investor calls for transparency and greater scrutiny of corporate activity by customers, particularly via social media.

On 1 April this year, the Indian Government implemented new corporate social responsibility (CSR) guidelines requiring companies to spend 2% of their net profit on social development. India is the first country in the world to mandate CSR.

For our latest International Business Report, we asked 2,500 businesses across 34 economies about what is driving their CSR activity, examples of CSR initiatives and how these are being reported.

CSR drivers

Globally, businesses report increasing moves towards more environmentally and socially sustainable business practices. The vast majority of businesses surveyed are involved with local charities, either through donating time, money or products/services. Businesses are also working to reduce their environmental impact, with increasing numbers calculating the carbon footprint of their operations.

The survey shows that corporate responsibility increasingly makes good financial sense. Cost management (67%) is the main driver globally, followed by customer demand (64%) and being the ‘right thing to do’ (62%). The impact on company reputation is an increasingly important factor in many countries.

Similarly, in India, cost management topped the list of key CSR drivers, equal with tax relief. These were followed by, customer demand, brand building and staff recruitment/retention issues.

This growing recognition of the potential cost savings of CSR both in India and globally suggests that the benefits of running a strong CSR programme are becoming more tangible. The most popular initiatives undertaken by businesses – donating money to charities and improving energy efficiency and/or waste management – can impact the bottom line, either indirectly through tax relief, or directly through lower utility bills.

An increasing awareness of the benefits of reporting on sustainability measures and not just financials, is also evident. Sustainability reporting has increased significantly since 2011, with more than half of businesses now viewing integrated reporting as best practice.

Global trends

The research shows that, generally, CSR and broader business objectives are becoming more aligned across the world. Despite the overall recognition of cost benefits, however, it's interesting to see that, by contrast to India, consumer demand is the top driver of CSR for UK businesses; it seems that British businesses are more reactive in their approach to CSR, largely responding to stakeholders' needs.

In India, as in much of the world, CSR is not only increasingly seen as making good business sense, but more than ever before as a key business differentiator.  The leadership of dynamic Indian businesses towards more socially responsible and transparent practices is likely to emerge as a competitive edge to unlock their potential for growth in an ever more crowded marketplace.

The full report is available here, Corporate social responsibility: beyond financials [ 3253 kb ].