The survey conducted among key corporate social responsibility (CSR) executives highlights India Inc.’s high dependence on third-party implementation partners to lead and execute CSR programs.
Corporate social responsibility has evolved in India over the last few years from being voluntary, philanthropic and unsystematic, to organizations instituting structured and strategic programs to contribute toward causes that enable the welfare of society as a whole. The focus and effort made around CSR was enhanced by the amendments to the Companies Act 2013 that defined the scope for organizations above a certain size and threshold. Key amendments included the introduction of Section 135 that outlines mandatory spends, a defined program and a dedicated committee to administer and monitor the program. Recent data released by the government highlights significant amounts being spent for the development and management of CSR initiatives, with a reported spend of close to INR12,000 crore in 2018-19, the highest since the Act became mandatory in 2014-15.
With the prevailing COVID-19 pandemic, CSR teams and initiatives have had to step up and be at the forefront as the world faces turbulent and unprecedented times. Organizations are re-aligning priorities, ongoing projects are being reviewed for efficacy, while fostering new programs aimed at relief activities for wider community building and engagement. The impact of social initiatives is paramount, especially during times of crisis. But measuring the performance and impact of CSR initiatives can be challenging, particularly as it is aimed at delivering long-term value for communities at large. Instituting governance and compliance programs from an initial stage can strengthen the supervision and the outreach, minimize any waste or leakage and deter unethical practices. Integrity needs to be at the heart of CSR initiatives to make a real difference.
Against this backdrop, EY’s report Corporate social responsibility in India: re-engineering compliance and fraud mitigation strategies – in which we surveyed over 100 CSR executives in India – found India Inc.’s high dependence on third-party implementation partners to lead and execute these programs. However, the level of governance in identifying vulnerabilities and understanding the authenticity and credentials of third parties tends to be very rudimentary.
Other aspects emerging from the survey findings were low involvement of management and limited monitoring over the implementation process, including understanding if the allocated funds were utilized for the actual purposes as described in the CSR plan.
Understanding the third-party challenge in CSR programs