Introduction
Giving back to the society can be in the form of charity and also by way of Corporate Social Responsibility (‘CSR’). Charity involves helping society by giving financial resources. CSR also involves helping society by giving financial resources but being accountable for these spending. CSR is not merely about spending financial resources but also ensuring that the financial resources spent has created an impact on the society. In this context spending financial resources through CSR carries an obligation that the funds spent have created an impact on the society.
CSR reporting or impact assessment is made mandatory for the listed company having per project outlay of ₹1 crore and overall CSR spend of Rs 10 crore[1]. However, even if the law does not require companies whose CSR obligations fall below this limit to undertake impact assessments, every company engaging in CSR should assess the impact of its activities.
In this article we will delve into the problems faced by companies while doing impact assessment of their CSR projects and their generic solutions.
Challenges Arise During Impact Assessment
1. Absence of policy framework for impact assessment: While there is no one-size-fits-all approach to conducting impact assessments, there are established frameworks and guidelines such as GRI Standards, SROI and the OECD guidelines, that provide structured methodologies for evaluating CSR project impact. These frameworks provide a common foundation, but agencies typically adapt their assessment process to align with the unique context and goals of each project. Choosing the right assessment framework is essential to accurately capture the impact in its full essence. While doing impact assessment a variety of challenges arise. If these problems are not addressed properly may undermine the accuracy and effectiveness of the impact assessment process. Here are some common problems which arise during impact assessment.
2. Third party verification:
Involvement of the independent organization for the identifying impact assessment is recommended in order to have third party verification.
3. Incomplete or inaccurate data Collection:
Impact assessment is primarily dependent on the accurate data collection relating to CSR projects. If the data collected relating to progress of CSR projects is incomplete or inaccurate the finding of the assessment will be unreliable which may lead to misleading conclusions and unforeseen negative impacts. Conducting thorough multisource data collection through fieldwork, stakeholder engagement and expert consultants will reduce the risk of inaccurate data collection. Incomplete data may arise due to following reasons:
a) Language barrier: It has often been observed that conducting impact assessments in the stakeholders’ local language significantly enhances their engagement and participation.
b) Unavailability of Stakeholders: During impact assessments, challenges may arise when stakeholders are unavailable due to important cultural or personal commitments, such as preparations or attending the festivals considered auspicious and significant. Such factors should be taken into account when planning the assessment process.
c) Reluctance to participate in impact assessment process: Input from stakeholders is vital for a thorough and accurate CSR impact assessment, as their feedback helps evaluate the true effectiveness of the project. However, issues like conflicts of interest or reluctance to participate can create obstacles in the process. Stakeholders may avoid sharing honest opinions due to personal biases, fear of negative consequences, or a lack of trust in the process. This can lead to incomplete or biased data, affecting the reliability of the assessment. Building trust and fostering open communication are crucial to overcoming these challenges and ensuring meaningful feedback from all involved.
d) Technological Illiteracy: Technological illiteracy creates significant barriers in CSR impact assessments. Stakeholders unfamiliar with digital tools may struggle to provide feedback, leading to incomplete or inaccurate data. Limited access to technology in certain regions forces field teams to rely on time-consuming, less reliable methods. Additionally, the lack of expertise in using advanced analytics or digital monitoring tools hinders the ability to gain valuable insights. As a result, the assessment process becomes more costly and less efficient, undermining the overall effectiveness of CSR evaluations.
e) Obsolete demographic data: Demographic data available for doing impact assessment is sometimes not updated. This creates challenges to ascertain the exact impact and change that has been brought in the society.
4. Complexity in measuring certain impacts:
Some impacts, like cultural heritage, mental health, or biodiversity, are difficult to quantify. These hard-to-quantify impacts may be underestimated or missed, resulting in insufficient mitigation strategies. Solution to this problem is to use qualitative research methods, consult experts, and include focus groups or community consultations to capture these nuanced impacts.
5. Financial Constraint:
Conducting thorough impact assessment may require significant resources, which smaller organization may lack. Limited resources may lead to incomplete or rushed results. Prioritizing critical impacts and risks within budget constraints and taking external funding or partnerships or scale the assessment to fit available resources while addressing key concerns may resolve this problem.
Conclusion:
The impact assessment of CSR projects is not just a regulatory requirement but a strategic tool for ensuring that corporate efforts genuinely contribute to societal well-being. With extensive planning and smart handling of challenges, companies can ensure a thorough and unbiassed impact assessment. This approach helps build trust with stakeholders, refine their strategies for future projects, and establish themselves as socially responsible organizations. In the long run, this commitment strengthens the alignment between business goals and societal needs, creating a win-win scenario for both. In essence, a well-executed impact assessment ensures that CSR efforts are not just about meeting obligations but truly about creating meaningful change.
Notes:-
[1] Rule 8(3)(a) of CSR rules, 2014
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This article is written by Written by Animesh Joshi, Associate MMJC
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