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  Social Responsibility

Published on: June 6, 2020, 11:34 a.m.
The challenge in CSR programmes
  • Broadening outreach in the current era can prove to be an arduous task. Source:

By Business India Editorial

Integrity needs to be at the heart of CSR initiatives to make a real difference," says Arpinder Singh, India and Emerging Markets Leader (Forensics and Integrity Services), Ernst and Young, in a recently released report titled Corporate Social Responsibility in India: re-engineering compliance and fraud mitigation strategies.

"However implementing programs and broadening outreach in the current era can prove to be an arduous task," he adds.

The survey was conducted through an online questionnaire and over 100 responses were received. The respondents were senior executives from CSR functions, representing a mix of Indian enterprises as well as the Indian subsidiaries of MNCs.

The study highlights that Corporate India’s dependence on third-party vendors or specialists has increased over time. Bringing forth one of the most common challenges: a lack of readily available and transparent information on specialists. Due diligence has become more important during the pandemic, with companies mobilising resources to support the government and address the immediate threat.

For Ernst and Young, the definition of due diligence includes getting information from the NGO, and conducting independent and reference checks with different stakeholders of the NGOs. Such a study has at times led to reveal issues around legal disputes, regulatory defaults, and information about funding channels.

The consultancy firm has also highlighted risks emanating from sub-contracts issued by the NGO during the execution of the program, sometimes without the knowledge and consent of the company. There have also been some cases around conflict of interest, to assess possible linkages with employees.

For instance, in one case the third party had started to charge a fee for trainings that were meant to be free, submitted inflated records of attendee trainees, and had discrepancies in the locations of the training centres.

A few other cases included bribery, favoritism, standard operating procedures being bypassed, repeated work provided to the same NGO despite unsatisfactory work, as well as kickbacks to certain employees.

According to the Companies Act 2013, the implementation partner managing the organisation’s CSR activities should have an established track record of three years in undertaking similar programs or projects. According to the EY survey, less than half of the respondents had taken any steps to check past record.

Lack of standardisation is another challenge as there is a different set of regulations that would typically govern implementation partners. With no benchmarking data, credential checks, and other information, evaluating the authenticity of the programs implemented, assessing their capability, commitment, and strength becomes a difficult exercise.

"Successful businesses tend to have a robust governance structure and internal controls for all departments," notes the E&Y report. But 56 per cent of the survey respondents said that there was no involvement of the board in the CSR committee.

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