Today, it is mandatory for companies conducting CSR activities above a certain amount to conduct impact assessment.
This law was enforced by the Companies Amendment Rules on the 21st of January ‘21. Many benefits, on multiple fronts, accrue from corporate social responsibility activities for businesses. This statutory obligation makes India the first country to impose such measures on CSR spending and reporting.
CSR activities of companies strengthen companies’ brand recognition and solidify their commitment towards uplifting the society. Including CSR initiatives have also shown a rise in employee retention. Working towards sustainability and finding solutions to resolve societal inequalities lead to more innovative strategies being implemented in the workspace. These benefits are added to the overall social and environmental development that effective CSR strategies can contribute towards. Thus, it is increasingly important to understand the business value of CSR initiatives to efficiently distribute the company’s resources and maximize its outreach.
Some of the key policy changes that have been implemented regarding impact assessment and reporting are:
1. Companies with a CSR obligation of INR 10 crore with projects of INR 1 crore or more are required to conduct CSR impact assessments.
2. The impact assessment should be conducted and completed within one year of the project’s completion.
3. The project assessment report will be annexed to the company’s annual report on CSR.
A company’s strategic, ethical, and internal growth are all impacted by CSR activities and CSR impact assessment creates the framework for transparent reporting of the value created and added by the company. It is thus an important tool, not only for creating credibility, but also charting future courses of action for the company.
Impact can mean different things for each company and setting goals based on the company ideology is important to trace the company’s impact on its beneficiaries. CSR impact assessment is a powerful tool to understand and assess an initiative’s value creation, with similar objectives as the Social Return on Investment (SROI) framework. While SROI analyses the value created by a business for social, human, and environmental welfare, CSR impact assessment goes a step further.
It adds elements of transparent reporting and prospective analysis for future plans to be undertaken by the company. These assessments are multifocal and make the process of assigning CSR resources and taking CSR initiatives more manageable for the company. The process of implementing solutions for existing and perceived roadblocks also becomes easier and efficient through the results of this assessment. Using a quantitative tool for data collection and assessment provides metrics that can result in more cost-effective strategies for meeting the company’s CSR goals as well.
CSR impact assessment analyzes a company’s output, CSR outcomes, and impact. It reports on the firms’ capabilities as well as evaluates the partner NGOs and communities that receive CSR benefits. A comprehensive report deals with factors such as risk assessment and the allocation of funding, along with growth trajectories for the various initiatives that are undertaken by a company. It identifies and highlights the areas where companies can create business value using CSR activities and encourages an effective use of their natural and human resources to reach their potential.
Generating this report and conducting yearly assessments leads to better transparency and increases accountability. The detailed assessment of the projects and their outcomes offer an insight into the impact created in the society, thus building credibility for the company.
Companies can choose to conduct this assessment internally or hire an external agency to conduct the assessment. SoulAce, for example, is an agency that is dedicated to soulful projects that enrich the company, environment, and society. CSR impact assessment at SoulAce includes assessing the performance goals and company ideology along with those of the partnering NGOs. Competency and impact evaluations are also made for a comprehensive view of the company and NGO, thus leading to a report that can provide timely and effective solutions for potential speedbumps.
With a detailed and stepwise assessment of all factors influencing CSR initiatives and outcomes, SoulAce provides an expert and data-driven report of the company’s CSR framework.