VA
Insights

Within the past few years, companies, both local and multi-national, have begun to invest on Corporate Social Responsibility (CSR) to enhance their competitiveness. What are the CSR initiatives and projects featured with? Have they reached meaningful impact? Are they going to sustain in the future? This article provides VA’s observation on these questions in the hope that CSR practitioners can better structure the project portfolio and make customized strategic plans.

We have concluded with four features of a good CSR project based on best practice analysis:

• Strong demand and important role

A good CSR project must first target at a highly demanding issue, which affects a large group of people. At the meantime, it should be differentiated in terms of target beneficiaries, the scale and extent of investment, or the choice of partners, in order to highlight the company’s indispensable role. For instance, DBS (Development Bank of Singapore) provides holistic services for social enterprises from seed grant to public advocacy, from capacity building to sourcing products and services from the social enterprises they support; thus, DBS plays an unique and irreplaceable role in promoting the development of the emerging sector.

• Sustainable impact

Impact does not just mean how many people have benefited from the CSR project, or how much their quality of life has improved; more importantly, it lies in providing a holistic solution to a specific problem and setting up a sustainable ecosystem that makes the impact last, especially when the project exits. The Seeing is Believing project of Standard Chartered Bank is a good example, as it not only covers millions of rural beneficiaries, but also offers capacity building for county-level hospitals and helps to improve the blindness treatment and prevention system.

• Stakeholder engagement and recognition

Key stakeholders include clients, suppliers, employees, partners, shareholders, government agencies, media, etc. Only by involving them in the CSR projects and having their recognition to enlarge the impact can the CSR projects continuously obtain supportive resources. The sustainability initiatives of H&M encourage its suppliers to enhance social and environmental performances by providing incentives, and promote customers to join second-hand apparel recycling by offering new purchase discount.

• Synergy with business

This kind of integrated CSR projects could best strengthen the sustainability of the projects, bringing potential real interest to the company while doing good to society. For example, Coca Cola has signed a Source Africa plan. They partner with professional NGOs and directly procure raw materials from farmers with micro-size business. By doing so, the procurement cost is lowered, meanwhile, the consistency and sustainability of procurement in the local market are ensured, which also provides the farmers with sustainable production and revenue generation.

Based on the above features, our team categorizes CSR practices into four groups:

1. Donor-driven: This category does not reflect any of the four features. Some MNCs replicate their global CSR projects to China without any localization, ending in an awkward situation: many focused areas are overlapped, or the projects are not meeting demand of local communities.
2. Traditional: Though addressing to the demand, the way these CSR projects are designed is very simple and only short-term impact can be achieved. Disaster relief and donation for school building construction are the most common examples.
3. Strategic: This category usually includes company’s core CSR projects with meaningful and sustainable impact to social development. In the long run, companies can also benefit by gaining brand recognition and loyalty, and employee stability.
4. New opportunity: This is a very innovation category of CSR projects. New products, new market, and new business model can be discovered, but very few projects are in this category now.

Our team recommends that, in order to make the CSR projects sustainable and effective, companies should focus on strategic and new opportunity categories to develop 1-2 core CSR projects (depending on resources available), improve model of traditional projects to transit to strategic level, and drop those not demanded by local communities.