In the third of an ongoing series of interviews, SharingValueAsia maps what ‘Shared Value’ means in different Asian markets. FleishmanHillard India’s Yusuf Hatia reveals a complex landscape of historical legacies but points to huge potential for delivering global innovation
Spending trends amongst Indian firms remain closely tied to philanthropic, monetary donations. Is India, broadly speaking, behind global trends in sustainable corporate engagement practices?
In some ways India is actually ahead of the game. If you look at the CSR clause in the Companies Act its pretty radical and India is the first country in the world to mandate something like that. It’s a radical move, a pilot for other countries and continues to be supported, surviving changes of government. Moreover, India deserves recognition for the notable absence of resistance to this legislation. Such an ordinance is still a dream in many other developed economies. But where India is not ahead of the game is that people do not think in terms or concepts of shared value and impact investment.
Shared value, as a concept or idea, itself needs to be defined and adapted to the Indian context. Whenever I speak to companies in India, I start be explaining shared value as businesses working in partnership with government and civil society to solve a currently unmet social issue resulting in accrued commercial benefit and social impact.
What India needs is collaboration and a ‘PPP’ hybrid in which Public, Private and the People all have a role to play.
These concepts are still very new and I sense that there is some discomfort with them. The ‘sharing’ component is a little alien, especially if there are connotations of benefitting or making capital from CSR. While this may be the reality for sustainability, capitalism remains a somewhat dirty word in India in the context of giving. Across the board companies are still giving in a very traditional way. This is part of India’s heritage.
There are examples of certain innovative firms such as Tata and Piramal in which their engagement is a core part of their business and philosophy, but most enterprises have just looked at CSR as ‘we need to give back to society’. While perceptions are changing, the best, most efficient way in their eyes remains to give money to a cause and these causes tend to be limited to donations to local schools, hospital, temples.
Since the Companies Act Amendment 2014 was enacted the government has sought to provide clarification on how corporates can contribute to CSR programmes in India. How do you think the government should best be leveraging corporate strengths in this marketplace?
The act has been a catalyst, but it’s not for government alone to define this space. The drivers of shared value go beyond compliance with the CSR clause alone; they include greater demands by shareholders, increased consumer activism and NGO scrutiny (particularly on supply chains), and increased demand for transparency – all these point to the need for a more sustainable business model irrespective of the Indian Government’s mandate.
What India needs is collaboration and a ‘PPP’ hybrid in which Public, Private and the People all have a role to play. This is certainly the case in regards to this legislation as its approach is not yet in sync with global trends, corporate strengths and India’s requirements.
That said, government is essential in establishing frameworks. This and the previous government have done well in terms of addressing how much companies should give, what constitutes giving and covering aspects of communicating those activities. In their absence business would invariably revert to previous self-defined practices. But it certainly remains a work in progress.
Big companies are still trying to work out what it really means, how much should they give and what activities are compliant. It will take a few years and perhaps some enforcement to realise its true form. Suffice to say it does require some changes and India is ready for the next version.
What opportunities do you see in India for Shared Value and business-led solutions to development issues?
There is no doubt of its potential value. Indian businesses are used to giving, growing and implementing on a mass scale and you can’t introduce any concept in India without businesses and consumers adapting and tailoring it to their own particular use. The difficulty arises in that CSR is well understood, but remains defined in its traditional form and as pure charity. Shared Value is the next stage up, but it has a long way to go to explain itself, be accepted and probably needs to be re-defined or re-calibrated in the Indian context. Someone needs to ‘own’ shared value in the Indian market, define it, show value and put a framework behind it, and it must be on a grand scale. Fortunately, this is fertile ground.
India is a global laboratory for frugal and scalable innovation with implications for markets around the world.
India is a global laboratory for frugal and scalable innovation with implications for markets around the world. After all if you cannot scale an idea here, transplant it to neighbouring states and apply it on a broad national level then it is just a good idea! India is, in many respects, a ground zero for field-testing successful and sustainable shared value innovation. India simply needs a little guidance in considering alternate models to giving. After all, if companies continue to build schools, hospitals or even toilets, how many can they build and fund before they must fundamentally change their business model?
What is the real value that corporates should be contributing beyond programme sponsorship?
The monetary value stipulated in the Companies Act is the downside of the legislation as it tries, but does not move beyond this definition. The act should recognise companies’ human and intellectual capital that supports knowledge transfer. If that can be tapped and applied alongside the money then we would see a much larger multiplier impact.
The Companies Act is expected to generate $2.5 billion; ostensibly a lot of money, but not in India. The size of India and the size of the problems, it is not for the faint hearted. US2.5 billion can be quickly spent scores of initiatives and causes. The money needs to be focused, concentrated and the programmes run in a professional manner in order to have the necessary impact.
Regrettably, very few business units, teams and senior management have experience in CSR. Foundations are also typically run by family members, when they should be run as a business unit with a CEO answerable to a board of directors. Yet business in India is intrinsically good at growing business. If these same skills can be leveraged for social impact and generate its own revenue to be channelled back into the issue then there is a greater chance that people will see it through.
Hindustan Unilever is hailed for its programmes such as projects Shakti and Sunlight, but of equal importance are initiatives such as Project Millennium in the late nineties that helped identify leaders who went on to map commercial opportunities and create value in new areas.
The Companies Act is expected to generate $2.5 billion; ostensibly a lot of money, but not in India.
What is necessary in India for successful tri-sector collaboration between governments, corporates and development organisations to become mainstream?
That’s one of the biggest challenges. These are not groups that have talked in the past and there are legacies in their genetics to be overcome. No company can work without the NGO supporting them on any issue because it requires ‘boots on the ground’. Nor can you operate the best scheme with the best funding without the state government’s buy in. Ultimately it’s a market where you have to roll your sleeves up and get involved and collaborate with others to make a programme work. It cannot be done remotely, in isolation or without support.
How is the PR and PA industry responding to these challenges?
The industry is cognisant of the opportunity, but it has not yet come together to define Shared Value, nor prepare a strategy of engagement. We understand that there is an opportunity, but should not be pursuing this in only financial terms as this will incur a counter-productive response. Alas when figures in excess of $2.5 billion are touted some parties will inevitably seek to benefit.
Where we do see direct complementarities is within the Companies Act itself, which defines instructions on reporting and how activities are to be communicated. So there is a natural synergy and the opportunity is best served by helping businesses to communicate their activities and to advocate shared value. It takes a very experienced skill set to handle this and we do see growing demand from clients. Some of our largest projects in the past year have originated from firms and foundations wanting to both communicate their work on shared value and social good and to broaden their impact.
Yusuf Hatia is Managing Director of FleishmanHillard in India and was in conversation with Oliver Fall