CSR projects gone wrong is a risky thing, need third party assurance: Martin Neureiter, CEO, The CSR Company
Martin Neureiter is the CEO of The CSR Company. He is also a Chairperson – Advisory Council for BlueSky Sustainable Business LLP. He Chairs the Implementation Task Group within ISO Working Group Social Responsibility writing the ISO 26 000 standard – published November 2010.
In an interview with India CSR Network’s Rusen Kumar, Martin Neureiter said ISO 26000: Guidance on Social Responsibility, which is now adopted by India, gives a comprehensive overview of what Social Responsibility is all about – especially on what it is not. He says “A CSR project gone wrong is a reputational risk. This can be managed by a third party assurance”. Edited excerpts:
Why do we require an ISO standard for Social Responsibility?
Social Responsibility is a vastly uncharted area, and everybody claims to be doing something without any proof or any strategic direction. Activities like cleaning the beach are considered CSR, just the same as a strategic plan to reduce the emissions of a factory. Therefore in the year 2000, consumer organizations approached ISO (International Standards Organisation) to develop a standard that would define Social Responsibility and enable the customers to identify companies and activities that fall under this remit. It took in total some ten years to develop ISO 26000. It gives a comprehensive overview what Social Responsibility is all about and especially on what it is not. It has a definition, and it lays out principles that organizations need to follow and then defines the seven core subjects organizations need to address when strategically implementing social responsibility. And finally, the implementation section of the ISO 26000 manual helps organizations put the system in place. So ISO 26000 is a kind of one-stop responsibility reference for any organization interested in integrating social responsibility into their management practices.
What type of organisations can use the ISO 26000: Guidance on Social Responsibility?
ISO 26000 applies to all kinds of organizations. So never mind if you are a multinational enterprise, a small rural NGO, a government entity, a family run business, ISO 26000 can support you. It is also not limited to specific industries, or countries-it is globally applicable in any business – as long as the business is legal The standard always speaks of organisations, and not of businesses or companies only. Currently most of the users are businesses, with a clear trend of companies that are part of the international supply chain. International buyers require their supply chain to prove their social responsibility activities – and ISO 26000 is well placed to do exactly that. Further companies that want to differentiate themselves from their competitors by showing to customers that they are doing right – use the ISO 26000 standard. We also see many companies where the owner believes that doing good is the right thing to do – and prefers an internationally recognized tool like ISO 26000 to support the integration into management practices.
How does ISO 26000 help in comparing the impact of 2 different type’s social projects-, e.g. water salinization and girl education?
In comparing the social responsibility of let’s say a water salination project versus girl school education, ISO 26000 is a powerful tool to measure and evaluate the usefulness, the materiality, relevance and significance, and the stakeholder view on the projects.
First of all, ISO 26000 clearly states that charity is NOT CSR. CSR is about HOW an organization( business) manages its impacts. Charity is directed to the outside without necessarily having any connection to the core business of the organization. So, the first measurement is all about “Is the activity related to the core business of the organization”. This is important to understand sustainability. An organization will support an activity- even in financially challenging times – if it is related to the core business. If something has nothing to do with the company’s purpose, every sane CFO will cut these expenditures first. So, it is about the sustainability of the project, the project beneficiaries, AND sustainability for the organization itself. That is what ISO 26000 emphasizes. CSR is an investment, not a cost. It is about making money, not spending money. Once this is understood, then ISO 26000 is the ideal tool to implement that approach. Further, once the project has been chosen based on the relationship to core business, on stakeholder expectations, relevance and significance for the company, then ISO 26000 Guidelines supports the organisation by guiding it.The standard explains how to move forward without having to take wrong exits or misleading trails. And then, once the projects are implemented it supports assurance of the impact of the project, its success, its stakeholder acceptance by defining the parameters by which the project can be measured
Do you think providing Assurance for CSR Projects is useful for Indian Business? Why?
Assurance is always useful, not only for Indian businesses. There is the old management saying that what you cannot measure you cannot manage. Social responsibility projects need to be managed. They are not black holes in which you dump money because of legal obligations with no idea of what is happening. This money needs to be spent wisely. It needs to support the organization by gaining reputation, by differentiating from competitors, by ease of public affairs activities, by customer trust, by band value. It also needs to fulfill the purpose of the project as such- education, health, environment, whatever the topic might be. For that an external assurance is critical. Otherwise the activities are susceptible to insider deals, corruption, nepotism, or just merely misconduct of means because of negligence. Only a third party assurance can make sure that the money is spent as planned and whether the project has achieved the set targets and created a positive impact. It is very much also a risk tool for the organizations. A CSR project gone wrong is a reputational risk. This can be managed by a third party assurance
What can somebody do to reach this knowledge and make Indian business work better?
There are many ways of improving the knowledge of CSR, especially in India. But as somebody looking for an excellent course or lecture I would look at the credentials of the teacher and his/her understanding of the subject matter. If they are trying to tell you about how to spend your money on community projects, stay away. If they try to tell you how you can make money through your community projects, these are the ones you need to listen to. CSR Company International together with BlueSky offers various training in India and outside We have awareness sessions, and we have in-depth certified trainings. Specifically, we are looking at educating internal auditors for social responsibility based on ISO 26000 because this is going to be the growing trend in India and we need the qualified workforce to do this. Assurances will be the thing in the next few years in India, based on The companies Act section 135. INR 55000 Crores have been spent on CSR in this country from 2014-2019 – That is an enormous amount of money to be spent without any assurance on its impact. The CSR Company also participates with Ferdinand Porch University, one of the most reputed private universities globally, to offers a unique MBA program. It is an e-learning course taught in English, called “International Corporate Social Responsibility Management“. It runs for a year and a half, and it is completely based on ISO 26000.. I have the privilege of being the program director for this MBA.