The Importance of CSR Impact Assessment Study

Today, nearly every company strives to solve a problem. It could be a global problem or a more community-level problem. Businesses who address the concerns of customers and other stakeholders are likely to be more successful. In addition to building monetized products and services, a business also has the opportunity and responsibility to help and donate to its community or society at large through the Corporate Social Responsibility (CSR) policy.

To evaluate the impact they’ve created through their CSR initiatives they conduct a CSR Impact Assessment Study.

What is CSR Impact Assessment Study?

A CSR Impact Assessment Study helps evaluate the social impact of a particular CSR project. By building a CSR impact report, a company can measure the impact generated quantifiably to benefit themselves, their employees, their clients/customers, as well as the society at large.

Advantages of CSR impact assessment

The following are 5 of the most important benefits of conducting an impact assessment of a CSR project:-

• Provides Insight into Development of the Community

  The provisions for impact assessment have come into effect from 22nd January, 2021. Hence, companies are required to undertake impact assessment of the CSR projects completed on or after January 22, 2021. However, as a good practice the board of a company may undertake impact assessment of completed projects of previous financial years as well.

  A big reason to do that is to gauge how the CSR project and activity may have impacted the community the project took place in. For instance, if a company were to decide to build 50 toilets for women in the rural village of West Bengal, an impact assessment of CSR project would answer the questions of - How many women in the village used these toilets? How did it improve their daily lifestyles? Did they improve the health and hygiene of the locals over a certain period of time?

  The answers to these questions will help the company understand the current state of affairs in the select community so that they can create a bigger and more targeted impact in the future.

• Highlights the Gaps in the Project and Ways to Improve It

  Not every CSR project is implemented optimally. There may be certain areas that require more attention for greater impact. A CSR impact assessment study will help the company identify these gaps so that they can focus on bridging the same to deliver results as hoped.

  Let’s take the example of an educational CSR endeavour, where a company is opening a first of its kind kindergarten school for the children of rural Bihar. However, even though the school is built, teachers are recruited, and study material is distributed, the school witnesses a very poor attendance record. If the company conducts a CSR impact assessment report, they might discover that the lack of attendance is due to the lack of incentive to attend school for the children who come from underprivileged backgrounds. Thus, if free lunches are introduced in the school, the attendance is likely to soar.

• Calculates Detailed Financial Information for the Board

  The CSR impact assessment can provide insight into past year’s performance to current stakeholders. It can help the founder, funder, or the business owner understand how effective their CSR donation was.

  For instance, if a company donated Rs. 50 lakhs to buy equipment for farmers that help them detect and prevent pests, a CSR impact assessment report can give you detailed insight on how the amount was divided to carry forth the project. The report might suggest that 60% of the amount was used to purchase 5000 soil readers for 50 farmers, and that the remaining 40% was used for distribution, maintenance, education of the working of the technology, implementation, and repair.
  

  Through this data derived from the CSR impact assessment report, the board can work towards reducing their operational costs and finding more efficient ways of carrying out the processes.

• Facilitates Performance Valuation for the Management

  Since success of a project is highly subjective, a CSR impact assessment report helps quantify the project from start to finish so that one can easily determine it’s result. Instead of a general statement like, “the literacy rates in the slums of Mumbai increased since the start of the CSR project,” the CSR impact assessment will allow you to provide credibility to the performance statement through numbers. It could say, “the number of students enrolled in schools in the slums of Mumbai have increased by 56%, and the number of grade 12 students that passed out saw an increase by 15%. Moreover, the number of child marriages in the community fell drastically by 45% of which 300 students found full-time jobs in the city.”

• Evaluates the Relevance and Sustainability of the Project

  The success of the project is an all-rounded measure of its holistic results. A CSR project might claim to increase farming in a specific part of the country, but if it is doing so at the cost of an increase animal cruelty or environmental degradation, is the project really successful? It probably isn’t.