How businesses can have greater impact on society

India has always been known for bold policies. From funding the Green Revolution, which prevented the starvation of millions, to Narendra Modi’s recent demonetisation programme which focused on tackling corruption – the Indian government is more often than not a policy pioneer.

And so it was with the 2013 Companies Act, which required that companies with a net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or a net profit of Rs 5 crore or more, must give away 2% of their net profit to charity. This law really was the first of its kind – no other country has mandated corporate social responsibility (CSR) for business.

Three years later the Companies Act has had some impressive results. Indian companies’ charitable spending has increased seven-fold to Rs 25,000 crore and the Act has helped bring CSR to the attention of company executives. For all of the good driven by the Companies Act, it doesn’t render all socially responsible investment equal. And we shouldn’t measure the societal impact of business by just charitable donations alone. Businesses can have a greater impact, and set themselves apart, by developing advanced CSR strategies that go beyond philanthropy. With increased transparency, and a recognition that business and society need each other to succeed, companies around the world are realising that doing business better not only produces better returns, but adds real value to society.

Companies are also using CSR policies to attract the next generation of talent. By 2021, 64% of India’s working age population will be Millennials, a demographic with very different expectations of employers. For this generation, business is about more than the bottom line – Deloitte’s 2017 Millennial Survey found that almost nine in 10 (86%) Millennials believe the success of a business should be measured by more than just its financial performance. Yet business has still to live up to this expectation. The survey also found that while 74% believe that business has the potential to solve challenges that most affect them, only 59% feel they are doing so. This provides an important opportunity. A commitment to society that goes beyond philanthropy, builds trust and can inspire consumers and employees. But how should companies approach this?

I believe the first step is recognising that a company’s contribution must go beyond financial donations. Business has a unique set of skills, resources and methods of operation which empowers it to find different approaches to drive progress. Using their capacity for innovation and problem solving, companies have the potential to revolutionise the way we think about and address social challenges.

Charitable and philanthropic organisations (including NGOs) are a crucial part of this approach, which means turning them into real partners for change and not just beneficiaries. These organisations, through their close proximity to communities and legitimacy, can provide businesses with a better understanding and ability to affect change.

The second step lies with accurately identifying the issues where a company can make the greatest difference. At Deloitte we have been working with the Social Progress Imperative (SPI), a non-profit focused on helping countries and communities find ways to think about and measure what matters most to people and the wellbeing of society. Relying only on a country’s wealth or GDP creates an incomplete picture of human and societal advancement.

SPI’s Social Progress Index provides a more holistic view of how to improve people’s lives. If businesses seek to be make a difference, and to be judged by more than just financial results, tools like the Index can help guide where and how best to effect change. Indeed local indices can be used by business as a roadmap to create and fund innovative social policies and programmes, and work is already underway to develop a State level Social Progress Index for India. Finally, I believe to be truly differentiated by a commitment to society, this commitment must be sustainable.

Tackling challenges on the scale that India faces cannot be accomplished in months, or even years. It requires both dedication and determination. To substantiate this, companies need a purpose. This is a concept that goes beyond the corporate mission statement – purpose is instead an explicit connection between what a company does and the contribution it makes to the wider world…in essence why it exists. It must be embedded throughout a business and used as the compass to guide decision making. Only then can companies signal a clear commitment to champion a social cause.

Ultimately, by viewing initiatives like the Companies Act and the Social Progress Index as opportunities, rather than a cost, leading businesses can use CSR to set themselves apart from competitors. In this way companies can build a reputation, and a business, that will last and have a positive impact on society.