A market-based CSR approach

Aug 21 2014, 01:47 IST
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SummaryCompanies should use their CSR capital and skills to catalyse innovative solutions

Innovation is sometimes just thought about as thinking big and starting small. However, when trying to address Indias development challenges we also have to think about scaling fast.

This is especially true when considering the size of these challenges. In India, 400 million are without electricity and 500,000 people die each year from the effects of indoor air pollutiona result of toxic fumes generated from cooking on open fires and inefficient stoves.

But there is potential for change with the recent corporate social responsibility (CSR) norms mandating 2% CSR spend for companies above a certain threshold. This policy is estimated to unlock R 15,000 crore for the social and environmental sectors.

However, just because organisations are mandated to do good doesnt mean they will do it as well as they can. Focus should also be around finding ways to create long-term sustainable impact that will significantly address Indias development challenges. Simply pouring funds into short-term projects can create a dependency to live off and be sustained just by donations.

Instead of looking at aid as the only answer; it is important to askis it possible to tackle major global development challenges in ways that are both scalable and sustainable? While the Shell Foundation doesnt have all the answers, our experience over the last 14 years has shown us that taking a market-based approach can be a more cost effective way of delivering long-term impact at a global scale.

The Shell Foundation has been working in India and globally to create business-based sustainable solutions that are designed to be scalable and financially self-sustaining. Why? Well, some of Indias development challenges can be viewed as market failures where there is a lack of products and services for low-income consumersand where entrepreneurs and companies can play a key role in delivering a solution.

For example, the Foundation developed a long term partnership with Envirofit to address the challenge of indoor air pollution by creating a viable and scalable clean cooking stove business. Envirofit has developed durable, efficient and affordable ($15-$30) clean cook stoves that reduce harmful emissions by up to 80% and fuel usage by up to 50%.

In 2009, Envirofit started selling clean stoves in just two states Karnataka and Tamil Nadu and today is operating across 16 states and 40 countries globally. But to scale up this level and create greater impact, Envirofit needed to overcome a number of market barriers,

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