Everyone is on a mission nowadays to build a sustainable brand, starting from the corporate sector to even the non-profit sector. The common factor in this mission is that both of them are intertwined with one single word, 'sustainability.' But the numbers say that there is a long way to go for both these sectors to join hands and work towards a partnership.
Corporate social responsibility (CSR) is no longer a nice-to-have fancy term to add to your company statements. Increasingly, responsible citizens and governments are asking companies how their activities are contributing towards sustainable development goals, uplifting lives and improving the world.
Social impact investment through partnerships with Non-government Organisations (NGOs) is one-way businesses are answering those questions while also improving their bottom line.
Moving straight toward the CSR investment and funding dynamics, it is visible that the government has been motivating businesses to be more serious about environmental, social, and governance (ESG) factors.
If an organisation has strong ESG values and principles, investing organisations like banks and others can contribute directly to a company's performance. ESG principles can reinforce a company's cost efficiency, environmental management, labour rights and relations, and also internal corporate governance.
Most corporations focus their social responsibility efforts on a specific set of causes. This shortlist typically emerges from one or more of the following: the needs and ground realities where the business operates; the country of operations and the government's agenda for the country's development with reference to larger frameworks such as the UN's Sustainable Development Goals; alignment with the business's core competencies, brand, and corporate values; and long-term benefits for the company.
For example, a central bank as the governing body has the right to ensure that financial institutions play a responsible role to practise strong ESG principles. Bangladesh Bank has published a revised circular in January 2022, where banks and non-banking financial institutions (NBFIs) are allowed to expend a minimum of 30% of their total CSR funds, instead of the previous 20%, which has obviously been triggered by the Covid-19 crisis.
Due to this increased amount, banks reached out to both international and local NGO partners to ensure the proper disbursement of funds. For example, multi-national bank Standard Chartered Bank partnered with Campaign for Popular Education (CAMPE) in July 2022 to provide relief to 15,000 catastrophic flood-impacted beneficiaries in Sylhet. The pro-active fund disbursement has been primarily possible due to strong CSR policies issued by the Central Bank to improve the country's socioeconomic status.
Local banks are also not falling behind, as City Alo, the female-targeted product division of The City Bank Limited also signed an agreement with the trade body, Bangladesh Women Chamber of Commerce and Industry (BWCCI), to have a strategic partnership on building women empowerment through financial literacy programmes. This partnership shows that even though BWCCI is not operating as an NGO, there are myriads of international and local NGOs who are working almost at every point in Bangladesh and can extend the services to the deepest of the rural areas.
Also, as per the new circular, spending for the environment and climate change mitigation and adaptation sector has been raised to 20% of their total CSR funds, instead of the previous 10%. Financial institutions have broader opportunities now to invest in climate resilience and adaptation programmes already single-handedly being implemented by NGOs.
Internationally, businesses have always partnered with NGOs with similar agendas and mindsets when looking to tackle social and environmental issues. Successful examples include GSK's partnership with Save the Children to help reduce child mortality, LEGO's partnership with WWF where LEGO Group's global suppliers are cutting energy usage, the Aviva-British Red Cross collaboration to help communities with disaster preparedness and response, and Lifebuoy's partnership with almost all global NGOs to promote hand hygiene.
Corporate and not-for-profit partnerships are also on the rise. The 2021 Corporate-NGO Partnerships Barometer from C&E Advisory, a UK-based consultancy, has found that for corporations, reputation/credibility remains the most important factor – with 100% of respondents of business respondents citing this main reason. Conversely, 95% of all NGOs say access to funding is the main motivation for partnering with corporations.
This basically means that both these sectors have a common agenda they can agree on and work together. In this report, it has also been highlighted that 77% of corporate respondents and 61% of NGOs believe that business practices have improved because of their engagement in partnerships.
For some time now, young consumers have been willing to pay more and stay loyal to brands that are seen as ethical and sustainable. CSR activities and partnerships motivate the young and active generation to understand the impact their purchase decisions have been making in the world. From purchasing a plastic toothbrush to a car, everyone is being cautious to control their carbon footprint.
Corporations are also stepping up their 'Social Impact' game from every angle possible. For example, the unique partnership between Bata, a footwear company and CARE, an INGO in rural Bangladesh that trained women as salespeople to be economically independent, shows that NGOs can also help businesses in building a customer base in a market where they have minimal coverage.
So how to ensure that a successful partnership has been developed between these two entities with different agenda?
Choosing the right partner
Once a business has identified a cause and is seeking an NGO partner who shares a common value system, evaluations can be made on aspects such as expertise and impact, government and local connections in the target geographies, and scalability.
This should be accompanied by due-diligence checks on the financial health and reputation of organisations being considered. Both organisations can seek help from external consultants and CSR auditors to actively participate in this activity.
In addition, major NGOs may seem to be relatively risk-free choices that bring greater credibility to an initiative. However, businesses should also carefully consider smaller, lesser-known charities that are doing innovative work, often in niche causes. Traidcraft Exchange (now known as Transform Trade), a British NGO operating in Bangladesh is working to create 15,000 women entrepreneurs by incorporating them into the formal value chain by ensuring good governance through all capacity and skill-building training.
A jointly developed framework is necessary for both
Corporates and NGOs have different operating purposes, they have extremely opposite priorities. The main reason behind a partnership is that working with each other will bring unique and distinctive skill sets to the table. So there needs to be a clear framework to reach the end goal in terms of impact, so that they can work together in perfect harmony. These might include, but not limited to, monitoring mechanisms, reporting requirements, expectations in terms of shared resources and engagement levels, mutually agreed-upon communication strategies, and obviously an exit plan if something goes wrong.
In fact, an exit plan should be developed at the beginning of the relationship since no resources should get wasted in the long run which is meant for the socially and economically vulnerable population.
Use online tools and research
Corporates have a strong business interest, so due diligence depending on credential-providing organisations can prove to be extremely useful. For evaluating US-based NGOs in Bangladesh, GuideStar (guidestar.org) has a database of 2.7 million not-for-profit organisations, including more than 23,000 charities working internationally, and provides information from publicly available US tax documents.
For UK-based charities, the Charity Commission for England and Wales host a Central Register of Charities, available at gov.uk, that lists revenues and expenditures for over 1,68,000 organisations. Rules governing charities are left to member states throughout the EU, so disclosure requirements vary, and there is no central repository of EU-based charities.
Evaluator organisations such as Givewell and the UK's Charity Clarity offer deep analysis on a limited number of select global charities. For NGOs in Bangladesh, it is very easy to reach out to NGO Affairs Bureau, the government wing to manage all NGOs operating in Bangladesh. In or worst-case scenario, for an INGO, you can always do desk research and reach out to the board, trust or foundation members as they are usually structured in this manner for further clarification of their activities.
Think long-term and manage expectations
It is crucial to understand that since this is an investment model, it is wise to appoint an expert, mostly the CSR Manager from the corporate organisation to interact and deal with the NGO partners. The private sector often forgets that NGOs may not have the same set of resources and skills in areas such as accounting, reporting, and automation.
As field organisations, NGOs are very good at delivery and results, but if corporates do not engage to see and monitor the consistency of impact, they might not be able to measure the baseline point versus the achievement. Corporates can also support NGOs here by creating a skill-sharing programme to ensure that a long-term, trusting relationship has been developed with NGOs in Bangladesh.
Raisa Adiba is a corporate banker who enjoys writing as a hobby among many other things.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.