In the case of market for carbon credits, a business has to go beyond full compliance with all environmental norms by adopting processes and technology that will reduce emissions and increase efficiency.
Similarly, the concept of CSR credits implies that a business has to comply with all social and environmental norms and then do something extra to create social value.
It’s not possible for small companies to spend anything but small amounts on CSR. A market for CSR credits will allow these companies to buy credits from the market and contribute their mite to the social good.
I understand that such a market will require defining and quantifying social good. There is a large agreement on what needs to be done in education, health, livelihoods, and infrastructure, but we still need a way of measuring social good.
I am sure our economists can come out with clever models to measure social good.
It’s important that all stakeholders – government, corporates, NGOs and the local communities – meet openly, not behind closed doors, to decide how a project can help the community. Lack of trust between these stakeholders will never allow us to determine what creates social good.
In conducting CSR activities, what we need is a regular engagement process with government and the local community.