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Leveraging CSR for funding tech innovations

Leveraging CSR for funding tech innovations

Authored by: Mr. Kaviraj Nair and Prof. Mahesh Panchagnula

Corporate funding for start-ups in public institutions can catalyse social transformation

In 2019, Finance Minister Nirmala Sitharaman announced that the scope of corporate social responsibility (CSR) is being expanded to allow firms to support research and innovation by government-funded incubators, or agencies funded by central and state governments or public state utilities.

Further, any contributions to support public universities such as the IITs could also be counted as CSR. This has opened exciting possibilities for companies to depart from traditional ways of spending CSR, like donating to NGOs and charities, contributing to disaster relief funds, or launching short-term CSR drives and projects.

Would it not be more exciting to create new technologies that change our solution pursuit paradigm as opposed to implementing existing technological solutions?

Two factors drive CSR. Firstly, it’s a compliance issue. Most Indian companies must spend 2 per cent of their average net profits over the last three years towards CSR activities.

Secondly, it is increasingly being leveraged to build a positive brand identity for corporations and help their ESG compliance. Brand image has gained importance as stakeholders have become more aware and involved in social issues. Employees, investors and consumers are now looking to associate with organisations that are equally interested and committed to doing social good as them. Borrowing rates from several European banks are tied to a company’s commitment to ESG and social impact.

In response, corporate India is also striving to present a more holistic brand image to the public. The challenges, despite this growing awareness, remain in identifying the right partners and projects, as well as in selecting projects that are long-term impactful, scalable, and are self-sustaining.

Tech for social good
It is now widely acknowledged that the key to a non-linear scale-up of any project lies in leveraging technology. Solving societal problems is no exception. A policy environment that encourages CSR investments in technology-led solutions has made sustainable and scalable solutions a reality. Additionally, collaborations with local bodies and the establishment of governance and community engagement structures can ensure these projects become self-sustainable in the long run.

The Centre announced that January 16 shall be celebrated nationally as Startup Day. There is a vibrant and thriving start-up ecosystem centered around most higher education institutions. These institutions are centers of high energy innovation and pioneers in developing technologies and innovations for social impact.

For example, IIT Madras is home to one of the best deep tech startup ecosystems in the country with one new tech start-up being incubated every week. Working across sectors such as healthcare, education, agriculture, skill development, housing, energy, clean water, etc. these companies present an enormous opportunity for companies to partner and make deep social impact.

CSR can be used to meaningfully support the tertiary education sector in a number of ways. Funds can be channeled into the implementation of socially relevant projects conceptualised by faculty members, or for supporting scientific research that will unravel the answers to key scientific questions underlying social problems.

Further, grants can be given towards government-recognised incubators, setting up new incubators, supporting existing incubators to hire more people through internships and fellowships, and providing seed funding for start-ups. The fact that the government’s CSR policy allows a company to choose to intervene at any point in the end-to-end tech value creation process is a great enabler.

Several examples of such projects that aim to tackle major social issues across domains can be presented. Some of the examples include creating sustainable construction materials that are affordable and recyclable, developing India-centric greening options such as novel heat and power management systems and addressing socio-technical issues (such as flood management systems) by carrying out in-depth risk analytics on relevant parameters.

Projects such as these enabled through CSR funding and led by higher education institutions accelerate the transition from laboratory to actualisation and serve communities in innovative ways.

Leveraging CSR for innovation through educational institutions such as the IITs also presents an opportunity to harness and nurture the potential of the students and faculty. These institutions and incubators are hotbeds for creating the next generation of innovators.

Globally IIT alumni are contributing to the development of sustainable companies. There is also a heightened sensitivity and responsibility among these young individuals to find innovative solutions to social issues. Corporate India needs to recognise the vibrant intelligence and talent of these highly motivated individuals and invest in them for socially relevant initiatives aimed at improving society.

Be it sanitation, energy, water, agriculture, or energy, there is a tech-enabled solution for every critical need waiting to be researched, developed, and implemented. It is time for companies to leverage their CSR to invest in projects which will create transformative value in the long term, drive change, contribute to the research and innovation ecosystem, and nurture future talent by building partnerships with institutions of learning.

CSR should be invested to create unimaginably novel tech solutions to chronic societal problems.

Prof. Mahesh Panchagnula is Dean (Alumni and Corporate Relations), IIT Madras; and Mr. Kaviraj Nair is CEO, Office of Institutional Advancement, IIT Madras

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