As the Corporates are increasingly extending their support for developmental projects which are beneficial for the society it is also an imperative to assess the impact of the developmental projects initiated by them. Impact assessment of CSR projects essentially implies a process through which a company can evaluate the efficacy of CSR programs and projects undertaken and their impact on stakeholders including the society. Impact assessment of CSR projects aims to evaluate the ‘short term as well as long term effects of CSR projects on society, economy and environment’ at large. It is the review of a ‘company’s CSR policy guidelines, initiatives, outcomes as well as budget (fund) utilization vis-à-vis the impact’. It analyzes the impact of corporate CSR activities on various stakeholders including workers, customers, local communities and the environment at large. The Ministry of Corporate Affairs also has revised the Corporate Social Responsibility guidelines in which CSR impact assessment studies has been made mandatory for all companies which are implementing CSR
projects.

The amendments made and the policies which govern the revised guidelines for CSR Impact assessment are

 Impact assessment is only mandatory for companies with CSR obligations of INR10 crore with projects of INR1 crore or more.
 Companies can set aside a maximum of 5% of the CSR spent or INR 50 Lakh – whichever is lesser – for impact assessment.
 Impact assessment needs to be done before the completion of one year since the end of the project. For example, if your CSR project was completed in April 2023, your impact assessment process for the same should begin in May 2024.
 The assessment report which will be produced at the end of the process will be annexed to the company’s annual report on CSR.
 The impact assessments must be undertaken by an independent agency.

‍Impact assessment has been primarily focused upon for several reasons. Now that we have established this, here is what impact assessment assures for your business:

Impact assessment of CSR projects offers multiple benefits to the incumbent company. These are:

a. Make CSR Project Transparent and Easily Manageable: Since CSR impact assessment is generally done by independent external agencies having requisite expertise in this field, their report is more authentic and ensures greater transparency.

b. Instilling Greater Accountability and Trusts amongst Stakeholders: Conducting impact assessment of CSR projects indicates company’s policy towards greater accountability to the stakeholders.

c. Exploring Scope of Improvement: Independent and expert assessment of projects helps the company to identify the areas which require further attention. The company can develop strategies to overcome the shortcomings of existing approach and projects and try to maximize the positive impact.

d. Risk Mitigation: Independent assessment of CSR projects can often help to identify the risks associated with long term projects and alert the company to take timely action to mitigate the same.

e. Greater Compliance: As impact assessment is a legal requirement, conducting the same meaningfully ensures greater compliance which improves the corporate image.

Elements of CSR Impact Assessment

CSR impact assessment broadly includes three aspects as follows:

Social Impact Assessment: It refers to the favourable or adverse effects that a certain CSR project has on the society or community. The impact assessment agencies collect data through surveys on the perceptions of stakeholders. Secondary data published by Government and other agencies and in academic surveys are also considered to be useful.

Environmental Impact Assessment: It refers to the short term and long term favourable or adverse effects that a certain CSR project has on the environment. Life Cycle assessment is a routine tool used in this context. Additionally, environmental data published by Govt. are also used.

Economic Impact Assessment: It refers to the impact of a certain CSR project on the economic development of the target group. Economic modelling to measure the benefits and costs and secondary CSR data analysis to explore opportunities created by the company for employment and business development are the tools used in this context.

The amendment in the CSR Rules in India mandating impact assessment of eligible CSR projects is aimed at revealing how the CSR initiatives of companies are contributing towards economic development, environmental sustainability and above all social welfare in real sense. The study clearly shows that Indian companies are committed towards the same and are fair in their approach to  assess the success of their initiatives. This exercise, therefore, is likely to improve the transparency and corporate image and essentially translate into better accomplishment of long- term corporate objectives