Winston Churchill once said that the price of greatness is responsibility.
All businesses have a responsibility and commitment to the social and economic development of their stakeholders, community and society at large. In fact, the practice of CSR or Corporate Social Responsibility as a business model has evolved from being a slogan that was considered trendy by some firms to the current era where it has become more of a business requirement rather than just an option.
Businesses understand the significance of having a sound CSR plan in place to be sure of superior financial posturing. Truth be told though, not all businesses are completely forthcoming about their CSR activities and they make it challenging to validate claims of social responsibility and commitment to sustainability. This is a good example of the limitations of this CSR program and shows us how the focus is on improving the current system of capitalism rather than changing it completely.
American research shows that more than 95 percent of charitable donations do not reach the people whose lives they are intended to improve. This statistic shows us the flawed story of lost humanity in this space and it can be blamed primarily on lack of financial transparency, dependency, reporting and governance among a few. There is a need for a strong process that can overcome these various obstacles faced by these organisations during the execution of CSR projects which ensure a more open system. Blockchain can help achieve this objective.
How Blockchain is Making CSR more Transparent?
Transparency, Authenticity and Security are associated with CSR. Blockchain can be used to facilitate CSR projects and can create an open system out of the existing capitalistic setting. Here’s how Blockchain can revolutionise the social responsibility sector:
Provide Greater financial transparency: As previously discussed, a majority of charitable donations do not reach the intended people, and organisations have not been able to garner the required trust from the public. Blockchain is a technology that can be decentralised and has shown that it can be very useful in ensuring increased financial openness by allowing people to track every cent from start to finish. The presence of smart contracts will aid people to verify that their funds have been spent properly and reduce the risk of mismanagement.
Enable Transparent Communication: Blockchain Technology allows stakeholders taking part in the CSR activity to access requisite information at their own convenience. Smart contracts facilitate open communication. They provide traceability of all records through the life cycle of the project and this technology is supporting in disclosures while allowing access for donors, regulators and investors.
Ensure Better Stakeholder Management: One of the big challenges faced by organisations when executing a CSR activities is the effective management of stakeholders. Data is often hard to get your hands on. Due to a lack of standardised data, it is very difficult and the information is ineffective for analysis. Solutions for management of data powered by technology like Blockchain can play a big part in eradicating human errors and contributing to proper management of such projects.
Tracking Success of CSR Initiatives: With blockchain, one can track and measure and this allows us to hold the group responsible for what they do. Blockchain makes it possible to have external verification of internal implementation. This proof of performance allows supervisory managers to be held accountable for everything. As programs and their progress get verified and are then documented, CSR initiatives can outgrow its potential of false promises and numbers that cannot be relied upon.
To build stronger communities and foster economic growth that can be sustained, businesses need good management of their CSR programs. A robust system that can eliminate the shortcomings of the previous system is what is required and we need to be able to trust this open system. Blockchain technology allows businesses to create a completely fresh environment of smart humanitarianism. This can ensure that funds and the benefits of various CSR programs reach the right recipients coupled with better visibility for brands.