Whither Corporate Social Responsibility

[Dr. L. Ramakrishnan]

I have been thinking of writing on Corporate Social Responsibility (CSR) for quite sometime. The subject now has many dimensions: philanthropy, strategic philanthropy, Sustainability, triple bottom-line, responsible business, ethics in business, governance, bribery and corruption, labour issues, discrimination and so on. To me CSR (Sustainability) is nothing but the management of issues arising out of the interaction between the organization and stakeholders for the long term (and sometimes short term) benefit of the organization. Ideally I would expect the modern business to improve its profitability while discharging its responsibilities to its stakeholders (e.g. on issues like environmental performance, improving livelihood of people around, improving working conditions, reducing discrimination etc.). Looking around (at least in India) I find that only an insignificant number of businesses bother about this so called strategic issue. I could see that even among those who project themselves as "responsible" the sincerity of approach is missing. It appears that the CEOs have not moved an inch from their archaic view (e.g. Milton Friedman) of "business of business is to maximize shareholder value". It appears that they have not learnt lessons from the past and the present on the consequences of neglecting other stakeholder "interphase" issues (e.g. Bhopal, Enron, Worldcom, Satyam, Siemen, Apple, BP, Exxon, Walmart, Nikie, Coca Cola, Pepsi, Vedanta, Posco, HP, Mittal, recently the 2G/telecommunication companies scam and just today Tatra). There appears to be a tendency to fit in "CSR" issues in the "business as usual" model; if it cannot be fitted in, the trend appears to be to manipulate the issue or to give a different colour to the issue (e.g. most of the times environmental issues are reduced to energy issues - Carbon footprint, GHG emissions etc., leaving the rest out of the discussion). Moving out of the "business as usual" is the CSR imperative.

It appears that CSR has been reduced to a public relations exercise for the big corporations; and for the smaller organizations it is yet to dawn on them that these are issues of importance if they want to grow and sustain. It appears that business and the CEO give a damn to such issues that may erode profit or reduce his bonus. Quarterly results appear to be more important than long term growth and results.

Long live CSR !

 

[somashekar]

Long live CSR sir, but what do we really want CSR to be and to do. Quarterly results leads to half yearly and to annual and to the financial health of the corporation. Somewhere in these results are the CSR costs. What cut out of the corporate earnings are earmarked towards CSR initiative is best left to the corporations. I am certain this slice is not the biggest and it will never be as well. Investments into newer designs and technology do also indirectly benefit the CSR. Certainly any corporation will not have CSR as its primary focus and it need not be too. Along the way of corporate growth, CSR gets its own due to the extent of the corporation philosophy, and it is just OK if it differs from each other.
Smaller organizations and CSR are again the organization director's understanding and being sensitive to the CSR. Certainly not in the top priority as far as I see it from a smaller organization perspective. CSR has got to do a lot with respecting and meeting several statutory and regulatory requirements along with added other responsibilities. How good are the general health of the society at large to being doing all this for smaller organizations or the small scale industries. How much does each rule compliment with the other such that a small industry can without manipulation be able to meet the rule as well as be competitive and sustain in the business under stiff competition ?
What is expected about CSR from a smaller organization ?
Here is my tale:
A certain small scale industry located in a rural area employed several persons from the nearby villages and was also providing the daily meal apart from decent salary. It so happened that there were a few child labor and both the director and the child (guardian included) did not mind. They were happy that the child was able to learn a trade, get his meal of the day and some money as well.
There comes one day the factory inspector and finds out that this plant employs child labor. It was not new to the director and he replied with facts, and said that both parties are fine and so where is the issue. Hmmm this inspector has his duties to perform and that is to report for action.
He asked for BRIBE to cover up and this was REFUSED.
The report is made and the deputy director visits and finds the same. BRIBE REFUSED again.
He orders the closure of factory for violating rules.
The factory is lock out and the director meets all the employees outside and tells them the reason and commits to them that the plant will open if they all go to the factory inspector office and put forward their stand.
For several days the employees staged a dharna (sit from morning to evening in protest asking for a legitimate demand) to lift the lockout and provide them there daily earning. OR
Provide them alternate jobs and education and food for the below age kids.
After weeks of dharna, and on the intervention of the local leaders, the factory was opened and all is well. The plant director did not step into the office of the factory inspector nor BRIBE the inspector. No report was made and no case booked.
The plant director absorbed all the losses over the time and got back to his business and plant got operational.
Where is the CSR here ?
For me, this plant director is far greater in his CSR which the statutory prevented him based on rule books and paid the price.
Is the CSR then with the statutory or with this simple entrepreneurial outlook.
CSR is way far for the smaller organizations and will be this way untill the basics improves.

 

[Dr. L. Ramakrishnan]

Dear Somashekar,

The example you have given is precisely the type that I am concerned about. A child below 14 is supposed to be in the school and not in a factory. The trade apprenticeship should be complementary to the formal education. Our (mine not your) generation has failed India in bringing poor out of their abject poverty; at least the next generation should wake up. As the proverb goes: Please don't give them fish; teach them how to fish. Check the deaths in Sivakasi and disabilities in UP involving child labour; Just take the news item flahsed yesterday: a child in New Delhi had been locked up in an apartment without proper food for five days by her employers who had gone to Bangkok for holidays !! Can any civilized society tolerate this. Your story precisely supports my concern: there is no sincerity among the employers about the social and environmental aspects of their business. With bribery stories coming out every day, even in the economic dimension, their only interest appears to be "profit" not how that profit has been achieved (ref to Nira Radia tapes; I could not believe Ratan Tata speaking to Nira Radia to manipulate Government decisions). As I said, our generation (and the ones after the independence prior to us) has failed India. The next generation at least should wake up and improve the situation.

By the way the Ministry of Corporate Affairs, Government of India, has come out with a guideline document on CSR in 2011; there is also a suggestion to make this guideline mandatory soon. Like you have pointed out, in India the cost of non-conformance is lower than the cost of conformance in quite a few cases. Our people will find out how to "meet" the requirements without doing anything !!!

I should also mention that quite a few of the PSUs do a good job on this (I have assessed them and so have personal knowledge); but they are routine and without imagination.

with kind regards

Ramakrishnan