The Hindu Business Line : The `do-good to feel-good' factor

FROM philanthropy to social responsibility — it is a long road. And it has taken several decades to traverse from "helping" to "empowering" people. Philanthropists feed people fish for one day; the experience of centuries has shown policy-makers and leaders the value in teaching people to fish so they can eat for a lifetime, in keeping with the old Chinese adage.

For business houses, traditionally the largest philanthropic institutions, the significance of the changed approach is still unfolding. For instance, at a leading paper and chemicals manufacturer, the awareness of the distinction began with a visit. When its CMD visited one of the units in 1999 to inaugurate a mobile health facility for the surrounding villages, to his utter surprise he was met with protests from the community.

This made the company's decision-making team pause and think. They realised that good intentions and sporadic inputs are not sufficient to develop effective community relations. It was time the company looked at the issue more professionally.

With professionalism, corporate philanthropy has evolved into good corporate citizenship. It has shifted focus from spending a portion of profits on `good works' for the community to adopting good business practices to co-exist `with' the community; it has shifted focus from charity to enabling business processes to produce an overall positive impact on society.

This is not meant to play down the role of philanthropy, one of India's greatest social practices. A tradition set by royalty, it was natural that business houses should follow it with alacrity, setting up charitable foundations, educational and healthcare institutions, and trusts for community development.

But businesses need to go beyond philanthropy — not because philanthropy is not relevant or because we need to ape the West, but simply because practices that come under the umbrella of `corporate social responsibility' (CSR) are becoming relevant in India in the era of globalisation.

Globalisation brings with it greater stakeholder awareness, increased empowerment of civil society organisations, intensity of competition and environmental challenges. The imperatives of globalisation have, in part, impelled business houses to enforce emission standards in automotive products, labelling requirements in pharmaceutical and food products, and processes in the paints, dyeing and other industries.

Corporate social responsibility is about companies operating in a manner that positively impacts all its stakeholders, within the company and outside. It is about acting with commitment to the community, not merely following legal requirements. And it is about not just what companies do with their profits but also about how profits are made.

Businesses are beginning to see that, with globalisation, underdeveloped and developing nations are more vulnerable economically and, therefore, politically than ever before.

Issues of national development are more crucial to continuing business health than before. The ills of what economists call the `Dutch disease', where companies fail to reinvest in technology and other business improvements despite being rich in natural resources, can be extended to the entire social plane.

Where corporate organisations refuse to take responsibility for failures in effective delivery of public rights and economic development, the disease strikes at the very roots of society.

It is not surprising then that the Corporate Social Responsibility Survey 2002 — India, jointly conducted by the United Nations Development Program (UNDID), the British Council, the Confederation of Indian Industry (CII) and PricewaterhouseCoopers, covering 19 industry sectors, revealed that increasingly companies in India are evincing interest in social responsibility and playing an effective role as good corporate citizens.

In Africa, several corporations are not mere participants but also substantial investors in the war against HIV/AIDS. In Europe, corporations have played an active role in the rehabilitation of refugee populations and conflict resolution. Closer home, chambers of commerce and industry are significant actors in third-track diplomacy efforts in South Asia and the East Indies region, especially Indonesia.

Even as communities have benefited from corporate support in the fight against HIV/ AIDS, the companies have benefited from a drop in absenteeism and employee turnover, thus stabilising the workforce and leading to lowered training costs.

Such social responsibility initiatives by private corporations, in order to be sustainable, need also to be profitable. Partnerships with communities, often through non-governmental organisations (NGOs), are ways in which profits are shared with the communities.

While the impact on the community is quicker, more direct and tangible, the benefits to business are not so. Some benefits are more direct, others more subtle — such as the community's (or employees') growing readiness to discuss, openly and without hostility, differences with the company.

Social responsibility impacts investor behaviour as well. A survey by GlobeScan Inc (previously Environics International) — for its annual Corporate Social Monitor reports in 25 countries — shows that three in ten shareholders say they would sell their shares in a company if it behaved socially irresponsibly, even if the share earnings were considerable.

Social concern by Indian corporates, thereby, is not merely a good-to-have option. In fact, for India Inc. today, good corporate citizenship and social responsibility initiatives are inextricably linked with improved corporate reputation, shareholder value, employee relations and retention, and improved relationships with the local community.

(The author is Head of Corporate Social Responsibility at Ballarpur Industries Ltd.)

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