The Hindu Business Line : `Big cos can improve market cap by doing social good'

THE Institute of Directors, which celebrated its 15th anniversary last week, started with the basic aim of improving the competitiveness of the director fraternity. "But we believe that our role has changed and stakeholders demand much more than profits. They expect companies to be ethical and socially and environmentally responsible," according to the IOD President, Dr Madhav Mehra. Therefore, the Institute is now tackling issues of environment, corporate governance, corporate social responsibility and innovation."

In the area of eco-management, IOD is focussing on Total Eco-Effectiveness Management (TEEM), which is looking at both upstream and downstream sections of the product chain. "Companies should keep a watch on a product right from where it comes to where it is disposed," stressed Dr Mehra, who believes that we have to live on dividends not on the principal. "This is especially valid for companies that are mining for construction purposes," is his view.

Dr Mehra, who started the TQM (Total Quality Management) and TEEM movement in India felt that these two concepts could bring about transformation only when there is transparency, trust, honesty, integrity and equity in the decision making process. "This leads us to the issue of good corporate governance," he said.

IOD also believes that the biggest challenge for Indian businesses in the 21st century is to bridge the disparities that have widened since start of globalisation. Dr Mehra, who's also the President of the World Council for Corporate Governance, was of the opinion that large companies can improve their market capitalisation by doing social good. "There is a public perception of CSR, but are companies really doing it?" he asked.

Last but not the least is in the area of innovation.

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