AMERICAN PERISCOPE. Limits of CSR

While we want our companies to be socially responsible, do we want them to be social activists? In fact, what we mean by being socially responsible has itself undergone a change over the years. At one time, a company could write out checks to a cancer society or boy scouts and feel good about itself. This is not sufficient anymore. Nowadays, we look to see if the company is using its expertise in doing good. An engineering company that can spare its technical staff to fix the irrigation or water supply problems in a nearby village would be appreciated more than one that just writes checks.

So while those checks for cancer research are welcome, we are also concerned if a company that is aware of quality problems in its product does not take adequate steps to fix them in a timely manner. Several pharmaceutical and automobile companies have paid a heavy price in fines and compensation by overlooking that precept. Thus, while we want our companies to do good, at the very least, we want them to do no harm.

However, a company’s social responsibility can be resented if it spills into social activism. A bank in India wants to give an award to the residents of a street where there is no garbage dumped on the sidewalk would be cheered. But if the bank decides khap panchayats are retrograde and instructs its tellers to talk to everyone who comes to the counter about it, then it raises several questions.

For one, you would wonder what business is it of the bank (a question you would not ask of a cleanliness campaign). Secondly, you would wonder if the tellers, even if trained, had the skills to engage a customer in this conversation. Finally, the shareholders would certainly wonder if this contributes, in any way, to the reasons why they invested in the bank’s stocks.

When high profile CEOs take a public stand on social issues of personal concern, they can be excused but when they draw their organisation in, then they are wading into unchartered territory.

That is what Howard Schultz, the CEO of Starbucks, the global coffee retail chain did. He wanted his counter service personnel (baristas) to engage the customer on the problem of race discrimination and inequality in America.

This is a sensitive topic that lingers just under the skin of American society and has been raising its head in the recent past, but even the well-educated may feel uncomfortable discussing it with their friends. To ask a barista to do that and to write or put a sticker on the cup saying ‘Race Together’ may be putting the business in jeopardy.

I am not a Starbucks customer, but if I came into the store to get a cup of coffee, I do not want the clerk to engage me on race relations. Moreover, if I am in a line itching to grab my coffee and rush to work, I can see my blood pressure rising if the people in front of me are taking those extra valuable seconds to chat with the barista. And if I am a shareholder, I am going to be calling my broker to ask if there are any other attractive stocks in the market.

Starbucks is not a privately owned company and as long as the stock is performing well, Schultz may be forgiven his foibles. But there are some issues that are socially charged. And wading into them may not make good business sense. Fortunately, Starbucks has suspended the campaign.

The writer is a professor at Jindal Global Business School, Delhi NCR, and at Suffolk University, Boston

COMMENT NOW