Social issues at the heart of business

Our Bureau Chennai | Updated on March 11, 2014

There are no free lunches. But, considering what US entrepreneur Blake Mycoskie is doing, one cannot say that about shoes.

His venture TOMS puts soles under the feet of one poor child in South America and Africa for every pair it sells.

The for-profit business model, begun in 2006, goes to show community welfare and profit-chasing need not be divorced from each other, said Vinita Bali, Managing Director and Chief Executive Officer, Britannia Industries.

Meet on CSR

Speaking at a conference on Corporate Social Responsibility, organised by the Confederation of Indian Industry, she said incorporating a social cause into business strategy will not dilute profitability. The company sells NutriChoice Oat Cookies, diabetic-friendly and rich in fibre. Most of its biscuits have a dose of ragi, oats and corn, which help in controlling bad cholesterol, said Bali.

“The reality in India is that 47 per cent children are undernourished. So, we thought ‘why not bring out biscuits rich in micronutrients?’ Every company must find a model where a social issue is at the heart of the business.”

Nachiket Mor, on the board of the Reserve Bank of India, and who recently released a report on how financial services should be delivered to small businesses and low-income households, talked of the current milieu where companies “run schools but let their contract labourers live under tarpaulin sheets and with poor sanitation facilities in their plants”.

“Businesses and CSR are poles apart now,” he said.

Mukund Rajan, Brand Custodian and Chief Ethics Officer, Tata Sons, says the idea is to keep the long-term in view. The Tata Nano may have had its hiccups, but the intent was to empower the middle and lower-classes with a car. “The company will continue to take risks and experiment to address social and economic needs.”

Tata trusteeship

The corporate structure also plays a role in the ability to give. The Tata Group had instituted a trusteeship that holds two-thirds of the parent company Tata Sons. “What this means is the dividends earned by individual companies goes to Tata Sons and eventually to the Tata trust, from where it gets distributed to the society.”

The Tata Group is set to increase its CSR spends because some group companies such as Tata Consultancy Services do social work that does not count as CSR with the guidelines notified by the Corporate Affairs Ministry in February. The average spend has been around ₹1,000 crore for the last two fiscals.

Lakshmi Narayanan, Vice-Chairman, Cognizant Technology Solutions, says spending may have to go up at the company, too. Cognizant does a portion of community welfare by itself, while the rest is executed by Cognizant Foundation.

Delivering the inaugural speech, Tamil Nadu Governor K Rosaiah said: “The companies should consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, and the environment.”

Published on March 11, 2014

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