Kanika Datta: Responsible business is the best 'CSR'

SWOT

Is corporate philanthropy becoming an alibi for good business practices? The question suggests itself because, all of a sudden, business in India seems to be seeking to present a kinder, gentler face to the world. It's part of a global trend towards greater corporate accountability that many corporations misinterpret.

This search can be detected in the rash of news releases about "corporate social responsibility" or CSR initiatives with which the media and public are being besieged. Every business excellence award pays obeisance to it. All awardees virtuously affirm that they are responsible corporate citizens, listing NGOs to which they donate and, sometimes, work with. Public relations consultants are regularly being importuned for advice on CSR "strategies".

The current fixation with CSR also explains why C K Prahalad's bottom-of-the-pyramid theory has proved so popular. It provides a politically correct framework for companies to reconcile the seemingly conflicting objectives of business growth and social responsibility""though several marketers are beginning to discover conceptual flaws when they convert theory to action.

Corporate philanthropy has been a long tradition among the larger and more established Indian corporations. What's changed now is the urgency with which newer, emerging companies are seeking to be seen as righteously "giving back" to society.

While it may be gratuitous to criticise these efforts""many are truly praiseworthy""it is also difficult not to be a little cynical. It is uncertain how many of these initiatives are driven by genuine concern for society and how much of it is done with an eye to image-building. It is difficult to escape the nagging misgivings on the latter count. Too often, corporations turn to "CSR" to solve a local problem or to assuage local sentiments when jobs are lost or land is appropriated for new projects. These impulses can scarcely be distinguished from the seventies-style "garibi hatao" policies that perpetrated many iniquities in the name of the poor""and for which the current political dispensation is showing an alarming predilection.

Surely, truly responsible corporations don't need to wear their hearts on their sleeves? This is a point that Paul Holmes, editor of The Holmes Report, a thought-provoking weekly electronic newsletter for the public relations industry, recently made. Reviewing a book by Andrew Savitz of PriceWaterhouseCoopers and Karl Weber called the The Triple Bottom Line, Holmes makes the point that a truly sustainable corporation has no need to "give back" to society. "The whole notion of giving back becomes redundant if the company doesn't take anything to begin with," Holmes writes.

The triple bottom line that Savitz posits""and this isn't a new theory by any means""is one in which a corporation "creates profits for its shareholders, while protecting the environment and improving the lives of those with whom it interacts".

As Savitz writes in the introduction, "It could be said that the truly sustainable company would have no need to write checks to charity or 'give back' to the local community because the company's daily operations wouldn't deprive the community but would enrich it."

In other words, the best "CSR" lies in responsible business practices. In this context, corporate responsibility is not a warm, fuzzy, "good-to-have" concept but a hard business reality that is directly tied to the sustainability of the corporation. This is a much more long-term concept and probably far more challenging for corporations to achieve. But there are any number of examples in India that it can.

The Bajajs in Pune, the Tatas in Jamshedpur and Maruti in Gurgaon all provide useful examples of how corporate activity can result in a healthy triple bottom line by creating a momentum of local prosperity and growth. Mumbai's giant integrated textile mills demonstrated the flip side. With textile workers living in near-Dickensian conditions, the door was left wide open for Datta Samant's ultimately ruinous interventions. Going by the current evidence of the hovels and industrial effluent in the heart of the city, Mumbai's large factories continue to stoke rather than assuage social unrest, even as fashionable corporate matrons host glittering dinners for charity.

Scaled up to India Inc., such practices suggest that India's competitive advantage in manufacturing may be built on an unsustainable base of growing environmental degradation and deficient community benefits. This is what compels companies to make public atonements in the form of publicised and unconvincing CSR initiatives. Ultimately, it's a wasted effort. A good image begins with good business practices.

The views here are personal