Kanika Datta: Why 'CSR' attracts incredulity

SWOT

Over the past few years, the rash of corporate scandals in the US has put "corporate governance" squarely back on the agenda of the intermittent corporate reform movement. A sub-set of this is Corporate Social Responsibility (CSR).

This has become a significant concern for large corporations in general, and particularly so for multinationals establishing or expanding operations in developing countries like India where attitudes are still relatively FDI-wary and old "socialist" values still provoke innate suspicions about Big Business.

As a result, "CSR" has become one of the pivots on which corporations look to build their reputations. To be fair, their efforts in this direction make an intrinsic and valuable contribution to society and it would be gratuitous to deny that.

Over the decades, thousands of Indians have gained from the mammoth education, medical and sports trusts set up by large Indian corporations like the Tatas, Birlas, Bajajs and so on.

Across the Atlantic, Bill Gates's foundation has done some seriously useful work on combating Aids, and his is just one of many gigantic CSR initiatives coming out of US Inc. Why is it, then, that CSR continues to be regarded with such universal scepticism?

The responsibility, of course, lies with the corporations. They make it hard to escape the general view"" though there are many honourable exceptions""that all the do-gooding ultimately has a mercenary intent.

Donations are made to attract tax breaks, trusts are typically set up as conduits for unaccounted money, large social projects are mere quid pro quos""these are some of the traditional popular attitudes to corporate good works.

Like medieval believers in Europe who bought "Indulgences" from the Church to expiate their sins, corporations, it is thought, pay for good works to compensate for, say, environmental damage and dodgy practices.

Corporations themselves have done much to provoke this perception. They have this irritating habit of insisting on hyper-publicity, of broadcasting their virtues to the world.

For months after the Tsunami, all journalists will recall being inundated by a tidal wave of self-congratulatory press releases on how such-and-such company had donated lakhs or crores and sometimes distributed their products to the victims. Most of these found their way into waste-paper bins.

Other corporations with similar intent and a more realistic understanding of how newspapers think, paid to publish advertisements, often prominent one-pagers replete with photo-ops and tacky adulatory text.

After the Gujarat earthquake, many of us sniggered at the anxious phone-calls from the hapless public relations department of a large Mumbai-based corporation requesting coverage of relief work by the wife of the industrialist.

Journalists reporting on post-Tsunami relief work had many stories to tell of how pharmaceutical and consumer goods corporations considered the crisis an opportunity to showcase their products to rural markets and establish stronger links with local government officials.

Such overtly cynical use of a tragedy fools nobody and runs the ultimate hazard of detracting from the Good Corporate Citizen image that corporations are working so assiduously to build up.

This approach is as true of the manner in which corporations choose to project their CSR operations in their official communiques. Couched in such terms as "sustainable development", "social responsibility" and "corporate citizenship", their accounts tend to employ a righteous tone and take the high moral ground in a manner that provokes incredulity rather than admiration.

These efforts are feted by lavish functions attended by influential dignitaries who meet carefully pre-selected and primed beneficiaries of corporate largesse. The latest fad is to draw on inspiration from management guru C K Prahalad's seriously flawed book The Fortune at the Bottom of the Pyramid, which suggests that the poor can be empowered if they buy consumer goods made for them.

What is often overlooked in this apparent obsession with commerce with morality, to paraphrase Gandhi, is that CSR schemes are among the first on the firing line when corporations need to cut costs, restructure or prepare for bad times.

Naturally, these reversals never find their way into the public domain, but they are well-known enough among the NGO community to entrench scepticism. In other cases, corporations often jettison projects if they find them out of sync with their "values".

The truth is, the notion of good corporate citizenship needs an overhaul. Like the obsession with "shareholder value" that is taught in B-schools, it is considered an exogenous virtue rather than an intrinsic attribute of corporate operations.

Corporations should contribute to society just as much as they should pay their taxes and follow the laws. The latter two are rarely activities that corporations publicise.

By the same token, why should they lavish attention on the social work they do? Shouldn't it be considered a given? And can it ever be proxy for bad corporate governance? In this case, less publicity would add much more credibility to the message.

The views here are the author's.