Responsible corporate citizenship: Sharing social value to create business sense

Companies can no longer pretend to operate in a vacuum. Ramifications of every action (or inaction) can be felt not just on the balance sheet of the company, but also on the environment surrounding the production facility. Hence, it is critical for organisations to display responsible corporate citizenship, which implies an ethical relationship between the company and the society in which it operates, for ensuring peaceful co-existence in the society.
 
It is more so important for chemical companies, which are viewed by community as polluters of the environment without understanding the useful contribution of the chemical industry to the society. “The chemical industry is poised to grow exponentially as India’s share in the global pie is quite small and internal and external growth is on the cards. The chemical sector does not enjoy the best of reputations given the history and the nature of the industry. A very important criteria to sustain and ensure growth is responsible and sustainable growth of the industry else we may face hurdles and roadblocks from stakeholders,” opines Ravi Kapoor, MD, Heubach Colour Private Limited; and VP, Indian Chemical Council (ICC).
 
According to R Mukundan, MD, Tata Chemicals Ltd, the practice of good corporate citizenship is important for chemical companies and they should ensure high-safety measures in managing the chemical substances they use so as to minimise the possibility of all negative impacts.
 
For the public good
Chemicals touch and support the human life; however, if not used responsibly they can have adverse effect. Hence, it is essential for chemical industry to create awareness among the society and demonstrate the responsible & safe use of chemistry at every stage going beyond the legal requirements.
 
Mukundan says, “Chemical companies should work towards reducing their carbon footprint by stitching green practices in all business functions. Sustainability and corporate citizenship should be developed as a core company practice and core strategy. A well designed corporate citizenship program preserves and invests in communities, creates solutions to advance human progress, and generates shared value around the world.”
 
Sustainable development is very important in creating the approaches in resolving the current needs of the community without jeopardising the development needs of future generations. “Efficiency and innovations have always been those wheels that drive evolution and, if a company understands that today, it takes a leap closer to lead the sustainable growth of tomorrow,” adds Mukundan.
 
Growth drivers
Under new Companies Act, certain class of profitable entities are required to shell out at least 2 per cent of their three-year annual average net profit towards social welfare activities. This is expected to push companies to focus on their Corporate Social Responsibility (CSR). “The new law forces companies to be more formal and methodical in their approach towards CSR. Formalisation has brought in greater sense of accountability in the company. Companies such as Excel Industries - who have experience and know-how of community activities - are in the better position to implement CSR requirement as per the new Companies Act,” opines Ashwin Shroff, CMD, Excel Industries.
 
In addition to legal requirements, other voluntary initiatives in the chemical industry such as Responsible Care (RC), green chemistry, etc can also help companies to have open and transparent communication with the community. “Responsible Care is a voluntary initiative taken by the leaders of the industry to grow and foster their industry. Responsible corporate citizenship is part of the RC initiative and has even wider positive ramifications,” says Kapoor, who is the chairman of ICC’s Responsible Care Committee.
 
Though companies are now aware of their legal obligations towards CSR, often they are found wanting when it comes to implementation. “Awareness creation and overcoming apathy are the first hurdle in adopting responsible corporate citizenship initiative. Second is the knowledge of solutions available to fulfil the requirement of responsible corporate citizenship. Third is the formulation of policies and fund allocation. There are number of government schemes, which are targeted at providing benefits to the people. Unfortunately, people are unaware of such beneficiary policies,” says Shroff.
 
According to Shroff, the most important aspect for the company is to connect with the community and understand the needs of the society, and offer credible solutions.
 
Social cause making business case
Companies need not look at social responsibility as pure cost centre, but can also create business opportunity through it. Excel Industries’ solid waste handling project is an excellent example of this. The company ventured into this uncharted territory mainly to help society and community to solve the problem of solid waste by using Excel’s in-house technical skills in biotechnology. However, this has emerged as a major business opportunity for Excel with many municipalities approaching the company to solve the problem of solid waste in their localities.
 
So, as the companies look to adhere to the requirements of new Companies Act, they will have to work towards deep integration of CSR within organisations and ensure true alignment of corporate responsibility with the business goals that the companies want to achieve.