On CSR, govt is not quite right.

With new directive it has exposed its own ignorance on the concept

adve-srinivasa-bhat

Adve Srinivasa Bhat | April 2, 2014



The government is not quite right. Choose to explain.

No, I am not egging on the companies to disobey but I believe it is now more important for both; the government, including the state governments, and the corporate sector, including the companies outside the obligation limits to know the true sense of the concept – ‘Corporate Social Responsibility’ (CSR) – which I feel is already buried in this strange approach of the government to get the companies socially responsible. But, is the government really trying to turn the companies socially responsible with the directive? Does the government know the degree of compliance on the responsibility on the part of the companies? Does the government know the deficit areas and the root causes?

Do companies become socially responsible by spending the stipulated sum on suggested social welfare programmes? No, none in the government, even those in the ministry of company affairs, would say yes. On the contrary, smart companies with slight respect for social responsibility can cleverly greenwash their irresponsible practices with a good list of good deeds aggregating to 2% of their profits and leave the society with a big nett negative impact. Not a big deal. Satyam Computers with its foundation for social welfare probably did a lot more than what the government is asking for now, but in the end it left the mishandled company to the government to handle the negative social impact of it all.

Social harm caused by companies owing to business compulsions or sheer greed or worse owing to plain lack of real social sense of it all do often vastly outweigh the social good they proclaim about. In its website, Kerala Minerals and Metals Ltd has put a good list of good deeds done and a nice set of perspectives on the social responsibility. It beats the government’s expectations on all counts very convincingly but all that turns hopelessly negative on the balance with the misery of the people living in the vicinity of its factory in Kollam, in Kerala. The very proposition of the profitable company to buy the lands of villagers hit with chronic ill health and toxic land after over a decade of deficient care tells of a certain lack of understanding on the very essence and spirit underlying the concept of CSR. So does it say of the government’s move as well.

The potential of businesses to cause harm to the society is largely linked to what they produce and how they produce. The impact is harsher when the care is lesser on critical issues of sustainability – of natural resources, of pollution of life critical things and of course culture too in complex countries, like ours. The Times group which, among other products, publishes the Times of India newspaper across the country extols the social responsibility initiatives it undertakes through its foundation set up for the purpose. The government ought to be happy. But social responsibility of businesses is not about doing good elsewhere but about being responsible in the conduct of the business and demonstrate it earnestly; in the products, in the production and in the selling – for the good of the of the larger society, and, most essentially and at the least, manage it with particular care in ensuring that no harm is caused to others in the society. Simply put, a business should not profit, not even lose at the cost or even at the displeasure and inconvenience of other members and constituents of the society. The Times of India, I believe and so do many who buy it, is particularly guilty of diluting the decorum and need attributes of much needed general and family newspaper with obscene visuals in its supplements – unmistakably as a strategy to trigger sales. Its version on the net is simply deplorable. To know the true sense of CSR in contrast to what is gross irresponsibility in the context of a general (relevant to all age groups) newspaper, one needs to relatively check; timesofindia.com and nytimes.com, any day. The difference is apparent and tells of a certain lack of maturity in the perception on the concept and that is largely true of businesses across sectors.

In the absence of law malpractice in business is smartness. Ironically, much of the irresponsibility on the part of businesses is motivated by the failure on the part of the government to frame policies and laws, in time and worse even when it is overdue, in spite of the damage, and in some cases even when the damage is widespread, grievous and glaring. Often it is the entire sector that is dirty. Housing is a typical example of gross irresponsibility – all through – where the government looks like an unconcerned spectator. In fact the sector thrives because of that. The noble purpose embedded in the name ‘housing’ is mercilessly derided by everyone in the business by obstinately selling investment opportunity instead – to those who already have it, not just one or two …, at the cost of homeless – at the cost having it at obnoxious price, at the cost of not having it at all. Nothing is clean here – right from land acquisition to selling flats.
 
There is no survey yet but reports tell of rags-to-riches-to-rags stories of gullible marginal farmers around the metros who sold early and cheap to middlemen who are all flourishing with multiple properties now. The game of notification and de-notification played by politicians and the encroachment of tracts of public land in connivance with people of power and influence only reeks of gross irresponsibility. The social cost of all this, from just one sector and from one city, turns the cash in the 2% stipulation too tiny a fraction. Some solace to small time vendors though. In spite of the crooked weighing balance they use vegetable vendors can kick their guilt and feel proud thinking of the property developers’ deceptive practice of selling by the dubious super-built area.

The instances above are typical of the carelessness across industry sectors and such lapses do cause huge negative social impact in real terms. While some larger companies can cause huge nett negative social impact it is the innumerable medium to small companies which collectively, being unchecked, cause most damage. CSR is surely not about doing 2% good by 0.31% of the companies but is essentially about not harming others’ interest in the process of making money in business.

With the new directive the government has exposed its own ignorance on the concept which is quite unsettling. The government is clearly wrong on two counts. One, the misconstrued sense on the concept will misguide and would even encourage all the big CSR critical companies to miss their respective true CSR obligations under the cover of 2% misplaced good deeds while simultaneously letting off 99.7% of the companies, of which at least 60% are CSR sensitive, off the noble thought. The nett negative social impact in spite of, or because of, the directive can be really huge. And, two, social welfare is essentially the government’s responsibility and to expect companies to spend on larger issues of hunger, education and health without a comprehensive national framework on each can only result in ineffective spending – and, worse, may dilute the very critical commitment of the government itself on these issues, particularly considering the missing sense of accountability in its work.

Nonetheless, the new directive is positive in spite of being misconstrued because it stimulates the conscience of corporate India. Of course, it makes this noble task of – Doing Good and Making Good from it – the most ideal approach to CSR – a little more challenging.  

(To be continued)

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