Exploring the Essence of CSR
(published in Mainstream Weekly. Vol LI No 13, March 16 2013)
By
diluting its major stake in many areas, Privatisation has become a charmed
policy of the Indian
State India . The on going debate on this
mandatory provision questions the very essence of corporate social
responsibility, which ought to be a voluntary contribution from the business to
its various stakeholders. However, in view of the ethical displacement theory
by Richard De George, which states that firms have a tendency to indulge in
unethical behaviour in order to cut their cost and the socio-economic
conditions of a developing nation, this mandatory provision of allocation of two
percent of net profits of the company has been a welcome move. The question
here is would social responsibility of the business terminate after allocating
some meagre funds for social activities?
Social Responsibility of a business should neither be casted
as just another function of business nor should be used as façade to cover up
the real business motive. What kind of responsibility can one expect from a
company that manufactures cigarettes and allocates funds in the name of
corporate social responsibility for improving the health of the citizenry? The
irony is similar to a gas station that bans smoking but sells cigarettes! A B Caroll’s
Corporate Social Responsibility Pyramid suggests the importance of an economic
base to fulfil the other responsibilities of legal, ethical and philanthropic.
However, if this economic base is strengthened with unethical source, would the
company be called a good corporate citizen even if it contributes substantial
amount to CSR? Similar instance can be quoted from the greed on the Wall Street
that led to the financial crisis of 2008. The Multi National Banks targeted to
exploit the poor black population and earn a profit on that account. Here,
again, would it make any sense if the Banks allocate CSR funds for poverty
alleviation? It is a classic case of covering up corporate wrong doings with a
false veneer of CSR activities. In the act of robbing Peter to pay Paul, both
Paul as well as Peter were deprived and Robin Hood became the real beneficiary
after the financial downturn! The moral
of the story is that means should never be neglected in the pursuance of the
end. Unless the means are ethical, it would be difficult to justify the
integrity of the objective. Corporate Social Responsibility should be adopted
as an essence of business and not as a tool for blowing its own trumpet. The
social responsibility of business would attain a more meaningful status if it evolves
simultaneously with the conception of the business idea. Research has to be
done before an idea gets transformed into action, and if it is found to be
detrimental to any of the stakeholders, it should be terminated at the
inception itself.
In India ,
Gandhiji’s trusteeship theory made a strong influence on the industrialists of the
pre-independence era. These industrialists contributed generously to the social
causes of national movement, in the building of schools, colleges and technical
institutions by abiding with Gandhiji’s reforms of untouchability, women
empowerment and rural development. They filled the lacunae, which the state
could not due to paucity of resources and competency. The New Economic reforms
liberalised manufacturing and trade norms enabling a thrusting growth of
industries. Hence, many new industries mushroomed to manufacture and market
goods while grossly violating their ethical obligations. The years from then on
became a witness to a series of corporate scams like the Harshad Mehta- Ketan
Parekh Scam, Satyam Scam, IPL scam etc. which exposed the individualistic and
selfish motives of people behind the corporate veil.
During this time, many a multinational companies entered to
capture the vast Indian middle class market with pent-up demands. These MNCs are
known to resist the environmental norms in India while they conform to the
norms in the developed countries. A comparison of the responses of British
Petroleum, responsible for the oil spill at Gulf of Mexico
and Dow Chemicals, which acquired Union Carbide - infamous for the Bhopal Gas
Tragedy, would well substantiate the previous statement. Another example is
that of the corporate hijacking of water resource by the Coca-Cola Company. The
Coca-Cola Company, which was shown the door in 1977, was welcomed with open
arms after the New Economic Policy of 1991. The Company’s bottling plants in
Palchimada, Kerala and Medhiganj, Uttar Pradesh were accused of illegally
extracting millions of litres of clean water, and thereby creating acute water
shortages, and polluting groundwater and soil. The irony is that this same Company
also markets it “bottled clean water” to the Indian Public after polluting and
depleting India ’s
water resources. Advocates of water democracy protested vehemently against
water privatisation, however, the strong corporate lobbying resisted them all
and is thriving with new vigour. Moreover, it is these huge companies, who can
be held responsible for infusing consumerism by encouraging unnecessary mass
consumption through their irresponsible ways of marketing. For example, the companies, through their
advertisements, unabashedly make you aware of the environmental pollution and
it’s after effects on your skin and hair. Then, they market their product as a
saviour to these problems. However, the irony is that they never disclose their
own share of contribution to pollution and environmental degradation. In fact,
these companies create problems in order to sell their solutions! And while
taking a glance at the Cosmetic Industry, which has taken a resolution to
convert the brown Indians to fair, white and spotless Indians, one ponders
whether it is trying to permeate the so- called ‘confidence’ into us or
underscore the inferiority of our race and ethnicity? Such is the influence of
marketing on society, that it creates needs which does not exist and coerce
people into unnecessary consumption and thereby leading to a wastage of valuable
resources.
Companies as corporate citizens should incorporate the
philosophy of CSR at two stages- before initiating their business and while
doing their business. CSR should never be seen as an approach to compensate for
the damages the business has already done. There is an imbalance of power
structure especially in a developing and emerging economy like that of ours. It
is a dualistic economy characterised by sky scrapers on one side and slums on
the other. Companies have huge assets and resources because of which they have
considerable power and influence in the society. This power and influence
should be used in the right direction so that the ethical dimension of
Corporate Responsibility gets highlighted more than the economic one. The
pressing problems of inequality, poverty and hunger can be alleviated to a
great extent if the corporate world does some simple gestures of paying the taxes
and avoid unethical corporate lobbying. The 2G spectrum scam, which caused a
huge loss to the public exchequer, was as a result of corporate lobbying. It could
have been avoided if the corporate big wigs focused on their ethical dimension
rather than their economic motives. The corporate philanthropic contribution in
the form of big bucks to NGOs would help in getting tax exemption and
publicity, but the company can never be justified as a corporate citizen until
and unless the ethical dimension is fulfilled. Milton Friedman’s statement, “the
business of business is to do business” was the buzzword of a bygone era. It
would hold no good in this age of sustainable development, environmental
regard, human rights awareness and social consciousness. Survival of the
fittest is the norm, and companies that would fit CSR sincerely in their day to
day activities would well survive.
