Corporate Social Responsibility: Needs a Reboot?

There was filth and squalor all around. The school, a government run single storied structure, was right behind a garbage dump. Dogs were running astray, feral beasts growling at the skillful kites that swooped down in calculated moves to usurp a common gourmet target from the dump. Street urchins loitered around in the midday sun. We mingled in that milieu as inconspicuously as a group of nuns would at a nightclub. Mineral water bottles in hand, all wearing a blue turtle-necked shirt, one carrying what obviously was a camera bag, we descended from a large bus and headed over to the school to do our social do. The annual Corporate Social Responsibility – a/k/a CSR – gig

It is not important to go into the details of our experience, which incidentally was quite overwhelming for us, curiously amusing to folks of the locality and rather useless for the NGO that we were affiliated to. The larger question is how best should something like social work be approached by corporations that want to give back to the society. The current model, most widely followed by companies in India that I know, has two variations. The first is where the company picks up a theme and aligns all it’s CSR activities around it. Anyone who has flown Jet Airways in India is aware of their Save the Children themed social activity. The second approach is more open where the firm chooses to work with a handful of NGOs of repute and lend resources for causes the NGO works for. Each model has its pros and cons and it is not my intent to initiate a debate on those. One feature of either model – or you may wish to call it a bug – is that the CSR activities happen parallel to, and most often in addition to, what the firm does as it’s business. This begs the question if there is a better model of social work where the company can creatively embed the cause into its business model

All businesses work to generate supernormal profits. There is nothing wrong in that. In pursuing that mission the business is interacting with and impacting the society in almost every activity it does. These are activities that happen as part of conducting business. Take my employers Thomson Reuters as example. We are the world’s largest provider of information and online workflow solutions for professionals. On the financial side, we power every financial institution on this planet in some way or the other. Thomson Reuters has a large business in India, a country plagued by financial illiteracy as well as a rather disturbing lack of penetration of financial products & services beyond Tier 1 and 2 towns. For a society to participate in and benefit from financial well being of a nation it is important to ensure optimal participation in banking systems and capital markets of every citizen of the country. A firm like ours can, and perhaps should, embed that social motive into our business model. Doing this frees up capital that was otherwise getting improperly spread too thin – now all the ducks can be aligned in one single straight line. A line that is no different from what the core business of the company is. This approach also allows the best use of human capital. None of us, for instance, we’re trained in what we ended up doing at that school (it was an opthalmological camp for people over sixty). Had this been about something that all of us are trained on, the engagement levels would have been much higher and consequently the impact of our work. This model works naturally for companies that have deep supply chains that reach sectors of society that when developed serves a shared cause for both the company and that part of society (a lot of FMCG companies come to mind, especially the e-choupal initiative by ITC). I’m not sure how this would work for say a very diversified software services firm or for that matter a company I referred to earlier – Jet Airways

I claim to be no expert in the best approach for corporations to approach social service but I do believe nothing can be more powerful than an initiative that stands at the intersection of need, scale and expertise. I would like to think that the approach to CSR also shouldn’t be any different

Pictures in this post courtesy my colleague Ajay Singh

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3 thoughts on “Corporate Social Responsibility: Needs a Reboot?

  1. I completely agree with you on this , few of the good examples where exemplary work done resulted in win-win for these companies and their customers are E-Choupal, AMUL, Arvind Eye clinic , narayana hrudayalaya and US based company developing a low cost ECG machine for India . Lets hope we will find better way to deliver CSR soon…

  2. Mr. Majumdar,

    This is an energetic and captivating post that accurately frames the current state of CSR practices. As a fellow employee in the CSR sector, it is fascinating to see how consumers are influencing the major changes in our line of business. Before acknowledging these shifts, however, I want to commend your excellent characterization of the thematic and NGO models for corporate accountability. While you analyze these two operations in India, I also see their employment in North American markets. And considering that ExxonMobile supports the Kyoto Protocol, these frameworks are also practiced in the European Union. Given their widespread use, I agree with you that civic procedures are increasingly separate from other functions, or the “bug” feature, as you call it. But as you subsequently, inquire about a company plan that combines these two aspects, you implicitly highlight the fundamental shifts occurring in the private sector today. These changes, more specifically, involve an integrated model, where social responsibility applies to every line of business. Since 80% of consumers and employees support this idea, with most of them part of the younger, millennial generation, it appears that CSR will be remarkably different in the near future. Yet, provided that methods to facilitate this process are lacking, I wanted to explore your innovative recommendation.

    At the outset, I agree with you that a good initiative involves a compelling need and employs a precise scale. But how can a population’s “optimal participation” in the market place lead to a civic-oriented business model? While I acknowledge that this frees up capital for trade, I am confused as to how it “aligns all the ducks [civic and firm interests] in one straight line,” as you remark. Even more problematic, however, is the action of embedding this social motive into an overall scheme. It does not, for instance, seem economically feasible for a company to ensure consumer access to the capital market. In fact, similar concerns have attributed to the “staling” of a fully incorporated CSR framework, as Aaron Cramer argues. Regardless, I acknowledge that your approach would make the best use of human capital. Additionally, it would enable firms, with extensive supply chains, to address both the interests of the company and the needs of its community. Yet, let us briefly return to the issue of your plan’s economic unfeasibility. In addressing this concern, I would suggest that you look at Paul Klein’s systematic approach. Klein provides valuable insight as to how public policy and consumer behavior are tools that can mitigate the financial costs of a “responsible” business model, like the one you put forth. On balance, however, your solution presents valuable insight that executives should, nonetheless, consider when attempting to make their operations more socially accountable.

    • Jonathan

      Firstly, thank you for the insightful, detailed and cogent comment. Much appreciated

      To answer your question about lining up the ducks. One premise of my argument in this piece was unifying the intent of capital in both the “for profit” nature of the underlying business and the “for society” aspect. When executing that tactic, the business will have to find a sweet spot of alignment (my figurative “lining up the ducks”) where their business model, operating strategy and customer segments fall in as much a coherent line as possible

      Thank you once again for reading the piece and more importantly commenting your views

      Sincerely
      Subrata

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