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| The real CSR: More than an ideology, a future business driver |
| Kenneth D. Khalkho / New Delhi Aug 03, 2009, 15:18 IST |
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In the changing business environment, doing well (profit) and doing good (caring) are not mutually exclusive but mutually reinforcing. There has been a paradigm shift from the way business was done earlier to how it should be done today. However, for most of the organisations, corporate social responsibility (CSR) has become synonymous to charity or signing a few cheques for some non-governmental organisations (NGOs).
Today, only a handful of corporate houses are fulfilling the real CSR and there is a dire need to understand its essence and spirit. “As also witnessed during Hillary Clinton’s visit to India, global leaders are placing CSR on their priority list and this will be a major driver for business in the coming times. Surely Indian corporates need to gear up to the call,” says Rajesh Jain, Senior Partner, Walker Chandiok and Co.
The contribution of organizations and leaders who go beyond lip service and cheque book philanthropy has to be recognized and applauded, he added. As consumers, customers, employees and other stakeholders we want to take pride in the brand we associate with. As citizens of this country we want to join hands in being accountable to the planet and people for our actions. The blame game has to stop. Damage control is not going to solve the problem. We all need to contribute by being responsible individuals. There is a need to make informed decisions and act responsibly. The time to deliberate and introspect is over. We are already behind schedule and we have to act now before it is too late. The climate is already changing and we need to change to stop this change.
When doing well and doing good starts complementing each other it becomes a strategy for sustained development that can be called environmental stewardship or community development. The leitmotif is responsibility although everyone likes to sing and will keep singing their own tunes.
I believe allocating a budget for CSR is secondary. The actual cost to the company (CTC) is compassion, time and commitment. If you are compassionate you are sensitive. You are not only passionate about what you do but how you do it. You reflect upon your actions and make necessary amends. It is important for you to realise your dreams but not at any cost but in an acceptable way. The amount of time you spend in pursuit of your passion is critical for you to excel.
| Community |
Environment |
Human Resource |
Governance |
Supply Chain |
Reputation & Image |
| • Identification of key communities and their needs
• Spread of initiatives
• Understanding of stakeholders and stakeholder engagement
• Sustainability
• Plan of action
• Budget allocation
• Implementation structure
• Evaluation & measurement of impact
• Report/disclosure
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• Environmental policy
• Environmental Management Systems (EMS)
• Monitoring & auditing to asses environmental compliance & measure impacts
• Environmental disclosures
• Climate change
• Continuous improvements
• Addressing environmental concerns in business relations/dealings
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• Training
• Appraisal
• Rewards & recognition
• Employee engagement in CSR initiatives
• Health & safety
• Human rights & other policies
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• Driver of CSR
• Responsible persons for CSR
• Time spent by top management
• Composition of Board of Directors
• Appointment of Board Members
• Ethics & integrity including whistleblower and anti-corruption policies
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• Code of Conduct (COC) for responsible business
• No child labour in the supply chain
• Internal and external monitoring of COC compliance
• COC implementation training for suppliers
• Rewards & recognition for best practitioners |
• Market reputation
• Recognition through positive media coverage, awards, etc
• Proactive measures to correct concerns
• Negative press
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The amount of time you spend for a cause is also a measure of your compassion and commitment. You may have the money and time but if you are not committed to a cause the investment is futile. Thus, compassion, time and commitment have to complement each other for responsible businessmen and businesses to succeed.
The businesses to become responsible businesses therefore have to do two things to begin with. Firstly, they have to change their approach and methodology which was focused on making profits and enhancing shareholder value to creating value and taking care of the interests of both the internal and external stakeholders. Who are these stakeholders? How can value be created? A corporate stakeholder is anybody or any group that can influence or is influenced by business.
Shareholders, employee and managers are few examples of internal stakeholders where as suppliers, community, government, creditors, customers, etc are external stakeholders.
In order to create value it is imperative to understand and map the interests of various stakeholders and address them. For example, the local community would be interested in employment opportunities, inclusion and environment. The customer would be interested in cost and durability of a product or even customer care. The employees would be interested in rewards and recognition, welfare, their health and safety, etc.
Secondly, they have to change their relationship with their stakeholders through stakeholder engagement. In order to strengthen the economic, environmental and social performance or the triple bottom line businesses have to manage and align their interests with that of their stakeholders.
This formal process of relationship management and alignment of business interests with that of the stakeholders that is mutually beneficial and builds trust can be defined as stakeholder engagement.
It is therefore important for businesses to know their stakeholders, prioritize and classify them, understand their concerns and then align these with prudent business strategies that can win them and their support. This exercise is called stakeholder mapping which clearly brings out supporters, neutrals and opponents who give businesses the politico-legal and social license to operate.
It is essential for businesses to identify a stakeholder engagement team, revisit and realign their business objectives, identify roles of stakeholders and engage them. Responsible businesses start with the people and set out the rules for employee engagement. The benefits are huge. Take BMW for instance. The company saved 10.5 million pounds in two years by involving their staff in the company’s innovation process. Similarly, Toshiba’s internal innovation programme saved 3 billion pounds worldwide in three years.
The six focus areas of intervention that can make a difference in the way you conduct your business includes community, environment, human resource, governance, supply chain and reputation & image. The key concerns that can be addressed in each focus areas are set out in the table.
Thus in the light of the above discussions we can conclude that CSR is desirable, achievable and profitable. It borrows from socialism and departs from hardcore capitalism. It creates more than profit. It creates value by bringing about sustainable development.
It doesn’t invite criticism, suspicion and awe but instills confidence, responsibility and respect. It prevents fragmented growth and leads to inclusive growth and affirmative action.
It brings businesses close to the citizens of this country and through constructive engagement involves them. It doesn’t sacrifice profits but inspires out of box thinking and innovation to create wealth without compromising the interests of the people and planet.
Finally, it is not an idealistic but an effective and pragmatic way of doing business which is in sync with time.
The author is Associate Director (CSR and Sustainability), Grant Thornton India
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