Corporate Social Responsibility: An Exercise with a Conscience

Community is not just one more stakeholder, but the very purpose of business.”
Jamshedji Tata, founder of the Tata Group, India's oldest and largest business conglomerate

These famous words, reiterated almost 75 years later at a recent symposium on corporate social responsibility (CSR) in Mumbai, ring just as true. The symposium was held to launch a long-term engagement between the government of India, the World Bank, and Harvard Business School (HBS) to spread the message of CSR across Indian industry. Top leaders from government and industry shared their views and experiences at the daylong event.

CSR is no longer a mere buzzword; today, its mantra of giving back to society is finding many takers among public- and private-sector enterprises. The CSR spending of companies in India for the year 2009-10 was $7.5 billion. What’s more, public-sector enterprises spend about $700 million annually on CSR activities. However, there is a need for these massive amounts of funds to be allocated judiciously towards social inclusion and the development needs of the country.

The World Bank will be working closely with the government of India to help the CSR community gain greater access to international best practices and knowledge, facilitate policy dialogue among different stakeholders, and build capacity to better utilize financial resources.

Union Minister for Heavy Industries Praful Patel (left, with World Bank Country Director for India Roberta Zagha) said that while a lot of CSR initiatives were under way in the country, the public and private sectors needed to pool their resources and undertake larger projects to make a visible impact on the community they are working with. The minister hoped the Mumbai symposium would trigger a long-term partnership to help public- and private-sector companies build capacity for CSR work.

Agreeing with the minister, Ashok Kumar Pavadia, joint secretary of public sector enterprises, said, “We hope our partnership with the World Bank and HBS will help us share knowledge and learn from what’s happening in the field of CSR.” He said the government was finalizing guidelines for CSR for public-sector enterprises. “The thrust of the guidelines will be on inclusive growth, sustainable development, and capacity building, with due attention to the socioeconomic needs of the marginalized society. These are key issues of concern for any developing country,” he added.

Kasturi Rangan of HBS was very enthusiastic about the potential of such a tripartite partnership. “We can take good CSR models that are working in the country today and create a forum where they can be shared. Between HBS and the World Bank we can create best practices, share through education forums, and probe in a much deeper way. This cross-pollination will work very well under a partnership of HBS and the Bank,” he suggested.

Bhaskar Chatterjee, director general of the Indian Institute of Corporate Affairs (IICA), however, warned that knowledge sharing was not all about sharing of successes alone. “In such meetings companies should also dwell on the lessons learnt and what went wrong. If people spoke of those failures, we’d learn far more,” he said.

Rangan agreed. “We need to understand the issues and problems. The hard part is capacity building. We need more discussion on how to develop skills. Thus, knowing what’s worked and what hasn’t is very important,” hesaid.

Zagha drew attention to the need to focus on issues of norms, values, and ethics, while emphasizing the criticality of collaboration. “The 2008 economic crisis showed us that regulations could not do their job where ethics could have played a better role. The larger ecosystem of ethics, norms, and values needed to come to play. Therefore, we need the voice of the community, civil society, and even the government so that CSR is not just an exercise, but an exercise with a conscience,” he said.

Issues of accountability, lack of capacity, need for convergence, and sharing were expressed across the board.

“The past two decades has seen great economic growth, but India is among the three countries where the hunger index has gone up. We have huge resources allocated to the public sector for CSR. So where is the accountability? Today public and private sectors may be working on the same issues, but separately. How can we converge and partner?” asked Anu Agha of Thermax.

Speaking on behalf of the Tata group, one of the pioneers of corporate social responsibility in India, Managing Director Kishor Chaukar said companies should make CSR a strategic business exercise rather than mere philanthropy. “We need a mindset change. CSR is not a cost but an investment. We need to stay there for the long run and can’t be fly-by-night operators,” he said.

Other industry leaders at the event included Nadir Godrej, managing director, Godrej Industries Ltd; Rajashree Birla, chairperson, Center for Community Initiatives and Rural Development, Aditya Birla Management Corporation Ltd; Ranjit Sahani, country head, Novartis; and Onne van der Weijde, managing director, Ambuja Cement.

Participants emphasized that the public and private sectors needed to leave their differences aside and come together to make a meaningful impact. Pavadia hoped the budding partnership between the government, World Bank, and HBS would play a major role here. “We are in dialogue with the World Bank and HBS to harmonize the two and hope the partnership develops to provide long-term strategy for effective CSR in India,” hesaid.

HBS Dean Nitin Nohria concluded: “We need a solution mentality. The public and private sector can work together.”