Social Responsibility in Business – An Indian Context by Vijay Kapur & Enakshi Sengupta

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By Vijay Kapur & Enakshi Sengupta

Corporate philanthropy started in India way back in 1800’s and this long tradition continues even today. Charity giving was common amongst merchants both on an individual capacity and also collectively through their guilds and trusts that they created. At individual level giving alms to the poor and needy was a regular affair, community feeding during festivities, or construction of pathshalas (traditional schools) was common. Some also contributed towards construction of night shelters for the poor and travelers, and helped in building water reservoirs, wells and bathing ghats.

During the pre Independence erathe business leaders of emerging indigenous industries in India were found deeply rooted in the tradition of philanthropy, which was gradually undergoing metamorphosis into modern day CSR. The leaders of such business families began to support schools, colleges, hospitals, orphanages and the promotion of art and culture during 1850 to early 1900. Setting up of trusts and endowments started gaining its momentum.

Post Independence the emphasis was laid on vocational and technical training especially for the under developed section of the society. Emphasis was given to improve public health, power and water supply and the Gandhian social reform movements. At that time when new India was chasing the dreams of moneymaking Gandhi stressed the need for moral leadership and social responsibility. Speaking at the Indian Merchants Chamber, he had said; “Industry and trade have to discharge many responsibilities to the community.”

We see a reflection of the same thoughts in the western world. William C. Frederick (1960) defined social responsibility as he wrote, “Social responsibilities mean that businessmen should oversee the operation of an economic system that fulfills the expectations of the public. And this means in turn that the economy’s means of production should be employed in such a way that production and distribution should enhance total socio-economic welfare”. In 1976, H. Gordon Fitch defined CSR in terms of solving social problems. He stated, “Corporate social responsibility is defined as the serious attempt to solve social problems caused wholly or in part by the corporation” (Fitch, 1976, p. 38), thoughts that were echoed by Indian thinkers and the business community.

JRD Tata whose emphasis was not merely to create honest citizens pointed out that, “Apart from the obvious one of donating funds to good causes which has been their normal practice for years, they could, as some of the companies with which I am connected have done, use their own financial, managerial and human resourced to provide task forces for undertaking direct relief and reconstruction measures. This form of public community service could be expanded by the cooperative effort among members of various industries”.

Recent years in Indian business witnessed a drift from charity and traditional philanthropy towards more direct engagement of business and towards embedding CSR in the mainstream. “This has been driven both internally by corporate will and externally by increased governmental and public expectations” (Mohan, 2001). It has been estimated that India has over 200,000 private sector trusts and foundations, a large number of which are set up by Indian businesses houses and are working towards a social causes of mitigating social evils.

CSR has taken a prominent role with the growth of globalization, liberalization and emerging free market economy. Foreign investors are vying for India more than ever before. With the growth of trade links between India and other countries CSR continues to be an important aspect in business. “Companies can benefit from adopting corporate responsibility policies in response to globalization, through access of markets, cost and risk reduction, improved productivity, competitiveness and improved public image” (Dasgupta A. 2007).

The journey of CSR in India is not a smooth ride obstacles come in the form of adhoc approach by the top managementthere is also alack of consensus on priorities and agenda within the firm regarding the CSR policies and programmes and also the measurement and evaluation of CSR activities accounting for the return of investments (Krishna, 1992).

“Unclear policies, bureaucracy, poor monitoring, complicated tax systems, and poor infrastructure are a few more hindering factors” (CSM, 2001).

There has been a trend amongst Indian companies to adopt voluntary standards such as ISO 14000, OHSAS 18000, and Social Accountability (SA) 8000 (SAI, 2001), United Nations’ global compact, and Global Reporting Initiative guidelines are gaining grounds outlining a wide range of responsible business practices related to stakeholder issues such as environment, occupational health and safety, labor, human rights, corruption, etc. A recent survey of 27 companies by KPMG finds that only 25% of the companies are signatories to GRI guidelines, 8% mention about their social expenditures and 25% file CSR reports (Handique, 2008).

Indian companies are also adopting CSR policies to generate positive customer perception and reputation about product quality and safety which leads to increased sales or decreased costs associated with stakeholder relationships (Waddock and Graves, 1997). There has been a growing trend towards social businesses which are based on models of micro credit, self-help groups and stakeholder centered management that has grown to become large and successful businesses in India.

Organizations like Amul Milk Cooperative, Sewa India, Shri Mahila Griha Udyog have illustrated business success with decentralization of management and with a focus towards empowerment and participation of the poor. There are several business and NGO cross partnerships where implementation of social projects has been undertaken by businesses houses, including the Chambers of Commerce, Industry Associations. “In today’s world it is clearly demonstrated that human and ethical values pay better results in industry and business” (Swami Someswarananda, 2000).

The journey has begun but CSR in India is yet to be realized in its full potential. “Individual and collaborative initiatives continue to be dominated by self-assertion rather than accountability” (Dasgupta A. 2007). There is certainly no dearth of innovative CSR activities and projects, but what is missing, are definite goals, embedding of a CSR culture and practice and metrics for evaluating their social impact in improving the plight of many.

The codification of theses activities remains highly descriptive and self praising in nature, lacking the recording of actual facts and figures which can be measured vis-à-vis the money spent on these activities. India’s markets continue to exhibit negative externalities and free riders where cost for destruction and degradation of environment and community is not accounted for which ultimately leads to socio-economic degeneration.

(This article has appeared in “Domain” Magazine from Janson Business School Jul- Dec 2010 issue)

Vijay Kapur
Vijay Kapur a Senior CSR Consultant in Kuala Lumpur and has over 16 years of experience working in the field of social responsibility, reputation management and strategic communication. He is an MBA with Merit from University of Nottingham and received a Distinction in his Management Project on CSR. He had the opportunity of studying CSR under stalwarts in the world. He gained his diploma in Public Relations from the Chartered Institute of Public Relations, UK and a diploma in Marketing Management from Narsee Monjee Institute of Management Studies and an Advanced Certificate in Marketing from Chartered Institute of Marketing, UK. He is also on the advisory board of Wockhardt Foundation, India. He heads the Wockhardt Foundation’s initiative in Malaysia. His expertise and knowledge in the field of CSR has resulted in competitive advantage and bottom line growth for his clients. He is pursuing his PhD in CSR from Universiti Sains Malaysia.

Enakshi Sengupta
Enakshi Sengupta is a Senior CSR Consultant in Kuala Lumpur having over 15 years of experience in the field of CSR and Communication. She is an MBA with Merit from the University of Nottingham. She received a Distinction in her Management Project on CSR. She also completed her diploma in PR from The Charter Institute of Public Relations, UK. She has done her Masters in English Literature from Calcutta University, a Bachelor’s degree in English Honours from St. Xavier’s College, Calcutta and a Bachelor’s Degree in Education from Calcutta University. She also has expertise in the field of marketing acquired through a Diploma in Marketing Management from Narsee Monjee Institute of Management Studies, and an Advanced Certificate in Marketing from The Chartered Institute of Marketing (CIM), UK. She is Chief Coordinator of Wockhardt Foundation’s initiative in Malaysia. Enakshi is pursuing her PhD from University of Nottingham.

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