Voluntary Guidelines on Corporate Governance and Corporate Social Responsibility (CSR) – a tool to enhance the Brand value of a country

Nilakanta Shastry Tata

Corporate Social Responsibility (CSR) has undergone remarkable changes over the years from merely dispensing cash by way of charity to organisations or NGOs engaged in social work. Corporate “Outreach Programmes” include all stakeholders viz., shareholders, employees, customers, suppliers, project affected people – directly or indirectly.

The current understanding of CSR also attempts to deploy a company’s core competencies to help address the society’s problems. Numerous examples can be given viz., Tatas, Birlas, Mahindras etc., from the Corporate side. Even media print and television – have come up with brilliant ideas in educating the masses (Times of India teach programme), CNNIBN’s Citizen Journalist programmes etc.

With Indian economy expected to grow 8-9% annually with one of the youngest population in the

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fore in the world, responsibility of Government, Corporates and all other stakeholders of the Society in which we live increases to preserve, protect and mitigate the hardships of the people of India and across the globe.

Continuous development encompasses in it various vagaries which left unchecked, lead to natural calamities. In order to sustain the growth and minimize and mitigate the hardship to the people living in the society it is imperative that each stakeholder of the society—be it Government agencies, Corporates or others – to effectively deal with the situation in a planned manner.

In this context the CSR Voluntary Guidelines, 2009, published by the Ministry of Corporate Affairs, Government of Inida, brings to the fore six important aspects:

1. Care for all Stakeholders
2. Ethical Functioning
3. Respect for Workers’ Rights and Welfare
4. Respect for Human Rights
5. Respect for Environment, and
6. Activities for Social and Inclusive Development.

Let us examine them from the corporate perspective and to create a brand value for a country as a whole:

Care for all Stakeholders

Depending upon the business entity’s operations it should endeavour to expand its horizons beyond mere employees, suppliers etc. It should encompass the society as a whole where, say, its manufacturing activity is being set up, environmental issues, social and all other related issues need to be addressed effectively to the satisfaction of all concerned. It is not merely obtaining NOC from the respective Statutory authorities. It should be imbibed in the corporate culture how to protect and preserve the environment in which it intends to operate. How to manage with the affairs of the local people, their displacement issues, readjustments, difficulties etc. have to be discussed in advance and resolved amicably. If one adopts a “all-inclusive” approach, many “after- effects” can be eliminated.

Ethical Functioning

There is no precoined word called “corporate ethics”, the personnel who are in the control of the

affairs of such corporate need to have high ethical values. This again stems up from the individuals’ upbringing, education, societal pressures,”intent“to uphold values in one own life etc. A corporate being a legal entity controlled by human beings – corporate culture is nothing but true reflection of personnel operating such corporate/organizations. This aspect plays a very vital role in CSR. The acts done under CSR should be absolutely to benefit all stakeholders and society at large.

Respect for Workers’ Rights and Welfare

Safe, hygienic and humane workplace environment not only increase productivity but also leads to overall well-being of the organization and society at large. Creation of Brand value for an organization emanates internally from its employees and other stakeholders which, in turn, leads to better brand image of the organization.

Organizations hugely benefit from such brand building which is essential to sustain the competitive market environment. It is also true that a nation can have a brand image for itself.

Example : German quality…. Quality… is key for any German product. Worldover, Germany has

created in the minds of the people that Germany as a country will not compromise on “quality“—hence any product coming out of Germany will have the required quality standard.

Based on the above, how will India present itself to the world as a “Brand”? On what parameter (s)?

Respect for Human Rights

Human rights pervades many aspects – Corporate should show in letter and spirit that they value human rights – respecting all caste, creed, color, sex and nationalities as an equal opportunity employer/ stakeholder.

Respect for Environment

This is taught by our Indian forefathers – respect environment which includes earth (land), air, water (rivers), trees, mountains, and all biological species. with utmost respect. Revere’s them as GOD.

Natural calamities taking place in today’s world is all making of human beings who shamelessly misuse the natural resources for their selfish ends. This needs to be guarded effectively by the Corporates and general people of society in order to preserve the ecological balance effectively. Reporting on alternative source of energy development, conservation of energy and appropriate utilization of energy resources have all become part and parcel of Annual Reports of many Corporate.

This should not be left to only few Corporates or Governmental initiatives. It should be a mass movement at the grassroot level and each citizen of any country need to be associated in order to bring about a change in the alarming global warming signals which may, ultimately, affect all, globally.

Activities for Social and Inclusive Development

Corporates engaging themselves in areas need to see that the area is well protected from ecological degradation, balancing environmental and societal needs. Give adequate representation to the local populi in order to uplift their economic stature. Create good culture, values, ethics so that it is imbibed not only in the vicinity but also all around.

Effective CSR today is that which relates directly to the giver’s core competencies and offers real value, not just philanthropy. It is no longer considered good for business, but simply good business.

Because, when you give back to the society you operate in, you become truly embedded in that society, rather than being perceived as seeking profits alone –

Giving is better than receiving because giving starts the receiving process. — Jim Rohn

(Nilakanta Shastry Tata is  Managing Director – Chennai Operations, RSM, Astute Consulting (Chennai) Pvt. Ltd., Chennai)

 (Article sourced from The Management Accountant, August 2011)