Corporate Social Responsibility Initiatives by Indian Corporate Houses – The Way Ahead

The world business council for sustainable development defines “Corporate social responsibility (CSR) as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. Most corporate houses in India have full fledged CSR initiatives, which are being managed by their trusts or foundations. When one glances through the recent annual reports of Hindustan Unilever Ltd (HUL) and ITC one can see the increased interest and coverage that such initiatives are getting.

Within the CSR initiatives one can see two distinct categories, one is the pure CSR initiatives in which the company has no business objectives attached to it, on the other hand there are the quasi initiatives, wherein there is a profit motive attached to the initiatives, though may not be in the short-term. Initiatives in education of Azim Premji Foundation and Infosys Foundation would fall into the first set of classification and so could be the Shiksha initiative of P& G. In the Quasi categories are initiative like Project Shakti of HUL and e-choupal of ITC, in both the cases though the initiatives are not totally profit oriented, they are linked to their businesses. In the case of Project Shakti HUL is using the Self Help groups in villages as an alternate channel of distribution and in e-choupal ITC is setting up kiosks in villages for procurement of agricultural commodities.

The positives of a CSR initiative are that it can draw upon the internal resources of the organization both in terms of finances as well as managerial talent and also attract right people to work on the initiatives. They also help in providing opportunities to field-test ideas and become a source of innovation in addressing pressing needs and problems of the society. The draw back is in terms of the scale of their initiatives which normally tend to small and benefits localized. The problems related to scaling up are also constrained by the fact that the value created by these initiative are not getting reflected in the market and thus there is a need to ensure that these initiatives are driven by market forces and not inspired by corporate conscience alone .

Thus looking at the initiatives by Corporate India one feels that the Indian society expects more from them and thus there is an urgent need to address the scaling-up the various CSR initiatives and also a need to build a mechanism through which such efforts are recognized and rewarded.

Back to CSR - ITC's AGM Speech

Some time back I had written about the AGM Speech of HUL and its focus on CSR. On 27^th July the AGM speech by Y.C. Deveshwar of ITC had the heading 'Making Markets Work for CSR'. The AGM speech of two of our major FMCG companies has CSR as the main focus. This makes one think why is the sudden interest on CSR in the country??? To be fair to ITC, the company has not tried to fit CSR and social benefit into the cigarettes that it sells as was the case with HUL. Y.C. Deveshwar in its AGM speech has spoken more about their ITC echoupal and other initiative in the rural areas in the country. The speech touched upon the returns that a company would or should expect from the CSR initiatives, and how market forces should make CSR a crucial component of share holder value creation so that these initiatives are driven by market forces and not inspired by corporate conscience alone. One can listen to the audio files or watch on demand video of the speech on their website.

Corporate Social Responsibility Initiatives ..

Today 'Corporate Social Responsibility' is a concept which is in vogue in the corporate world and it is not because it is suddenly that the corporate world has realized it's responsibility towards the society or that the current government is working towards a more “inclusive” growth. Most corporate houses have their own CSR initiatives and many of them are very well received and appreciated by the community, but today what I will talk about is how the concept is being mis-used by many corporate. The first company is Hindustan UniLever Limited (HUL).The FMCG major is a company known for its marketing prowess and brands in the country, but if one were to read the latest AGM speech given by the chairman Harish Manwani, on would get a feeling as if we are reading the activities done by an NGO not a corporate. I for one believe that the corporate world has to come forward and take the burden off the government in promoting social issues in the country and that is being done by many companies in India and abroad, but saying that they are selling soaps to sell hygiene or to promote women empowerment they have launched project Shakti initiative is stretching the idea a little too far. The case seems to be one of claiming more than their fair share in terms of media attention and credit than they deserve. Similarly Coca Cola has come has entered into a tie-up with WWF to support freshwater conservation and freshwater bio-diversity around the world. And they have announced a $2.05 million fund for the same, which according to analysts is pocket money compared to the turnover of the company and the expenses it would incur on normal product launches and promotions. The publicity and benefits that company would like to draw out of it would be much much higher, which in itself is not a bad thing but if done with the right intentions. I also had an opportunity to listen to one of the senior executives of coke in India making a presentation on the various rural initiatives like Jalsa, Chaufaulla, ‘Thums Up Rural Games’ in villages across the country. It was as if each of these initiatives was directed at promoting the local culture and events and it was only incidental that the entry to events was only to people who purchased Thums Up....