Since the inception of the double bottom line after Shell’s PR nightmare with Greenpeace, and now the triple bottom line, corporate social responsibility has become the favorite all-encompassing term and budget for all corporate communication efforts to win over public opinion. Suddenly everything from sponsoring sporting events like Premier League games to building schools and cultural spaces falls within the scope of CSR. Viewed from another direction, CSR is really not much different from buying ad space on billboards except that even non-consumer corporations are doing it – i.e., large industrials like steel manufacturers.
In developing countries like India, CSR initiatives are even more amorphous, as many corporations assume roles and responsibilities that are normally handled by the public sector. When industries set up new manufacturing plants in a rural area, they inevitably also bring economic growth as well as infrastructural development. For example, Visa Steel in Orissa builds roads for the communities around its steel mills; Vedanta Aluminum and NALCO all have health clinic initiatives for the surrounding rural villages; and of course, there is Tata Steel, which outright adopts villages and takes over most municipal functions (my city, Jamshedpur being case in point). It’s a strange niche that CSR fill in India that straddles the public and private sectors as corporations to contribute to the community’s growth and fill in gaps where the public sector fails.
What strikes me, however, about these CSR initiatives is how unrelated the various community programs are to the core business of these industries. Each company sponsors a women skills development program, a cultural sports and dance event, a basic health clinic, etc. The cookie-cutter similarity of these programs seems to me to be an indication of the lack of internalization of CSR as a core business activity, even though indirectly, they do contribute to the continued success of the corporation. I was at the Confederation of Indian Industries’ CSR conference last week, during which, each industrial panelist presented the exact same set of CSR initiatives. Of the ten panelists, there was only one representative from POSCO Steel who expounded on why CSR initiatives are crucial to the successful gaining the approval of the local community for green field projects. In my opinion, ALL CSR representatives should have demonstrated why and how their initiatives were contributing directly to the company’s bottom line. Otherwise, CSR initiatives become an unsustainable fringe department of a corporation, subject to the fancies of the budget allocator.
The good news is that there do exist progressive CSR programs, which are moving towards an inclusive business model. At a subsequent International Business Leaders Forum last week, CSR representatives and NGOs discussed how to internalize the benefits and impact of social initiatives in the company’s bottom line. Roads that are constructed in a rural village benefits the community, yes, but it also eases the transportation logistics for the industrial corporation. Even sponsored cultural dances and sporting events help a core business operate by raising the goodwill of the community and preventing bandhs (strikes). These “inclusive business models” are focused on measuring and quantifying the benefits of seemingly normal CSR activity to calculate it into the company’s P&L statement. The result is a more sustainable form of social impact activity, which is unlikely to disappear when CSR goes out of fashion.
The bottom line is that whether it’s called corporate social responsibility or inclusive business, all social initiatives taken up by a private corporation should have an impact that is measured and shown to contribute to the core business. Only then, will CSR stop being seen as a form of corporate philanthropy and be seen as a necessary part of doing business.
