Corporate Social Responsibility – Where should it start?

5:09 PM |

I have been hearing a lot about Corporate Social Responsibility (CSR), that is, a company’s responsibility towards the society. In simple terms it means that a company must manage its role in society as a producer, employer, customer and citizen. I think most of the discussion on the subject centers around a corporations involvement in supporting social causes. Every corporation adopts some social causes and thinks that this is the best way of implementing CSR.

What prompted me to write about this topic was an article I read about ICICI Bank, the largest private Indian bank. It was reported that ICICI was going to establish a ICICI Foundation and fund it with 1% of its profits. Even one of its very senior executive was going to head this foundation. But let us try to reconcile what ICICI does in actual practice. Various cases have been reported where ICICI Bank has been involved in causing pain and suffering to its customers who had taken loan from it because of its illegal practice of hiring goons to recover money. If I am not mistaken, one of thier customers even committed suicide because of the threats of recovery agents hired by ICICI.

Now I find the above very illogical. First, ICICI Bank wants to make more money and adopts aggressive selling tactics to palm off loans. When they can’t pay the monthly instalments, ICICI sends recovery goons to collect the dues. The illegal methods adopted by these recovery agency results in pain and suffering to its customers. On the other side, ICICI decides that it needs to donate money for social causes. Now as a producer, doesn’t the bank have a responsibility towards its customers?

Lets also consider what Airtel does. It bills its customers for services not ordered by the customer and then donates the money for social causes through its foundation. This is how they exercise their responsibility as a producer.

Lets look at how comapnies are discharging their responsibility as an employer. Today, companies are putting so much pressure on their employees that practically everybody I know of is working late. Employees of companies that have 5 day working week are also working of Saturdays. This is creating health problems for employees. Why are companies putting so much pressure on their employees? Simple, they want to make more money. So first they create health problems and then they donate money to build hospitals through their foundations. I read an email of a senior Infosys executive telling employees that they should not work late. My suggestion to this gentlemen is that he should make sure that the offices are closed on time so that nobody can work late and the problem will be solved. He should know that the employees have no choice but to work late because of work pressures. Will he close office at 5pm. Will he walk his talk. I doubt it. Reasons are obvious.

What about the Times of India Group? It runs a rich foundation to support social causes. But how does it make money? It passes off “bias-paid-for-news” as “unbiased news” thereby deceiving all its readers. It sells news through its subsidiary MediaNet. Recently, there have been a number of articles about TOI buying stakes in various small companies and then using its publications to promote these companies without disclosing its vested interest. It is almost a certainty that some people may invest in these companies based on articles printed in Times Group Publication and end up losing money as well as their mential well-being.

Why do they want to do such a thing? Of course, to make more and more money (as if they don’t have enough already)and then donate money through their foundation, maybe to build mental hospitals for those who turn mental when they lose money in the stock market.

It is obvious that the business world has misunderstood what CSR means and where it should start. I think if every business takes care of its immediate stakeholders like customers, employees and vendors, I doubt if they would need to need to establish foundations.

I will explain the above with my example. I run a small company. First, as a producer I try very hard to keep my customers happy. I do not bill them for anything that they have not asked for. I make sure that they get “value for money” and sometimes even more. As a customer, I pay my vendors on time. I do not put unnecessary pressure on my vendors. If they mistake, I even work with them to resolve the same in a fair manner. What about as an employer? As far as my employees are concerned, I truly believe that charity begins at home. I have never refused anybody leave. We do not work very late to make more money but we do work late sometimes to complete customer’s work. I also take care of my employees in times of difficulty without their even asking for it.

So if everybody takes care of its immediate direct stakeholders like employees, customers and vendors, I think the need for CSR will almost disappear. This could have a domino’s effect. Every employee, customer and vendor has a family. In addition, some of your customers and practically every vendors would have employees, vendors and customers and the chain reaction could emcompass the whole society. Also, I am sure you will agree that this is better way to implement CSR than causing pain to your employees, customers and vendors so as to make more money and then donating a part of this money for social causes.

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Anonymous said...

There is truth in what you say, especially in the Indian context. But it is not possible to have strict controls on all firm-wide activities in large companies. CSR would thus be necessary in this context.

From a more global perspective, CSR is to ensure that deserving NGO's receive not just monetary support but also strategic/operational/logistic support that can contribute to increased social impact.

To put it simply; it is like karma trading. One does some wrong somewhere and tries to balance by doing good. Your suggestion is to not do any evil in the first place which may not always be possible. I agree that your approach of Prevention is better than Cure is the best but not always be the easiest.

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