Tuesday, February 10, 2009

When is CSR Sexy?

Being a born drifter, after sailing through some choppy waters in the last few years – I floated into the world of Corporate Social Responsibility (CSR) sometime back. I saw in it an opportunity to dip my toe into the social sector – something I had been contemplating for long as a post retirement career option. Unlike some contemporaries who took a plunge into the NGO world only to jump out with a start, it has been – thus far - a rather fascinating journey for me.

Over the years – a veritable industry has spawned around CSR. Now with all brouhaha over Climate Change, Carbon Emission and Sustainability – it is mega business really. Not a single workday passes without my receiving a call or invitation for sponsoring or participating in a conference or seminar on CSR (paid, of course). Consulting firms have also jumped into the bandwagon starting their practices – to advise companies on how to develop their own CSR Strategy and roll out CSR programmes. NGOs big and small come up with proposals for “partnerships”.

Green-wash, Blue-Wash or White-wash?

Without a doubt CSR has come a long way from the days of Merchant Charity and Gandhian Philanthropy to responsible corporate citizenry. It is – understandably – still largely driven top down by the CEO or the owner-promoter, often goaded by a conscientious Board of Directors. Much of it, many would argue, is just lip service for the purpose of publishing in Annual Reports or for making presentation to industry bodies and the government. At times, it is also with some collateral motives - what has come to be known as “Blue-wash”– (where companies aim at distracting attention from the social and environmental consequences of their production and products) or “Green-wash” (polluting industries trying to buy their ‘license to operate’).

Of course, the UN Global Compact and MDG (Millennium Development Goals) have been pushing corporations towards re-organsing their businesses along sustainable lines. But, even otherwise, the movement is beginning to gather steam across the world. A lot of this is because of pressure coming laterally from external stakeholders (Communities, NGOs, Government and share-holders in some instances) and also, very often, from below – i.e. the employees.

The Satyam Effect

Increasingly employees – especially the younger ones – are becoming conscious of the kind of organizations they join and work for. Though’ the discounted head-count of Satyam is still a whopping 40k, socially responsible organizations like Infosys and TCS still command a premium in the employment market. Another phenomenon , which seems to be catching up is employee volunteerism – with more and more people within the organization wanting to contribute their skills and time to the community. Earlier this used to be just a few good souls wanting to do their bit for society, putting in some work for charities in their spare time. Today it is happening in a much more organized form - with groups of employees coming together to help communities around their immediate sphere of activity using their own and the organization’s core competencies. Overseas many organizations have a clear policy for employer-supported volunteerism – where companies encourage its employees to do volunteering work by giving time-off or by making matching monetary contributions for their efforts etc. In India too this trend is picking up. A band of young, passionate social sector professionals are making the difference.

Just Hot Air ?

It’s fashionable these days to try and make a business case for selling the concept of CSR. The standard line is ‘why CSR is good for your business ?’ and the common arguments used are CSR helps in creating employee motivation, brand premium, consumer loyalty etc. While these can certainly be incidental benefits – the logic is far too tenuous to hold water for today’s CEOs who being hostages of the ‘street’ can’t look beyond the quarterly numbers. Therefore, you can’t quite fault Stefan Stern who in a recent column in the Financial Times (Read "The Hot Air of CSR" by clicking here ) writes “now that recession’s here we can forget all that nonsense about CSR and get back to making some money”.

But, CSR need not be through Cheques alone. In fact – some of the best CSR programmes have a very small monetary component, if at all. Good corporate governance, taking care of minority shareholders, promoting work-place diversity are by themselves good CSR.

Much before the term CSR gained currency – way back in the early 80s, Hindustan Lever (not HUL!!) had a Rural Training Program under which every Management Trainee of the company had to compulsorily spend 2 months in a village, in the very backward District of Etah in UP, where the company had a Dairy Unit. During this period the trainees (“Manager Saab” as they were lovingly referred to by the gracious villagers) were expected to provide managerial inputs for the development of the villages. The motive was not entirely altruistic. The visionary Chairman of the company had seen that the survival of the Dairy Unit and economic upliftment of the District were closely inter-linked. A collateral benefit was the solid “grounding” it gave the Management Graduates in the basics of rural marketing.

Often tiny innovations make for great CSR. A chain of Cafes in Kathmandu employ only speech and hearing impaired waiters. Many years back – I remember a small snack bar at the end of Prabhat Road in Pune used to engage needy students. A placard on the table requested customers not to hurt the dignity of the boys by offering them tips. But, instead – if they wished – to put in their contribution into a box, the collection from which would be used for subsidizing the cost of their books and tuition fees. I wonder how many Corporates would think of engaging physically challenged individuals in their pantries and canteens – jobs they can easily do.

Heart, Head or Condoms ?

But, CSR is not just a matter of the heart it’s a function of the mind as well The real answer to Stefan Stern’s provocative thesis, therefore, lies in how CSR can be woven into the fabric of the organization – where it is not an ‘add-on’ or ‘stand-alone’ activity but an integral part of the operations to yield visible and tangible benefits. Strategically conceived, good CSR practices can actually help companies deliver better bottom-line results – which can look especially attractive, when the chips are down. HLL (sorry, HUL)’s Project Shakti and ITC’s E-Choupal are 2 such examples , – which even after discounting the ‘hype’ have significant top-line potential for the 2 companies. The ICICI Foundation’s foray into Micro-financing and Social Entrepreneurship is another good model to emulate.

In the 70s and 80s, consumer product companies like HLL and ITC used to sell Condoms (marketed under the Government's Family Planning Programme) through their Distribution Channels – which, to my mind, was also a form of CSR. So, when CSR is not just ‘good for business’ but it becomes a part of doing business, does it begin to look sexy !!