Financial Daily from THE HINDU group of publications
Wednesday, Dec 14, 2005
Corporate - Society & Development
The business of social responsibility
The public expects businesses to behave ethically and contribute to economic development, while improving the quality of life of the workforce, their families and society. Till the late 19th century, the mission of business firms was exclusively economic. Today, partly due to interdependencies of many groups in society, the social involvement of businesses has increased.
Businesses have to increasingly associate with governments, environment groups, universities, NGOs, and even religious organisations/bodies. This means they have to operate in a pluralistic society, where organised groups represent individual interests. Each group has an impact on the other, but no one entity exerts inordinate power; each has an impact over businesses.
Working in such an environment has several implications for business. One, various groups keep business power in check. Second, business interests can be collectively expressed by joining groups such as a chamber of commerce. Third, businesses participate in projects to better society. Fourth, individual groups agree and disagree with one another. Finally, in such a society, one group is aware of what the others are doing.
An organisation receives inputs from society and environment in the form of labour and raw material. Business, in turn, provides goods and services to society. Thus, a business exists because of society.
This realisation is very important for firms. It is in their interest to take care of society. This realisation has led to an increasing focus on CSR. Businesses cannot operate in a vacuum; they operate in the real world.
Ethics, accountability and balanced governance reflect a firm's intentions for society. Besides profits, money, and share prices the key words of any business if its top management is concerned about society, such a firm ought to prosper.
Gone are the days when industry is driven by supply of raw material and cheap labour. We are witnessing a period where inputs are becoming scarcer. In fact, if we do not stop exploiting the environment, doom's day is not far away. If organisations are socially conscious, they will enjoy enhanced visibility, loyal employees, customers, suppliers, lenders and investors.
In India, the role of CSR has been gaining momentum for a decade now. The realisation that the participation of the private sector can foster the public-private partnership is vital in terms of sharing resources, bringing in expertise and appropriate technologies. This can enhance visibility of campaigns, and bringing about civil society response.
Good beginnings are being made by a number of companies. Wipro, Tata, Infosys, Reliance, and National Thermal Power Corporation (NTPC) are setting good examples. Among these, Tatas and Infosys have done great work on corporate philanthropy. The PSUs are also self-driven on CSR. ONGC and IOCL have seriously begun to engage with NGOs on various causes.
In 1997, at the World Economic Forum at Davos, Sir Richard Skyes, Chairman of Global Business Council on HIV/AIDS, said, "Businesses can act as advocates, helping to keep AIDS on the international agenda, and thereby demonstrate the benefits businesses can bring to society as a whole through its products and as corporate citizens in partnership with the public sector."
Apollo Tyres: In association with 36 NGOs, the tyre company launched Apollo Tyre Health Care Centre in October 2000 to provide general and sexual health services for truckers and transport communities at large.
The centre provides STD diagnosis and treatment, behaviour change communication and condom promotion. It operates from Sanjay Gandhi Transport Nagar, New Delhi.
The inception of the clinic was a logical conclusion of the company's welfare policy. Through consistent counselling and educational programmes with the help of a dedicated team of volunteers, the centre enlightens the truckers on numerous risks involved and the prevention of AIDS.
Besides, the centre also rehabilitates sex workers. Apollo Tyres also supports Umeed, an NGO providing medical and health-care facilities to the underprivileged in the rural areas.
Steel Authority of India Ltd: SAIL has initiated SAIL AIDS Control Programmes (SACP) in association with the National AIDS Control Organisation (NACO).
The company formulated a policy on HIV/AIDS, which has been approved by the board of directors. As part of inter-sectoral collaboration, SAIL has initiated a multi-pronged programme on implementing the policies and guidelines of NACO in its plants, units and townships. All medical personnel have been trained to WHO guidelines.
SAIL's major initiatives include school AIDS education programme, safe blood and blood products, family health awareness campaign, and voluntary counselling and testing centres (VCTC).
State Bank of India: SBI has taken an initiative to encourage commercial sex workers to save their earning. This project was implemented in Sonagachi, one of Asia's largest red light areas, where residents where encouraged to open a savings bank (SB) account. While this can be called a social service, it also reflects a sharp business sense.
Infosys: The Infosys Foundation in the past provided considerable financial assistance to war widows. It has also been involved with construction of a super speciality hospital in Andhra Pradesh and reconstructing a school in Karnataka.
Wipro: The Azim Premji Foundation run by the Wipro chairman is working on providing elementary schooling to thousands of underprivileged children. It believes in partnering to guarantee learning in school.
The CSR effect has been creating a positive ripple in both society and the corporate world. The initiative has changed the landscape of India's development sector. A large number of public and private sector organisations have their own foundations, which work in close association with NGOs and the government.
Together they tackle a lot of local and public issues. These organisations focus on education, primary healthcare, AIDS awareness and infrastructure.
In the words of Dr Madhav Mehra, President of the UK-based World Environment Foundation and the World Council for Corporate Governance, "The realisation that companies have a great prospect to making profits through a triple bottom line approach is helping the development sector to enhance its reach and tackle the yawning gap between India's rich and poor."
(The author is a Professor of Marketing at SIES College of Management Studies. She can be contacted at firstname.lastname@example.org)
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