"It isn't about just writing a cheque, but also about being sensitive to your surroundings," says Anu Aga, director of Thermax, an energy and environment solutions provider. Keeping your supply chain free of child labour, reducing effluent emissions and employing enough women are all indicators of how socially responsible a company is—and these aren't easily translated in money terms.
"Companies need to differentiate between 'doing good' and 'not doing bad'," says Sachin Joshi, senior researcher at the Centre for Social Markets. Take, for example, Coca Cola, which calls itself a "hydration company" with a "shared interest in finding effective solutions to water management". But the soft-drink giant was publicly lynched in Plachimada, Kerala, for excessive extraction of groundwater, adversely affecting water availability in the area for drinking purposes and agriculture. (see Don't Poison My Well, May 16, '05.) More recently, community leaders have accused the company's bottling plant at Mehendiganj, near Varanasi, of stealing water, and are pressuring it to close down.
Reliance Energy was also hauled up by the Dahanu Taluka Environment Protection Authority, a quasi-judicial body set up by the SC, which indicted it in March '05 after it reneged on the setting up of a flue gas desulphurisation plant to reduce sulphur emissions from its thermal power unit at Dahanu, in Mumbai's outskirts. The order directed REL "to deposit Rs 300 crore to show their bonafide, or close down the power station till theFDG plant is installed." The fine has since been cut to Rs 100 crore by the Mumbai HC, but REL has only till October 2007 to meet the clearance conditions.
Indian businesses aren't mandated to publicly disclose CSR investments, and expenses often look larger than they really are when described by a PR person. "Ask about CSR and you get directed to the PR department," says Srinath. "It's more about managing perceptions and corporate image than anything else."
One of the arguments for CSR is that business organisations have both the managerial expertise and the technology to solve problems that have befuddled governments for years. "We can no longer rely on our government, economically or morally," says Raghunathan.
a JSW-initiated Nari Vikas Kendra
True, but businesses tend to attach themselves to short-term projects that look good on paper. Social problems, unlike business ones, demand a long-term vision; and impact is not always measurable right away. What sets the Gates Foundation apart is its depth of understanding on social issues, no doubt a product of their hands-on approach. Health initiatives, for example, are not just about providing medication, but also looking at what to do when a man is too starved to swallow the pills he's being given. "They're much farther along on the learning curve than Indian companies," laments Srinath. "Here, money tends to get focused on easy-to-measure issues, like setting up a school and getting 300 children enrolled."
Another reason that corporate giving is an unstable funds source is that it is what Raghunathan calls a "fairweather activity" subject to business cycles. Or subject to whatever the CEO is turned on by. Social initiatives that are entirely CEO-driven, without active participation at other levels of the organisation, falter when leadership changes. "Work has become so demanding that mobilising people (for philanthropic projects) is difficult, even at my company," admits Aga. "People working six-day weeks don't want to give up a Sunday."
Another problem is that corporate giving is often determined by what cause is in vogue. "It's fashionable to get into certain projects and tom-tom about them," says Joshi. "Shelters for AIDS-affected children are battling for funds but the corporate stand is, 'Why should we give money for a child who is going to die anyway? We should spend money on AIDS prevention so that we can create a future generation of healthy workers.'"
This might sound terribly cynical, but as financial journalist Sucheta Dalal points out, almost every corporate is involved with health and education—and not just for altruistic reasons. It's because their involvement in these two core areas help them gain access, goodwill and influence with even incorruptible government officials. The government throws up its own roadblocks to charity, in the form of permissions, delays, bureaucraticredtapism and a politicisation of the giving process.
"The government message seems to be, 'Don't do it'," says Dalal. "If they want philanthropy, they should make it easy." Aga recalls how a charity trust that she set up was raided because she refused to pay a bribe. "I'd think twice before setting up a trust or a foundation now," she says. But roadblocks or not, more organisations are setting up dedicated foundations to look after their CSR work. Commitment to social initiatives is becoming project-based, not year-on-year; and trained staff are taking over CSR from PR personnel.
a Forbes Marshall ‘Prerna’ primary school near Pune
Besides, companies these days are not content with just writing out a cheque to some NGO and forgetting about it. Especially when finding a credible NGO is an uphill task. CMD's Joshi points out that India has between 1.5-2 million 'civil society organisations', the largest number of NGOs per capita! So, many prefer a hands-on approach. That isn't easy either, particularly because social initiatives, by nature, are often so far removed from a business organisation's core competencies. As Rati Forbes, director of Forbes Marshall, observes, "Companies don't know how to give, even when they want to give."
Corruption is another deterrent. India scored just 2.9 out of 10 (10 being least corrupt) in Transparency International's 2005 Corruption Perception Index. "There is a high correlation between a country's transparency ranking and its CSR," says Raghunathan. "Unless organisations believe in the government, they won't give money away."
According to Aga, the same transparency should be expected from government as is demanded from business organisations. "The best CSR we can do is demand accountability... instead, many companies are guilty of adopting a stand like 'I've paid my taxes and done my bit, now it's up to the government'."
That's no longer enough, not when 51 out of the world's 100 largest economies were business enterprises, not nation-states, at the turn of this century. Michael Smith, author of Beyond the Bottomline, points out how in 2000, General Motors was bigger than Denmark; Toyota was bigger than South Africa; and three persons owned more wealth than the combined gdp of the 34 poorest nations; and yet millions are still without basic livelihoods.
"We Indians have high resilience but low sensitivity," says Aga. "Otherwise, with so many have-nots, could we continue to live the way we do? We always need a foreigner to shake us up." That foreigner, undoubtedly, can be Buffett. What is doubtful is whether even he can inspire Indian businesses to take corporate giving beyond tokenism.
