Sudhir K Sinha Head–CSR, Moser Baer India Limited sudhir.sinha@moserbaer.net

Sudhir K Sinha is a Corporate Social Responsibility (CSR) expert and has a wide and varied experience of working with corporate and NGOs both on CSR issues. A social activist, who did his post graduation in Rural Development, worked for almost 18 years as Hony. Assistant Secretary of Tata Steel Rural Development Society. He worked with Partners in Change (PiC) – an NGO promoting CSR in India before joining Moser Baer India Limited as Head – CSR. Pushing stakeholders’ model of CSR and aligning corporate philanthropic initiatives with MDGs in India are his two personal agendas.

Q1. Corporate Social Responsibility or CSR as it is popularly known, has nowadays become a buzzword in both corporate and social sector. Various private firms are taking up initiatives to invest some their resources for social cause. What is the driving factor for corporates to take up CSR so seriously?

Ans. Various CSR studies and surveys indicate that the most important reason to undertake CSR initiatives is to be a good corporate citizen. This, they believe, can be achieved by discharging their responsibilities through carrying out philanthropic activities around their operational sites. Such initiatives essentially help companies to improve their relationship with local communities, build a good public image and thus improve the brand value of companies over competitors. For some companies the compliance with the legislation is the driving factor whereas some old and large companies do maintain that philosophy of the founders is the guiding factor for companies to undertake CSR initiatives. Though a large range of factors drives CSR initiatives of companies, I would put all of them into following three major categories and term them as underlying ‘drivers’ for corporates to take up CSR:

1. To have Social License to operate business
2. To mitigate reputation and operational risks
3. To ensure higher sales volume

Q2. What is the underlying principle that companies follow for addressing CSR? When and where did the CSR movement start and at what level?

Ans. ‘Sustainable business’ is the only underlying principle for companies to follow CSR. However different companies might have different principles.

The history of CSR is as old as business is. With times, the scope and magnitude of it have changed. Therefore no particular place or region can be said as the birthplace of CSR. However, the recent history goes back to the seventeenth century when excesses of the East India Company were commonly expressed. The tradition of benevolent capitalism is as old as over 150 years. Some Quakers, such as Barclays and Cadbury; socialists such as Engels and Morris practiced value based and socially responsible business. In 1790s, the England witnessed the first large scale consumer boycott over the issue of slave harvested sugar which finally forced importer to have free-labour sourcing. In India, JN Tata in the beginning of 1900 wrote to his sons “to pay back to society….”, the values which resulted in to several ethical, social and environmental practices that got well integrated into business culture in Tatas – a brand name known for its social responsibility.

Q3. What are the most common agendas and programmes covered under CSR initiatives? Is it essentially done in collaboration with voluntary organisations/NGOs or is it handled internally from within companies themselves?

Ans: The program under CSR flows from the ‘factor’ that drives company into CSR. However, the philanthropic mode of CSR dominates and therefore companies prefer to contribute to welfare programs under health, education and relief mostly. I would rather be critical saying that the philanthropic activities are even non- strategic as companies have failed to achieve human development goals even in their spheres of influence. The stakeholders model of CSR, which overarches workplace issues, Human rights issues, customers’ expectations and aspirations, suppliers’ issues, environment and etc, has still far way to go in India. The meaning and scope of CSR initiatives in the country is limited to dealing with community as the only stakeholder, which is of course a voluntary action but driven mostly by business needs. Otherwise, programs dealing with other stakeholders are limited to compliance and hardly have companies been seen taking voluntary and proactive actions on those counts.

As regards corporate partnering with NGOs, PiC’s survey indicates that 16% companies had worked in partnership with NGOs. Companies like to make cash donations mostly. But, there are companies have their own institutions – foundations/ trusts. Alternatively, Companies get their CSR programme implemented through their internal functions like HR and Corp Communication, which I would like to suggest corporate that they should hire CSR experts by creating separate division of CSR. I don’t mean to do marketing of social experts but it is essential for corporate to understand that CSR is a different and very specialized function and can not be treated as sub function. Most companies fail to produce impacts of CSR just because the approaches undertaken by HR/Corp Comm. are always different from what a CSR expert would have initiated. Partnership is the key to the success and sustainability of CSR and therefore “public-private people partnership” should be given more stress.

Q4. What is the most common funding mechanism for CSR initiatives? Is it the pre-defined percentage allocation of overall corporate budget or is it the ‘payroll contribution model’? Which among these is more sustainable and why?

Ans.: There is no established mechanism for committing resources. It again depends on how well CSR is integrated as a part of business processes. Since the philanthropic activity is meant as CSR, companies allocate some budget for the community development programes. It is not the ‘strategic giving’, rather, is more of a ‘fair weather approach’ – depending mostly on the financial performance of the company or you can call it ‘profit’.

What I wish to emphasize on is that companies first have to institutionalize CSR as a core business practice. If it is done so, then resources for CSR are committed as a part of the revenues and not a part of the profit. This mechanism is more sustainable as it goes with the business. Resources for CSR as part of the profit are always a risky proportion.

Payroll contribution is related to employee voluntarism. Charity Aid Foundation has been promoting this as “Give As You Earn” and as a result companies such as Price Waterhouse Coopers and Glaxo SmithKline in India have provided opportunities to their employees to support their chosen charitable causes.

Q5. How effective is CSR in building a socially sensitive brand for an enterprise? What is the response of general community, stakeholders and consumers to CSR policies?

Ans.: Nike suffered the consumer boycott of its products in the mid -90s. It learnt from their mistakes and attacks from NGOs and today it has emerged as one of the most progressive global corporations as it improved its CSR practices and integrated it as one of their core business practices. Nike is a brand today. Another example, Exxon Mobil, decided to fight the environmental movement, faces on going NGOs’ severe criticism, consumer boycotts just because it failed to recognize the wider importance of CSR as a corporate strategy. There are several examples as to how CSR has helped companies improve their brand image over its competitors. The best example in India is Tatas – a brand known for its values / principles and practices that has made this group sustain in the business for almost over a century.

Q6. A lot of debate is going around in public and private domains, entailing arguments both in favour and in opposition to CSR. Allegations of CSR being a face saving mechanism for corporate misdeeds, along with injustice on part of companies in putting shareholder’s money into financially unyielding purposes are making their rounds. What is your viewpoint in relation to such concomitant controversies with CSR?

Ans.: There cannot be a second argument that CSR, over a period of time, has been instrumental making sustainable business. CSR is a dynamic business process that mitigates the concerns and aspirations of stakeholders. This ‘form’ of CSR certainly does not leave any scope for any controversies or challenges for business. However, CSR in its limited ‘form’, using this as instrument only towards mitigating business challenges in short term does not long last and therefore be dissuaded. Such an approach even cannot help companies in face saving. There are extractive companies active in India and Africa, who despite having their well laid out CSR policies at the group level failed to deliver the same intent locally. They are working with conviction that doing CSR in form of community development initiatives will save their misdeed in terms of Human rights abuse, poor work-place practices, environmental violations and corruption/ bribery. No, it is their mis-belief. It is therefore these companies have continuously been facing threats from different stakeholders.

Q7. What is the future of CSR initiatives? Can we expect to witness a corporate led social development movement in the coming days?

Ans.: In a globalsing world where companies are increasingly relying on brand strength to add value and product differentiation, and where NGO-driven consumer activism is increasing, role of CSR will be inevitable as it makes good business sense. Malcom-Baldrige and EFQM models of Business Excellence have already positioned CSR as one of the core business processes. Companies following these models have to integrate CSR in to their business culture. Still, CSR is in evolving process and therefore there is no uniformity in understanding and approach. This has been understood and articulated differently – continent to continent; country to country; companies to companies and even individually – therefore I foresee a huge scope of CSR in future.

Q8. How do you think evolving CSR strategies can help to integrate UN Millennium Development Goals?

Ans: Corporate has a definite role to play in forwarding MDGs. They can link up their philanthropic or community development initiatives with MDGs in order to achieve the global goals locally in their spheres of influence. Secondly, they can reduce the impacts of their operations or services at the work place linking those with MDGs. Finally and very importantly, corporate can use their influence or economic power on improving the policies which would help country achieve the MDGs.