Download In 1902, a visionary and entrepreneur in Kerala

Book Review
CSR: A Profitable Concept
Subhash Mohanti
Independent scholar, Email:
Corporate Social Responsibility: Past, Present and Future
by Sanjay Kumar Panda;
The Icfai University Press;
373p, 2008.
In 1902, a visionary and entrepreneur in Kerala by the name of Aryavaidyan P S Varier and
who set up Arya Vaidya Sala at Kottakkal, stipulated in his Will that 40 per cent of the profits
of his organization would go to a free hospital catering to the needs of the poor and the
indigent, while another 50 per cent to a Ayurveda College in the neighbourhood. If this was
not enough, he willed a part of the remaining profits to promotion of Kathakali, a dance form
belonging to the rich art tradition of Kerala. Thus, the concept of corporate social
responsibility first took root in this southern state of India.
In its purest form Corporate Social Responsibility (CSR) has always meant programmes to
distribute and increase cumulative wealth in the immediate operating environment, whether
such wealth is represented by monetary benefits or an incremental increase in the standard of
living. The term Corporate Citizenship may also be used instead, lending itself to a wider
ambit of responsibility, including environmental and social responsibility apart from the
conventional economic responsibility that a company has to its shareholders.
CSR is also a close adjunct of the concept of the Triple Bottom Line (TBL or 3BL) which
seeks to evaluate companies by the extent of profitability in economic, social and
environmental terms. 3BL is being seen by companies as a new way to monitor long term
progress and commitment to profitability.
In recent times, the noise around the subject of CSR has only grown louder. While the debate
has swung from side to side, from it being perceived as contrary to shareholder value on one
side to it being imperative to societal peace on the other, in turn creating distinct business
advantages, the larger consensus is gravitating towards a decisive role CSR plays in
alleviating social problems and fostering real inclusive growth.
The author of the book Corporate Social Responsibility in India – Past, Present and Future,
Sanjay Kumar Panda has delved deeply into the concept of CSR and its power to improve
livelihood security of the poor. He also advocates its crucial role in achieving national goals
for food, health, education and work for all, well for the vast majority.
Panda is gold medallist graduate from Utkal University in Orissa and later an officer of the
Indian Administrative Service; his commitment to societal responsiveness is deep rooted.
While working for promotion of handloom and sericulture in the Orissa government, Panda
had the unique opportunity of looking into the strong relationship between investment in
society and inclusive growth. His field experiences and onsite involvement in a number of
areas which brought him closer to large sections of society as a chief electoral office, director
in the ministry of youth affairs, chief vigilance officer in Steel Authority of India and
principal secretary in the state of Tripura offered him the unique insight of social challenges
and solutions that lay in greater cooperation between the investing classes and unfortunate
sections of people.
His book also explores the different CSR routes in Western countries as well as in India. The
author traces the emergence of social responsiveness in the industrial revolution in Europe
which transformed the agrarian society to an industrial society bringing about significant
changes in the means of production, ownership and related socio-economic features. As the
revolution laid the foundation of organized industry, it became necessary to set up formal
institutions for acquiring skills befitting the growing needs of trade and commerce the world
over.
The phenomenon also, side by side, saw the surfacing of social discontent. While those who
had access to facilities grew, entered the markets and derived immense benefits of the
industrial growth sweeping across borders, those who did not have such facility became
disadvantaged and deprived of benefits which led to depression among the underprivileged
thereby sowing seeds of discontent. As the fruits of development of science and technology
extended to smaller sections of society, obviously those who had the means, the prevalence of
material based opportunity alongside deprivation, disease, hunger and malnutrition posed
major global challenges that got became more visible given the rapid growth in the tools of
information proliferation and an extremely active media.
The expansion of trade and commerce and the emergence of a corporate world that was
expanding exponentially raised questions about profits and its sharing. Here, the author points
out the gradual realisation among companies that financial profits were not the only benefits
arising from manufacturing and commercial operations. Non-monetary benefits such as
reputation and social capital while carrying on business were clearly attaining a significant
relevance that could not be ignored. Undoubtedly, business needs society to remain in
business.
Discussing the evolution of CSR, the author speaks of the realisation among corporates as
business going beyond the meaning of an ‘economic institution’. He admits, however, that
this was not enough for companies to get sufficiently focused on concerns for the society.
Around 1930, business houses first realized their responsibility towards society. This
happened when it dawned upon them that corporates need consumers for marketing their
products. The Great Depression aggravated that need. Business houses felt that it would be in
their interest to look after consumers particularly for generating purchasing power, which
would increase the demand for their products. Panda, however, does not hesitate to point out
that the response of businesses towards the welfare of society arose more out of a selfish
concern rather than as an altruistic, selfless and philanthropic concern.
Post independent India and political compulsions vitalised the value of social welfare and
established the concept of a ‘welfare state’ which subsequently formed the cornerstone of
state policy. The preamble of the Indian Constitution enshrined these principles and declared
that the growth of the country was dependent on securing justice – social, economic and
political, liberty and equality - for all segments of society. Given the importance of the public
sector in the building of India, social responsibility and public accountability of state-run
establishments assumed importance paving the way for involvement of public sector units in
greater acts of social responsiveness. The government also recognised the need to engage
even the private sector in such activities in a more structured manner so as to reach the
benefits of industrialisation to a wider section of the deprived population.
In his book, the author has documented succinctly the engagement of both the public sector
as well as some of the bigger among the private corporations in CSR activities in areas of
education, health and employment generation. He notes that even though the awareness levels
have persisted since the second half of the 1990s, there has clearly been a distinct
improvement in recent times, though it still seems to be restricted to sectors like metallurgy
and mining to a large extent. In the post liberalisation era, which saw the emergence of
information technology and services sectors as key drivers of economic growth, the
endeavours in the area of corporate social responsibility has appeared to expand beyond
education and public health to areas such as skill development and environment. In the true
sense the latter began to constitute what we understand as the triple bottom line approach to
CSR, where such activities are even being seen as investment for future growth.
Clearly, CSR has gone beyond philanthropy, something which began way before India
attained political independence. In those days, activities with a view to benefit society were
conducted through private trusts created by business houses, and that too, focused largely on
community development in and around the vicinity of business activity promoted by them.
Current studies on CSR activities of select PSUs and private corporations indicate that the
Indian Corporate Sector has started realising the importance of CSR. That the benefits are
manifold is not in doubt. First and foremost, it is crucial for enhancing prestige in the local
community for enabling peaceful expansion of business. Being known as a good corporate
citizen is also helping companies in the market place. The earlier approach relating to charity
is giving way to CSR as a long term measure and sustainable development.
Another major development which has helped awareness levels to new heights besides
creating opportunities for CSR has been the growth in number of non-governmental
organisations and civil right groups. Armed with local knowledge, these entities have proved
to be worthy partners of the corporate sector seeking to engage in CSR.
In order to make CSR intervention effective and bring about synergy, the NGOs are also
publicising their sectorwise of expertise through different communication channels available
today. This gives Corporates the opportunity to select NGP partnership depending on their
areas of involvement. Panda has also substantiated on the role of media and its importance in
creating awareness and a strong public opinion favour CSR and corporate engagement for
public good.
Finally, Panda’s book enlists a large number of case studies of activities in the CSR space
adopted by the Indian corporate sector. The author hopes that an exposé of such nature will
not only encourage other corporations to come forward to hold the government’s hands to
alleviate the conditions of a huge mass of underprivileged people of the country, it would also
provide ample encouragement to undertake CSR activities as they are profitable in today’s
context.
Subhash mohanti