CSR specialist Mary Longhurst asks whether Indian companies, which are mandated to spend 2% of their profits on CSR activities, should bow to western notions or responsible conduct or fuse them with a more traditional approach to philanthropy.
Corporate social responsibility is now a mainstream concept, spanning industries from oil extraction to fashion and from the wealthy West to the Global South. But can a western-defined model dovetail with more traditional ideas of corporate philanthropy and paternalism in Asia? And is there a sense that the West’s way is the “right way”?
This debate is very much at the forefront in India. Since the Indian Companies Act in 2013 made it mandatory for large companies to spend 2% of their profits on CSR projects, corporates, academics and NGOs have taken an interest in the repercussions across the world.
As the concept of CSR is not defined within the act, only the social issues that must be attended to, the eternal debate over what constitutes CSR has continued. This discussion buzzed around the a conference on sustainable development hosted in January by the FORE School of Management in New Delhi, and partnered by the International Association for Business and Society (IABS). It was attended by visiting academics from the US, Australia, the UK and Poland, plus representatives from business and academia across India.
There is no definitive definition or framework for CSR the world over, so every country will have its own approach
In the West the view tends to be that CSR must be directly linked to the business model and therefore be part of a strategy that adds value for both the company and its stakeholders. For many companies this goes hand-in-hand with the explicit promotion of these activities. In India, there appears to be a more fluid approach to CSR, which frequently embraces philanthropic activities as part of its approach.
Such activities tend to be dismissed by western academics and practitioners as wide of the mark, or not the role of business. Yet Indian businesses continue to pursue philanthropic practices and, as such, can feel patronised by this western thinking. Indeed, its imposition could start to sound like colonialism in another form. But is the West listening?
In the West the view is that CSR must be directly linked to the business model. (Credit: one photo/Shutterstock)
There is no definitive definition or framework for CSR the world over, so every company in every country will have its own approach, dealing with complex issues in different contexts. Indeed, the fact that it is a social concept means that its practice must be context-specific. Western academics and practitioners will often, for instance, refer to the lack of a welfare state in developing economies, such as India, and the need to address a wider range of social needs, for these philanthropic practices. But listening to the presentations and comments at the conference it was clear that this is over simplifying the situation.
The application of combined CSR and philanthropic activities in India are often routed in historical practices, much the same way as they are in the UK.
Companies traditionally supported local communities by ensuring their employees were housed, healthy, and fit for work. These efforts have now been extended to make efforts not to pollute the local environment and engage in community activities that keep companies alert to the local issues.
It’s not to say that one way is wrong and one right, but that different contexts demand different interpretations of CSR
From here, companies in India and the West have developed branded activities, for example, Shell’s LiveWire programme to encourage young entrepreneurs and Tata Steel’s Kids of Steel programme that gets kids active. These activites meet a specific business need, such as attracting new employees, while allowing them to promote the activity to its stakeholders.
In the India context, however, the approach is often more subtle. Some of the best cases are using a combination of CSR and philanthropic activity to provide their stakeholders with a sense of meaning. They appreciate that business alone can fail to do this and by providing employees, for one specific example, with the opportunity to become involved in community work, they have a better chance of holding onto those most valuable to their business.
Furthermore, Indian companies are also using philanthropic activity as a way of developing trusting relationships with their communities. It was clear from the conference presentations that when a community perceives a company is only investing to ensure a return, that trust can be broken. Philanthropic activity, whereby a company is judged on its altruistic actions, therefore becomes an essential part of the process. CSR can only then be effectively implemented when that trust is established and secure.
Tata Steel’s motivations to conduct CSR present as being about sustainable and spiritual development.
This is an approach that western models of CSR tend to ignore. It’s not to say that one way is wrong and one right, but that different contexts demand different interpretations of CSR and the experience and practices of one business offers opportunities for others to learn from that. It is, however, understandable that Indian academics and practitioners in this field can often feel their views are landing on deaf ears when the western, more rigid model of CSR, is perceived as the “right one”.
India does now have a chance to show the world the impact of its approach, but it may have to shout loud to be heard. Sharing knowledge and experiences, however, is vital if trust in businesses around the world is to be improved, and continuous communication must be an essential part of this process.
One example of an Indian company marrying CSR and philanthropic activity is Tata Steel. CSR within Tata Steel India acknowledges the role of philanthropy yet separates the two by a stated need for direct involvement and engagement in an activity. The CSR must support ethical practices in pursuit of the sustainable development goals for the company and its stakeholders. This is achieved with its community stakeholder through its affirmative action programme.
Tata Steel India’s philosophical narratives express not only an ethical approach but articulate a connectedness between the inner self and outer world and relate to a sense of meaning, purpose and reason for existence.
The motivations for the company to conduct CSR thus present as being about sustainable and spiritual development. In this way it offers its employees and community a sense of purpose and meaning, and in the process creates brand ambassadors and a positive reputation. This is driven by the perceived integrity of the company’s managers in a way that maintains its reputation and manages risk. It is underpinned by the company’s articulated role as a corporate citizen, and perceived and designed to be embedded as an integral part of the business.