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The New Corporate Citizen

June 7, 2012

Companies need to evolve beyond CSR, speak for the good of all citizens and for democratic values

Like a kite in an updraft, the rupee-dollar graph continues its gravity-defying rise, even as the GDP growth-rate seeks to desperately side with Newton through a rapid free-fall. Further respect for the law of gravity comes from the Sensex, which continues to sink.

Meanwhile, the ship of state has dropped anchor, and remains motionless. The captain’s order to move — and in which direction — are not yet forthcoming.

In the blazing Delhi summer, ‘Western disturbances’ (from Europe, particularly Greece) are the official villains; the haze makes it difficult to look ahead, explaining the faulty predictions of GDP and inflation. The heat also causes somnolence and torpor in government. Parliament avoided such lethargy, but generated more heat through an energetic frenzy against a cartoon. Maybe cool monsoon winds will bring solace, get the ship to move again and facilitate new growth.

Business barons, bruised by Budget blues, have been bemoaning the inaction — first cautiously, but now more stridently — as ‘policy paralysis’ becomes the buzzword. Though critical of social sector subsidies and schemes, seen as exacerbating the fiscal deficit, corporate leaders do support the concept of inclusive growth. Many companies have active programmes of corporate social responsibility (CSR) and fund activities of societal benefit. The focus is mostly on communities around their area of operation and in fields like health, education, water and sanitation. Some of this is undoubtedly based on altruism, but much of it is brand-building and self-interest: happy people do make good neighbours.

Government’s thrust on inclusive growth, and a view that the corporate sector must do much more, has led to proposals for a mandatory CSR spend.
The new Companies Bill may well include a clause on this — probably as a ‘comply or explain’ provision. As always, some companies will find clever loopholes while some officials indulge in rentseeking. In any case, voluntary spending based on genuine altruism or enlightened self-interest is generally a better approach. Reporting about CSR efforts and spending, combined with an independent rating of companies on this dimension, may well be sufficient, since the market is known to reward companies that are better governed and contribute more to society.

Traditionally, CSR has committed corporate resources to deliver specific social services to disadvantaged communities or to improving the physical environment. Some argue, though, that CSR is not just philanthropy, but is the integration of social goals into the mainstream business of the company. Thus, providing quality products at affordable prices to meet the needs of poor consumers in a manner that is financially viable for the company, is a way of fulfilling social responsibility.

In fact, since this is sustainable, it is better than pure philanthropy. Similarly, addressing environmental concerns by reducing resource use, recycling and reuse in a company’s operations may be a more effective expression of CSR than a one-time showpiece project in a local community. Is this sufficient or is there need for a different and broader interpretation of social responsibility in today’s context? As a big and important part of the country’s economy, the corporate sector gets a large — some say, disproportionate —share of mind of the government. Business leaders, unlike those from civil society groups, can get appointments with ministers and top officials with ease. This opportunity, combined with the size and influence of the corporate sector, is generally used to lobby for favourable regulations and tax concessions for their particular sector or, at best, for industry-friendly policies. However, its powerful position as an influencer puts greater responsibility on business. CSR must, therefore, extend to broader realms of public policy and national issues.

In its new form, CSR must mean engagement with the government and, importantly, with civil society organisations (CSO) on matters of social consequence — going beyond the narrow interests of business. The business-CSO dialogue has been a major missing element in evolving a consensus on many vital national issues like land acquisition, mining, the environment and hydropower projects. A dialogue can avoid confrontation and litigation, and develop acceptable solutions. To be genuine and useful, such a dialogue must be broad-based, involving industry associations. Individual companies talking to, and sometimes trying to buy out, a CSO, or using one CSO to front a battle against a rival, might work in the short term, but is bound to backfire in the course of time.

CSR must include taking a stance to protect civil and human rights, not only because the rule of law is essential for a positive business environment, but also because it is a responsibility. Sadly, one is hard-pressed to think of a company or business leader who has spoken out against violations of human rights, or the disregard for civil liberties inherent in draconian laws like AFSPA or cyberspace regulations. In the recent cartoon controversy, while one heard many voices from academia, the silence from the corporate sector was deafening. Surely, a community that often complains about educational quality had a point of view about textbooks that sought to promote thinking, questioning and debate, not rote learning? Companies and business leaders can no longer limit responsibility to their balancesheet, their shareholders or to occasional philanthropy. They have a duty to promote the welfare of all citizens, to democratic and egalitarian values and to the country: this is what CSR must mean.

  1. yogesh permalink

    Mr karnik, i saw that piece last week!! we have met in the past, on that subject. i’d love to be able to meet you per your convenience..

    my e mail id is as below and would appreciate your response.

  2. yogesh permalink


    i noticed the comments here are moderated before these get handphone number is: +91-9899643747 and i am a director with microsoft corpn. India.

    i do look forward to see you.

    thank you,


  3. Dr. Mayank Agarwal permalink

    Dear Mr. Karnik,

    I am writing to seek your help regarding harrassment by Torrent Power, Agra. I am trying to approach MD of Torrent Power, Agra to fix the issue but I am being turned away everytime. I was just wondering if it will be possible for you to give me e-mail ID of MD/Grievance Officers at Torrent. I apologize to use your blogosphere for personal matters.
    Dr. Mayank Agarwal MBBS, MPH( Emory)

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