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By GSMIweb on 22-Apr-10 01:22.
The corporate responsibility movement is hitting against real limits because of the distance of most initiatives from core business. In the face of the Millennium Development Goals, CSR is providing precious little in the way of a substantial business contribution towards tackling some of the most significant development issues facing human kind. This is the key message of a new report by Sustainability, produced for the Global Compact, called 'Gearing Up'. The report argues that in order to address the fundamental questions of how to achieve real scale and impact, companies have to shift their focus from individual initiatives and programmes towards a more effective global governance framework. Although many CSR initiatives are evolving in the right direction, with companies beginning to take action on an increasing number of key issues, the fact is that such action is often disengaged from any long-term strategy. Many leading companies pursue disjointed and conflicting activities. Whilst they employ environmental management systems, their lobbyists seek to lower legal environmental standards, for instance.
It seems that there has been something of a minor revolution in what shareholders are prepared to accept from business management. In particular, the protests about perceived excessive levels of executive remuneration have swept the recent round of AGMs like the corporate equivalent of SARS. What are the rules here? Is this the last bastion of corporate greed, or is there simply no response to demands made in this area that would constitute a body of best practice within the terms of corporate social responsibility? The arguments are straightforward. Senior directors earn absurdly more than the other workers in their business. Sure, they work hard - but not that hard. Their value has been defined purely by what the market will bear - and because remuneration committees are peopled by other company directors who have an interest in the market norm being constantly raised, so the salaries and benefits just spiral upwards.
There is some discussion that a number of the people in the leading companies - the pioneers, the CSR enthusiasts, the committed - are getting pretty fed up of being on the hamster wheel of churning out annual CSR reports. They spend most of their time collecting data, and not coming up with new ways to improve business practice. Revolt is in the air. Not that there is due to be an out and out assault on the principle of performance measurement and disclosure. But the current form of CSR reporting is simply not proving its value. It needs to evolve and fast to show that it can meet real needs. As it stands, vast amounts of money and time go into reports and it is known only too well by the people carrying out this investment that the stakeholders at whom the reports are aimed largely don't read them. Sooner or later, businesses begin to question a process where the standard rules of communication are routinely ignored, and the business value is slight. It is easy to say that no-one will be spending half a million dollars on reports that no-one reads in ten or twenty years time. It is harder to work out what will happen in the next three years.
Indian companies are now expected to discharge their stakeholder responsibilities and societal obligations, along with their shareholder-wealth maximisation goal. Nearly all leading corporates in India are involved in corporate social responsibility (CSR) programmes in areas like education, health, livelihood creation, skill development, and empowerment of the weaker sections of the society. Notable efforts have come from the Tata group, Infosys, Bharti Enterprises, Coca Cola India, Pepsico and ITC Welcome group, among others. In fact, four Indians, including Sunil Mittal, Chairman and Managing Director of the Bharti Group, NRI businessman Anil Agarwal, Shiv Nadar, HCL Technologies Chairman and NGO activist Rohini Nilekani were featured in the Forbes list of '48 Heroes of Philanthropy' recently. According to a survey carried out in June 2008 by TNS India (a research organisation) and the Times Foundation, over 90 per cent of all major Indian organisations surveyed were involved in CSR initiatives. The leading areas that corporations were involved in were livelihood promotion, education, health, environment, and women's empowerment.
The question of the role of business in society has received a high profile in recent months with a couple of films that have sought to shine a critical spotlight on what many see has the dominant institution of our times. Of these, Super Size Me, is the least interesting. The idea that it's news that if you eat nothing but McDonald's burgers you will get fat is a fact so mundane that it seems hardly worthy of comment, let alone making the premise for a full picture. Of course, the picture still manages to make some reasonable hits - particularly on the lack of real interest and supervision in a number of school canteens. Recent research in the UK suggests that parents believe that schools, families and individuals are primarily responsible for influencing diet choices, with less than 1 in 10 seeing the main focus as being companies. So there is a real message here about how far those institutions do or don't embrace that responsibility.
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