India has been on the lips of just about every economist and businessman in recent years. Its booming economy is growing at over 10 percent a year and the country is ranked among the biggest, fastest growers by the IMF.
You’d think there’d be little room amongst all this capital-intensive activity for CSR, but you’d be wrong.
The Indian government has arguably tried to be a trailblazer in introducing CSR into its governance structures. In 2009 a new Companies Bill proposed that every company with either a net value of Rs 5 billion (£66 m), a turnover of Rs 10 billion (£13.2 million) or a net annual profit of Rs 50 million (£ 660,000) be required to spend at least 2 percent of its profits from the preceding three years on CSR projects (as defined by the company itself).
Perhaps unsurprisingly the move was deeply unpopular and earlier this year the government backed down from making the proposal mandatory and has has opted for non-regulatory guidelines instead.
However the intention is clear so to try and understand a little more what was going on India I turned to Akhila Vijayaraghavan, founding director of the international CSR consultancy The Green Den.
A culture where business already gives
“The Indian business model by and large is dominated by small family businesses,” she explains. “For this reason, it has always fostered a charity based model of CSR whereby ‘social good’ is emphasised upon.”
As an example she points out how even the smallest of micro industries often make donations to the local orphanages, and I remember writing up a report by ethical fashion consultancy Shirahime for The Guardian which emphasised that small companies can be just as sustainable as larger ones, but they’re unable to afford the reports.
This is in stark contrast to the western business model where the smaller the business the less likely it is to be socially engaged, and what social engagement there is by large corporations often looks decidedly like mutton dressed as lamb (for example sponsorship of sports events or teams, which would more rightly be called marketing).
“Another major thing that industries spend on is temple donations,” Akhila continues. “These donations are used by temples for their own projects as well as maintenance of the temple premises.”
I find this a rather fascinating aspect of the Indian approach to CSR and wonder for a moment whether any parallel can be drawn with David Cameron’s Big Society. Akhila demurs: “The problem with giving money to temples is that you are never sure where the money really is going,” she elaborates. I think of targeted campaigns, such as WWF and Sky working together to protect jaguars in the Amazon rainforest, and get the point.
Changing each culture, not homogenising them
“Culturally, the idea of ‘give-back’ is pretty deeply ingrained into Indian business,” Akhila says. “However this now needs to be streamlined and shifted away from the notion of ‘social service’ into CSR that makes strategic sense.”
Taken on the large stage, this is a very important point. What CSR is and how it should be implemented is different for each country and culture around the world. Furthermore, there does not necessarily need to be common agreement on the destinations along the way so long as companies who wish to compete with one another are in some way comparable.
So what India has already and what it demands from CSR is very different to what, say, the UK has and demands. Furthermore, the two countries do not need to come to an agreement of what entails a responsible company so long as their competing companies are comparable.
On this note though, Akhila also sounds a warning about getting too hung up on CSR reporting itself.
“Reporting only serves as a formal means of gauging CSR activity, it is definitely not the only yardstick by which CSR performance can be measured,” she says. “Many of the smaller companies, even if they are doing tremendous work in the CSR realm, need not or cannot afford to produce reports.
“Indian industry is 70 percent small and medium scale – to expect these sectors to produce reports borders on ludicrous. Having said that, this sector should not be neglected in the promotion of CSR because this is the area for real stakeholder engagement.”
The key: stakeholder engagement
One of the key elements of CSR is how to bring a human aspect back into business, an aspect which has been squeezed out by the need to maximise profits.
When we talk about engagement we often forget we’re talking about person to person communication. Reports don’t foster this: rather they perpetuate the ivory tower view of the world held by accountants and auditors. Furthermore, all actors which a business engages with are stakeholders, whether they are businesses, NGOs, locals or customers.
So when we say stakeholder engagement we don’t mean reports, we mean communication and collaboration.
“India has a deeply ingrained sense of sustainability,” Akhila concludes. “Concepts like reuse, recycle, waste not want not etc are part of our culture and this makes the concepts of sustainability easy to grasp. What India needs is infrastructure and a streamlined process of tackling problems … additionally there needs to be a new emphasis on environmental sustainability and biodiversity protection, both of which are sadly lacking in Indian business.”
And what CSR needs is for stakeholders across supply chains and consumer networks to talk to one another and, crucially, learn from each other. That is how CSR will truly influence how business operates in a more sustainable and responsible manner in the future.
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