CSR and Companies in India

Corporate Social Responsibility in IndiaIn India, most of the work done by companies is still in nature of philanthropy. Consider that of the six short listed companies for the Business World FICCI CSR award for year 2003, five ( Lupin, Canara Bank, Indal, Gujrat Ambuja and Wipro ) are involved in community development work. This means building roads, running schools and hospitals, creating income-generating schemes and similar projects . Only ITC’s CSR – its e-choupal project and others – has direct linkages with its business. This is understandable given that many of the traditional development indicators – life expectancy, infant and child mortality, sanitation facilities and access to primary education – are still abysmal for India. In fact even the government expects Corporate India to participate in welfare programmes even though it is a tacit admission that the state has failed to deliver even the most basic amenities. But of late experts argue that as India gets integrated into the global economy, companies should pick up projects that are business centric. The CSR initiatives should become a part of the business process.

In an era of no free lunches , the attraction that the business centric model of CSR holds is obvious. But if more Indian Companies are to adopt that, some other things , too, need to change besides mindsets and developmental needs. The links between good CSR and good business have to be established clearly. Sure even overseas there is still no way that the capital markets reward good CSR practices directly or are willing to ovelook other flaws in lieu of good CSR. But experience shows that substantial benefits do flow in different ways.

Research in West shows that investors are increasingly questioning companies on corporate social practices and are allying with those that have high respect for CSR. In fact there is a whole eco-system being built around this concept – with outfits like Ethical Investment Research Service, a U K based independent researcher of ethical, social and environmental practices advising outfits like Goldman Sachs, J P Morgan, Redit Suisse, Merill Lynch and Standard Life on CSR practices of companies. Moreover the likes of FTSE and Dow Jones are coming up with indices such as the FTSE 4 Good and the DOW Jones Sustainability World Index. The FTSE 4 Good is an index comprising stocks of companies with good practices. To be a part of FTSE 4 good family of indices one need to apply to the FTSE 4 Good applications committee. In the absence of all these , it’s quite unlikely that CSR in India will change from being more philanthropic to more business centric in the near future. Yet such developments taking place worldwide and also because India is developing as back office centre, movement towards business centric CSR models is possible.
Strategic Corporate Social Responsibility: Stakeholders in a Global EnvironmentTaking clue from the Business World FICCI CSR Awards, still it is not clear how much Indian companies invest in CSR but from the list of the companies that applied and evidence on ground suggest that time has come and is important for large companies to enter into business centric CSR models. However, considering India where so much is to be done, it doesn’t matter whether companies take business centric view or the philanthropic centric view.