Corporate NGO Partnership
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Corporates have the reason, means and tools to facilitate the Sustainable Development, NGOs have the knowledge, empathy and bandwidth to reach the core issues at grassroots and solve them and Government has the authority and mechanism to govern the progress, keep it on track and above all the structure to initiate, facilitate, measure, review and retain all projects in control. A Creative and little liberal collaboration of Corporates’ CSR policy, reviewed for compliance with the legislative regulations and implementation of it by NGOs through Social Development Projects is the only win-win situation at the given point of time.
![State level Conference on ‘Creating a Livable Planet’
Friday, 22 January 2016 [12:15 PM – 01:00 PM]](https://image.slidesharecdn.com/corporatengopartnership-160123113355/85/Corporate-NGO-Partnership-1-320.jpg)
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Corporate NGO Partnership
- 1. State level Conference on ‘Creating a Livable Planet’ Friday, 22 January 2016 [12:15 PM – 01:00 PM]
- 2. HOW CORPORATE INDIA AND INDIAN NGOS CAN WORK TOGETHER BY FOLLOWING LEGISLATION FOR CSR
- 3. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 4. PEOPLE PLANET PROFIT CORPORATE CSR NGO 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 5. 22 Jan 2016 at VIM © Manish Puranik 9823021823 INDUSTRIALIZATION
- 6. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 7. 22 Jan 2016 at VIM © Manish Puranik 9823021823 The need for reconstruction in the immediate aftermath of World War II. The evolution of colonialism or "colonization" into globalization and the establishment of new free trade policies between so-called 'developed' and 'underdeveloped' nations. The start of the Cold War and the desire of the United States and its allies to prevent the Third World from drifting towards communism.
- 8. “We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. The old imperialism – exploitation for foreign profit – has no place in our plans. What we envisage is a program of development based on the concept of democratic fair dealing.” - Harry S. Truman, 1949 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 9. “The groups and institutions that are entirely or largely independent of governmental and characterized primarily by humanitarian or cooperative, rather than commercial objectives”. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 10. EARLY 20th CENTURY SOCIAL MOVEMENTS 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 11. India’s Independence Movement 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 12. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 13. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 14. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 15. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 16. Formation of SEBI Security and Exchange Board of India following the historic fiscal crisis of 1991 1992 ‘Desirable Corporate Governance: A Code’ – By CII – Confederation of Indian Industries 1998 Kumar Mangalam Birla Committee by SEBI to promote and raise the standards of Corporate Governance 1999 Key recommendations of KMB Committee Clause 49 of the Listing Agreement of Stock Exchanges. 2000 Companies Bill – Based on recommendation of Dr. J. J. Irani Committee setup in 2004. 2008 NASSCOM – National Association of Software and Services Companies formed a committee chaired by Narayan Murthy. 2010 Evolution of Corporate Governance in India 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 17. “We have to transform the pursuit of ‘more’ to the fulfillment of ‘better for all of us’. We have to create an India where more and more wealth is created while human dignity is enhanced.” Narayan Murthy 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 18. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 19. GOVERNANCE CSR ACCOUNTABILITY CONTROL TRANSPARENCY TRUSTEESHIP ETHICS FAIRNESS 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 20. “Corporate social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society.” - Nobel Prize-winning conservative economist Milton Friedman, 1970. ‘71 percent of CEO’s would sacrifice short-term profitability in exchange for long-term shareholder value when implementing a CSR program.’ - SIXTH ANNUAL GLOBAL CEO Survey of nearly 1000 chief executives from Europe, Asia and the America by PricewaterhouseCoopers, 2002. Corporate Social Responsibility (CSR) has undergone significant changes in the past several decades. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 21. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 22. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 23. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 24. Ethical Businesses always strive towards improving the quality of life of people by offering safe and excellent products. The efficient use of resources in a business to benefit all the stakeholders involved has an across-the- board impact on financial performance which results in increased revenue for the businesses. This typically happens if a sense of social responsibility prevails throughout the organization in all the business processes and become a routine practice among its employees. “Arthshastra” By Kautilya Vishnu Gupta Chanakya 4th Century BC 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 25. ‘It does not make sense to achieve a ‘developed’ status without a major and continuing upliftment of all Indians who exist today and of the many more millions who would be added in the years to come…’ APJ Abdul Kalam 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 26. SUSTAINABILITYSUSTAINABILITY ENVIRONMENTAL STEWARDSHIP SOCIAL PROGRESS ECONOMIC GROWTH Socio- economic Socio- environmental Eco- efficient PEOPLE PLANET PROFIT 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 27. 22 Jan 2016 at VIM © Manish Puranik 9823021823 “The fact is that in modern society there is no other leadership group but Managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will.”
- 28. 22 Jan 2016 at VIM © Manish Puranik 9823021823
- 29. 22 Jan 2016 at VIM © Manish Puranik 9823021823
Hinweis der Redaktion
- Respected Professors, Faculty Members and my soon-to-be-manager Friends @ VIM, Good Afternoon! At the outset I would like to congratulate the management of VIM for making a proactive effort to organize State level Conference on “Creating Livable Planet” and become one of the forerunners of recognizing Sustainability as an important subject to be included in the Business Management curriculum, certainly a need of the hour! And I would like to thank VIM for inviting me to present my perspective on ‘How Corporate India and Indian NGOs can work together by following legislation for CSR?’ I hope I would be able to do the justice to the topic, thanks!
- Before I get into the subject that was my Research Objective for my Post Graduate Diploma in CSR, I would prefer to share one ‘disclaimer’, as it is technically referred to, for having a mutual understanding and clarity beforehand to make it easy for you – I am not here to teach you anything as I wholeheartedly believe that that there is no such thing as ‘Teaching’, it’s only ‘Learning’! In the history of mankind there never was a concept called ‘Teaching’. To teach anything to anybody is a social myth created by some authoring minds overwhelmed with their ability to influence. All an individual can do is to offer and share his/her knowledge, skills, passion and values to a rational audience. It would always be up to the audience to accept, assimilate and digest whatever part of the offering it can identify and intensify with. That’s the reason a philosopher like Socrates said, ‘I can never teach anybody anything, I can just make them think’.
- ‘Teaching’ at the most could be considered as facilitating the learning. This is like hand-holding when a kid is trying to walk, ride a bicycle, climb a wall or pass a narrow strip. Every child is born with an intrinsic ability of doing whatever it is supposed to do like walking, driving, climbing, balancing and so on. What it needs is a support or fallback option while it is practicing and mastering that skill. Otherwise the unfortunate and deprived children who have to raise themselves without any support would never have walked or balanced themselves. On the contrary they seem to do it early, fairly and promisingly than their fortunate counterparts. Nature intends it that way. No being needs teaching to develop; all it needs is to learn it!
- Secondly, as the topic of discussion suggests, there are 3 distinct elements to be understood independently but perceived collectively for the holistic perspective of the subject matter and those are Corporate, NGO and CSR, all in Indian context. For a better flow of understanding and putting it in a chronological order, we will first try and explore the NGO sector followed by Corporate and will try to find the synergy between these two to take it ahead on the path of CSR. I hope you would also prefer it that way as it might provide you with opportunities to find some insights in due course…! There are two vigorously debated and widely accepted approaches to look at anything – Spiritual Philosophical and Scientific Rational. Both have their own theories of Human evolution, not necessarily contradicting in every element but on some different levels altogether, for sure. However diverse their schools might seem, both allegedly seem to agree on the fact that when it all started, all humans were equal as far as their physical set of conditions are concerned. We cannot say societal as it was long ago before a Society is formed by the humans; there were only groups and troops to begin with, in the hunters and gatherers stage. Nor can we deliberate on intellectual or economical aspect as then Human Intellect was restricted to basic instincts just like other animals and humans were yet to discover a magic called currency which in the long run changed the entire game and left humans with insatiable desires.
- The insecurity of the unpredictable natural phenomenon in wild gave birth to the concept of Superpower or Deity to find a solace in hard times with extremely adverse circumstances while the need of fair exchange of commodities explains the dawn of currency. However, in its evolution phase, the currency that entered the scenario as a convenient mode of exchange soon started to become the commodity itself that could be bought and stored for future utilization. This interesting reversal of the famous English saying, ‘The ends justify the means’ transformed the ‘fair’ exchange into a ‘Smart’ trade wherein smart sellers started selling what they wanted to sell and not what was the sheer need of the society at large. Being a ‘Smart’ trade, it even made the people believe that this would bring ‘development’, a magic key that has all the solution to world problems right from poverty to disparity! During the phase of ‘Industrialization’, ‘Land’ being the most powerful weapon of mass control (if not destruction), the smarter ones made it a point to grab as much as land possible by any means they can employ to achieve their objectives. To make it a socially workable and legally acceptable model, they developed Markets, Corporations, and formed Organizations and Governments so that no weak and deprived section of society would have any opportunity to think against it, let alone oppose or revolt.
- ‘Green is the color of development and Green is the Power on this planet’ was the motto behind all this development, of course with a presumption that nobody would ever question ‘Which Green…?’ Playing the real diplomats that they were, they told the masses to go to hell in such a way that the society actually looked forward to the trip! This giant wheel of development shifted to top gears at the turn of the 19th Century and the 2nd half of the 20th century became the famous 'era of development'. The origins of this era are attributed to:
- The need for reconstruction in the immediate aftermath of World War II. The evolution of colonialism or "colonization" into globalization and the establishment of new free trade policies between so-called 'developed' and 'underdeveloped' nations. The start of the Cold War and the desire of the United States and its allies to prevent the Third World from drifting towards communism. International Development in its very meaning is geared towards colonies that gained independence. The governance of the newly independent states should be constructed so that the inhabitants enjoy freedom from poverty, hunger, and insecurity.
- It has been argued that this era was launched on January 20, 1949, when Harry S. Truman made these remarks in his inaugural address – “We must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. The old imperialism – exploitation for foreign profit – has no place in our plans. What we envisage is a program of development based on the concept of democratic fair dealing.” Before this date, however, the United States had already taken a leading role in the creation of the International Bank for Reconstruction and Development (now part of the World Bank Group) and the International Monetary Fund (IMF), both established in 1944 and in the United Nations in 1945.
- By the late 1960s, dependency theory arose analyzing the evolving relationship between the West and the Third World. In the 1970s and early 1980s, the modernists at the World Bank and IMF adopted the neoliberal ideas of economists such as Milton Friedman or Bela Balassa, which were implemented in the form of structural adjustment programs, while their opponents were promoting various 'bottom up' approaches, ranging from civil disobedience to appropriate technology and Rapid Rural Appraisal. In this context, World leaders were forced to accept the existence and impact of Social Movements transforming into more organized and structured entities becoming influential with each passing day and to establish their existence, it needed a criteria to identify them. World Bank’s Operational Directive on NGOs (No.1470, August 1970) defined the term of ‘NGOs’ as – “The groups and institutions that are entirely or largely independent of governmental and characterized primarily by humanitarian or cooperative, rather than commercial objectives”.
- While at home, around the turn of 19th Century we had missionary social reformers forming Social Development groups as Arya Samaj, Bombay Natural History Society, Brahmo Samaj, Khudai Khidmadgar, Muhammedan Anglo Oriental Society, Prarthana Samaj, Ramkrishna Mission, Servants of India Society, Theosophical Society and alike topped by India’s Nonviolent Freedom Movement that brought the Nation together. During the independence movement, there was increased stress on Indian Industrialists to demonstrate their dedication towards the progress of the society. This was when Mahatma Gandhi introduced the notion of "trusteeship", according to which the industry leaders had to manage their wealth so as to benefit the common man.
- “I desire to end capitalism almost, if not quite, as much as the most advanced socialist. But our methods differ. My theory of trusteeship is no make-shift, certainly no camouflage. I am confident that it will survive all other theories.” This was Gandhi's words which highlights his argument towards his concept of "trusteeship". Gandhi's influence put pressure on various Industrialists to act towards building the nation and its socio-economic development. According to Gandhi, Indian companies were supposed to be the "temples of modern India". Under his influence businesses established trusts for schools and colleges and also helped in setting up training and scientific institutions. The operations of the trusts were largely in line with Gandhi's reforms which sought to abolish untouchability, encourage empowerment of women and integrated rural development.
- India achieved Independence but was forced to face its repercussion in form of partition that tore the nation apart. At this time Indian society went through a calamity like no other and NGOs played their role in supporting the Government that was trying to apply all the possible disaster relief measures. These efforts not only empowered Government’s efforts but also helped make the system – Participative, Accountable and Transparent in process. In India, it was the 1970s which saw rapid growth in the formation of formally registered NGOs and the process continues to this day. Most NGOs have created their respective thematic, social group and geographical priorities such as poverty alleviation, community health, education, housing, human rights, child rights, women’s rights, natural resource management, water and sanitation; and to these ends they put to practice a wide range of strategies and approaches.
- Primarily, their focus has been on the search for alternatives to development thinking and practice; achieved through participatory research, community capacity building and creation of demonstrable models. When we review some of the work done by NGOs over the past 3 decades, we find that they have contributed greatly to nation building. Many NGOs have worked hard to include children with disability in schools, end caste-based stigma and discrimination, prevent child labour and promote gender equality resulting in women receiving equal wages for the same work compared to men. During natural calamities they have played an active role in relief and rehabilitation efforts, in particular, providing psycho-social care and support to the disaster affected children, women and men. NGOs have been instrumental in the formation and capacity building of farmers and producers’ cooperatives and women’s self-help groups. NGOs have significantly influenced the development of laws and policies on several important social and developmental issues such as the right to information, juvenile justice, ending corporal punishment in schools, anti-trafficking, forests and environment, wildlife conservation, women, elderly people, people with disability, rehabilitation and resettlement of development induced displaced people to name a few. Further, NGOs made their modest attempts to ensure the effective implementation of these laws and policies by conducting and disseminating findings from participatory research, budget analysis, public hearings, social audits, workshops, seminars and conferences.
- As on date, India has possibly the largest number of active non-government, not-for-profit organizations in the world. A study commissioned in 2010 by the government put the number of such entities at 3.3 million! That is one NGO for about 400 Indians, and many times the number of primary schools and primary health centers in India. Even this staggering number may be less than the actual number of NGOs active in the country. However, due to different reasons the performance of NGOs at the national as well as community level has not been up to the expectation of the people. They are criticized for their lack of accountability, transparency, competency, sustainability and quality. The NGOs have plenty of people with volunteer spirit and willingness as well as competencies to work among the disadvantaged population in difficult situations. But a large numbers of NGOs do not have competencies and capacities to deliver program, undertake planning and management of the program, mobilization of local resources and their management etc. Because of lack of such competencies, most of the NGOs face questions about their sustainability and viability of their organizations. One of the important reasons for lower level of performance of the NGOs is because of low level of capacities of the NGOs. This brings us to the end of the first part of our discussion – Indian NGO sector and present status of Indian NGOs. Contrary to the corporate sector, NGOs often promote vague and non-quantifiable objectives such as improving human rights, protecting the environment, or advocating democracy. To be more specific, the primary objective of non-profit organizations is to change the quality aspects of the human life or transform societies, thus making assessment of effectiveness extremely difficult. To conclude this topic we can sum it up as – In business literature, indicators of success of the business organization are typically assessed against the profit it gains. But what makes NGOs become effective and efficient, as their work is not driven by the profit motive? It is widely accepted that the non-profit sector has not yet developed its own theoretical framework of management. Because of the fact that they do not possess a ‘bottom-line’ against which to measure success; organizational standards of performance simply do not exist. Now let’s try to understand the Paying mate in the equation, the Big Brother with the Buck who is expected to fuel the engine of social development – The Corporate Sector!
- Henry Ford once said, "A great business is really too big to be human." Indeed, that is the purpose of the corporate structure, to transcend the ability and lifespan of any individual. And it is also the challenge of the corporation. The efforts by humans in directing and controlling other humans, whether through democracy or fascism, whether by carrots or sticks, have been notoriously unsuccessful. Efforts by humans to control institutions are an even greater challenge. The very elements of the corporate structure that have made it so robust - the limitation on liability, the "personhood" that can continue indefinitely - make it very difficult to impose limits to ensure that the corporation acts in a manner consistent with the overall public interest. Indeed, the corporate structure creates both the motive and the opportunity for externalizing costs to benefit the insiders. As we will see, most of the problems and failures and obstacles we find in looking at corporate functioning from both a micro and macro perspective come from this seemingly intractable element of their existence. In other words, we must make sure that we’ve created a structure that is not just perpetual, but sustainable.
- The concept of corporate governance was almost non-existent in India. In late 90’s the concept of corporate governance was introduced in India by the Securities and Exchange Board of India (SEBI) through Listing Agreement, which is applicable to the listing companies only. According to OECD the Corporate Governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the Board, managers, shareholders and other stakeholders spells out the rules and procedures for making decisions on corporate affairs. According to Sir Adrian Cadbury, “Corporate Governance is the system by which companies are directed and controlled.” Narayan Murthy, Founder of Infosys says, “Corporate Governance, to me, is about maximizing shareholder value legally, ethically and on a sustainable basis, while ensuring fairness to every stakeholder – the company’s customers, employees, investors, vendor-partners, the government of land and the community. Thus Corporate Governance is reflection of company’s culture, policies, how it deals with its stakeholders and its commitment to values.” Corporate governance may be defined as the broad range of policies and ethical practices which are adopted by an organization in its dealing with the stakeholders. In 1994 the King Report on Corporate Governance (King I) was published by the King Committee on Corporate Governance, headed by former High Court judge, Mervyn King S.C. King I, incorporating a Code of Corporate Practices and Conduct. In the words of the King Committee:
- “...successful governance in the world in the 21st century requires companies to adopt an inclusive and not exclusive approach. The company must be open to institutional activism and there must be greater emphasis on the sustainable or non-financial aspects of its performance. Boards must apply the test of fairness, accountability, responsibility and transparency to all acts or omissions and be accountable to the company but also responsive and responsible towards the company’s identified stakeholders. The correct balance between conformance with governance principles and performance in an entrepreneurial market economy must be found, but this will be specific to each company…” Corporate Governance is the structure that is intended to make sure that the right questions get asked and that checks and balances are in place to make sure that the answers reflect what is best for and trigger positive actions towards creation of long-term, sustainable value. Corporate Governance is based on Ethics and not Morals; ‘Ethics’ as residing in relationships. They are visible, negotiated commitments and behavior between the parties involved. As individuals and entities that are accountable to certain ‘others’ in a covert way. Morals are privatized, individually arrived norms that are based on belief that the individual wishes to base his or her morality upon; accountability to others in a general, non-particular overt ways.
- However, Ethical conduct requires Moral imagination rather than righteous rigidities! Rules and ‘imposed’ structures do not work – Classis case are ENRON, SATYAM and recent Volkswagen – all having a well developed, sophisticated and level-playing market place. Does this mean more Rules? NO. Chairman of Security Exchange Commission William Donaldson puts it right when he says, “A Check the Box’” approach to Corporate Governance will not inspire a true sense of ethical obligation. It could lead to an array of inhibiting ‘politically correct’ dictates. If this were the case, ultimately corporations will not strive to meet higher standards; they would only stain under new costs associated with fulfilling a mandated process that could produce little of the desired effect. They would lose the freedom to make innovative decisions that an ethically sound entrepreneurial culture requires”. To ensure Good Governance Structures should be created that will make sure that the RIGHT questions get asked and checks and balances are in place that reflects what is best for the creation of long-term sustainable value.
- Three Levels of Corporate Responsibility Material Obligations to shareholders, employees, customers, suppliers and creditors, to pay taxes and meet statutory duties. Responsibility arising out of actions of companies in carrying out their primary task and includes making the most of community’s human resources and avoiding environmental damage, etc. Society’s priorities over company’s commercial interests. Principles of Corporate Governance Accountability The Code of Corporate Governance envisages accountability of the Board of Directors of the Company before all shareholders in accordance with the legislation in force, and is the governing document for the Board of Directors in issues related to strategy planning, administration and control over the Company’s executive bodies. Fairness The Company undertakes to protect the rights of its shareholders and treat all shareholders on an equal basis. The Board of Directors enables its shareholders to receive efficient protection if their rights are violated. Transparency The Company shall provide timely disclosure of credible information on all the important facts related to its activities, including information on its financial condition, social and environmental measures, results of activities, ownership and management structures; the Company shall provide free access to such information for all interested parties. Responsibility The Company acknowledges the rights of all interested parties envisaged by the legislation in force, and aims at cooperation with such parties in order to provide steady development and ensure financial stability of the Company.
- Relationship between Corporate Governance and CSR The conceptualization of CSR was, initially, purely in terms of philanthropy or charity. However, the post-liberalization phase has seen a fundamental shift from this philanthropy-based model of CSR to a stakeholder- participation based model. Furthermore, CSR is gradually getting fused into companies’ Corporate Governance practices. Both Corporate Governance and CSR focus on the ethical practices in the business and the responsiveness of an organization to its stakeholders and the environment in which it operates. Corporate Governance and CSR results into better image of an organization and directly affects the performance of an organization. For many years, the approach of companies on the role of business in society could be summarized with the following words of Milton Friedman: “there is one and only one social responsibility of business to increase its profits” and “Business of business is business”. However, it may be worthwhile to mention that the world has moved far ahead from the aforesaid words of Milton Friedman, now a day’s Corporate Governance and CSR are integral part of any company. It may be noted that, at present, the provisions of Corporate Governance are mandatory and recommendatory under various provisions discussed hereinabove. However, there is no concrete system for CSR, it is purely optional. Furthermore, since Corporate Governance and CSR is interrelated and complementary to each other, by incorporating CSR provisions within Corporate Governance framework would be beneficial for India. In conclusion, transparency, disclosure, sustainability and ethical behavior is central theme in both CSR and Corporate Governance. Further, it is worthwhile to mention that CSR is based on the concept of self governance which is related to external legal and regulatory mechanism, whereas Corporate Governance is a widest control mechanism within which a company takes it management decisions. Let us try to understand the concept of Moral and Ethics with a popular legend in insurance sector. A man bought several boxes of cigars and had them insured against fire. When he had smoked them, he put in a claim against the insurance company that they had been destroyed by fire. The company refused to pay, and the man sued. The judge ruled that the company had given the man a policy protecting against fire, and must pay. As soon as the man accepted the money, the company had him arrested on a charge of arson! What the clever fellow did was right according to his moral but was unethical!
- Now for the third and last component of the subject matter, let us discuss CSR, the platform trying to bring both Corporate and NGO on board! As Abraham Lincoln put it rightly, ‘You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time…’, eventually around the millennium years, thought leaders and ecology researchers realized that it was already high time the conspiracy in the name of development should be countered, questioned and probed into for a common good and sustainable development in its truest sense.
- Following the adoption of the United Nations Millennium Declaration by the consensus and commitment of 189 member states of United Nations and 23 International Organizations, the new millennium marked a path-setting resolution – MDGs – Millennium Development Goals! Most of these goals are meant for the social development and inclusion of the marginalized and disadvantaged sectors of society into mainstream development along with ensuring environmental sustainability. Initially some Millennium Development Goals (MDGs) were resolved by the world leaders that were recently transformed into Sustainable Development Goals (SDGs) with a major focus on peace, poverty, hunger, security, development, human rights, environment, and global cooperation all around the globe. However, achievement of the MDGs targets are faced with the reality of the limited ability of Government funding, both at central and regional levels, thus achieving the SDGs is still difficult to implement if only relied on public funds alone. The commitment to meet the SDGs requires further funding and involvement of a range of stakeholders, and efforts are required to enhance the participation of stakeholders.
- Strategies are needed to harmonize the efforts of various parties to accelerate the achievement of the SDGs. One of the high potential schemes for synergy with government programs for the SDGs is the Corporate Social Responsibility (CSR) organized by the business entity (corporation). CSR has a potential to support the achievement of SDGs due to its similar goals and benefits with those of SDGs’ program. On the other hand, variety of Not-for-profit social organizations are working towards community development goals similar to SDGs for years together all around the world. The area of Environmental Sustainability also found the place in the list of SDG for ‘Creating Livable Planet’ and if looked at it in a holistic and little philosophical perspective, the situations that are addressed are the result of injustice from one element to other(s) in the society in one form or other. What the awaken world now demanding is the justice and neither the favor nor the philanthropy. The bottom-line of this new-age realization is ‘If you are doing well, it’s great, our compliments. But you must not forget that many elements have paid (and are paying) the price for your elite status and you must return the favor by shifting the focus from profit maximization to social business.’ Period…!
- CSR is not a new concept in India. Ever since their inception, corporates like the Tata Group, the Aditya Birla Group and Indian Oil Corporation, to name a few, have been involved in serving the community. Through donations and charity events, many other organizations have been doing their part for the society. The basic objective of CSR in these days is to maximize the company's overall impact on the society and stakeholders. CSR policies, practices and programs are being comprehensively integrated by an increasing number of companies throughout their business operations and processes. A growing number of corporates feel that CSR is not just another form of indirect expense but is important for protecting the goodwill and reputation, defending attacks and increasing business competitiveness.
- Companies have specialized CSR teams that formulate policies, strategies and goals for their CSR programs and set aside budgets to fund them. These programs are often determined by social philosophy which have clear objectives and are well defined and are aligned with the mainstream business. The programs are put into practice by the employees who are crucial to this process. CSR programs ranges from community development to development in education, environment and healthcare etc. For example, a more comprehensive method of development is adopted by some corporations such as Bharat Petroleum Corporation Limited, Maruti Suzuki India Limited.
- Provision of improved medical and sanitation facilities, building schools and houses, and empowering the villagers and in process making them more self-reliant by providing vocational training and a knowledge of business operations are the facilities that these corporations focus on. Many of the companies are helping other peoples by providing them good standard of living. Also, corporates increasingly join hands with non-governmental organizations (NGOs) and use their expertise in devising programs which address wider social problems. CSR has gone through many phases in India. The ability to make a significant difference in the society and improve the overall quality of life has clearly been proven by the corporates. Not one but all corporates should try and bring about a change in the current social situation in India in order to have an effective and lasting solution to the social woes. Partnerships between companies, NGOs and the government should be facilitated so that a combination of their skills such as expertise, strategic thinking, manpower and money to initiate extensive social change will put the socio-economic development of India on a fast track. India became the first Nation of the World to bring a landmark piece of legislation in form of the CSR Act under the Companies Act, 2013, according to which, any company having a net worth of rupees 500 crore or more or a turnover of rupees 1,000 crore or more or a net profit of rupees 5 crore or more should mandatorily spend 2% of their net profits per fiscal on CSR activities. The rules came into effect from 1 April 2014 and after completion of First year of CSR Act being in force, the outcome is neither very reassuring but nor completely depressing as well. With Corporate Social Responsibility (CSR) being made mandatory in the form of Section 135 of the Companies Act 2013, corporates have now begun to recognize CSR as a core activity, and are looking to find innovative ways to effectively utilize their CSR fund. This has brought to the fore the role that NGOs and other implementing agencies can jointly play along with corporates in order to achieve what is known as collective impact. While implementation of Section 135 is still in its nascent stages with companies trying to get a hang of what needs to be done and how, collaborative projects may take a few years to come up and yield results. However, in the long run, in order to solve India’s long term and large scale issues, it would be necessary for the industry to work towards collective impact which can make use of expertise and capacity required to achieve the desired outcomes.
- Involvement with the Society is open to anyone who believes in effective management and ethical leadership. The founder of modern management, ‘Peter Drucker’ believed strongly that all institutions have a responsibility to the whole of society: “The fact is that in modern society there is no other leadership group but managers. If the managers of our major institutions, and especially of business, do not take responsibility for the common good, no one else can or will.” The empirical results show that although management should pay attention to cost, profit and growth (economic performance), ethics and social responsibility (social performance) is as important. It seems therefore that there is a shift towards the triple bottom line concept (economic, social and environmental performance). The use of resources for ethics and social responsibility should be encouraged as although costly in the short-term, the long-term benefits exceed the short-term costs. It seems that managers do not always realize that attracting and retaining high quality employees could increase the level of ethics and social responsibility in the workplace. Like in the past, customers do not necessarily prefer products and services of ethically socially responsible organizations as they are not aware if organizations are unethical or socially irresponsible.
- With all this discussion and conclusions, most of you must have tuned into the WI3FM radio, isn’t it? What is in it for me…? Well, you are the Managers-in-being and I must conclude in a Management language to make you feel connected to and concerned about the topic, I guess! If Peter Drucker has not made it very clear, I will give it a try… Today managers are discovering that organizations are evaluated how they perform in terms of social responsibility as public interest has increased considerably due to the publication of the Sustainability Reports. Today organizations firstly have an ethical responsibility to do what is right and this requires that managers must ensure there are policies and guidelines in place to guide employee behavior. The following general guidelines for managers to manage ethics and social responsibility in the workplace are suggested –
- Managers should pay attention to ethics and social responsibility to the same extent as paying attention to cost, profit and growth aspects of an organization. Managers should ensure that the triple bottom line concept is adhered to by giving attention to economic, social and environmental performance. Managers should use organizational resources when managing ethics and social responsibility. Managers should strive to attract and retain high quality ethical employees to ensure high level of ethics and social responsibility in the workplace. Managers should ensure that their organization and products meet the requirements of customers with regards to being ethical and socially responsible. It is suggested that a formal certification process (similar to ISO certifications) should be instituted so that organizations can display a certificate of meeting ethical standards. This way a customer will be aware whether the organization complies with ethical standards. Having a Certification Body evaluating the CSR initiatives by a Corporate and provide ‘Sustainable Development Credits’ to make this effort more consistent, desirable and alluring. In terms of evaluating social responsibility efforts of organizations it seems that economic criteria are still the main concern which is aimed at producing goods and service that society wants and to maximize profits for owners and stakeholders. It appears that there is still a long way to go before organizations would apply discretionary criteria which is purely voluntary and is guided by the desire of an organization to make social contributions not mandated by economics, law, or ethics.
- Corporates have the reason, means and tools to facilitate the Sustainable Development, NGOs have the knowledge, empathy and bandwidth to reach the core issues at grassroots and solve them and Government has the authority to govern the progress, mechanism to keep it on track and above all the structure to initiate, facilitate, measure, review and retain all projects in control. A Creative and little liberal collaboration of Corporates’ CSR policy, reviewed complying with the legislative regulations, and implementation of it by NGOs through Social Development Projects is the only win-win situation at the given point of time. This brings us to the concluding part of the discussion about ‘How Corporate India and Indian NGOs can work together by following legislation for CSR?’ and I would like to believe that I made you think about it and not educated you! Luciano De Crescenzo said it precisely and concisely “We are each of us angels with only one wing and we can only fly by embracing one another…” All the best, Think Sustainably and Manage Responsibly! Way to go…!