Are Corporate Citizens Capable of Doing Enough for Community Development?

Dilip Cherian

My central thesis is that goading by government to achieve something that is both voluntary and really good cannot be relied on as a robust mechanism. Ultimately, it must be the propulsion of innate impulses of either generosity or guilt that drives corporates, which ultimately means the individuals who manage them, into substantive giving. The question is only how to either tantalize generosity or trigger guilt. Meaningful, inclusive community development will only happen once this current and naturally hectic process of economic development is played out. And when hopefully, we reach a situation of social homeostasis. To weld a mere emerg­ing traditional society into an evolved post-agrarian, quasi-industrial and semi-service-providing community is a difficult call at the best of times. The problem is this process could prove unacceptably long. Can concerned citizens who are informed, aware, and influential, sit still while the process of the market winds its way down to the last individual at the end of the line?
Will society itself hold together in this long-drawn-out process? These are some of the issues that India is attempting to manage today. Sadly, this process is not entirely either voluntary or premeditated. It's a kind of process that seems to veer between a r a n d o m evolution and impetuous convolution.

I think community development that would meet the basic needs of Indian society today, realistically requires an approach that is focused on community capacity building. This would empower people with the skills and facilities they need to be effective and also cope with changes that are inevitable in their environments. If vigorously imple­mented, community capacity building has the potential of enabling Indian society to become a more mature and therefore naturally less fissile organism, on the route to becoming more fully developed, economically. (The initiatives in this area that immediately come to mind are in micro-financing, buoyed by the extra­ordinary success of the Grameen Bank in Bangladesh .)

But what exactly is community capacity building? Is it limited to skills development and economic empowerment? Important as these are, they do not reflect all the development needs of a community. Capacity building in the long-term doesn't just involve creating an enabling environ­ment, it also includes institutional development. This must be inclusive, most often of women, traditionally downtrodden in the Indian milieu and clearly also the under classes. The process is certainly not short-term or quick fix but lengthy and complex, in which all stakeholders in a society, or at least significant parts, must participate in one way or the other. These include central & state governments, municipal departments, the judiciary and the police, Non Governmental Organizati­ons, corporates, professional and industry apex bodies, academicians, civil society and others.

Needless-to-say, capacity building must continually evolve to meet the needs of a given society. Thus, it can be defined to also include the social infrastructure that every developed community must have; parti­cularly, modern, up-to-date facilities and services that address the needs of the weakest, most vulnerable sections of society: women, the old, the sick and children. These have been largely disregarded by India 's policy makers, who have in the past addressed the needs of these segments in token, superficial ways only. As a con­sequence, the facilities that do exist are completely inadequate. It has often been easier to ignore or to misrepresent such social problems than to address them. For instance, for years, we subscribed to the fallacy that Indians take care of their old; that it was only the uncaring, materialistic Western societies that put their old parents into old-age homes. I think we have been forced to finally jettison this comforting delusion, reality having been driven home quite forcefully by the need for recently enacted laws that will now empower the elderly with quick and inexpensive legal recourse should they be abandoned or neglected by their children. Since laws are generally made only after a significant time gap from a substantive felt need, and inevitably, only to attempt to redress existing social ills, and actually, cannot easily be designed to pre-empt them, we can no longer deny that our youth is as callous here as elsewhere, when it comes to caring for aging parents.

But alas, these outlined attempts at predicating what kinds of community development are urgently needed, are only the mere tip of the iceberg. The fact is that most of us simply don't know. That's because we are far too cut away from the harsh reality of ground level evolution of the new kind of India that's happening, even as growth is being focussed on elsewhere.

It's the Non Governmental Organiza­tions that know. They have been in the vanguard of community development efforts in India, notwithstanding often cynical scrutiny from the public and media verging at times on the paranoid, when, for instance, they were even castigated as being anti-Hindu in a rather shortsighted study released last year. If there have been any real advances made in community capacity building, they have more often than not been effected by selfless individuals working with NGOs, taking shortcuts to develop­ment through outreach programs that by­pass multiple channels to directly reach those they are meant to help. This is today a considerable force. An incredible 34,000 and counting Indian Non Governmental Organizations are currently working in different development fields in India. Many projects run by them are no doubt in partnership with Indian corporates as part of Corporate Social Responsibility (CSR) efforts, but it needs to be said that most socially responsible initiatives undertaken by corporate India, are reduced to minimum investment and effort for maximum media exposure. Outlays by most corporates are often small change when compared to their huge turnovers. (But on this, and on why it persists, more later.)

On the other hand, there is the beguiling story of India producing more and more billionaires. The economy, fueled by the gold rush at the markets, is turning out more fantastically rich people than ever before. The numbers of Indian billionaires travelling the global stage, even when double counting does not quite make them into the world's richest as yet, are serious enough to cause concern when juxtaposed with their comparatively small CSR activities. They would do well to remember that in a democracy, with the kind of intolerable disparities, immense visible wealth needs to be balanced with an equally large and visible philanthropic effort, and not one that is limited to funding places of worship.

When asked to comment on the major challenge that is being faced by Indian CSR, Ashok Soota, Chairman & MD MindTree Consulting and previously President of Wipro said: “… the major challenge is of course that there is so much to be done. The issue is how to make a difference and impact. A company must be able to choose how to build the CSR into the fabric of the business. The needs of the country are simply so large -the inequity, the differential income, the degrees of poverty, health care needs, condition of women; these concerns should reflect in the entire fabric of the business.” In response to the charge by NGOs that CSR is a mere brand-building exercise for corporates, Ashok Soota went on to say: “…people must look at the programmes various companies are running and note their impact. They can also see the size of their scale, for example, the Azim Premji Foundation; I am sure it has a pretty substantial budget. Most of the large corporate houses have significant budgets towards developmental activities. These are the significant activities, which add lot of value to the different communities they are working for…”

However, the general attitude among most corporate entities in India is that major development issues are the government's responsibility and any corporate efforts in this area are necessarily in the nature of supplementing the government's efforts, only. This approach effectively absolves Indian corporates, with a few, notable exceptions from making any major contrib­utions. In reality, although it may be true that the government is best equipped to reach the maximum number through its multiple delivery channels, some of our multi-billion dollar Indian multinationals, with turnovers the size of a small country's GDP and marketing and distribution networks crisscrossing the entire country, could well undertake major, nation-wide development projects that would speed up this process of community development in India. But do they? The answer is that they don't and they won't. Not because they don't recognize the need, but because they feel that paying taxes is often adequate, to absolve themselves of any responsibilities, in terms of their duties to society at large.

Without taking names, let me say that some of our most prominent luminaries in the corporate world don't even have a valid and current CSR section on their websites. That's how much importance they give to community development in India. In a world where citizens want to know what you're giving back to society, both giving and letting the world know are important. They want and indeed deserve to know that their business leaders are meaningfully engaged with the nation as responsible corporate citizens and are not just interested in making huge profits. They also want to see evidence of this philanthropy.

When corporates do act in a socially responsible manner, their CSR initiatives are more often than not extended only to employees' families - and perhaps to the few villages that surround a manufacturing facility. It can be argued that these initiatives are substantially large and benefit the general community through a ripple effect. But when compared to what these enormously wealthy and well-networked companies could do in terms of community development if they really put their hearts into it, their efforts are inexcusably pusillanimous.

A paltry 8 per cent of the 500 top Indian companies have a meaningful CSR programme that reaches out not just to employees, but to the vicinity and to society at large. Among the rest, an estimated 46 per cent are involved in a limited way in CSR initiatives benefiting employees and occasionally, the immediate vicinity. A whopping 46 per cent have no CSR programme currently – and we are talking here of India's largest listed companies. I think, considering these disheartening figures, a roll of honour mentioning the names of the most socially responsible companies is in order. Topping this list are just four companies: Tata Steel, Infosys, Titan Industries and HDFC Bank, with significant CSR initiatives ranging from heath-care and tribal welfare to education, c o m m u n i t y bu i l d i n g , t h e d i s a b l e d , children's welfare and disaster management. (Curiously, of the Tata group companies, only Tata Metalinks and Tata Power are worth mentioning; TCS and Tata Motors limit CSR initiatives to their employees and vicinities.) Wipro, Dr. Reddy's, Godrej, Aditya Birla, Lupin, Larsen & Toubro, Hindustan Lever and a few others find their place on this roll of honour as well, though well below the top four.

There is no doubt that CSR has to be initiated from the top. For instance, Narayana Murthy, Chairman of Infosys said recently: “Social responsibility is to create maximum shareholder value, working under the circumstances where it is fair to all its s ta k e holders, w or k er s, consu me rs , th e community, government and the environ­ment”. Walking the talk, he has placed Infosys right at the top of the roll of honour by reaching out not just to stakeholders, but society at large through his company's CSR initiatives in education, health, community building and art.

Perhaps the most pragmatic view of CSR came from Managing Director, Sundaram Clayton, Venu Srinivasan, during the CII National Summit on CSR 2007 in Chennai in June, when he acted as Chairman for the Summit. He felt that the benefits of the Government's welfare schemes did not always reach the target groups and that Industrial houses could help here. He stressed that industry had expertise in human management, financial manage­ment and business planning and could easily provide the missing ingredients of leadership and organization and establish the “last mile connectivity” to take the benefits to the people.

My own take on this is that instead of depending on spill-over effects and trickle­through effects, policy-makers should urgently consider making inclusive community capacity building a priority, putting it on par with economic reforms. Both need to be done in tandem, and to ensure meaningful corporate involvement, the government ought to introduce a quid pro quo element in the tax benefits it regularly doles out to industry, making them contingent upon community develop­ment involvement. Furthermore, I think the government needs to identify development areas which need urgent attention, and these should carry greater incentives to make them the first choice of corporates looking to get involved. Although corporate involvement in community development obviously cannot be made compulsory, it should make so much business sense that it would be silly not to get involved. In fact, why stop with corporate India? Why not extend these benefits and incentives to everyone involved in community develop­mental work, from private citizens to Small and Medium Enterprises (SMEs) to large corporates.

It is obvious that we cannot depend upon market forces to carry India over from the status of developing to developed. No amount of economic growth is going to automatically admit India into the developed world. We cannot enter that exclusive club until all our citizens enjoy a certain minimum standard of living with access to modern facilities and conveniences. So, if economic reform won't do this, and political will is either lacking or is being blocked by vested interests or sheer inertia, then it's obviously left to the citizens of this country to do what needs doing. We know what needs to be done; God knows we talk enough about it. The question is, are we public-spirited enough to actually get down to community building? I veer towards believing – purely based on empirical evidence – that unfortunately, most of us are not.

Is this lack of altruism caused by a serious character or genetic flaw? Do Indians lack that recently discovered variant of gene AVPR1a that makes human beings more likely to be altruistic? Or are we simply looking after our own immediate families only, as we have done for centuries, knowing that if we don't do it, no one else will; coping with the uncertainties and insecurities of life in a brutal environment that has only turned relatively kinder in the last three decades or so?