Defining CSR: The India Perspective:
True sustainability versus a goodwill wash.
True sustainability versus a goodwill wash.
-The need for definition and integrated processes, viz. the Need for Corporate ‘Sacred Groves’
-Frank Costanzo
Director, Peerless Green Initiatives
When one of the fathers of India’s green revolution approached PGI in 2009 requesting assistance to resolve a decade old environmental disaster, we accepted with honor the opportunity to act as the facilitation arm for the stakeholders and NGO’s. A year later, PGI’s diligent pro-action was rewarded by being shown the exit, the primary reason being that PGI was a ‘for profit’ company. The sad reality was that PGI’s plans of action had upset an established ‘disaster economy’ that had cropped in the wake of the original toxic tort. For the members of that industry, mediation of the environmental tragedy would end a steady stream of funding. It was a hard but valuable lesson, but it illuminated the challenges and perceptions faced by private social initiatives (and the realities of a few disingenuous NGO using crisis as a means of revenue.) Can private companies do good while making profit, or are corporates doomed to the perception of acting only for the furtherance of bottom line gains? It all depends on ones understanding of CSR and what it means to be profitable.
These perceptions were recently unintentionally highlighted by the Hindu newspaper in their coverage of a corporate ceremony meant to illustrate the importance of CSR. The corporate had made a sizeable donation to a youth organization. The director of the corporation explained the importance of CSR and that corporations should be philanthropic and not pursue CSR for profit.
I would agree with the director’s assessment as it relates to the donation to charity. I categorically disagree as it relates to CSR. Again, the issue is definitional: What is CSR? What is profit? The director’s misinterpretation of CSR is an example of the increasingly common trend: a misunderstanding of CSR principles; and intentional ‘green washing’ of actions and processes for the appearance of CSR.
CSR: Corporate Social Responsibility. Terrible name. No wonder the confusion. The ‘S’ should be replaced with the word ‘Sustainable’. CSR is the act of looking at a company’s internal and external processes and determining whether it is in fact sustainable. For example, PGI has spent years analyzing this paradigm and came to the decision that the core prinicples of sustaibable business are contained in the maxims of the 10 principles of the UN Millennium Goal Global Compact. (See Footnote) It is an overarching guide for analytics and a roadmap for the companies we design and facilitate. They are:
Human Rights
• Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and • Principle 2: make sure that they are not complicit in human rights abuses.
Labour
• Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
• Principle 4: the elimination of all forms of forced and compulsory labour;
• Principle 5: the effective abolition of child labour; and
• Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
• Principle 7: Businesses should support a precautionary approach to environmental challenges;
• Principle 8: undertake initiatives to promote greater environmental responsibility; and
• Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
• Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
Using the GC lens, a company’s charitable donation may or may not be considered CSR. Charity is just that, charity. CSR and charity need to be distinguished. Whether a company feels morally or ethically obligated to donate revenues to charity is a singular discussion. A company’s ethical and moral decision to adopt CSR is a mandatory multi-channel discussion. Viz, actions that may be charitable but do not address that particular company’s internal and external sustainability are simply not CSR. To categorize the action as such is a pale gesture that does little more than discount true CSR and increase its misperception. Nevertheless, the action may be a generous act of charity.
Let me explain why this is the case. Times of India last week (Feb 12, 2011 p. 4, Chennai Edition, Arun Janardhanan) ran a terrific piece on the restoration of ‘Sacred Groves’ throughout Tamil Nadu. PGI has always maintained that India is the one place in the world where CSR and true conservationism could take hold in a meaningful way. The reason is that India-particularly in the South- is steeped in tradition and culture – a culture with an ingrained relationship between man and nature. http://timesofindia.indiatimes.com/city/chennai/Sacred-groves-regain-pulse/articleshow/7471966.cms
PGI has always maintained that India is the one place in the world where CSR and true conservationism could take hold in a meaningful way.
Based inter alia on Vedic scripture. As part of the Vedic scriptures, society, nature, heaven, earth are all inextricably related. One of the finest examples of this is the concept of Sacred Groves which are made up of plants and trees that each community should nurture and preserve. Each sacred plant was deemed by the Vedics to have qualities necessary for sustainable nature and society. The depth of the relationship went so far as to correlate the sacred plants with the 27 constellations of Hindu astrology.
The recent news of groups going out and restoring sacred groves is indeed inspiring and could be the simple centerpiece of a CSR program of every company that occupies land, however small.
The wisdom of the Vedics made it such that the adoption of sacred groves in each community provided that community with a constant source of nutritious food, preservation of microclimate, a 24 hour pharmacy of medicinal herbs, a watershed, a source of rapidly renewable building materials and conservatory of endemic biodiversity. First millennium sustainable processes at its finest, lost recently to growing population, land mis management and short sighted agricultural expansions. So perfect is the Sacred Grove ethos, that PGI incorporated the concept in its landmark ag-business model (Eco Logical Fox) as it pertains to inter-cropping, carbon capture, biodiversity/micro-climate protection and conservation. The recent news of groups going out and restoring sacred groves is indeed inspiring and could be the simple centerpiece of a CSR program of every company that occupies land, however small. In fact, last year PGI presented its Peerless Award to the Eco-Club of Senior Secondary School, Madras for their self-initiated sacred grove project on an unused patch of barren property behind their main school building.. Sensational.
Coming to the point, CSR is about analysis and planning. Each company determining what impacts it has on the environment and society. The sum of which create outputs only possible through crowd sourcing. In other words, each company takes care of its impact as a part of its business ethic, thereby alleviating the task of legislating solutions by already overly stressed Governments.
The end result? Nature will profit, society will profit and in turn punitive taxation to stem irresponsible corporates will be reduced and the markets will profit. So in a sense, CSR is all about profit. PGI has found that approaching businesses with spreadsheets demonstrating these profits is a far better CSR tool than sensational photos of polluted lakes and distressed animals. Corporations exist for one reason and one reason only – generation of revenue for profit. If you are like the activist-journalist that expressed ‘suspicion’ of PGI and all corporations –even those with noble missions- then you’re living in a world unreal…and in fact unsustainable. The future will be governed by whether commerce can live in harmony with nature and social justice. Integration of commercial endeavor with conservation and social justice is an absolute ethical requirement of the times. The massive paradigm shift necessary to meet the challenge of feeding, sheltering, clothing and providing safe water to tomorrow’s 9 billion human inhabitants will be solved through corporate ethics and innovations and nothing else. Good intentions, Government legislation and piecemeal conservative practices will not change the course of the rapidly approaching tipping point.
Integration of commercial endeavor with conservation and social justice is an absolute ethical requirement of the times.
Profit: Only a profit model of natural and human economy and capital can influence the human mind and initiate change. This requires a different perception of the word ‘profit’ and the end of governments compartmentalizing and coddling social and environmental issues for which they are unable to execute integrated plans. Only through cross-cutting networked approaches, designed into plans of CSR, based on achievable outputs (aka profits) can mankind and economy reverse the trend and become sustainable.
CSR is ultimately about profitability in every sense of the word. It doesn’t matter whether the company makes solar panels or drills for oil. Their objective is identical. Further, CEO’s and CFO’s of corporations want profits they can measure on a P/L at the end of the year. Genuine CSR demonstrates how properly managed internal and external processes can create parallel profit streams to their workers, their families, their environment and their nation. And if that is not enough to convince the ‘board’, CSR case studies show conclusively that those parallel social and eco profits create ‘real’ corporate profit in the form of increased revenues, goodwill brand equity, lower overheads, reduced taxation and a healthier workforce with lower attrition. This forensic and evidence driven approach makes CSR a concept boards can accept, because they understand it in terms they are accustom to dealing.
Genuine CSR demonstrates how properly managed internal and external processes can create a parallel profit streams to their workers, their families, their environment and their nation.
The PGI vision is that Boards will not need to be explained why installing a solar panel (without more) is simply not CSR. They will instead look deeply at their processes, their efficiencies their waste streams and recognize the interdependence of their endeavors and the need for cross-cutting strategies, medium services and integrated approaches toward sustainability. They will voluntarily adopt and allocate resources to employee and community welfare schemes with an eye on outputs that measure social success and ultimately their own bottom lines. They will adopt processes and embrace infrastructure that increase their efficiency and reduce overhead; and as they progress will realize the interconnectivity of their actions on their bottom line running companion with natural capital resource profit . They will dig deeper and extend their influence further as their business grows due to their greater definition of profits. CSR will then become part of the corporate value chain - its ethos- and if each company applies these principles it will become the standard ethic that is scientifically taught with clarity in law schools and business schools and grade schools across the world.
Just like it is easier for one billion people to each plant one tree than a Government to implement legislation and facilitate the planting of a billion trees, so too will corporates create the Sacred Grove of sustainability through adoption of true CSR. So with the definitions imparted in this introduction, PGI invites you to follow our monthly installment, each highlighting one of the 10 Global Compact principles; and part of our virtual symposium re the ground realities of CSR in India, the product of which will be PGI’s COP contribution to UN, TEEB, CBD and GC. A dialogue of the integrated processes necessary to create the ‘profits’ needed to assure economic, social and natural capital resource security.Footnote: The Global Compact is one of a number of metrics that PGI uses as a guide to designing and implementing CSR and other soci-eco-business models including the Eco Logical Fox agri-business model. PGI is also aware of some of the criticisms of the GC as it relates to making concrete the scope of each principle and modes of monitoring. The coming issues of Green Eye will address these and other issues, and prefers the GC's current framework as less rigid and self-monitoring as that respects the natural evolution of business ethics necessary for the GC to be a living constitution and platform. Allowing corporations to determine ethical standards is a proven method of adoption versus impressing strict dogma. "Those convinced against their will, are of the same opinion still." (attributed to Ben Franklin as modified by D Carnegie.)
Source : A man convinced against his will; is of the same opinion still. Source Unknown
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Just like it is easier for one billion people to each plant one tree than a Government to implement legislation to plant a billion trees, so too will corporates create the Sacred Grove of sustainability through the portal of true CSR.
