Thursday, December 29, 2005

Understanding Corporate Social Responsibility

Should companies be satisfied by complying with legal standards or should they be involved more in the ethical standards and conducts of society? Should there be a dichotomy between the society and the companies as there is a separation between the state and the religious establishment [or is there?]. Or should there be larger interest in public private partnerships? These were some of the questions addressed by Mr.Nandan Nilekani in the recently held lecture at J.R.D. Tata auditorium in Bangalore. Speaking in the inaugural event of the General Thimmappa lecture series, instituted in honor of the Cottonian stalwart, Mr. Nilekani the CEO of Infosys and an ex-cottonian himself, discussed what according to him where the causes, needs and explanations of Corporate Social Responsibility.

Globalization 2.0 and Globalization 3.0 according to Thomas Friedman in his book The World is Flat is when large corporations around the world have made the size of the world smaller, tinier and also “flat” it in the process. It is no wonder that these corporations are the main drivers of the economy and account for almost 50% of the largest economies in the world. With corporate giants like Wal-Mart being bigger than the economy of countries like Indonesia, it is not hard to believe that 28% of the world’s economy is accounted for by some 200 corporations. In such a scenario, would it be correct for businesses to adhere to Milton Freidman’s old adage “The Business of business is business!”

In his lecture, Mr. Nilekani discussed how such a narrow minded approach towards the responsibilities of global business houses would not be a constructive way ahead. He elucidated the following points as the key features which he believes form the basic framework of Responsible Corporate Citizenry.

1. Corporate Governance

2. Sustainability

3. Corporate Philanthropy

4. Public Private Partnerships

5. Corporate Advocacy

Corporate governance which further simplified he explained would mean the ensuring of fair and ethical practices in terms of labor handling and decision making by corporations. Sustainability of growth and wealth creation is another imperative for ensuring accountability. It was the last three points which he chose to highlight as the real significance behind a genuine implementation of the principles of corporate social responsibility. Corporate Philanthropy he argued was an active involvement of responsible corporations to the resolution of social stigmas of the environment in which they are functioning. Creating a difference in the context of the company’s employees and their social contexts is as important a function of the company as its main business interests. Further advocating the setting up of effective public private partnerships to improve the state of infrastructure and human intellectual capital, he argued quoting a few successful examples. He also explained how involvement in public private partnerships did not mean the private capture of public opportunities and services and categorically disagreed with such faulty generalizations. Imploring the gathered crowd of various corporate heads to take up corporate advocacy and involve in decision making at the government and bureaucratic frameworks he said that it was essential for ensuring not only trade friendly regulations but also for reducing the problems facing the global environment and goals of energy conservation.

It is interesting to note the amount of thought that is going into these topics which arise as a result of a successful business built on a capitalistic background wanting to better the environment in which it thrived. But the contribution of business to the society by being successful should not be underestimated. After all, what greater contribution can a corporation provide to society other than being profitable and succesful with the goals of creating a sustainable enterprise of wealth!

Note: This lecture was held at the J.R.D.Tata Auditorium at NIAS campus of IISc on 17th December 2005. This is not the same as the J.N.Tata auditorium which is also in the IISc campus where the deplorable terrorist attack took place yesterday (28th December, 2005).

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