CSR
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This article has been contributed by Deekhit Bhattacharya, from ICSRM.

The symbolism explorable within the strata of Hindu Pauranic literature can be truly astounding. We are offered a fascinating glimpse into then prevailing moralities, encoded in iconographic cosmic sagas straddling the mortal and the supernatural. An underlying theme, however, is of contrast and conflict amidst expressions of the same concept. One such question is of particularly heightened societal interest of late, as the debates regarding it turn evermore louder. How exactly should we perceive wealth? Is wealth to be seen as an inclusive ladder to prosperity, or is it a consequence of evil exploitation? The Puranas offer us two narratives, which are poles apart. On one hand is Kubera, an embodiment of wealth. He is depicted as a deformed motley dwarf, possessing three legs, lacking an eye, and having broken teeth among other unpleasant attributes (His name itself can be translated as ‘the ill-shaped one’). He hoards, and hides, zealously keeping wealth under his thumb while flaunting it. The other side of the same coin is Lakshmi, the divinity of wealth, fortune and prosperity. As Raja Ravi Varma vividly painted in ‘Gajalakshmi’, she’s adorned in red, embellished in gold, with her awe-inspiring divine form resplendent upon a lotus pedestal. In fact, one may recall Botticelli’s ‘The Birth of Venus’ in its presence, replete with the subtle strength of spectacle and the magnificence of the archetypical feminine rising from primordial oceans. She gives, she brings wealth forth, and opulence is her attribute, not identity.

This very dichotomy is being replicated across the world as economic disparities are magnified by a sputtering global economy. One of the ever-intensifying fallouts of the 2008 global recession has been an unprecedented loss of faith in modern capitalism itself, as echoed by Raghuram Rajan. Whether it is the unanticipated result of the 2016 US elections, the bitter throes of Brexit or the drying up of global trade, a crisis of belief is brewing. At the forefront of bearing the popular brunt of cynicism is business- particularly big business. Case in point is the unanticipated ascendance of leaders such as Bernie Sanders and Alexandria Ocásio-Cortez in the land which lent its name to the idea of socioeconomic mobility known as the American dream. Buoyed by stagnant real wages, insecurities surrounding standards of living, and woefully inadequate delivery of public services, they have managed to influence the agendas of their colleagues and rivals alike. However, they’re symptomatic of the kind of resentment that is slowly coalescing within the people against big capital. ‘Land of opportunities’ has given way to the cynical murmurs of ‘the system is rigged’, aspirations of ‘making it big’ have turned into distasteful contempt for ‘the billionaire class’, and the 1% has fallen from grace into being portrayed as a gluttonous, self- serving enemy of the masses. India too is seeing increased disdain against big business, with talks of cronyism sounding louder than before in the backdrop of record-high unemployment and a struggling economy. Those once viewed as purveyors of Lakshmi are now being seen as henchmen of Kubera.

The one thing uniting the agendas of all those who wish to utilise this bitterness is couching their agendas in a language of moral fairness. They point out that it’s not fair for corporate honchos to earn dizzying amounts while workers get so low, necessitating a nigh retributive policy of taxation, further encouraging shady financial behaviour. They say that it is not fair for housing to cost so much and thus advocate for rent control, which is long known to be ‘the best way to destroy a city’ save for bombing, in the words of Nobel prize-winning economist Carl Lindbeck. They will point towards other countries for being manipulative, and slap tariffs arbitrarily, wrecking flows of trade sustaining thousands in all countries concerned. The thing is, it is simply not salacious nor provocative enough to argue for strong corporate governance with workplace democracy, or build an affordably dependable safety net, or negotiate multilateral trade agreements (respectively). Defending amorphous abstractions such as the invisible hand of Adam Smith, or economic choice, or even a civic and inclusive strand of nationhood is much too hard to do. The alternative of strongman politics, a politics of otherisation and voodoo economics is far simpler as well as effective in times of tumult. It is simply not a displayable enough voicing of virulent anger and projection of strength to heed to the economists. Thus, Dambisa Moyo and Swaminathan S. Aiyar’s repeated diagnoses-cum-warnings of the unavoidable failure of ‘half- baked globalisation’ will go unheard. Raghuram Rajan’s exhortations to effectively decentralise and empower communities while protecting free and inclusive markets will fall on deaf ears. Thomas Piketty’s calls for a multilateral, if not global, capital tax regime will not be considered. The easy thing to sell isn’t abstractions such as these, grounded in sound economic theory mindful of social realities. Indeed, it is instead to engage in unbridled virtue signalling, to brandish moral superiority, and to prove that they channelize popular anxieties effectively. 

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The tendency of socioeconomic policy to converge independently of partisan politics has been upended by an era characterized by gunboat disruptionism. There has been a woeful withering of the processes of social ascendance which brought in place John Adams’ ‘natural aristocracy’ or Dipankar Gupta’s ‘citizen elite’. In times not so long ago, this class gave political direction through sound knowledge, inclusive ethos and true merit. The slow demise of this class brought upon by declining mobility and incessant criticism by populists has unleashed on us an era of naked demagoguery. This, naturally, makes one expect the ongoing shenanigans of bread and circus fuelled by the relentless 24-hour news cycle to further whip hysteria and reduce people to receptacles of their respective echo chambers. Political institutions will further erode, problems will further entrench themselves, and success will further breed disdain. It is high time business realises this fact, and abandons its hopes of the political class waking up to good senses. Businesses, instead, have to take unforeseen responsibility and measures to prove that they harbour Lakshmi, not Kubera. The only reasonable way to do so is to radically embrace corporate social responsibility (CSR).

Usually, there have been four broad justifications to engage in CSR- the existence of a moral obligation, the need for sustainability, explicit or implicit license to operate, and burnishing reputation. While indeed these arguments offer compelling reasons to justify CSR, they are inadequate when it comes to formulating a coherent and systematic CSR strategy. These polemics fail to offer any templates as to how to balance the long term benefits of CSR with the short term costs the firm will incur. Often times, firms end up surrendering their CSR agendas to outsiders, whereby stakeholders who are not fully aware of the firms’ competencies, trade-offs and positions end up giving cardinality to the entire programme. This reduces CSR to being a grudging tax cheque to be encashed by an NGO or agency, diluting benefits for the firm. Meanwhile, it is also a common feature to see companies attempting to use CSR as a means to satisfy pressure groups. Over time, CSR thus degenerates into a never-ending series of short term defensive public relations palliatives entailing minimal value to society while offering no strategic gain for the business. The simultaneous conflation of CSR with public relations ends up losing the focus from the twin prerogatives of social benefit and business results. This myopic underwriting is causing a haemorrhaging of the raison d’être of CSR, shifting the goalposts and grossly impacting the benefits it could accrue to both society and companies. 

Even firms long espousing certain social responsibilities fall short of being able to quantify the social or business benefit, which calls into question the modus vivendi adopted so far. After all, what is the point if you cannot provide a clear picture of how your business has been benefited from CSR? The auxiliary arguments of altered consumer purchasing preferences and higher stock market performance too are inconclusive whence we review studies. The status quo is simply akin to having nothing more than a whimsical bleeding heart, instead of the kind of precise interlinkages we aim to build upon for quantifiable common benefit. That would be an exercise in philanthropy, not CSR. The ultimate realisation is that CSR is being approached from shaky grounds itself, whereby businesses are themselves not clear as to what exactly is the purpose of CSR. It is neither a PR stunt nor a blue-blooded institutionalisation of philanthropy. CSR is all about constructing relationships with communities for mutual benefit. It’s all about setting the stage for ‘shared value’ to take shape.

The ‘original sin’, so to speak, is that all of these approaches are fixated on the tensions between business and societies, and their mitigation thereof. What we should be pining for is instead focus on building upon the interdependence between business and society. Only then can we escape a litany of unrelated activities with dissipated social impact and no relation to the business strategy being passed off as CSR. The burden we must transition to is for firms to identify, prioritise, and address the social issues that stand central or where maximum impact can be delivered in a way which is beneficial for the company in the long term. This requires not only a fundamental paradigm shift concerning mindsets but also gauging the exact contours of the shared value being generated. As the 2019 Crisil CSR Yearbook puts it, “An independent third-party evaluation like grading of the NGOs/implementing agencies should be considered to gauge a potential partner’s ability to drive the desired social impact”. Consequently, this ‘grading’ process needs to be conducted at regular intervals to further understand and perfect the entire range of endeavours. Rather than issuing a carte blanche, there need to be clear, measurable goals and tracking of results over time. In other words, we require a process of auditing when it comes to CSR. Without this, we cannot feasibly make the leap from enforced philanthropy to CSR proper. CSR needs to be an exact, methodical science yielding tangible, shared results.   

Successful corporations are rooted in a societal context which is conducive to their functioning. Meaningful education, affordable healthcare and equal opportunity are prerequisites of a productive workforce. In the same vein, institutions such as the rule of law, the safety of property rights and sufficient political centralisation stand core to the setup of inclusive economic institutions, giving a backdrop to innovation and growth. After all, only a prosperous, aspirational and growing society can provide demand for companies to cater to. As Michael Porter and Mark Kramer said, “Any business that pursues its ends at the expense of the society it operates will find its success to be illusory and ultimately temporary”. Parallelly, a healthy society requires a business to blossom. As India stands testament thanks to its 1991 liberalisation, no social program or charity can possibly come close to providing avenues of social mobility and societal affluence compared to a booming business. The power of inclusive economic institutions, with the free market at its heart, to radically raise wealth and standards of living is an ongoing miracle which needs no defence. It is thus rather surprising to see the obsession of both civil society groups as well as business on the frictions between business and society, instead of celebrating the interdependencies while utilising it as a lodestone. To return to our mythological parable, the key to metamorphosing Kubera into Lakshmi is to pool shared value, whereby choices enrich both society and business.

There are two broad categories of linkages where society intersects with business. Inside-out linkages occur through the normal functioning of a firm, whereby its value chain and nodes thereof have a social impact on the communities it traverses through. While companies are becoming acutely aware of these effects, which translates into measures such as hiring practices and waste disposal, these linkages are far more fickle than often visualised. Not only are the social consequences dependent upon location, but also varies over time as social standards evolve and science progresses. Not only does this call for local participation and decentralised decision making, but it subsequently also asks for introspection into evolving social effects of the future. Therefore, expecting CSR to be a centralised, top-down system of farmans and fatwas is counterproductive. The second type of linkages involves the competitive context in which companies operate, known as Outside-in linkages. These include the business inputs available, the rules and incentives governing competition, size and sophistication of local demand, and local availability of supporting industries. Any and all of these aspects provide an extremely broad range of options to engage with in order to propagate shared value. In essence, there are three kinds of social issues a company may face- Generic social issues, Value chain social impacts, and Social dimensions of competitive context. Every firm will have to segregate its issues under these three heads, and then prioritise the issues accordingly. Staying within this framework and stressing upon creating quantifiable mutual accruals is the first step to truly realising CSR. 

There exists a pressing need to strategize the entire gamut of CSR to optimise its output. Strategic CSR is to move beyond good corporate citizenship and mitigation of negative value chain impacts to mount a small number of initiatives whose social and business benefits are quantifiably significant and impactful. It requires both outside-in and inside-out dimensions to work in tandem, with opportunities for the generation of shared value carefully identified, analysed and broken down into targets. At the same time, the social dimension of the shared value the firm is creating needs to be integrated into the product proposition being pitched to the consumer. The aim is to cater to certain needs of chosen customers which others cannot. This unique value proposition which is imbibed within the product stands at the heart of the overall strategy, whereby the social aspects of the business are at the forefront of product differentiation. The goal here is to make social participation of the business a part of the product branding, to be counted as a feature of the product itself. The newfound success of social ventures, whereby their sole selling point itself is the social impact of their value chains, drives home the fact that there exists an avid desire for a more humane system of engaging in business. The fact is that the brand is now inseparable from its stances even on those social concerns which are unrelated to its value chain. Case in point is the abortive venture of Google to re-enter China. In 2018, it was revealed that Google was working on ‘Project Dragonfly’, a version of its search algorithm compatible with China’s draconian censorship laws. While this in no way affected them directly, Google employees, as well as Google’s users worldwide, were incensed at Google’s capitulation to silencing free speech. Google saw the writing on the wall and backtracked for good. Simultaneously, individual instances such as the spectacular revival of the Khadi brand, the push for organic farming, and mainstream firms actively grappling with social issues only portents more socially conscious business practices to arrive in the future. The only question which now remains is if firms will take the next logical step and thoroughly systematise it to compete on an impact-oriented facet.

One of the many growing worries regarding the future is the onslaught of automation and artificial intelligence on our lives. While opinions exist dime a dozen, the truth is that it’s already making ripples and is here to stay. If the industrial revolution was any guide, it is particularly important for us to recognise that during times of dizzyingly fast technological changes, communities and the society at large undergo unanticipated upheavals. Skills are becoming obsolete at an unprecedented rate, and we still are unable to offer any satisfactory solution as to how to offer everyone a meaningful job in the upcoming economy of the future. This becomes important to firms on two levels. The first is the potential rise of neo-Luddites who would try to resist the inevitable and complicate the attempts of firms to streamline and update themselves. This is often reflected in stifling regulations on evolving technologies such as self- driving cars. India is no stranger to this, having witnessed protests from low-level bureaucracy and political parties when computerisation was ushered in. While it ultimately led to India’s IT revolution, a boon on which the India story prides itself, anxiety and fear was pervasive when computers were first introduced. The second is the potential replication of the American Midwest’s woes worldwide, where the transference of manufacturing jobs to lands having better comparative advantages, or to robots, wreaked havoc upon communities there. This ultimately set the stage for populism to capture the day in 2016 US elections, where the divergence between the red rust belt and the blue coasts of finance and tech could not have been starker. This could be the frightening future of a lot more places if businesses do not adopt an approach of equity and responsibility, whereby the ‘deplorables’ only grow in number. 

We are already seeing a deleterious trade war being fought in the common man’s name, under the slogan of getting jobs back, which is only pushing the global economy to its weakest growth since 2009. Meanwhile, no serious overhaul and reform of the public education, training, and re-education is visible on the horizon, something which would at its very outset enable more people to engage with the economy meaningfully. It is thus clear that the line between policy and rhetoric has collapsed to the detriment of the former, thus not much can be expected of such governments. However, if a business is to roll back the cynicism surrounding it, it is imperative that we take shareholders along with other stakeholders harmoniously, and emphasise on the inseparability of both their interests. Business must reignite the lights on their indispensability in giving shape to ambitions- individual and collective, as the foremost harbingers of Lakshmi for all.


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