Human Face of Corporates

Do corporates have a role to play in community initiatives? How compatible are money-making and social responsibility? To find out, TERI-Europe, the London affiliate of the The Energy and Resources Institute, conducted a poll among over 1,200 workers, company executives and the general public in Chennai, Kolkata, Mumbai, New Delhi and Tirupur on their perceptions of and expectations from business in India. Ritu Kumar, Director, TERI-Europe, who co-authored the report, ?Altered Images: Understanding and Encouraging Corporate Responsibility in India?, tells Saira Kurup that the popular mood is to include sustainable development into mainstream business strategy: What does corporate responsibility mean? There are four models of corporate responsibility globally. The first is the ethical one where there is voluntary commitment to public welfare. In India, it has its roots in the Gandhian philosophy of trusteeship. Examples of this model are the Tatas, Birlas and Reliance Industries ? who have provided cash, community investment trusts and schools. The second model is of state-owned PSUs. They provide housing and schools to workers. They have existed in India since 1947, such as in Bhilai and Bokaro. But this model is now being challenged by the trend of disinvestment and privatisation. The third is the liberal approach where the belief is that the free market would take care of corporate responsibility. Since the late ?80s and through the ?90s, there has been increasing realisation that business has a social responsibility. This has come about through public campaigns and pressure on the shareholders. The fourth is the stakeholders model. Companies like Nike have been sourcing raw material from developing countries. There were allegations of sweatshops being run by Nike and it had to change its practices. Corporate responsibility now means ethical and environment-friendly practices. Companies are expected to stick to the Triple Bottomline ? of economic, social and environmental responsibility towards workers, the shareholders and the community. Some form of these four approaches exist in all countries. What was the aim of the survey? We are doing a project in India, Sri Lanka and Bangladesh to assess the state of corporate responsibility here. India has had a long tradition of corporate philanthropy. Our aims were to assess the existing practices and see how they fitted with the evolving global corporate responsibility. We conducted a snapshot poll of about 1,200 individuals. These are however only preliminary results. We are now doing an in-depth analysis of the findings. What were your findings? Across the three groups of surveyed people, there were expectations for the companies to follow corporate responsibility, but they were not yet ready to judge the companies on this. Reputation and brand are still important. There were five major findings: There is more trust in the Press and NGOs than in business; The IT sector is regarded as the most responsible and alcohol and tobacco industries as the least. Workers rated the pharmaceutical and financial sector as the better ones. This could be because both these sectors are controlled by the government. There were differences in the views of the public and workers over the mining and auto sectors. Workers see the mining industry as responsible, possibly because it is a state-owned industry; Gender discrimination is a real issue in the workplace. It was felt that hiring policies and age restrictions were against women?s interests. But this was a feeling more among workers than executives; Workers and management have sharply divergent views of labour conditions, especially over wages and labour policies. Minimum wages were not being paid in many cases. There is corruption and pay-offs. All this is because of weak implementation of labour laws. Both labour unions and the managements need to change workers? perceptions but there is very little trust placed in unions too; Public expectations from corporations in social and environmental matters are rising. We also asked which was the most responsible company in India. Among MNCs, Unilever, Sony, Johnson & Johnson, Coca Cola, Proctor and Gamble were mentioned. The main reason stated was that these were trusted brands. Coke was mentioned because of its sponsorship of sports events. However, the factors of environmental care, human rights, transparency were not mentioned. Among Indian companies, the overwhelming choice was for the Tatas. So also Reliance, Birlas and BHEL. The reasons mentioned were ethical care, environmental practices and social work. Overall, MNCs were rated lower than Indian companies. Were the workers satisfied with their companies? Two-thirds said they were satisfied with the wage-levels. Among these, the non-unionised were less satisfied. Unskilled workers and those in the service sector were not satisfied. Two-thirds of the company executives claimed there was independent monitoring of labour courts. But in many cases companies had not even published their labour policies. Sixty-three per cent of the workers in the IT sector said they were satisfied; 73 per cent of the workers in the pharmaceutical industry felt their sector was the best; 65 per cent of the telecom industry workers and 75 per cent of those in the financial sector felt the same about their industry. Milton Friedmen, the economist, said that while it is the job of governments to govern and educational institutions to educate, the job of corporations and businesses is to generate and create wealth and employment. So don?t you think that by thrusting social responsibility on businesses, their attention would be diverted from their actual work? I do not agree with this liberal theory of letting the market decide. It has not been proven that free market can take care of social responsibility. Shareholders have not been able to do it. The corporate sector has to play a more proactive role. The sector needs to be regulated and it should make voluntary commitments. Companies which have taken up corporate social responsibility are making profits. For example, in Bangladesh 90 per cent of the workers in the garments sector are women. But there is a high rate of absenteeism because of maternity leave and problems with children at home. A group of women set up a creche for the children in one company and the cost was borne by the management. It was calculated that the cost of the creche for the company was 38 takas a month, while absenteeism was costing the company 38 takas daily. Thus the company actually benefited by setting up the creche. Corporates cannot penalise or regulate but can do a lot on a voluntary basis. I see the same catalyst role for NGOs. The government also cannot shirk its responsibility. Has business in India realised its social responsibility? Here, we are trying to move from corporate philanthropy to the stakeholder model. For example, the Tatas are known for their work in Tatanagar and have set up a Tata Council for Community initiatives. But by and large, Indian companies have a long way to go in imbibing corporate responsibility as a business strategy. Corporate philanthropy is only a part of corporate responsibility.