|| CORPORATE RESPONSIBILITY
Earlier this month, I was reading Khana Pugos Dina Pugos, a compilation of thought-provocative articles. In the book, the author and renowned media personality Rabindra Mishra has advocated, inter alia, need for practical philanthropy by individuals and corporates alike, for general welfare of our society and for the development of our country. He has presented several interesting anecdotes to highlight success stories in his writings. While agreeing with his pragmatic ideas, one particular aspect of the deliberation I am wary of is the ability and appropriateness of our business institutions to practice such social responsibility initiatives about which they have little or no knowledge and, more importantly, which are completely unrelated to their core business activities.
Today, Corporate Social Responsibility (CSR) has irreversibly become a part of the corporate fabric in Nepal. For-profit corporate institutions are pouring millions of rupees into different kinds of CSR programs in the race to strengthen their reputation. If we scan annual reports of banks and financial institutions, insurance companies, hydropower companies etc. we can find pages of descriptions about their ‘good’ social deeds. However a closer look immediately reveals that most documents merely report the contribution made by the companies instead of the impact achieved by their actions. And to top that, the social activities of the corporations are not for purely altruistic reasons.
In fact, the most common corporate response to societal needs has been all but cosmetic: public relations and media campaigns. Increasingly, CSR or corporate philanthropy is used as form of publicity or advertising, promoting a company’s image or brand through cause-related marketing or other high profile sponsorship. Most of these programs consist of small cash donations to some charitable organization or NGO, organizing blood donation programs, or running and walking in the street wearing t-shirts with the company’s logo printed on it; in the hope of generating goodwill among employees, customers and local community. Hence, the CSR programs have been nothing more than marketing tools for the corporations. This does not mean that what the corporations are doing for gaining goodwill and enhancing their reputation through philanthropy is futile, but the real objective of a CSR program is missing. There should be some tangible impact on the amelioration of the community. And the efforts should be sustainable.
This is not happening here because the corporations are deliberately or inadvertently distinguishing their core business work from social activities with the belief that this will lead to greater goodwill. There is a clear mismatch between corporation business strategy and their social actions. I am amused to see a bank’s credit analyst going to plant trees in parks on a weekend or an IT engineer hiking on the street to raise awareness about HIV, and so on. Why are the corporations involving themselves in areas where they have little knowledge or expertise? The result is often a hotchpotch of uncoordinated and assorted CSR and philanthropic activities that fail to make any meaningful social impact over a long period of time. Who can be convinced that a couple of hours of a public rally would preserve our heritage sites or donating a computer set to a government school will drastically improve education? Further, such efforts aren’t even sustainable. The more the companies donate, the more is expected of them and as soon as the company’s financial position deteriorates, its entire social work diminishes.
Instead, had they done something within their area of expertise connected to their core business activities, it would have possibly led to concrete, real and longer-term impact on society. A bank, for instance, may include a commitment to providing more microcredit for the self-employed in its CSR program, or helping poorer sections of the community gain access to bank accounts and other financial services. They can involve themselves—and staff members—in financial literacy programs among youth so that they learn how to manage money. This will create a win-win situation for businesses as well as for society at large. Businesses make profits but not at the expense of people. That’s why I am more optimistic about ‘youth saving program’, or ‘branchless banking programs’ some banks are effecting; which will help in elevating people’s financial conditions through access to and knowledge about formal banking channels.
The more closely a company’s philanthropy is linked to its business context, the greater the company’s contribution to society will be.
Additionally, why the CSR activities in Nepal don’t result in greater impact is because they often reflect the personal beliefs and values of executives. Why should a CEO—or any executive—decide on donating computers to a school or organizing heath-camps or contributing to an art-exhibition? If an executive is supporting a cause using the organization’s funds, which doesn’t yield any economic returns for the company, he is simply squandering shareholders’ money and cutting down employees’ bonuses. Hence, a corporation’s social spending should not come at the expense of its economic results. In the words of Michael Porter, a renowned professor of business strategy, all of a business organization’s social activities should be endorsed by it business activities so that social impact of the business is set in an effective and sustainable manner. Rather than delegating philanthropy entirely to marketing or public relations department or the staff of a corporate foundation, the executive must lead the entire management team through a disciplined and thoughtful process for drawing a synergy between its social activities and business functions.
Some might argue that philanthropy is purely a matter of conscience and should not be adulterated by business objectives. However, the more closely a company’s philanthropy is linked to its business context, the greater the company’s contribution to society will be. Other areas, where the company doesn’t create added benefit for business, should be appropriately left to individual donors who are free to follow their own charitable impulses.
The author is with the Business Development Department of the Nepal SBI Bank Ltd