EU-India initiative for corporate social responsibility

Navtej Dhillon & Malcolm Subhan

Indian and European business representatives are meeting in New Delhi today* (Wednesday) to see how best to meet their responsibilities to society at large. Gone, in other words, are the days when business had only one goal: to make money for its owners. Today, business is under pressure, from both stakeholders and the wider community, to adopt responsible business practices.
The demand is for corporate social responsibility (CSR). It is being made of companies in both Europe and India. The recent Clean Clothes Campaign in some European countries urged consumers to boycott stores which sold garments made by firms using child labour, for example. The conference on corporate social responsibility brings together Indian and European business because the 15-nation European Union (EU) and India are linked by growing trade and investment.

The EU is India’s largest trading partner, accounting for over 25 per cent of India’s foreign trade; it is also the largest source of foreign direct investment (FDI) in India. Increased trade and investment will raise living standards; but it should also help bring about positive social changes in India and Europe. The fact is that business around the world can no longer disregard its social and environmental responsibilities, for it is under growing pressure to help build a fairer society.

Claims that globalisation will spread the benefits of economic growth are not enough; economic operators must also demonstrate that they are also socially responsible. Business — European and Indian — must therefore work together to respond effectively to these new demands.

Europeans have recognised, for some time now, the potential benefits of a partnership between government, business and civil society to address social and environmental issues. Consumer behaviour — the decision of which product to buy — is no longer influenced by price alone. According to a recent survey, 70 per cent of European consumers say that a company’s commitment to social responsibility is important when buying a product or service.

Corporate social responsibility is now firmly on the political and social agenda of European Union countries. The United Kingdom government has appointed its first minister to hold the portfolio of corporate social responsibility. The European Commission, the EU’s executive arm, recently published a Green Paper on corporate social responsibility, with the aim of launching a broad-based consultation on the legal and voluntary framework the EU needs in order to promote corporate social responsibility. Corporate social responsibility is also high up on the agenda of the Belgian government, which currently holds the EU’s rotating presidency.

The declaration on corporate social responsibility, to be adopted at Wednesday’s business conference, is to be submitted to the India-EU Summit of the Indian and Belgian prime ministers.

India, on the other hand, has a long history of close business involvement in social causes for national development. Some 150 years ago the founders of many Indian dynastic enterprises were active in religious and social reform. Their charitable donations and philanthropy grew out of the need to develop the country socially, politically and economically in order to meet the challenge posed by colonisation. The need for rapid economic and social progress gained in importance after independence, with companies engaging in corporate philanthropy as the means to contribute to society.

Today, as the Indian economy adjusts to globalisation and liberalisation, a different response is required from business and government. The practice of corporate philanthropy needs to be supplemented with corporate social responsibility. For Dr Vikas Goswami, Director of Business & Community, an organisation working with multinationals in this area: “Corporate philanthropy is about doing good, and is essentially one sided. It does not involve interaction with stakeholders. Corporate social responsibility on the other hand is based on proactive engagement with all the stakeholders. It focuses not only what a company does but also the means they use to achieve them.”

As India faces the challenge of globalisation, it is imperative to take the concerns of all stakeholders into account. Corporate social responsibility provides an opportunity for delivering value to all. However, there is no single, transferable model of corporate social responsibility. While the pressures mounted by globalisation are similar across the world, responses must be local.

The conference of Indian and European business will try to ensure that corporate social responsibility is included in the agenda of the annual EU-India Summits. This will provide the political impetus for European and Indian business, on the one hand, and civil society organisations on the other, to exchange ideas and develop practices and programmes based on their experience and best practices.

* India-European Union conference on Corporate Social Responsibility: A Cross-Cultural Perspective, being held from 10-6pm. This conference is an initiative of EU-India Network for Corporate Social Responsibility which co-financed by the European Union.

(The writers are at the European Institute for Asian Studies, a Brussels based think-tank on EU-Asia policy)