CII plans map to help cos along CSR road

Rajeev Jayaswal & Rupali Mukherjee

Can investment in social responsibility by corporates lead to an increase in their bottomlines? Seems odd, but it’s true.

The image of India Inc. is undergoing a paradigm shift—from creating wealth to generating well-being. The new ambition—to be ranked as a good corporate citizen—is not just a philanthropic exercise undertaken by the Tatas and Birlas of yesteryears, it is an objective to create value for the company.

In order to dispense social responsibility in a sustained and focussed manner, the Confederation of Indian Industry (CII) has roped in five major companies, Tata Steel, Maruti Udyog Ltd, Mother Dairy, Paharpur Cooling Towers and Jubilant Organsys (the erstwhile Vam Organics) for a pilot project. The task is to map their strategy towards corporate social responsibility (CSR), streamline their investments for the purpose and execute the identified projects in order to provide maximum advantage to the community and, in the process, earn goodwill for themselves.

“In the present global economic scenario, the social image of a company is as important as its value in the stock market. Rather, it has a tremendous bearing on its stock value,” says K P Nyati, head of CII’s environment division, who is leading a team of experts in evolving a comprehensive strategy for corporates in social responsibility.

Mr Nyati points out that there is a growing fear among corporate citizens of being branded as social outcasts. He adds that in developed countries, companies are being increasingly judged on social parameters and cites a recent survey by Multinational Monitor, which has named Abbot Laboratories, Argenbright, Bayer, Coke, Enron, Exxon Mobil, Philip Morris, Sara Lee, Southern Co. and Wal-mart as the 10 worst corporations of 2001.

“Social value cannot be isolated from economic value. And while the role of the state is shrinking, the corporate’s social responsibility has increased,” he says, adding that India Inc. has also realised that social responsibility is not a burden, but a means to create efficiency and eventually add to the bottomline.

“The project that we are undertaking for five companies is aimed at employing their total spend on meaningful community development exercises. Corporates must learn to undertake exercises that are required by the local community and not try to impose something that they think has value for their employees,” says Mr Nyati.

Citing an example, he says: “One corporate bigwig visited villages in Uttar Pradesh near his factory and felt that the people there needed toilets. So his company invested in setting up toilets in every household. In a review a year later, it was found that all the toilets were being used to dump fodder as that was a more urgent need for the villagers!”

Giving details about the initiative, Mr Nyati says it will evolve a corporate sustainability management index, which will be employed in all the corporations under CII leadership.