An oft-repeated cliche is that business cannot succeed in a society which fails. This, of course, represents the vista of an extreme situation, which in some sense conveys only the negative aspects of a corporation not serving its longer term interest. A more positive view would rest on the reality that doing good for society in a visible and clearly demonstrable manner would certainly enhance the success, even in a business sense, of private enterprise as well.
In the past several decades, business decisions, which looked purely at generating higher profits for the enterprise have succeeded in a narrow sense by imposing heavy externalities and costs on society. This has happened not only at the local level but today there is a substantial danger of this occurring at the global level as well.
To adjust prices now, when equipment, appliances, habits and business practices have been acquired on the basis of low fossil fuel prices, becomes a difficult undertaking, with substantial resistance from most sections of society. But corporations need to show courage and vision in taking actions that would mitigate emissions of GHGs, as indeed some companies are doing.
In todays world, any damage to society and its overall interests at the local or even at the global level will not remain unnoticed and unreported. Todays information systems will ensure that a problem caused by any corporate entity in any part of the world will become news in every other part of the world almost instantly. Hence, it is in the interest of corporate organisations themselves to assess the impacts of their actions on society, both positive and negative. With growing consciousness of the role of a modern corporation and its effects on society at large, a good image established through good actions by any corporate entity would, in some sense, represent an effective means of advertising its virtue in the eyes of society. A perception of a lack of such virtue would represent just the reverse. The success and staying power of a company would, therefore, come only from the ability of a corporate organisation to ensure that it attains a favourable image by pursuing acts that have a favourable impact on society.
The concept of corporate social responsibility needs to be carried beyond the current operations of an enterprise. Despite the huge success that the world has achieved by increasing its income from $6 trillion in 1950 to $ 43 trillion in 2000, millions still live in abject poverty. For instance, the world had 854 million illiterate adults in 2000 and 1.2 billion people living on less than one dollar a day and 2.8 billion living on less than two dollars a day.
This is a section of the world population that has escaped the attention of the corporate sector. Technologies, products and services that have been developed throughout the period of industrialisation have essentially focussed on the upper segments of society, mainly because these provide immediate returns and provide business opportunities that could be tapped without unconventional efforts. Yet, the poor of the world represent a huge, untapped business opportunity. If services such as micro-credit and insurance, products such as renewable energy devices, cellular phones, and seeds that produce high agricultural yields could be made available to this section of humanity, not only would business expand on a large scale, but also poverty can be reduced effectively.
Of course, moving into these potential markets would require the establishment of infrastructure, which does not exist today. There is, therefore, a need to plant the seeds of future business opportunities today, which would provide widespread results tomorrow. This approach, termed as seeding the earth, represents a new way of identifying business opportunities that cannot be postponed much longer in a world where the barriers of the past are being demolished rapidly. Success in the removal of poverty has huge benefits for rich and poor alike. The spread or persistence of poverty on the other hand is not only a curse for those who suffer from it but also the rich who cannot insulate themselves from this scourge.
Interestingly, technology today displays some very favourable features that make its use widely acceptable. Whether it is modern information technology or distributed and decentralised forms of energy production, it is now possible for even those with low levels of literacy to use and operate these devices with minimal training and understanding of their complexities. The rapid evolution of these technologies has, therefore, opened up areas of business that did not exist earlier. Corporate social responsibility involving the spread of business to harness these opportunities is, therefore, not a form of charity but in actual fact a means by which the corporate sector is seeding the earth for much bigger returns in due course. But much of this will only happen if existing mindsets are changed and corporate managers look at the present as well as the future not merely in terms of profits being maximised in the next quarter but within a longer time horizon.
(R K Pachauri is Director-general of TERI)