Despite the noise, the Indian report card on corporate social responsibility is not very heartening. It?s still more of a fashionable diversion than a substantive effort. There?s a rational explanation to this: the implications of not following socially responsible business practices do bother boardrooms (as yet), so companies, minus a few honourable exceptions like Infosys, are not too bothered. The clich?d refrain has been to hold up the public sector as a model, which the rank and file of the private sector has not lived up to. But hang on a minute. The just-released report of the Comptroller & Auditor General (Cag) on financial reporting by public sector undertakings paints a rather different picture. Of the 47 units that signed up for the UN Global Compact, launched in 2000, for example, 24 were graded inactive on their social responsible business practices eight years later. Factors that give a company brownie points include whether its business practices are moderated by non-profit social objectives, whether its operations enrich the quality of life, and whether it addresses broad issues of gender, corruption, preservation of biodiversity, global warming and resource endowments. By any reckoning, these are socially relevant issues that every company needs to be sensitive to. Cag?s effort to mark out and bring them to the fore is welcome. Maybe the Institute of Chartered Accountants can consider applying a similar covenant to its reportage on private sector companies.
Further, a closer perusal of the Cag list shows an interesting split between active and inactive companies vis-a-vis social responsibility. Without fail, the companies that have done well on the Global Compact are those which have made substantial additions to their shareholders? wealth. This list includes Bhel, HPCL, IOC, NTPC, NHPC and ONGC. Conversely, those on the negligent list are mostly public sector entities which have seen their stock values, whether listed or not, stagnate. This connection is not happenstance. Good management strategies create value addition all round, irrespective of the sectors in which they operate. The chase for profits is a corporate and social good. It is, therefore, oxymoronic to claim that a company is ?inefficient but socially responsible?. The Cag list demonstrates this eloquently.
