CSR in the face of an economic crisis
Both the financial and the real sectors are facing a
liquidity crunch. Debts are being called in, and assets are being
downgraded. An interesting
article in Mint today discusses the impact (if any) of the
liquidity crisis on CSR spending by big corporates in india, and
argues that the current situation gives us a new way to separate
the "wheat from the chaff", i.e. companies that coherently and
structurally address CSR from companies that simply throw money at
it.
The article raises some inherent questions. "Throwing money" can be rephrased more charitably as "monetary donations". Are they necessarily an indication of "chaff"?
More so, what does "coherent and structural" CSR mean? If a company requires all its staff to devote 3 of their 40 hours to community activities, is that structural CSR? I am admittedly a little confused by this separation into wheat and chaff.
Social accounting, or social auditing is one interesting concept surrounding CSR. I would love to know if this has gained currency in India. Any ideas?
The article raises some inherent questions. "Throwing money" can be rephrased more charitably as "monetary donations". Are they necessarily an indication of "chaff"?
More so, what does "coherent and structural" CSR mean? If a company requires all its staff to devote 3 of their 40 hours to community activities, is that structural CSR? I am admittedly a little confused by this separation into wheat and chaff.
Social accounting, or social auditing is one interesting concept surrounding CSR. I would love to know if this has gained currency in India. Any ideas?
3 Comments
Brodie Ross
Sruthi,
This is very interesting. Indeed, tough times will show us who is truly commited to CSR and who is simply "throwing money." It seems that it is easy to be principled when fortunes are high and the financial crisis will be a true test for those commited to CSR.
Similarly, it seemed that the "green shift" proposed by Liberal leader Stephane Dion resonated with the general public that was growing more concerned with the condition of the atmosphere while the Canadian economy was booming but now that we are falling on harder times not as many people have the stomach for it.
Anthony D'Agostino
I think you're right in asking whether or not the division of 'wheat' and 'chaff' is setting a false dichotomy. Even if the argument in the Mint article was more persuasive in highlighting why "external, separate activities" are chaff (which it did not and hence undermines the accuracy of the article's title - just another writer blowing hot air with under-developed ideas and editorial staff failing to ask what exactly 'tokenism' is...), evidently India's track record demonstrates that even internalized and coherent programs are not inherently successful as per the Karmayog review.
"Coherent and structural" CSR can also be affected by economic downturns, so I'm not convinced that such events illuminate the effectiveness of CSR activities. Hiring local (marginalized) workers, soliciting community consultation in planning projects, developing comprehensive employee healthcare programs (above and beyond simple insurance schemes), supply chain analyses for sustainable suppliers, etc. would all be examples of structural CSR in contrast to donating proceeds to local NGOs, volunteering, or hosting events, like you stated. It's very possible that the former examples are ineffective and the latter are effective, but I think the point in emphasizing the value of "structural" CSR is the embeddedness within the corporate value system and the penetration it reaches in altering corporate vision. However, these values often come at a cost (though can be compensated through pushing the costs downwards to the customers or marketing the company under a green halo to heightens visibility and provide industry differentiation) and the plug could be pulled if senior management was in search for cost-cutting areas.
While I would typically ally myself with the notion that charity/donations accomplish little, giving money to an organization like The Nature Conservancy can accomplish a great deal. However, if you're a major manufacturing center polluting local streams and endangering wildlife (simply focusing on the environmental side of CSR), then giving money to TNC is just greenwashing. In this sense, I would agree with Subramanian's legless title that CSR can indeed be tokenist in nature.
Shruthi Jayaram
Thanks, Brodie/Anthony. Yes, I think it is useful to first try and understand what structural CSR itself means before evaluating companies on its presence/absence. What worries me even more is the "unknown factor" - the impact of many production/consumption activities on climate change, sustainable development or livelihoods is often not correctly estimated or even estimated at all. The benefits of switching to potentially "good" methods of production/consumption are often not informed. This may be a further obstacle in evaluating what constitutes at least marginal "structural CSR"