At the recently concluded World Economic Forum Annual Meeting held at Davos, Corporate honchos joined hands with global leaders, evangelists and rock stars to show case their commitment towards fighting against poverty and improving lives of the ‘bottom billion people’. Microsoft’s Chairman Bill Gates stressed on ‘creative capitalism’ and talked about directing the powerful forces of capitalism towards the betterment of lives of the people. Pepsi Co’s chairman Indra Nooyi too echoed the same view and she talked about the benefits accrued by the companies when companies involve themselves in socially responsible efforts. Cisco’s Chairman John T. Chambers talked about the obligation of companies to give back to the society. He said that it isn’t just the right thing at do, but also good for business.
While I was reading about these in the World Economic Forum website, I couldn’t stop wondering about the metamorphosis of CSR in the present business scenario. With the beginning of the 21st century, the chemistry between CSR and Capitalism changed and the relationship reached a new plane. I decided to trace the journey of this phenomenon. Its indeed interesting to note that CSR and Capitalism share a typical Bollywood bhai bhai schmaltzy story. The movie starts with the endearing mother in the form of Adam Smith conceptualizing the inception for both Capitalism and CSR in his book The Wealth of Nations and The theory of Moral Sentiments respectively.
It wouldn’t be audacious to state that CSR owed its raison d’etre from The Theory of Moral Sentiments. It begins with a bold statement “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it” thereby laying a basis for socially responsible actions.The Invisible Hand theory explained in The Wealth of Nations paved the foundation for the establishment of market forces which ensured that self interest could also lead to the unintentional benefits for the society where the market is operating.
Capitalism, the younger brother of the two (Well, I can see ur impish smile...Considering the fact that The Theory of Moral Sentiments came during 1739, much earlier than the Wealth of Nations) soon began to grow up, with the help of several foster mothers- economists like Ludwig Von Mises, Keynes, Friedman etc.and philosophers like Ayn Rand. They helped capitalism break its cocoon and acquire widespread appeal as the viable social and economic system of the world.
Although CSR had its inceptions in the early 16th century, it took more than three hundred years for it to come out of its shell. It came into being during early 1970s (as per Wikipedia). To put it in the typical Bollywood way, the estranged brothers who forgot that they were conjoined twins reunited after a long gap of 300 years. However this bonding came in only when corporate honchos felt the need to ward off the evil karma of their profit oriented capitalistic practices. They used this CSR as an effective tool to salve the collective conscience of the company and smother the social activists who raised voices against the companies.
While Microsoft’s image was always under the scanner, thanks to various controversies on antitrust laws and business tactics; the establishment of charitable Melinda Gates Foundation considerably improved its reputation.
However many companies couldn’t continue with this strategy, thanks to network organisations like SOLIDAR. Forming a chain of NGOs; SOLIDAR works to ensure that companies bring CSR within their bureaucratic framework, rather than employing it as an knee jerk reaction for their avaricious pursuits. As a result of such concerted efforts, companies which took CSR as a timely PR exercise began to take it very seriously.
With passing of the time, CSR has seeped into the atomic lattices of what Corporations are made of. Companies apart from the timely philanthropic acts looked inward and focused on making their operations environmental friendly. Companies have started to look at the larger picture when they think about the benefits of CSR related activities. Companies have now begun to believe that it is possible to be commercially successful even if they follow ethical values and respect people’s rights. They have realized that profit is not the only motive for companies to survive. In one of the speeches made by Anu Aga, Chair person of Thermax, she explains this with a wonderful analogy. “If breathing is must for survival”, she says “can we say that purpose of life is breathing?”
Though historians- looking at the huge time lag to bring socially responsible actions -might accuse the companies of the past for not being socially responsible, it is indeed difficult for me to blame them. It’s Maslow’s Hierarchy of needs at play here. Companies during those days simply had to focus on survival. Now that companies have risen up the pyramid, the time has now come to look on various other issues other than surviving.
At the present juncture, Corporate Global Citizenship is the latest mantra. Companies are now interested in making themselves accountable not just to shareholders and investors but to the society in whole. In board meetings, Companies nowadays refer to Triple bottom line of good governance-involving financial responsibility with social and environmental responsibility. This indeed augurs well for societies which were less fortunate to reap the benefits of globalisation. The good news is that the growth will be more inclusive. The issues discussed at the Annual Meeting of World Economic Forum clearly testify this fact. The dream of seeing a fairly equitable society in this flat world isn’t far fetched anymore.