Don’t just tick the box

Doing well by doing good should be the core strategy

Mahindra Group Chairman Anand Mahindra was spot on when he said at the Business Standard Awards function on Saturday that the biggest commercial opportunities in the next decade and more lay in the business of shared value. Receiving the Most Socially Aware Corporate of the Year award on behalf of Mahindra & Mahindra (M&M), the chairman said companies often took a tick-in-the-box approach on corporate social responsibility, forgetting that the best-performing businesses of the future would be socially aware businesses that integrate driving change and building value for societies in its core business model. In other words, commercial interests of a company are inseparable from the interests of society. M&M has indeed walked the talk for decades now, as it has built a strong foundation in the social sector in diverse fields. Among its most recent projects, which got the company the award, is the ‘Rise for Safe Roads — Zero Fatality Corridor Project’, which looks at minimising the loss of lives on the Mumbai-Pune expressway.

There is no doubt that companies will have to recognise that the formula for success must include a focus on pressing societal needs. And the strategy should be to address those needs in ways that are profitable and sustainable in the long run. Many companies have done that successfully for years — for example, Unilever’s Sunlight soap built a business out of relieving the tedium of washing in Victorian England. And even today in India, Lifebuoy helps save lives when it spreads the simple message that washing hands with soap fights diarrhoea and other diseases. Marks and Spencer, for instance, has a programme to invest up to £200 million to position itself as the UK’s greenest retailer. These and other examples show that doing well by doing good is something companies of the future need to internalise instead of treating CSR as just an ornament.

Unfortunately, the organisational focus on implementing CSR activities in India has traditionally been fragmented and even superficial. It is often based on who in the organisation is driving a specific CSR initiative, rather than being holistically driven by the top management. The government mandate to spend at least 2 per cent of a company’s three-year average net profit to fulfil its CSR is a step in the right direction, but regulatory obligation can’t be the only way to go. The more important aspect is transparency — open reporting on the negative impact of their businesses can prompt companies to take responsibility for their own actions and allows the public to differentiate between a company with best practices and those with only good marketing. It makes business sense too.

CSR, as the name implies, is about the company as a socially responsible citizen. That has to be put at the top of the business plan, before mission vision and values, so that everyone can see that the company is serious about adding some value to society. Managements can be surprised at how much more engaged staff and customers are when they see the social point of what the company is doing. For that, what is required is the integration of CSR into organisational systems, processes and structures so that corporate responsibility and sustainability are linked to competitiveness.