Wednesday, June 10, 2009

"Business must be run in a socially responsible manner". Comment on the statement.

"Business must be run in a socially responsible manner".
Comment on the statement in the context of Indian business along with

Answer. Social responsibility of a business refers to what the business does, over and
above the statutory requirement, for the benefit of the society. The term corporate
citizenship is also commonly used to refer to the moral obligations of the business to
the society. This implies that just as individuals, corporates are also integral part of the
society and their behaviour shall be guided by certain social norms. The operations of
business enterprises affect a wide spectrum. The resources they make use of are
limited to those of the proprietors and the impact of their operations is felt also by many
a people who are in no way connected with the enterprise.
The current concept of CSR (corporate social responsibility) covers a range of issues
that could perhaps be covered under and be linked to the fabric of sustainable
development. Protection of the environment and a country's natural resources would
certainly be a paramount element of this concept of sustainable development. But what
would be equally important is the need to ensure that society does not suffer from
disparities of income and provision of basic services like health care, education and
literacy. To carry this list further, it could be argued that the United Nations' Millennium
Development Goals (MDGs) and the WEHAB (Water, Energy, Health, Agriculture, and
Biodiversity) agenda of the UN Secretary General are key essentials for bringing about
a solution to the very basic problems facing society. Consequently, if corporate actions
are to target the most fundamental problems facing a poor country like India, then the
components of the MDGs, including water and sanitation, prevention of eradicable
diseases and the items included in the WEHAB agenda in some sense become
guideposts for corporate social strategy and action. It is often asked why a company
should worry about anything other than the bottom line measured purely in financial
One response is of course to say what has been stated above, namely the cliche that
business cannot succeed in a society that fails. Hence, in an indirect but powerful way
the success of business even in narrow financial terms depends on the success of
society as a whole. The progress and welfare of society is not merely the responsibility
of governments alone. In an effective sense it involves appropriate actions by all
stakeholders, of which the corporate sector is extremely important. Hence, actions to
address some of these basic challenges also become important for leaders of business
and industry.
Social Responsibility Examples

Companies in India enjoy touting their socially responsible credentials, but are failing to
demonstrate accountability in real. Corporate responsibility in India has come out of its
infancy and has become a business in itself. If one goes by the number of companies
touting their achievements, civil society groups and consultants offering ethical
corporate services, and government framing policies to involve business in
development issues, then corporate responsibility has evolved to be acceptable to all,
at least in concept.
Case 1- A V Birla Group - Hindalco
The social projects are carried out under the aegis of the Aditya Birla Centre for
Community Initiatives and Rural Development, which is stewarded by Mrs. Rajashree
Birla, who is a Director on your Board.
The footprint of our social work straddles across 332 villages that we have adopted,
close to our plants at Renukoot and Renusagar in Uttar Pradesh and our mines at
Jharkhand and Chattisgarh. The work has touched the lives of more than 400,000
HLL has been proactively engaged in rural development since 1976 with the initiation
of the Integrated Rural Development Programme in the Etah district of Uttar Pradesh, in
tandem with the company’s dairy operations. This Programme now covers 500 villages
in the district. Subsequently, the factories that HLL continued establishing in lessdeveloped
regions of the country have been engaged in similar programmes in
adjacent villages.
To improve the business skills of the SHG women, extensive training programmes are
being held. Such workshops have already covered a large number of Shakti
Entrepreneurs in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar
Pradesh, Tamilnadu, Chattisgarh and Orissa
As part of their training programme, all HLL Management Trainees spend about 4
weeks on Project Shakti in rural areas with NGOs or SHGs. Assignments include
business process consulting for nascent enterprises engaged in the manufacture of
products such as spices and hosiery items.
Shakti: The Vision
HLL envisions the creation of 25,000 Shakti Entrepreneurs covering 100,000 villages,

and touching the lives of 100 million rural people by the year 2005.
Case 3: Coca Cola
Coca-Cola continues to face agitation from local communities around its plant in the
southern state of Kerala; the agitation is now a thousand days old. Ironically, Pepsi and
Coca-Cola claim to be socially responsible in India, and have HIV/AIDS and water
harvesting projects respectively. Are they socially responsible in the true sense?
Case 3: Reliance Energy
Reliance Energy continues to pollute the soil around its plant in Maharashtra, even
after being held responsible for it. Rather than correcting its own operations, it is busy
influencing policymakers and authorities to revise the local law in its favour. This at a
time when its chief Anil Ambani was given the ‘CEO of the Year’ award at the Platts
Global Energy Awards for 2004 in New York.
These illustrations are not meant to disfigure all the genuine good happenings in India,
but to pause and reflect on the state of affairs. In conclusion, but a beginning of a
useful thought, corporate responsibility reports about India need to be absorbed with
caution. It is important to look beyond the obvious and question every statement made
by both businesses and NGOs about the improvements on the Indian environmental
and social responsibility scene.

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