Tuesday, 29 January 2013

CEOs now more conscious about corporate social responsibility - The Economic Times

Corporate social responsibility is moving from the fringes to the mainstream of corporate consciousness. The upcoming government directive to companies to spend 2% of their net profit on CSR activities is making them think, strategise, plan and discuss more deeply. At an event in Mumbai earlier this month, three corporate captains outlined their CSR strategy. Speaking to ET, sustainability champion John Elkington points out what they were doing well and what they could do better


Mindset is Shaped at the Top: Harsh C Mariwala, Chairman and Managing Director, Marico

CEOs now more conscious about corporate social responsibility
The CSR Initiatives

First, we source copra (dry coconut) from small farmers directly as it motivates them to stay active and refrain from speculation; we also engage experts to educate them on farming and business practices. Second, we work with entities that don't know how to scale up, like Yuva Parivartan, a social organisation that provides employability training to young school dropouts. Third, even internationally, we do CSR wherever we are present because, being a foreign company, it is important to build an image in the society there.

The CSR Philosophy

CSR is driven by passion. It has to be led from the top. The mindset is shaped at the top and the key challenge is to drive it right down to the bottom. It also has to be customised because each person is passionate about different causes. We have a separate body to drive CSR, the Marico Innovation Foundation. Beyond that, we have decentralised CSR to do it at a local level. So, wherever we have factories, they have a budget given to them for CSR, and it is for that unit to determine what to do. Besides CSR, there has to be personal social responsibility. I am passionate about social entrepreneurship and have started the nonprofit Ascent, which helps social enterprises scale up.

Elkington's response: ...But internal dynamics remain


Passion is like rocket fuel. If it's the right rocket and you know where it is going, then it's good, but a misplaced one can cause complications. When you talk about it being driven from the top, in most companies, these issues are not mainstream or strategic. It is more about business and value creation. Even if you have boards and top management switched on for this, you still have internal dynamics playing through. Very often, you have certain functions where there is a professional disinterest or opposition to some of this.

f you think of a chief financial officer, very often, they are opposed to much of this stuff. Even if it becomes a regulatory requirement, you will find a lot of CFOs holding this down to the manageable minimum. Another group opposed to this is, oddly, the human resource function: they see this as part of their natural territory.

CEOs now more conscious about corporate social responsibility

Initiatives have to be Long Term: Anand Kripalu President, India & South East Asia, Mondelez Int.

CEOs now more conscious about corporate social responsibility


The CSR Initiatives

Cadbury brought the first cacao seedling from West Africa and planted it in Kerala in the 1960s. As cacao planting expanded, this little tree came to be known in Kerala as the 'Cadbury tree'. Climatically, cacao could be grown in all southern states of India, but there was a shortage of land. We did research with agricultural universities, and found that cacao could be planted as an intercrop between coconut trees. Today, we have 60 full-time employees working on cacao farming, helping 66,000 farmers; each year, we plant 6-7 million fresh trees. It's a win-win-win model: we save on imports, farmer incomes have doubled and provided livelihoods.

The CSR Philosophy

From this one example, the lesson is it is really powerful when social programmes and business are inexplicably linked together. Where it is not an appendage to your business, but at the very heart of it. Ad hoc initiatives have not worked. We are looking for the next cacao project now. Projects like cacao, which we have sustained over a long period of time, work better. We are discussing the next long-term initiative, where we will be invested in for five to six years; it will be integral to our business so that our employees feel passionately about it.

Elkington's response: ...But it has to Outlive Ownership

Very excited about the winwin- win strategy. Two issues here. One, we are talking about big companies. Cadbury, for example, bought a small organic, fair-trade chocolate firm and was then bought by Kraft. How do you continue the values and sense of mission of smaller companies as they become part of bigger ones? Two, the cacao experience struck me.

It was a strategic shift in what has become an industry. A lot of what passes for CSR is not that. When he talked about the need to find the next cacao, it resonated with me. That spoke of somebody who is not thinking of how do we do the fraction of 1% performance improvement, but how do we do something transformative. Also, sugar is a main ingredient of Cadbury's products. There are issues of chronic diseases like diabetes. This needs to be a concern.

An Exit Plan is Important: Ronnie Screwvala Founder, Swades Foundation

CEOs now more conscious about corporate social responsibility
The CSR Initiatives

We started eight years ago, and are involved in water, health, sanitation and education. We have a target of working with 2,000 villages over five years, with an exit plan at the end of that period.

The CSR Philosophy

We are all entrepreneurs for 20 years and will find solutions when pressure points are touched. Time and priority for social projects is always a problem. But if we link up with an expert in the field and a project head centrally within the organisation, it will have an outcome. (The coming CSR) legislation makes it easier for foundations like us: the assumption is when people have a budget, they will want to partner and see organisations that can execute. A parallel ecosystem of bodies is needed to measure impact. Also, an exit plan for social projects is important.

Elkington's response:...Exit, but Don't Abandon

NGOs don't like to think about exit strategies. In the absence of effective governance, exiting from communities you support after, say, five years, you will be abandoning people to their fates. A tertiary level of support is required. I like entrepreneurs. I warm towards someone like Ronnie. What he is doing in terms of his foundation with an almost venture capital approach to having an exit strategy is exciting. The scale of what he's doing is exciting.

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