The missing philanthropists
Pushpa Sundar's book chronicles succinctly in 10 chapters the fascinating story of India's business and its foray into philanthropy and CSR
India's growth is often compared with China's. The striking difference, however, is the history of India's merchant charity and its robust civil society. Interest in corporate social responsibility (CSR) is growing, now that the Companies Bill has been cleared by the Lok Sabha and is awaiting approval in the Rajya Sabha. Pushpa Sundar's book chronicles succinctly in 10 chapters the fascinating story of India's business and its foray into philanthropy and CSR. The growth of family enterprises saw India's leading business houses contribute to nation building through world-class institutions. G D Birla founded the Birla Institute of Technology and Science (Pilani), the Bajajs set up the Jamnalal Bajaj Institute of Management and the Tatas established the Indian Institute of Science - these are inspiring tales of the early philanthropists and their contribution to society. Some of these industrialists led frugal lives and built their wealth from scratch without much formal education.
It was Gandhi's concept of "trusteeship" that provided a means of transforming the capitalist order into an egalitarian one, preventing a violent revolution through self-reform by the owners of wealth. The 1990s and the winds of globalisation led to new thinking on CSR following the rise of a business class comprising first-time billionaires. For many, CSR has been more about improving branding and public perception of the firm than about responsible practice. As the Bhopal gas tragedy and other industrial disasters have shown, companies may bypass environmental, occupational and safety practices, but at huge costs. Indeed, as the author points out, civil society activism, which has helped expose practices such as child labour or environmental damage, has led to landmark judgments - thereby making sustainability an important facet of CSR.
After 1990, the composition of the business sector changed. To the large Indian family businesses was added the presence of multinational corporations (MNCs) and small and medium enterprises (SMEs). But the unique feature of India is that family businesses still dominate. The non-dynastic private sector focused on business lines that were part of the New Economy. These entrepreneurs - such as the promoters of Infosys, Wipro and so on - from middle class backgrounds and non-business families brought middle-class values, including the concept of social obligation, but very few gave away personal wealth.
By 2010, India had 49 billionaires, many of them flaunting their wealth and conspicuously spending on weddings and mansions rather than on social causes while inequalities widened. Even as the billionaires' club grows, India ranks 134 in the Human Development Index and a low 65 in the Global Hunger Index. The question the author raises is, "Where are India's great philanthropists? How can a country with so much wealth, technical know-how and management talent give back so little to its own people?"
As scams grew in the last decade, so did trust deficits across the world, which in turn called for better corporate governance to expose how companies paid little heed to environmental and safety norms, how poor people continued to pay a price for negligence and how MNCs discriminated between developed and developing countries in pursuit of profits. Crony capitalism and financial misadventures became the order of the day; in reaction, movements such as Occupy Wall Street spread in many countries. Mandating CSR is not a uniquely Indian practice, according to the author. In many European countries, firms are expected to fulfill legal obligations. If money on these obligations is spent wisely, it could reduce development deficits.
The traditional way was to give from surpluses with no questions asked, but contemporary CSR talks about responsible profit. Ethical deficits are visible in sectors such as realty, mining, pharmaceuticals and SMEs. CEOs, the author says, and rightly so, must take the lead in socio-economic debates that could alter the structure of their business and the rules of engagement.
CSR in India has followed its own path "with some western influences such as focus on supply chains and Human Rights". There have been some achievements, but there are many shortcomings and the exercise is guided more by self-interest. There are also differences between what motivates indigenous, family-owned businesses and MNCs, which have extraterritorial loyalties. Their ties to a society are impersonal and purely economic. The chapters on "Challenges" and "CSR as Trusteeship" offer deep insights into the trust deficits in the business-community interface and the many obstacles before CSR can become a transformative force. One agrees with the author that India's CSR must flow from its own history, culture and needs. All in all, this book is a must-read for all managers, management students, faculty, and business and civil society leaders if they are to be located in their own history and context.
BUSINESS AND COMMUNITY
The story of Corporate Social Responsibility in India
SAGE Publications; 408 pages; $45