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March 2011 - ISSUE I

CREATIVE PHILANTHROPHY

A portal to ignite energy and enthusiasm towards CSR

In this issue Pg 2 - Explaining CSR Pg 3 - Our Influences Pg 4 - Current endeavors  Pg 5 - An introduction to CSR in India Pg 6 - 4th Wheel suggests...

INTRODUCTION TO THE NEWSLETTER The fact that Corporate Social Responsibility (CSR) has gained tremendous importance cannot be debated. Owing to globalization and increasing economic power and

Another popular method has been to integrate CSR with a

influence in society, the business sector has been assigned or ‘gained’

company’s business model, such as in the case of Starbucks Corp.

a new role in society. There has been an increase in the expectation

working with Conservation International, a not-for-profit that seeks to

from businesses in the role they would play in the betterment of

protect ecosystems and biodiversity in order to ensure human health,

society.

to support farmers in minimizing their impact on the local

The United Nations Global Compact, a policy initiative for

environment.

corporate entities committed to aligning their businesses with

This reflects an increasing understanding among businesses that

universally accepted principles in areas such as human rights, labour,

they can play a positive role in societies where they operate and invest

the environment and anti-corruption, and the Voluntary Guidelines on

and contribute to social and economic development.

Corporate Governance and CSR released by India’s Ministry of

Looking at current trends and the heightened sense of

Corporate Affairs in 2009 are two examples of the heightened

responsibility of business houses, it is essential to get the ball rolling

importance of CSR nowadays.

and ignite enthusiasm and dialogue on CSR. This newsletter aims to

There has been a drastic change in the way CSR is perceived. It is no longer about charity. There has been a shift to profitable and

increase awareness of CSR among corporate entities and the masses and invite views on pressing social ills and problems.

sustainable business models to combat underdevelopment. One way has been the use of organizational skills to create social impact. For example FedEx Corp., the world’s largest logistics services company, provides contributions as well as logistics and transportation support for emergency and disaster relief. Microsoft Corp. launched Unlimited Potential (UP), a global initiative focused on imparting technological skills to disadvantaged individuals through community-based technology and learning centres. The other wave has been of socio-commercial investments, such as technology multinational Apple Inc. donating computers to schools, thereby increasing the usage and appeal of their systems.

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United Nations Global Compact ‘Never before in history has there been a greater alignment between the objectives of the international community and those of the business world! Common goals, such as building markets, combating corruption, safeguarding the environment and ensuring social inclusion, have resulted in unprecedented partnerships and openness between business, governments, civil society, labour and the United Nations.’


EDITOR’S NOTE Corporations have gained immense clout in the prevailing form of capitalism. The role of businesses in facilitating development has long been debated. We have progressed to a society, where businesses are no longer based on the sole motive of profit maximisation. There has been an acceptance of the role they can play in making the effects of globalisation and business operations, positive and reducing the ill effects by conscious efforts. These efforts in a broad sense are termed as Corporate Social Responsibility. CSR is an evolving concept and is no longer random charity or philanthropy but is now looked as key to business operations, sustainability and development. This endeavor by the corporate sector should be accompanied by appropriate State assistance, guidance and regulation. Civil Society and International Organisations can also encourage and make CSR more effective. This introductory issue introduces the concept to the reader and attempts to generate dialogue and discussion on the subject. The 4th Wheel, a start up think tank, in operation since September 2010 uses this medium to communicate their beliefs, interests and on going projects, hoping the literature transpires into ideas, innovations and support for CSR.  

..WHAT IS CSR? “CSR is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.” (World Business Council for Sustainable Development) In its broadest sense, CSR refers to “the firm’s consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social benefits along with the traditional economic gains which the firm seeks” (Davis,1973). CSR basically focuses on what an organisation does that affects the society in which it exists (Stone, Social issues in business, 1987) CSR is “a commitment to improve community well being through discretionary business practices and contributions of corporate resources”. (Philip Kotler and Nancy Lee, Corporate Social Responsibility, 2010)

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INFLUENCES

According to Bill gates, “Self interest is just one of two forces in human nature. The other is ‘caring for others”. The book asserts that the genius of capitalism is that it makes self interest serve the general interest. Philanthropy and government are supposed to address our ‘caring for others’ but there is not enough philanthropic or government money to solve the world’s problems. It is a dialogue and presents notable articles by professionals who discuss a reversed system which should use profit incentives where possible. Even where profits are not possible, there is a market based incentive: Recognition. Positive recognition is good for a company’s reputation, good for attracting customers and good for attracting employees. Creative capitalism is “a system where incentives for both profits and recognitions motivate both self interest and caring for others. Under creative capitalism, governments, businesses and non profits work together.” Bill Gates gives suggestions of corporations donating money or products or using technology to find new markets in poor countries. An apt example is ‘Tiered pricing’ wherein a drug company has a valuable patent and charges full monopoly price in the developed world but lets poor world manufacturers produce for less than one dollar a dose. Another example he gives is the Bono (RED campaign) model under which products are sold with a small percentage of the profits going to worthy causes in the poor world.

C.K. Prahlad (2005) has stated that “The idea that the private sector can and should be involved in creating market-based solutions for the world’s poorest consumers is gaining credibility.” He highlights various case studies, a noteworthy one being, ‘Jaipur rugs’, operating in India and elaborates on how a company can benefit the poor by connecting them with global markets. Jaipur rugs makes this connection by building and orchestrating a global supply chain on a massive scale- one focussed on developing human capability and skills at the grassroots level, providing steady incomes for rural men and women in the most depressed parts of India and connecting them with market of the rich, such as the US. He gives an example of the cell phone revolution which has demonstrated beyond doubt that there is a market for world class goods and services if they can be made at accessible at affordable prices. “The cell phone, we can say, has shown that the Bottom of the pyramid is not just a market but a source of innovation in business models and applications. It has transformed the lives of the poor. We can do well and do good simultaneously”. He mentions organisations which help the handicapped walk, helps subsistence farmers check commodity prices and connect with the rest of the world. There are banks adapting to the financial needs of the poor, power companies reaching out to meet energy needs, and construction companies doing what they can to house the poor in affordable ways that allow for pride. He also mentions the chains of stores tailored to understand the needs of the poor and to make products available to them.

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CSR in rural areas of Gujarat Business thrives on a prosperous society. India has 638,596 villages. The rural population is 72.2% (Census of India, 2001). These basic facts make it an important task to cater to

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contemporary India’s rural population and their quandary. The private sector has gained importance and plays a critical part in the growth of rural India. Their role can be looked at in two different ways, one is to bridge the gap left by the government and the other to increase their markets. For example when a corporate builds a road in rural India it not only benefits the community as whole but it is also beneficial to the corporate which can use these roads to deliver their products to the rural market which stands very important to them as two-thirds of the country's one billion consumers live in rural India, where almost half of the national income is generated. In April 2011, we shall initiate a 6 month research project to document CSR activities in rural Gujarat and the test the impact and the effect it has on the beneficiaries residing in rural areas. Examples of companies undertaking CSR in rural areas are Adani Foundation, which works in the rural areas for agriculture, animal husbandry, water conservation, village institution building, capacity building and amenities to fishermen, L&T's rural development programs which touches the lives of people in remote villages and isolated communities through comprehensive packages of medical services to the communities and ACC’s contribution to the rebuilding effort after the 2001 earthquake in Gujarat which was unique. Gujarat Livelihood Promotion Co. Ltd (GLPCL) signed agreements at the Vibrant Gujarat forum, with at least 30 firms, including Reliance Retail Ltd, Tata Motors Ltd, Future Group, ITC Ltd, Arvind Ltd and National Spot Exchange Ltd to create livelihood options for the rural poor. These case studies and interventions shall be showcased and understood, thereby leading to more effective and long lasting change in how CSR is currently undertaken.

Self Sustainable Business models. An Effective form of CSR investments. In India, most CSR funds are utilized to dole out charities. There is a dearth of awareness of business models that lead to sustainable and inclusive growth and development in society. Most CSR activities are charity and fail to build the capabilities of the beneficiaries. Through this seminar, we propose to discuss methods of more effective use of CSR funds, educate people about CSR and the need to move from charity to focused CSR, create a platform to increase the scope of PPP models and provide ideas and options for meaningful CSR. The seminar will take the participants through CSR models/case studies of sustainable projects which are currently running successfully and the different sectors, areas and social issues where sustainable models could be undertaken and how corporates can execute these ideas. This is an endeavor to build alliances, provide opportunities for people to participate and engage in solving pressing social issues and share experiences of agencies involved in social development, social change and CSR operations.The speakers are reputed academicians, development professionals, corporate employees, and NGO spear headers, amongst others who have achieved commendable laurels in their chosen fields.

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The Gandhian principle of trusteeship (Gandhi M.K. Harijan, 1927) expresses the inherent duties of the business enterprises to its consumers, workers, community and the mutual responsibilities of these to one another.

INDIA AND CSR

THE TRUSTEESHIP PRINCIPLE Indian industrialists were pressurized to demonstrate their Charity and philanthropy is not new to India. Mahatma Gandhi

commitment to social progress during the independence movement,

spoke of the trusteeship principle. The trusteeship principle is about

which resulted in the development of the notion of trusteeship, by

equity and sustainable growth.

Gandhi, whereby the owners of property would voluntarily manage their

The principle asserts that organisations have an obligation to see

wealth on behalf of the people. Gandhi’s influence prompted various

that the public’s interests are served by corporate actions and the way

Indian companies to play active roles in nation building and promoting

in which profits are spent.The Gandhi ashram was established and

socioeconomic development during the 20th century. This trend had

supported with the charitable acts of big industrialists and philanthropic

continued till date and has increased in scope and extent.

individuals.

IN THE NEWS

environment; and 6. Activities for social

2011- The new Companies Bill will

CSR Voluntary Guidelines

and inclusive development.

make it mandatory for private

The guidelines were issued at the

India is one of the latest Governments

companies to contribute a certain

conclusion of the first India Corporate

to reference the UN Global Compact

amount towards corporate social

Week in late December 2009

principles in formal CSR guidelines or

responsibility activities. The Ministry of

The guidelines set out six core elements

strategies, as has previously been done

Company Affairs (MCA) has said that

for companies to address

in Norway and Denmark.

companies will have to spend 2% of the

Covered in the core elements are areas

2009/10- The government made it

average net profit on CSR. India Inc. If

related to 1. Care for all stakeholders; 2.

mandatory for all public sector oil

approved, mandatory CSR will be made

Ethical functioning; 3. Respect for

companies to spend 2 per cent of their

part of the amendment to the

workers' rights and welfare; 4. Respect

net profits on corporate social

Companies Bill

for human rights; 5.  Respect for the

responsibility.

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RECOMMENDATIONS Organisations, blogs, books, movies, documentaries, movements, events BLOGS craneandmatten.blogspot.com Two business school professors from the Schulich School of Business in Toronto, Canada, best known for their books and research articles on business ethics and corporate citizenship. Have been writing the Crane and Matten blog since 2008, offering unique insight on a range of issues from across the globe.

THE 4TH WHEEL A Corporate Social Responsibility consultancy, advocacy and research firm. The name signifies the business sector in addition to the other three integral wheels- the state, NGOs and international development organisations, required and capable of driving human development.

Services

blog.bsr.org

FOR CORPORATES

The business of a better world (BSR) works with its global

Strategising and planning CSR projects/ Needs Assessment

network of more than 250 member companies to develop

Project implementation for corporate firms

sustainable business strategies and solutions through

Channel corporate decision making in socially desirable activities

consulting, research, and crosssector collaboration.

Monitoring and Evaluation of existing CSR/social and human development projects Stakeholder identification/mapping/ engagement

ORGANISATIONS

Stakeholder Cause promotions

SustainAbility

Compilation of CSR reports

A think tank and strategy consultancy working to inspire

Collaborations with NGOs

transformative business leadership on the sustainability

Creating partnerships between Corporates, the State and Civil society

agenda Read more about them on www.sustainability.com

FOR NGOs Project development

Business in the Community (BITC) Works with over 800 UK companies committed to improving their impact on society, and operates throughout the UK. BITC seeks to positively shape business impact on the environment, in the marketplace, in the workplace and in the

Events planning Content writing IT support

community. It is an organisation that works with businesses

ADVOCACY, RESEARCH AND EDUCATION

to improve their Corporate Social Responsibility (CSR)

Promoting CSR practices

credentials, offering advice and programmes tailored to

Heighten public awareness and create platforms for discussion and

meet their needs.

suggestions regarding CSR and its potential through seminars and

Read more about them on www.bitc.org.uk

workshops Developing case studies and best case practices

WRITE TO US Inviting views, suggestions and feedback from corporates, NGOs, Government employees, professionals, media personnel, entrepreneurs, businessmen, academicians, social institutions, students and anyone interested in the well being of society

Editor Sharon Weir

4th Wheel 16 Pahelgaon bungalows, near judges bungalow road, Ahmedabad, 380015 www.the4thwheel.com http://the4thwheel.wordpress.com/ newsletter@the4thwheel.com +919825885044, 079-40092492

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Content Payal Mulchandani Design Tania Lakadawala Art & Logos Sameer Singh & Pravin Mishra Marketing & Circulation Salomi Gupte


4th Wheel March 2011 Newsletter