'CSR: be good before doing good'

It's perhaps best for us to reflect again on the importance of CSR, why we engage in it, the issues of its practice and how we can improve its scope for a better tomorrow, MTI Consulting, CEO Hilmy Cader told the Best Corporate Citizen Award ceremony organised by the Ceylon Chamber of Commerce recently.

Excerpts from his speech.

He said that it's no surprise that corporate greed is widespread. Though the definition of 'corporate greed' may be quite contentious, it is perhaps synonymous with the persistent linear drive for higher profits with no concern of the consequences, such as resource depletion and various other residual effects.

'Powerty'

That's why CSR is so important today. Closing the gap between poverty and 'powerty' is pivotal in ensuring the bottom of the pyramid has a chance to begin scaling up to the top.

With an increasing number of organisations in Sri Lanka possessing a global reach - the resources, insights, capacity and efficiency they abundantly possess means that it is no longer solely the government's responsibility to solve social challenges.

What must be ingrained into corporate culture is the need to give back to society what they so profitably reap from it.

"CSR is neither justifying a loss-making enterprise nor playing 'Robin Hood'."

The real reasons for companies engaging in CSR are often masked by events glamorously awarding them for their various initiatives.

First, there's true benevolence. There's no denying the fact that some companies do it simply for the purpose of doing good.

But on the other end of the spectrum, there are egotistical reasons, doing it just because everyone else is doing it and you need to have your CSR activities held on a pedestal as well.

In the past 10 to 12 years, CSR has become quite 'fashionable'. CSR Awards may bring out the winners, but in the process end up creating the need to unnecessarily tick off initiatives, showcase and then design glossy sustainability reports.

Then, there are companies that undertake CSR purely due to the guilt caused by their business operations. They realise that their core operations are immoral and so they carry out as much CSR as possible to make up for it.

Peer pressure is another driver of CSR when it's just not right for your company to look naked when every other company wraps a glossy CSR project around themselves.

Of course, there's also CSR purely for marketing and ROI that comes along with it, which often blurs the line between CSR and traditional marketing (with a social aspect).

Finally there are a handful of companies that are actually conscious, concerned and wish to make a contribution to society.

In the end your conscience should be the only judge of whether you really deserve a CSR award. Whether you've undertaken CSR for a contributory and benevolent purpose or for use as a marketing and motivational tool is a question only you can answer.

It is, however, important to note that CSR does not entail running a loss-making enterprise simply to give back to society and further, it definitely does not mean playing 'Robin Hood' - trying to cover up a sin through your contributions to society.

Sanity or vanity?

Before carrying out CSR work, we generally assume that companies have complied, acted responsibly and do possess a high level of corporate governance.

It is only then that one can assume a company is in a position to help others. However, if we for a moment consider global corporate crime - ten global banks in the past five years have paid over US $260 billion in fines for reasons ranging from money laundering for Mexican drug lords to faking indices and exchange rates.

One energy company has had to pay around US $ 61 billion in fines, which is close to the GDP of Sri Lanka, while four major pharmaceutical companies have had to pay over US $ 6 billion in fines over the past five years.

We may boast about our CSR initiatives around the world, but this level of corruption is truly the reality of corporate practices today. Companies really have to 'be good' before they decide to 'do good'.

CSR in practice

Let's touch on a few issues with CSR in practice, particularly in the Sri Lankan context. There's a lot of pressure on organisations to 'tick-off', because if your annual report doesn't have an area on sustainability with glossy visuals and diagrams, then you feel quite naked.

There's greater focus on how good we feel by carrying out a CSR initiative as opposed to the impact the initiative actually creates. This entire focus is based on the concept of recipient versus beneficiary.

Companies tend to assume a 'handout' mentality, yet does it really benefit society?

Many CSR initiatives tend to be idea-driven - companies attempting to be creative with their CSR to differentiate themselves from other similar activities.

Doing so, however, means that companies ignore the bare basics of what society actually needs from them.

One of the key issues of CSR in Sri Lanka is the abundance and proliferation of micro-initiatives.

For example, taking the top 10 public listed companies, their CSR initiatives, when clustered, fall into 28 causes, ranging from giving spectacles to water management.

The problem here is that these causes are far too diverse.

The issue, however, does not exist only at the corporate level. An analysis of Rotary clubs in Sri Lanka shows us that they spend much of their energy on around 23 causes.

Micro-initiatives ignore the dire needs of society and illustrate - that among Sri Lankan companies - there is a great lack of focus on social issues. As much as companies focus on their domains, markets and customers, their CSR too needs focus.

Lacking an understanding of human suffering essentially holds them back from conducting impactful initiatives. Do we really understand what poverty is, compared to how well we dig into and understand consumers?

Or do we simply sign a cheque and hand it out with zero understanding just because that's the easiest thing to do?

Perhaps a reason for the abundance of micro-initiatives and the lack of understanding is that there is very little and if so, limited synergies and cooperation between companies on CSR initiatives.

There really should be an award for companies that work together on initiatives compared to simply awarding them on their individual excellence.