Collated and edited by

Huzaifa Khorakiwala

&

Dr S Srinivasan

SOCIALBUSINESS

iiiii

Dedicated to the law of reciprocity

“The more you give the more you get”

viv

AcknowledgementsWe have drawn from numerous sources to put together this

collage of varied fragrances and we thank all of them for

allowing us to spread the noble message of philanthropy.

The Chairperson and Trustees of Wockhardt Foundation have

been highly supportive of this effort which could not have

fructified but for the encouragement by each and every

‘Warrior’ of Wockhardt Foundation.

“We make a living by what we get

we make a life by what we give”

viivi

PrefaceAnu Agha, ex-chairperson of Thermax Limited, famously said,

“We survive by breathing but we can’t say we live to breathe.

Likewise, making money is very important for a business to

survive, but money alone cannot be the reason for business

to exist”. This book draws inspiration from those thought-

provoking words. If money cannot be the reason for a

business to exist, then what is?

The etymology of “business” relates to the state of being

busy either as an individual or society as a whole, doing

commercially viable and profitable work. While no one

questions the profit motive, the line between making

legitimate profit on the one hand and making profit at the

expense of someone else on the other, is indeed wafer-thin.

If profit clashes with social justice, then there is a dilemma,

even a struggle.

Millennia ago, Plato raised several questions that are still at

the heart of many modern conflicts and heated debates.

What is justice? What is goodness? Does a lack of goodness

stem from a lack of knowledge about justice? Plato examined

these questions as separate aspects of a single theme. He

then used his answers to come up with his own rendition of

the perfect existence. He believed that the power of wisdom

is possessed most abundantly in kings and philosophers and

that others should accept the authority of those wise and

morally superior leaders.

Plato and many other academics throughout history, tended

to think of business as a necessary evil in society and not as

something worthy of serious philosophical consideration. You

cannot serve God and Mammon at the same time, said The

Bible (Matthew 6:19-21). The Bible teaches that there are two

aspects to human nature. First, we are created in the image

of God and thus able to control the economic system. But

second, human beings are sinful and thus tend towards greed

and exploitation. This points to the need to protect

individuals from human sinfulness in the economic system.

The twenty first century has begun with similar questions but

worded differently. The arguments against bailing out

institutions that were on the wrong side of ethics and those

against lopsided compensation to top brass of corporate

bodies are examples.

According to Peter Drucker, The Guru of all Gurus,

management by objective works if you know the

organisational objective but ninety percent of the time you

don’t. While Drucker has dealt with countless business issues

in numerous publications over his long life, he also inquires

into the principles and concepts that underlie commercial

activity and organisational structure and he asks what ought

to be the mission of a business and, in particular, how can we

reconcile a business mission with conflicting interests in the

marketplace and society.

In a manner of speaking, social business can be distilled and

even dismissed as running a non-profit organisation. But

1viii

there is more to this issue than the simplistic dichotomy that

the legal system provides for. The standard and simplistic

argument would be, if you want to make profit, do business.

If you don’t want to make profit and still work, form a trust

and do charity. Well, that is the basic premise we want to

examine in this book. Can we indeed be in accordance with

the rules of business and yet look beyond the profit motive?

Obviously, this is not the first time that this issue is being

addressed in a book form. And surely this is not going to be

the last time either. Ours is an attempt to look at the familiar

and look for the unfamiliar if possible. See if the scheme can

be redrawn so as to preserve the profit component, yet serve

social justice in every possible aspect of the business. We

have no claim to infallibility. We don’t believe in dogmas

either. We will make a sincere attempt to look at all facts in

as rational a manner as possible and redraw the landscape.

The final outcome is for you to judge. Happy reading!

ContentsHistorical perspective..........................................02

Business models ..................................................20

CSR ......................................................................40

Downside of CSR..................................................56

CEO-speak ............................................................72

Smart partnering.................................................86

CSE.......................................................................98

Innovations .........................................................112

Sustainability......................................................122

The road ahead..................................................144

Case studies .......................................................162

Post-script .........................................................200

Index ..................................................................202

About the authors .............................................206

2

HISTORICALPERSPECTIVE

TO MANY OF US, THE RECENT SPURT IN

HEADLINES ABOUT CORPORATE SOCIAL

RESPONSIBILITY AND SOCIAL AWARENESS

OF BUSINESS HOUSES MAY GIVE THE

IMPRESSION THAT MANKIND IS WAKING UP

TO NEW EQUATIONS WITH WELFARE

EFFORTS. FAR FROM IT. IN ANCIENT

MESOPOTAMIA, AROUND 1700 BC, KING

HAMMURABI INTRODUCED A CODE IN

WHICH BUILDERS, INNKEEPERS OR

FARMERS WERE PUT TO DEATH IF THEIR

NEGLIGENCE CAUSED THE DEATHS OF

OTHERS, OR MAJOR INCONVENIENCE TO

LOCAL CITIZENS. IN ANCIENT ROME,

SENATORS GRUMBLED ABOUT THE FAILURE

OF BUSINESSES TO CONTRIBUTE SUFFICIENT

TAXES TO FUND THEIR MILITARY

CAMPAIGNS, WHILE IN 1622, DISGRUNTLED

SHAREHOLDERS IN THE DUTCH EAST INDIA

COMPANY STARTED ISSUING PAMPHLETS

COMPLAINING ABOUT MANAGEMENT

SECRECY AND “SELF ENRICHMENT”.

3

HISTORICALPERSPECTIVE

In The Bible, there is

condemnation for charging

interests on debts. Jesus, in

some of his parables, such as

the Prodigal Son and the

Good Samaritan, exemplifies

the sharing of wealth. The

beatitudes too foster that

sense of community. The

concern on the part of the

Catholic Church for the poor

and underprivileged has

continued even to the 20th

and 21st centuries. The

Catholic Church in Latin

America developed

“Liberation Theology” in the

1960s to address the social

needs of the ‘wretched of

the earth.’ It emphasised the

fact that Christ had a

‘preferential option for the

poor.’

Islam places a premium on

charity. Charity has been

institutionalised wherein a

Muslim is supposed to

compulsorily donate a

minimum of 2.5% of his

income in charity which is

termed as "Zakaat".

Besides this there is also

the importance given to

"Sadaka" which is not

mandatory but also

desirable. "Sadaka" also is

charity and by Prophetic

traditions and sayings is

said to reduce calamities,

cure illnesses, increase

livelihood and help man

seek proximity to God. The

concept of giving is widely

prevalent in the Muslim

world and forms one of the

fundamental principles of

Islam.

In Hindu scriptures,

Vasishta Samhita says a

noble man shall not lend

anything at interest acting

like usurers. According to

this Samhita, 'He who

acquires property cheap

and gives it for a high price

is called a usurer and must

be blamed’. Charity finds

other mentions in Hindu

scriptures too. The

Mahabharata has a pivotal

character by name Karna

who was the symbol of the

nobility of giving even at

the risk of his own personal

safety. Giving one’s

possessions away in charity

ensured one a place in the

heaven and even

permanent relief from the

cycle of birth and death.

54

76

PrometheusPhilanthropy, as a concept, deserves a closer look before we

proceed to look at social business concepts. According to

wikipedia (accessed November 2009), the word was coined

2,500 years ago in ancient Greece, by the playwright

Aeschylus. According to mythology, the primitive creatures

that were created to be human, at first had no knowledge,

skills, or culture of any kind, so they lived in caves, in the

dark, in constant fear for their lives. Zeus, the tyrannical king

of the gods, decided to destroy them, but Prometheus, a

Titan whose name meant “forethought,” out of his

“philanthropos tropos” or “humanity-loving character” gave

them two empowering, life-enhancing, gifts: fire, symbolising

all knowledge, skills, technology, arts and science; and “blind

hope” or optimism. The two went together: with fire, humans

could be optimistic; with optimism, they could use fire

constructively, to improve the human condition. The new

word, philanthropos, combined two words: philos, or “loving”

in the sense of benefiting, caring for, nourishing; and

anthropos, “humankind”, “humanity”, or “human-ness”.

In the West, when Constantine I legalised the Christian

Church, the church set up poorhouses, homes for the aged,

hospitals and orphanages. These were often funded, at least

in part, from grants from the Empire. Over a period of time,

the church developed a system for circulating the

consumables to the poor: associated with each parish was a

diaconium or office of the deacon. As there was no effective

bureaucracy below city government that was capable of

charitable activities, the clergy served this role in the West

up through the 18th century. During the Middle Ages, the

Christian church had vast influence on European society and

charity was considered to be a responsibility and a sign of

one’s piety. This charity was in the form of direct relief (for

example, giving money, food, or other material goods to

alleviate a particular need), as opposed to trying to change

the root causes of poverty.

In more recent times, the movement began primarily in the

United States and England. After the end of feudalism, the

poor were seen as a more direct threat to the social order

and so the state formed an organised system to care for

them. In England, the Poor Law served this purpose. This

system of laws sorted the poor into different categories, such

as the able bodied poor, the impotent poor and the idle poor.

This system developed different responses to these different

groups.

The 19th century ushered in the Industrial Revolution. There

was a great leap in technological and scientific achievement,

but there was also a great migration to urban areas

throughout the Western world. This led to many social

problems, which in turn led to an increase in social activism.

Also, with the dawn of the 19th century came a great

“missionary” push from many Protestant denominations.

Some of these mission efforts (urban missions), attempted to

resolve the problems inherent in large cities like poverty,

prostitution, disease and other afflictions. In the United

States, workers known as “friendly visitors”, stipended by

church and other charitable bodies, worked through direct

relief, prayer and evangelism to alleviate these problems. In

Europe, chaplains or almoners were appointed to

administrate the church’s mission to the poor.

98

Today, multiple definitions of “philanthropy” are available:

John W. Gardner’s “private initiatives for the public good”;

Robert Payton’s “voluntary action for the public good”;

Lester Salamon’s “the private giving of time or valuables for

public purposes” and Robert Bremner’s “the aim of

philanthropy is improvement in the quality of human life”.

Combining these to connect modern philanthropy with its

entire previous history, “philanthropy” may best be defined

as, “private initiatives for public good, focusing on quality of

life.” This distinguishes it from government (public initiatives

for public good) and business (private initiatives for private

good).

Out of the countless noblemen and women who worked

tirelessly for the poor, weak and the needy in the more

recent centuries, two towering personalities stand out.

Benjamin FranklinA noted polymath and one of the Founding Fathers of USA,

Benjamin Franklin (1709-1790) was a leading author and

printer, political theorist, scientist, inventor, civic activist,

statesman, soldier and diplomat. Regarded in his own time as

“the first great American,” idolised in 18th-century Europe

and America as a model of American values and especially of

the Enlightenment in America, the key to Ben Franklin’s life

was his Classical and classically American, philanthropy. He

self-consciously and purposefully oriented his life around

voluntary public service. Even his political rival in France,

John Adams, avowed that “there was scarcely a peasant or

citizen” who “did not consider him as a friend to humankind.”

Immanuel Kant, the leading philosopher of the German

Enlightenment, called Franklin the “New Prometheus” for

stealing fire from the heavens in his scientific experiments

with lightning as electricity, for the benefit of mankind.

Franklin had direct connections with the Scottish

Enlightenment; he was called “Dr. Franklin” because he had

been awarded honorary degrees from the three Scottish

Universities, St. Andrews, Glasgow and Edinburgh and while

travelling, there he had personally befriended the leading

Scottish Enlightenment thinkers.

In Philadelphia, Franklin created perhaps the first personal

system of civic philanthropy in America. As a young

tradesman in 1727, he formed the “Junto”: a 12-member club

that met on Friday evenings to discuss current issues and

events. One of the four qualifications for membership was

the “love of mankind in general”. Two years later he founded

the Philadelphia Gazette and for the next thirty years he used

the Junto as a sort of think-tank to generate and vet

philanthropic ideas and the Gazette to test and mobilise

public support, recruit volunteers and fund-raise. This system

was heroically productive and beneficial, creating America’s

first subscription library (1731), a volunteer fire association, a

fire insurance association, the American Philosophical

Society (1743-4), an “academy” (1750, which became the

University of Pennsylvania), a hospital (1752 through

fundraising with a challenge grant), the paving and patrolling

of public streets, the finance and construction of a civic

meeting house and many others.

11

in the Netherlands. By 1911, Carnegie had given away a huge

amount of money amounting to 90 percent of his fortune.

As a child, Andrew Carnegie learned values from his parents.

From his father, Andrew learned the value of helping those

who are less fortunate. Carnegie’s father, Will Carnegie, was

part of a British working class movement in Scotland, which

believed in making conditions better for the working man.

Will Carnegie was a weaver but when he was unable to find

work in America he tried to produce and sell his own cloth.

Carnegie became the wealthiest human being of his time, but

he was convinced of the merits of poverty in developing

character. His vast wealth, produced by the sweat of his

fellowmen he lovingly called “the toilers of Pittsburgh,” he

returned to the city he loved, to America, to Scotland, to

England and to the world. He was not a religious person, but

he spoke in spiritual terms when expressing what he hoped

his benefactions would accomplish in the world and in the

lives of those very toilers whose labour had produced his

wealth (Value based management, Jaico, 2005).

10

Andrew Carnegie Andrew Carnegie (1835-1919) was born poor in a Scottish

family that migrated to the United States but he worked his

way up to become a powerful businessman and a name to

reckon with in the American steel industry during his life.

Today, he is remembered as an industrialist, multi-

millionaire and philanthropist.

Carnegie preached and practiced the “Gospel of Wealth,” by

which he meant that wealthy people were morally obligated

to give their money back to others in society because they

got it all from them in the first place. Carnegie had made

some charitable donations before he announced his

retirement in 1901, but after that year, giving his money

away became his main occupation. In 1902 he founded the

Carnegie Institution to fund scientific research and

established a pension fund for teachers with a $10 million

donation, which in today’s equivalent could easily run into

billions.

In his childhood and early youth, Carnegie lived near Colonel

James Anderson, a rich man who allowed any working boy to

use his personal library for free. Carnegie never forgot

Colonel Anderson’s generosity. No wonder, he supported

education to the hilt; he gave money to towns and cities to

build more than 2,000 public libraries. He also gave $125

million to a foundation called the Carnegie Corporation to aid

colleges and other schools.

Carnegie was a lover of peace. He established the Carnegie

Endowment for International Peace and funded the building

of the Hague Palace of Peace, which houses the World Court,

1312

Here are some excerpts fromAndrew Carnegie’s writings

“Man does not live by bread alone. I have knownmillionaires starving for lack of the true nutriment whichalone can sustain all that is human in man and I knowworkmen and many so-called poor men, who revel inluxuries beyond the power of those millionaires to reach.It is the mind that makes the body rich. There is no classso pitiably wretched as that which possesses money andnothing else. Money can only be the useful drudge ofthings immeasurably higher than itself. Exalted beyondthis, as it sometimes is, it plays the beast. My aspirationstake a higher flight. Mine be it to have contributed to theenlightenment and the joys of the mind, to the things ofthe spirit, to all that tends to bring into the lives of thetoilers of Pittsburgh sweetness and light. I hold this thenoblest possible use of wealth”.

The manwho diesrich dies

disgraced.

“This, then, is held to be the dutyof the man of wealth: first, to setan example of modestunostentatious living, shunningdisplay; to provide moderately forthe legitimate wants of thosedependent upon him; and, afterdoing so, to consider all surplusrevenues which come to himsimply as trust funds which he isstrictly bound as a matter of dutyto administer in the manner which,in his judgment, is best calculatedto produce the most beneficialresults for the community”.

Philosophy of businessAndrew Carnegie has been called a “corporate paternalist”

by some scholars who believe that the concept put forth by

him has evolved into what we now call “corporate social

responsibility” (CSR). In 1929, the Dean of Harvard Business

School, Wallace Donham, commented within an address

delivered at NorthWestern University: ‘Business started long

centuries before the dawn of history, but business as we now

know it is new – new in its broadening scope, new in its social

significance. Business has not learned how to handle these

changes, nor does it recognise the magnitude of its

responsibilities for the future of civilisation’.

Nearly a century later, the scenario does not appear to have

changed much. We now have a globalised economy, an ever-

expanding internet, instant communication cutting across

time zones, changed business environment, genetically

modified foods and so on, but the fundamental philosophy of

business houses has apparently remained unchanged. Social

and environmental concern about business could be an issue

which every new generation would like to think that it has

discovered.

Business touches nearly every aspect of our lives, but very

few thinkers have shown an interest in it from a rules or

philosophical perspective until recently. Indeed, few

philosophers can be said to have paid much attention to the

business enterprise itself, prior to the latter part of the 20th

century. Many philosophers tended to look askance at

commercial activity, believing, as Plato did, that only the

worst sort of people are involved in such matters.

15

business theory. Bishop Butler claimed that pursuing the

public good was the best way of advancing one’s own good

since the two were necessarily identical. Lord Shaftesbury

turned the convergence of public and private good around,

claiming that acting in accordance with ones self interest will

produce socially beneficial results. An underlying unifying

force that Shaftesbury called the “Will of Nature” maintains

equilibrium, congruency and harmony. This force, if it is to

operate freely, requires the individual pursuit of rational self-

interest and the preservation and advancement of the self.

It is fair to say that most modern philosophers of business

are involved in other philosophical or scholarly pursuits and

that they come to the philosophy of business as a sub-

specialty, or only indirectly because it relates to another area

of interest. Thus, they are primarily philosophers dealing

with other subjects, economists, or business management

theorists. If one were to examine the philosophy

departments in most universities, today, one would find

precious few courses in the philosophy of business (as

opposed to a growing number of business ethics or applied

ethics courses). There are indications that a growing number

of philosophers with formal training in academic philosophy

will come to specialise in the philosophy of business.

Perhaps the best known modern philosopher of business is

Peter Drucker, whose publications have had a profound

influence on management and organisational theory,

generally and on how we think of the business enterprise.

More often than not, people who think about business issues

14

During the 17th and 18th centuries, thinkers like Rousseau

created the intellectual foundation upon which modern

business and capitalism was built. A basic principle in

business practice and economic theory is the notion of free

will. Thomas Hobbes, John Locke and Jean-Jacques Rousseau

acknowledged that morally, we are free agents, able to make

decisions, control our own destiny and engage in a social

contract. Thus an entrepreneur freely decides to pursue a

risky venture in the hope of receiving great rewards.

Likewise, a consumer is entitled to his choice of what to buy

and at what price.

It was also assumed that people are fundamentally rational.

Capitalism would rest on that assumption even if it is found

wanting on occasion. For two hundred years economics was

founded on the assumption of Homo economicus. The key

ethical unit was assumed to be the individual. Social

institutions were thought to be secondary structures that

individuals could use for their own purposes. Some scholars

like Milton Friedman used this assumption in arguing that

corporations have no moral responsibility because, they are

not individuals capable of responding to moral claims. Only

the individuals within the business enterprise have a moral

responsibility.

An important concept underlying modern business is egoism

where the core moral obligation was to oneself and all

actions are based on motivation of self-interest. A group of

thinkers belonging to the “enlightened self-interest school”

developed this into one of the core concepts of modern

1716

are considering it from an applied perspective, which is to

say, what is the best or most effective means of transacting

commerce or managing the enterprise, with some goal in

mind, usually profitability, improving employee relations, or

marketing. Drucker may not have answers to all questions in

business ethics or philosophy but he stimulated business

thinking along new lines with their fall-out effect on the

philosophy of business.

There is a close relationship between the philosophy of

business and business ethics. Philosophers specialising in

business ethics are primarily interested in how business

people ought to conduct themselves in the marketplace and

in society. Philosopher Norman Bowie adopts Kant’s versions

of the imperative for ensuring ethical business conduct and

he strongly believes that the people within a business must

be seen as a kingdom of ends and not merely treated as

means to an end.

With increases in government laws, regulations and court

decisions regarding business in the past decades, ethical

practice has conveniently changed from doing “the right

thing” as conscience would dictate to doing what complies

with the law or isn’t explicitly illegal. Thus there’s been a

gradual relaxation of internal moral compass and greater

reliance on external parameters, as in “if it isn’t illegal, it

must be all right,” as well as a new skillset in finding “legal

loopholes” in stretching the boundaries of compliance.

Purpose of businessSome would argue that the main purpose of a business is to

maximise profits for its owners, or in the case of a publicly-

traded company, its stockholders. Others would say that its

principal purpose is to serve the interests of a larger group of

stakeholders, including employees, customers and even

society as a whole. Most philosophers would agree, however,

that business activities ought to comport with legal and

moral strictures.

Peter Drucker defined the very purpose of business as

creating a satisfied customer. This definition is also useful in

evaluating to what extent a business is succeeding in

fulfilling its stated purpose. Many would hold that concepts

such as economic value added (EVA) are useful in balancing

profit-making objectives with other ends. They argue that

sustainable financial returns are not possible without taking

into account the aspirations and interests of other

stakeholders (customers, employees, society, environment).

This conception suggests that a principal challenge for a

business is to balance the interests of parties affected by the

business, interests that are sometimes in conflict with one

another.

Some believe that a business is essentially someone’s

property and, as such, that its owners have the right to

dispose of it as they see fit, within the confines of law and

morality. They do not believe that workers or consumers

have special rights over the property, other than the right

not to be harmed by its use without their consent. In this

conception, workers voluntarily exchange their labour for

1918

wages from the business owner; they have no more right to

tell the owner how he will dispose of his property than the

owner has to tell them how to spend their wages, which is

property belonging to the workers. Similarly, assuming the

business has purveyed its goods honestly and with full

disclosure, consumers have no inherent rights to govern the

business, which belongs to someone else. A property owner’s

rights are nevertheless not unlimited and that they are

constrained by morality. Thus, a home owner cannot burn

down his home and thereby jeopardise the entire

neighborhood. Similarly, a business does not have an

unlimited right to pollute the air in the manufacturing

process.

The mission of a business is basically what it does e.g., make

cars, sell computers and so on. The philosophical question

arises, are some missions immoral? For example, if a

business intends to manufacture and sell a recreational drug

that is known to be harmful to the users, is it immoral to do

so? What if the business fully discloses the risks and non-

users are not put at any unnecessary risk as a result? One

could easily ask such questions of guns, sex, motorcycle

helmets, dangerous amusement park rides and so forth.

Some sociologists would suggest that a business ought to be

allowed to sell virtually anything that does not harm

unwilling, rational participants (i.e., innocent bystanders),

provided the business fully discloses the dangers to those

who purchase its products. Others, of course, would say that

business and society have duties to protect people from

exercising poor judgment. A libertarian might say that such

proscriptions are laden with subjective valuations and that

people have a right to choose for themselves, that is, as long

as they do not harm others.

Regardless of how one thinks about these matters, it is

undeniable that a business enterprise represents an

increasingly important part of people’s lives, especially the

employees working there, for, in many ways, the business

constitutes a person’s principal social group and it amounts

to a replacement for the village or tribe that was the central

social setting for our ancestors. In many ways, one’s

affiliation with a business is the most important social

institution most of us have outside of the family.

2120

IN SIMPLE TERMS, TRADITIONAL

BUSINESSES REPRESENT THE ESSENCE OF

CAPITALISM WHICH IN TODAY’S UNIPOLAR

WORLD, IS UNARGUABLY THE DOMINANT

ECONOMIC SYSTEM. WITHIN IT, THE MEANS

OF PRODUCTION AND DISTRIBUTION ARE

OWNED BY INDIVIDUALS: PRIVATE

OWNERSHIP AND FREE ENTERPRISE ARE

BELIEVED TO LEAD TO MORE EFFICIENCY,

LOWER PRICES, BETTER PRODUCTS AND

RISING PROSPERITY. SOCIALISM IN

CONTRAST ADVOCATES THE OWNERSHIP

AND CONTROL OF THE MEANS OF

PRODUCTION AND INDUSTRY BY THE

COMMUNITY AS A WHOLE: THE COMMUNITY

IS BELIEVED TO BE BOTH MORE JUST AND

MORE EFFICIENT THROUGH CENTRAL

PLANNING. IN MARXIST THEORY, SOCIALISM

REPRESENTS THE STAGE FOLLOWING

CAPITALISM IN A STATE TRANSFORMING TO

COMMUNISM; FOR MANY, HOWEVER, IT IS A

GOAL IN ITSELF.

Businessm dels

2322

Individuals engage in the capitalist economy as consumers,

labourers and investors. As consumers, individuals influence

production patterns through their purchase decisions, as

producers will change production to produce what

consumers want to buy. As labourers, individuals may decide

which jobs to prepare for and in which markets to look for

work. As investors they decide how much of their income to

save and how to invest their savings. These savings, which

become investments, provide much of the money that

businesses need to grow.

Business firms decide what to produce and where this

production should occur. They also purchase the right inputs

(materials, labour and capital). Businesses try to influence

consumer purchase decisions through marketing and

advertisement as well as the creation of new and improved

products. What drives the capitalist economy is the constant

search for profits (revenues minus expenses). This need for

profits, known as the profit motive, ensures that companies

produce the goods and services that consumers desire and

are able to buy. In order to be successful, firms must sell a

certain quantity of their products at a price high enough to

yield a profit. A business may consequently lose money if

sales fall too low or costs are incurred that are too high. The

profit motive also encourages firms to operate efficiently by

using their resources in the most productive manner. By

using less materials, labour or capital, a firm can cut its

production costs which can lead to increased profits.

Commerce plays an important role in determining the growth

rate of the capitalist economy. An economy grows when the

total value of goods and services produced rises. This growth

requires investment in infrastructure, capital and other

resources necessary in production. In a capitalist nation,

businesses decide when and how much they want to invest

for these purposes.

The price of a product is determined by a balance between

production at each price (supply) and the desires of those

with purchasing power at each price (demand). This results in

a market equilibrium, with a given quantity sold of the

product. A rise in demand would result in an increase in price

and an increase in output.

The market is a term used by economists to describe a

central exchange through which people are able to buy and

sell goods and services. In a capitalist economy, the prices of

goods and services are controlled mainly through supply and

demand and competition. Supply is the amount of a good or

service produced by a firm and available for sale. Demand is

the amount that people are willing to buy at a specific price.

Prices tend to rise when demand exceeds supply and fall

when supply exceeds demand, so that the market is able to

coordinate itself through pricing until a new equilibrium

price and quantity is reached. Competition arises when many

producers are trying to sell the same or similar kinds of

products to the same buyers.

Competition is important in capitalist economies because it

leads to innovation and more reasonable prices as firms that

charge lower prices or improve the quality of their

production can take buyers away from its competitors.

2524

Furthermore, without competition, a monopoly or cartel may

develop. A monopoly occurs when a firm supplies the total

output in the market and means that the firm can limit

output and raise prices because it has no fear of competition.

A cartel is a group of firms that act together in a

monopolistic manner to control output and raise prices.

Many countries have competition laws that prohibit

monopolies and cartels from forming. However, even though

antimonopoly laws exist, large corporations can form near

enterprises in some industries. Such firms can temporarily

drop prices and accept losses to prevent competition from

entering the market and then raise them again once the

threat of entry is reduced. In many capitalist nations, public

utilities (communications, gas, electricity, etc), are able to

operate as a monopoly under government regulation due to

high economies of scale.

Income in a capitalist economy depends primarily on what

skills are in demand and what skills are currently being

supplied. People who have skills that are in scarce supply are

worth a lot more in the market and can attract higher

incomes. Competition among employers for workers and

among workers for jobs, help determine wage rates. Firms

need to pay high enough wages to attract the appropriate

workers; however, when jobs are scarce workers may accept

lower wages than when jobs are plentiful. Labour unions and

the government also influence wages in capitalist nations.

Unions act to represent labourers in negotiations with

employers over such things as wage rates and acceptable

working conditions. Most countries have an established

minimum wage and other government agencies work to

establish safety standards.

In capitalist nations, the government allows for private

property and individuals are allowed to work where they

please. The government also generally permits firms to

determine what wages they will pay and what prices they will

charge for their products. The government also carries out a

number of important economic functions. For instance, it

issues money, supervises public utilities and enforces private

contracts. Laws, such as policy competition, protect against

competition and prohibit unfair business practices.

Government agencies regulate the standards of service in

many industries, such as airlines and broadcasting, as well as

financing a wide range of programmes. In addition, the

government regulates the flow of capital and uses things

such as the interest rate to control factors such as inflation

and unemployment

The merits of capitalistic economy can be briefly stated as

follows:

The right to own property is central to man’s existence.

Private ownership of land, businesses and goods gives

individuals security. Ownership brings responsibility and

allows individuals to plan for themselves and their families.

The drive to succeed as an individual is the strongest

motivating factor a human being can feel in their work

The market determines the price of products and services,

including pay – the price of labour. If some people are paid

2726

high wages, it is because they have unique talents which are

worth paying for.

Competition yields better products and more efficient

processes in all fields of man’s activity.

Capitalism isn’t an uncontrolled monolithic system.

Taxation is a capitalist creation and almost all capitalists

accept a role for state regulation to prevent market rigging

and to help those in absolute poverty

The demerits of capitalism can be stated as:

The wealth of the earth belongs to all men or to none.

Under capitalism, property is concentrated in the hands of

relatively few well-off people. This leads to gross inequality,

exploitation and misery.

Capitalism rewards people in perverse ways. Some

sportsmen and company executives earn a thousand times

more than teachers and nurses. Wealth is concentrated in the

hands of the few. The rich get richer, the poor get poorer.

Capitalism does not secure competition automatically.

Monopolies and cartels are often formed with the sheer

motive of profiteering at the cost of the poor

(www.idebate.org accessed November 2009)

Profit vs greedOn 10 December 2008, the-american-catholic.com carried a

fascinating article on the connection between profit and

greed. It is worth a closer look in its entirety including first

person singular: One of the big criticisms of free market

economics is that markets are driven by greed. “Why would

you want to allow markets to set the price of health care,

wages, basic housing, food, education, etc.,” the argument

goes, “when that means subjecting a basic humanitarian

necessity of the dictates of unfettered greed?” I think this

represents a basic misunderstanding of how markets work

and I’m going to try to address that in this post — though I

approach the attempt with some trepidation given the

difficulties of the subject matter and the limits of the

medium.

I’m going to start by conceding a point which those making

the assertion I describe above may consider to prove their

case: The economic view of market dynamics tends to view

individual actors within a market as value maximising agents.

In other words, a market consists of a number of actors each

trying to get the most possible value for the least possible

expense.

Doesn’t this mean that markets are driven by greed? Don’t

we need to encourage people to be something other than

value maximising agents? Well, certainly, there is much more

to life than what you can buy and sell, so people should never

reduce themselves to nothing but value maximising agents.

However I’m going to attempt to argue that markets based

on individual value maximisation are not necessarily merely

exercises in greed.

2928

There are two things which must, I think, be kept in mind

here. First of all, we do not value things equally. And

secondly, a market involves all sides of every transaction

trying to maximise value. The first of these points is key

because the different values which we place on things result

in the motivation for trade. Say that I enjoy doing carpentry

while a buddy of mine enjoys doing car work. It would make

sense for me to help my buddy with building book shelves

and installing wood floors, while he would help me when my

car needs work, because the work of doing carpentry has a

higher “cost” to him than it does to me. (I enjoy it and he

doesn’t. Plus I perhaps have more skills than he does, so I

get it done faster and better as well.)

Since I get enjoyment from doing carpentry (and find it easy)

I would not be willing to pay someone much to do it for me.

But since my friend doesn’t enjoy it, he would pay

significantly more in order to avoid having to do the work

himself. When we specialise and exchange, we both get

increased value from the transaction. In essence, by

exchanging what we don’t want for what we do want, we

create value. Is either one of us being greedy in this

exchange? No. Indeed, you could argue that we’re both

helping each other, even though we are also both maximising

value for ourselves.

Let’s try this with an example which is more often seen as

showing greed. I bought a coat yesterday for $69 (50% off)

which was, according to its tag, made in Vietnam. I’d long

delayed buying a coat, even though the last one I bought nine

years ago was pretty seriously worn out, because I was put

off by the expense of the coats I was seeing. If you grit your

teeth and jog fast from your car to the building you’re

headed for, you can get by a long time in Central Texas

without a coat and the thought that the $150-$250 that many

of the coats I was seeing cost would feed our family for a

week or two, or buy winter clothes for all the kids, or cover

car repairs, or any of another of other items on the list of

household expenses. Now, if the wages for coat makers in

Vietnam were such that it was impossible to buy a coat for

less than $300, I certainly would not begrudge them a better

lifestyle, however I almost certainly would have continued

wearing my shabby old coat and dashing about in

shirtsleeves and put off buying the coat for another year.

And that decision of mine (and of others like me) would mean

that there would be a reduction in the demand for coats.

Which in turn would impact those who make coats.

The current cost of coats thus represents a balance. I want

to cover other household expenses before my own needs.

Coat sellers want to sell more coats and grow their business.

Coat makers want higher wages. Unemployed Vietnamese

workers living near coat factories want jobs and are willing to

get them by offering to work for slightly less than others who

are already skilled in coat making. All of these demands are

weighed and balanced through millions of individual

transactions in the coat market. And everyone gets as much

of what they value as possible given the demands of

everyone else. Some of the people involved in this complex

interweave of desires may indeed be profoundly greedy, but

in a sense, it doesn’t matter. Whether they are greedy or

simply trying to take care of their families by balancing the

many demands upon them, the result is a balance between

31

interest that they can without sacrificing the security of their

savings, so they will check around at a couple of different

banks and/or credit unions and put their money in the most

advantageous place. Similarly, borrowers will shop around

for the lowest possible interest rate.

If the community-owned model of credit unions always

provided greater value to depositors and borrowers, then

they would get all the business and banks be left on the

sidelines. And yet, we know that this is not the case. Why

not?

I think that more than anything else it boils down to

incentive. A bank is constantly incented to stretch itself in

order to both win more customers by offering high interest

to depositors and low interest to borrowers and also to make

those bets pay off in order to make money for the stock

holders and bonuses for the employees. As such, the

management and employees at a for-profit bank are strongly

incented to take good risks, avoid bad risks and find new

ways to make that extra basis point of profit. (A basis point

is 1/100th of a percent and it’s the sort of thing that a lot of

work is put into making when you deal with consumer

financing.)

The community owned, not-for-profit enterprise, on the

other hand, is primarily incented towards stability. At this

particular moment in history, when a lot of banks recently

made bad bets based on poor forecasting, focusing on

stability definitely has its upside. However, because a

community owned enterprise is incented towards stability

while a for-profit enterprise is incented towards risk and

30

the demands of everyone involved.

The idea behind markets is that given that hundreds,

thousands, or millions of people are often involved in a

complex economic supply chain, it’s far easier and more

efficient (and thus in the long run, better for all involved) if to

a great extent, prices are negotiated through free exchange

of goods and labour rather than through seeing prices or

wages where they “ought” to be — because given a

sufficiently complex situation the sum of the knowledge of all

the individual actors involved is much greater than the

understanding of any given regulator could possibly be. Still,

isn’t it a problem to have a market full of people thinking

only of their own profits? Wouldn’t it be better to have

community organisations whose whole purpose is to benefit

everyone involved?

A couple weeks ago I had an extended conversation with

someone over whether credit unions were morally superior

to banks. His argument essentially was, “The express

purpose of a credit union is to provide value for its members,

to whom it is directly accountable. A bank, on the other

hand, is accountable to its stockholders, so it is always going

to put the interests of its customers second to profit.”

If this were the case, it seems to me, then people would

invariably keep their money at credit unions, buy their food

at co-ops, etc. Because while a credit union and a bank have

different business and ownership models, the services they

provide are pretty much the same: They loan money in return

for interest and they pay interest out to depositors.

People with savings will naturally want to get the most

3332

innovation, the result is that a for-profit enterprise will often

provide goods and services at similar or lower cost than a

not-for-profit, while at the same time paying out a small

operating profit to its owners. By providing people with the

incentive of additional gain, for-profit enterprises encourage

the creation of more value than communally owned

enterprises.

One final example: Let us consider two grocery stores in a

small neighborhood. One of them is a community owned co-

op. As a member, you are a part owner and you help elect

the governing board which sets policies and hires employees.

Any reductions in costs are handed back to the members in

the form of lower prices. The other is a family owned

grocery and that family keeps all the profits which are made.

Both the co-op and the grocery will only have customers if

they provide good groceries at low prices. Sure you could

label the grocer as being motivated by “greed” in everything

he does, because if he finds that he can price cereal $0.05

higher per box he gets to keep the money — or if he’s able to

buy honey directly from a local bee-keeper he gets to pocket

the 5% markup that a distributor would have taken.

And yet, in order to make his family money, he needs to

provide customers with good products at low prices. While

his business model may be centered around making a profit,

if he doesn’t do just as good of job of meeting the food co-

op’s mission of “Provide the community with good food at

great prices while maintaining a warm, personal

atmosphere” he won’t have customers and won’t make a

profit. So while you could argue that his ultimate incentive is

to make a profit, the only way he can achieve that goal is to

give himself the personal goal of providing the community

with good food at great prices.

Meanwhile, the fact that he directly benefits his family when

he finds a way to save $1000 here in cost negotiations and

make $500 there where the competitive environment allows

him to raise prices incents the grocer to work harder and

take more calculated risks than the managers of a

community owned food co-op would be. After all, a $2000

increase in monthly profits might mean a great deal to a

family grocery store, but in a food co-op that $2000 would

be spread out across the monthly food budgets of hundreds

of families in small savings on each item until it became

impossible to notice.

Because ownership assigns the benefits gained from cost

savings, increased efficiency, demand generation and

optimal pricing to a small enough number of people for them

to have a compelling interest in putting a lot of work into

improving those numbers, for-profit enterprises can succeed

in producing more value for more people and have just as

much incentive to keep their customers’ interests at heart as

not-for-profit “community owned” enterprises.

3534

something reaches its correct size and then continues to

grow, the resulting protuberance is called a cancer. Much of

what increases when formal economy continues to grow is a

type of social cancer. Speculation grows, irrational or

destructive production grows, corruption and waste grow –

all at the cost of what really should increase: social justice

and the well-being of the majority.

In every country there are things that have grown too much,

things which should be made smaller – and others that have

not grown enough or need to continue growing for the

greater good. A high rate of economic growth, measured

through the gross national product, habitually reflects a

growth in what is already large, an authentic social cancer

and a diminishing of what should continue growing.

Economic growth produces the opposite of what it promises.

It does not imply greater well-being or employment for the

people, or greater efficiency in the use of resources. Quite

the opposite: it generates poverty, inefficiency and injustice.

There is abundant historical record to support this argument.

To continue to propose a high rate of economic growth as a

social goal is pure nonsense. It can only be attributed to the

ignorance of a simple soul, cynicism or a combination of the

two. To concentrate social efforts on economic growth

disguises the real goal: greater opulence for a few, at the

expense of generalised poverty and the destruction of the

natural patrimony. This result is hardly logical, as the

economist’s obsession does nothing more than apply to the

whole of society, a strict capital necessity that applies only to

him: capital that does not grow, dies; and so it follows

indefinitely. For this reason, cultivating the obsession implies

writing a blank check to the market leaders or the State, so

Capitalism vs exploitationOn another wavelength, a blog posted on 25th November

2007 (edstrong.blog-city.com), makes some hard-hitting

statements on the issue of social injustice in capitalistic

economy: Fifty years of capitalist propaganda have

converted the economists’ dogma into a general prejudice.

Without discussion, we accept that accelerated economic

growth is desirable. Now the time has come to abandon this

pernicious obsession.

Almost forty years ago, Paul Streeten, Prof Emeritus at

Boston University, rigorously documented the perverse

connection between economic growth and injustice He

demonstrated that greater growth corresponded to greater

poverty and that there is a relation of cause and effect

between one and the other. He demonstrated as well that the

famous “trickle down effect” – the idea that concentrated

riches spill out onto the majority generating well-being in

their wake – is a perverse and unfounded illusion.

The exploitation of natural resources has defined the

relationship between the West and the Third World. The great

advantage of Western Europe was savagery and warfare.

People the world over were astonished at the brutality of

Western Europe. According to Noam Chomsky, the renowned

thinker and humanist, today’s global economic system is

designed to transfer wealth from developing nations to the

developed world.

To get as much growth as possible from the economy as well

as growth in population appears to be a common sense

principle. But it is not. Many things should grow until they

reach their correct proportion: plants, animals, people. When

3736

that they do their thing in the name of the well-being of the

majority, a well-being that doesn’t appear and following that

path, will never appear.

We need to recover a sense of proportion that is simply

another form of common sense: that sense that exists in

community. We must struggle against a culture of waste,

disposability, destruction and injustice and the culture that

has produced global warming to which disasters caused by

irresponsibility are now attributed. We can reclaim the

sensible and responsible rejection of what is unnecessary in

the name of socially viable goals and discard forever the

idolatry of economic growth.

The time has arrived to seriously propose the advantages of

a negative growth rate, clearly specifying what we would

continue to stimulate. It is time to stop the dominant

insanity. Some things need to grow and others need to

contract. Let our capacity to sustain ourselves and our vital

autonomy grow. Let our expressions and spaces for

exercising liberty and initiative grow. Let the opportunities

for a good life multiply, according to the way in which each

individual and culture defines that good life. And, to make

that possible, let us reduce the weight of a formal economy

that oppresses us and wears us down, through everything

that contradicts a good life for everyone or destroys nature.

Gurcharan Das’ counterpointIn his article in the Times of India (14th November 2009)

Gurcharan Das begs to differ in favor of capitalism: If only we

would pause and look beyond the horizon of day-to-day

events, we would see a trend of great significance. More

people on the earth have risen out of poverty in the past 25

years than at any other time in human history and this has

happened primarily because of sustained high economic

growth in India and China. Unlike China, which has embraced

growth enthusiastically, India has a vast industry of

‘povertywallahs’, who incessantly raise doubts if our growth

is pro-poor.

These ‘growth sceptics’ tend to make our reformers

defensive, which slows reforms and the nation loses the

potential for even higher growth. Earlier they argued that

post-reform growth was ‘jobless’ until recent data has proved

them wrong. Nowadays, they usually say, “growth but…”

While the type of growth does matter, the truth is that

growth in itself is virtuous and we should celebrate that India

is experiencing this miracle.

Now, two experts on poverty have come up with new

research, which shows that India’s high economic growth

since 1991 is, indeed, pro-poor and has decisively reduced

poverty. Gaurav Datt and Martin Ravallion, both respected

economists, employed a new series of consumption-based

poverty measures from 1950 to 2006 and 47 rounds of

National Sample Surveys, to show that slightly more than one

person in two lived below the poverty line in India during the

1950s and ’60s. By 1990 this had fallen to one person in

three. By 2005, it fell again and only one in five persons now

lives below the poverty line.

3938

This happy news on growth, however, must be seen in the

context of lost opportunities. If only India had reformed

agriculture and had functioning schools and health centres,

the poor would have gained even more from high growth. In

another study comparing India, China and Brazil, Martin

Ravallion shows that China (with higher growth) and Brazil

(with lower growth) have done a much better job at poverty

reduction. India’s failure in education and health is not a

function of money alone, as the prime minister suggested

this week when he vowed to raise spending on education to 6

per cent. When one in four teachers is absent and one in four

is not teaching, we need accountability in delivering services

to the poor. Thus, administrative reforms are just as

important to the lives of the poor as economic reforms.

We have so far seen the essential features of business

operations in a free market economy, both positive and

negative. This form of economy is unlikely to change in the

foreseeable future, or at least till this book reaches your

hands, so let us see how we can weave in the elements of

social awareness and responsibility within the capitalistic

system without disturbing the profit motive or organisational

efficiency and productivity. We have of course come across

some experts who believe that the two, like oil and water,

simply cannot mix. Such a belief may even be partly true but

if it is allowed to influence our mindset permanently, it will

subvert and sabotage any attempt at helping the poor, weak

and needy sections of the society. Let us therefore move on

to see how the corporate capitalist world is looking at this

challenge in its own way.

In their paper ‘Has India’s Economic Growth Become More

Pro-Poor in the Wake of Economic Reforms?’ the authors

conclude that “the post-reform process of urban economic

growth has brought significant gains to the rural poor as well

as the urban poor”. The poor in urban and rural areas are

now linked through trade, migration and transfers, which

explains why rising standards in India’s towns are helping to

reduce poverty in the villages. Even though agricultural

growth has been relatively weak since 1991, overall high

growth has positively affected the lives of the rural masses.

This is an outcome that the reformers had dreamt of. They

believed that the reforms would create a more efficient and

productive economy, which would raise the overall growth

rate and transform both urban and rural society. This had

happened during the great transformations that occurred in

the West during the 19th century and in East Asia in the

second half of the 20th century. It is now happening in India.

An earlier study by the two economists had examined the

period prior to 1991 when our economy grew slowly. India’s

per capita GDP grew at an annual rate of barely 1 per cent in

the 1960s and 1970s; it picked up to 3 per cent in the 1980s;

and accelerated to 4-5 per cent after 1991. In the pre-1991

period, modest urban growth brought little or no benefit to

the rural poor. (Rural poverty decreased only through rural

growth, such as the green revolution.) High growth after 1991

seems to be different – it has pro-poor backward linkages to

the rural economy. Hence, the effort to create a more

productive economy through the reforms is benefiting the

poor and we have the permission now to dream of becoming

a middle-class country. The dampener, alas, is that inequality

after 1991 is also increasing.

4140

PROFIT-DRIVEN BUSINESSES ARE NOW WELL PROFILED

IN THEIR BEHAVIORS ACROSS THE GLOBE. ACCORDING

TO MARK WIERZBINSKI, PRESIDENT, EMPLOYEE

FITNESS SOLUTIONS, CHICAGO (EMAIL

COMMUNICATION, 12 NOVEMBER 2009), WHEN A

BUSINESS-FOR-PROFIT VENTURE HITS THE

MARKETPLACE, IT DOES (AND MUST) GO WHERE THE

MONEY IS! IT’S NOT AN EVIL ACTION, IT IS NECESSARY.

I CAN DO MUCH BETTER SELLING BMWS TO THE

WEALTHY CLASS, OR CLOTHING AND FOOD TO THE

HUGE MIDDLE CLASS, BUT TO DISTRIBUTE RICE AND

SHELTER TO THE MILLIONS WHO HAVE NO MONEY

TAKES TREMENDOUS CAPITAL OUTLAY AND VERY

LITTLE REVENUE POTENTIAL. MOST SOCIETIES (NOT

ALL) HAVE A HEART AND DON’T WANT TO SEE THE

POOREST STARVE TO DEATH, FREEZE TO DEATH,

THIRST TO DEATH, OR DIE FROM NEGLECT OF BASIC

MEDICAL CARE. SO, THROUGH THEIR GOVERNMENTS,

THEY SUPPORT PROGRAMMES WHICH PROVIDE THE

VERY MINIMUM OF THESE NEEDS. WHAT MAKES UP

THE MINIMUM DEPENDS ON HOW SOCIETY DEFINES IT

AND HOW MUCH RESOURCES SOCIETY IS WILLING TO

“GIVE AWAY” TO ITS POOR. BUT THAT’S THE LIMIT –

BARE SURVIVAL LEVELS.

CSR

4342

When free market governments or other leaders begin to

propose aid for those excluded from the economy and that

aid comprises more than the minimum, the standard of living

of the “poor”, in theory, begins to approach or reach the

standard of living of those who do participate in the economy

and don’t get such aid. That angers society and therefore,

gets shot down. So, for the most part, the free market and

government working together can ensure that the poorest

survive, but perpetually fail to break the cycle of poverty

because to provide enough aid to begin an upward cycle of

success and growth, cannot happen politically. Hence,

according to Mark, there is a need for social businesses. Not

to keep people alive and not to provide BMWs, but to provide

services that are the next step above bare survival.

What Mark Wierzbinski describes is the backdrop against

which corporate social responsibility as well social business

concept have started evolving over the years. The traditional

extremes of profit-driven businesses on the one hand and

totally charitable, profit-avoiding institutions on the other

are just extremes. There can surely be an in-between stage in

which both profit and service should be able to coexist.

Corporate Social Responsibility or CSR belongs precisely in

that ballpark.

Triple bottom lineAccording to wikipedia (accessed November 2009), corporate

social responsibility (CSR), also known variously as corporate

responsibility, corporate citizenship, responsible business,

sustainable responsible business (SRB), or corporate social

performance, is a form of corporate self-regulation integrated

into a business model. Ideally, CSR policy would function as a

built-in, self-regulating mechanism whereby business would

monitor and ensure its adherence to law, ethical standards

and international norms. Business would embrace

responsibility for the impact of their activities on the

environment, consumers, employees, communities,

stakeholders and all other members of the public sphere.

Furthermore, business would proactively promote the public

interest by encouraging community growth and development

and voluntarily eliminating practices that harm the public

sphere, regardless of legality. Essentially, CSR is the deliberate

inclusion of public interest into corporate decision-making and

the honoring of a triple bottom line: People, Planet, Profit.

The practice of CSR is subject to much debate and criticism.

Proponents argue that there is a strong business case for CSR,

in that corporations benefit in multiple ways by operating with

a perspective broader and longer than their own immediate,

short-term profits. Critics argue that CSR distracts from the

fundamental economic role of businesses; others argue that it

is nothing more than superficial window-dressing; others yet

argue that it is an attempt to pre-empt the role of

governments as a watchdog over powerful multinational

corporations.

J.J. Asongu is president of the African Policy Institute, a non-

partisan think-tank dedicated to general policy issues related

4544

to Africa, as well as a consultant with Global Thrust

Communications, a strategic management and marketing

communications firm. He has written an elaborate article on

the history and evolution of corporate social responsibility in

the Journal of Business and Public History of CSR (Spring

2007, vol 1, no 2). It is worth a close look for any student of

this important topic.

Corporate social responsibility (CSR) is a controversial

subject that continues to attract a lot of attention – from

those who argue that the whole issue is irrelevant to

business (Freeman and Liedtka, Business Horizons, July-

August 1991), through those who see the relevance, but think

it is a bad idea for business (Friedman, Capitalism and

Freedom, University of Chicago Press 1962), to the vast array

of writers who think that CSR is of strategic importance to

business.

First of all, let us look at the etymological definition of the

term ‘company.’ It is derived from two Latin words, cum and

panis, which mean “breaking bread together” (Arndt,

Business Week, March 24, 2003, pp. 22-23). Thus, the original

idea of a company has communal or social connotation.

Tracing the etymology of the term ‘company’ is relevant here

because as the words ‘corporate,’ ‘social,’ and ‘responsibility’

rightly suggest, CSR covers the responsibilities that

companies or corporations have to the societies within which

they are based and operate. From a practical perspective,

CSR involves a business identifying its stakeholder groups

and incorporating their needs and values within the strategic

and day-to-day decision-making process (University of Miami,

2007, www6.miami.edu).

Defining Corporate SocialResponsibilityThe concept of a company or corporation and even business

itself cannot be separated from society. However, a business’

‘society’ within which it operates, which defines the number

of stakeholders to which the organisation has a

‘responsibility’ is relative. The society may be broad (even

global), as in the case of a multinational oil company that has

to be careful of its impact on global environmental

conditions, or narrow as in the case of a small mom and pop

grocery store. It may also depend on the industry in which

the firm operates and its perspective (University of Miami,

2007, www.miami.edu). It is for this reason that the concept

may be seen as vague or imprecise and why there exist

various definitions of the term.

The online encyclopaedia, Wikipedia (2007) has one of the

best definitions of CSR. It states that it “is a concept that

organisations, especially corporations, have an obligation to

consider the interests of customers, employees,

shareholders, communities and ecological considerations in

all aspects of their operations.” It further clarifies that this

obligation extends beyond the corporation’s statutory

obligation to comply with legislation. Therefore, for

Wikipedia, most of what is called the ‘license to operate’ or

legal argument for CSR, would not pass the test for CSR.

Scholars like Porter and Kramer (Harvard Business Review,

December 2006) do see the license to operate as one of the

‘traditional reasons’ for CSR, although they argued in their

article entitled “Strategy and Society: The Link Between

4746

Competitive Advantage and Corporate Social Responsibility”

that the real importance of CSR is in the “shared value” that

businesses have with society. The basic premise of the

argument is that businesses operate in societies and

societies need these businesses – that is, there is a mutual

benefit.

The World Business Council for Sustainable Development

defines CSR as “the continuing commitment by business to

behave ethically and contribute to economic development

while improving the quality of life of the workforce and their

families as well as of the local community and society at

large”. This definition has been broadly accepted by CSR

practitioners and advocates and has come to define any

programme or activity engaged by a corporation that does

not directly bring profit and at the same time creates

tangible and intangible benefits for both the recipients and

corporation itself.

Scholarship and research grants, environment-friendly

practices and advocacy for a societal concern are lumped up

into CSR practices. This holistic and altruistic approach to

business regards organisations as contributing partners to

community development and progress in society, rather than

viewing them as money-grabbing, power-hungry institutions

whose primary function is to make a buck and serve the

needs of their shareholders.

As the Wikipedia (2007) article clearly shows, some authors

think there is a need to distinguish CSR from charitable

institutions and arms that sprang from a corporation’s

conscious effort to create goodwill in its locale. One example

that has been put forward is the Ronald McDonald House,

named after the food chain’s most famous mascot, Ronald

McDonald. Ronald McDonald House is an independent

charitable foundation that provides free lodging to parents

and relatives of children confined in nearby hospitals across

the globe. McDonald’s donates the equipment and materials

needed to build and maintain the houses but these are not

directly owned and operated by McDonald’s. The Ronald

McDonald House is a nonprofit organisation and is dependent

on donations from the public. These charitable institutions

bearing the name of the corporation that is the principal

sponsor are essentially non-performers in the bottom-line.

They do not directly add to profits and are normally not

included in financial statements. These organisations are

registered independently and have their own reports

removed from their principal sponsors. They are also

managed by a group that is not classified as employees

under the namesake corporation.

There is in fact no need separating this from CSR. According

to the four traditional arguments for CSR – moral (or ethical),

reputation (or brand image), license to operate (or legal) and

sustainability – these activities are genuine aspects of CSR.

Companies should take a strategic look at such investments

or expenditures and integrate them into their business

strategy. This is what is called “strategic corporate social

responsibility,” or simply “strategic CSR” (at times known by

49

to the company’s long-term gain, it is clear that it does

generate goodwill. There are other practical and more

concise definitions of CSR. According to Michael McComb

writing in the South China Morning Post (April 14, 2002, p. 5),

the notion of companies looking beyond profits to their role

in society is generally termed corporate social responsibility

(CSR). It refers to a company linking itself with ethical values,

transparency, employee relations, compliance with legal

requirements and overall respect for the communities in

which they operate. It goes beyond the occasional

community service action, however, as CSR is a corporate

philosophy that drives strategic decision-making, partner

selection, hiring practices and, ultimately, brand

development. Although I usually resist the temptation of

excluding profit motives from CSR, I think the above

definition captures most of what CSR is all about.

Another definition by Archie B. Carroll (Academy of

Management Review, 1979, Vol. 4, No. 4, p. 500) suggests

that “the social responsibility of business encompasses the

economic, legal, ethical and discretionary expectations that

society has of organisations at a given point in time.” This to

me is an even better definition than the previous one. The

Institute of Directors, a UK-based trade group, has also

presented another good definition of CSR: CSR is about

businesses and other organisations going beyond the legal

obligations to manage the impact they have on the

environment and society. In particular, this could include

how organisations interact with their employees, suppliers,

48

the acronym “SCSR”). There are corporations that willingly

spent money on community projects and donated substantial

amounts for certain advocacies such as music and arts. They

also encourage their employees to volunteer in community

work and thereby create goodwill in the community. This

enhances the reputation of the company and strengthens its

brand. Charity is a legitimate aspect of CSR as long as it is

approached from a strategic perspective. It requires that a

responsible company take into full account its impact on all

stakeholders and on the environment when making

decisions. This requires the company to balance the needs of

all stakeholders with its need to make a profit and reward

shareholders adequately.

Other CSR practices include affiliations with other non-profit

organisations and major advocacies. For example, The Body

Shop has always been an environmental advocate. It claims

that Body Shop products are biodegradable as well as

animal-friendly. The Body Shop products are not tested on

animals and do not use non-organic chemicals. The Body

Shop also has an advocacy against domestic violence,

especially against women. These practices go beyond the

bottom-line and extend to the community and society at

large. In essence, CSR calls for socially responsible activities

from corporation. These activities are not likely to bring

immediate increase in sales and improve returns for their

investors (though they sometimes do).

While it is arguable whether or not CSR practices actually add

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customers and the communities in which they operate, as

well as the extent they attempt to protect the environment

(Lea, The Institute of Directors, UK, November, 2002, p. 10).

“A Guide to Corporate Social Responsibility (CSR)” has

proposed one of the best definitions of the term: CSR is a

means of analyzing the inter-dependent relationships that

exist between businesses and economic systems and the

communities within which they are based. CSR is a means of

discussing the extent of any obligations a business has to its

immediate society; a way of proposing policy ideas on how

those obligations can be met; as well as a tool by which the

benefits to a business for meeting those obligations can be

identified (University of Miami, 2007). What makes this

definition better than most other definitions is that it

acknowledges the fact that corporations have to contribute

to society and that making a profit from a CSR activity is

permissible.

There are a number of related terms or vocabulary often

associated with CSR. It should not be surprising to have

various authors refer to this very concept differently:

‘corporate’ or ‘business responsibility,’ ‘corporate’ or

‘business citizenship,’ ‘good corporate citizenship,’

‘community relations,’ and ‘social responsibility.’ Other

closely related concepts that are all contained with the total

CSR perspective include: social and environmental auditing,

stakeholder theory, business ethics, environmental

sustainability, sustainable development, sustainability,

strategic philanthropy (cause-related marketing), corporate

governance, or strategic corporate social responsibility. From

the available literature, it is fair to conclude that consistent

definitions, labels and vocabulary have yet to be solidly

established in the field of CSR.

The current emphasis on the role of businesses in society has

been promoted by increased sensitivity to and awareness of

environmental and ethical issues. Issues such as

environmental damage, improper treatment of workers and

faulty production that inconveniences or endangers

customers are highlighted in the media. In some countries

like the UK and other EU member states, government

regulation regarding environmental and social issues has

increased. In addition, standards and laws are often set at a

supranational level. For example the European Union has its

own set of law about the environment. Some investors and

investment fund managers have begun to take account of a

corporation’s CSR policy in making investment decisions –

this is called “ethical investing,” or “socially responsible

investment (SRI)”.

According to Freeman and Liedtka (1991), the idea of

corporate social responsibility has its roots in the writings of

Andrew Carnegie and others in his time. Carnegie, who

founded U.S. Steel, articulated two principles he believed

were necessary for capitalism to work. First, the charity

principle required more fortunate members of society to

assist its less fortunate members, including the unemployed,

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According to “Altered Images: the 2001 State of Corporate

Responsibility in India Poll”, a survey conducted by Tata

Energy Research Institute (TERI), the evolution of CSR in

India has followed a chronological evolution of four thinking

approaches:

Ethical Model (1930 – 1950): One significant aspect of this

model is the promotion of “trusteeship” that was revived and

reinterpreted by Gandhiji. Under this notion, the businesses

were motivated to manage their business entity as a trust

held in the interest of the community. The idea prompted

many family run businesses to contribute towards

socioeconomic development. The efforts of Tata Group

directed towards the well being of the society are also worth

mentioning in this model.

Statist Model (1950 – 1970s): Under the aegis of Jawahar

Lal Nehru, this model came into being in the post

independence era. The era was driven by a mixed and

socialist kind of economy. The important feature of this

model was that the state ownership and legal requirements

decided the corporate responsibilities.

Liberal Model (1970s – 1990s): The model was

encapsulated by Milton Friedman. As per this model,

corporate responsibility is confined to its economic bottom

line. This implies that it is sufficient for business to obey the

law and generate wealth, which through taxation and private

charitable choices can be directed to social ends.

52

the disabled, the sick and the elderly. These “have nots”

could be assisted either directly or indirectly, through such

institutions as churches, settlement houses and other

community groups. Second, the stewardship principle

required businesses and wealthy individuals to see

themselves as the stewards, or caretakers, of their property.

Carnegie’s view was that the rich hold their money “in trust”

for the rest of society. Holding it in trust for society as a

whole, they can use it for any purpose society deems

legitimate. However, it is also a function of business “to

multiply society’s wealth by increasing its own through

prudent investments of the resources that it is caretaking.”

Almost every company worth its name has developed some

sort of CSR programme. These programmes vary from

company to company, but there seem to be no way to avoid

CSR. In countries like Germany and United Kingdom, there

are regulatory bodies involved in pushing for regulations of

certain CSR practices in order to create a more harmonious

relationship between the corporations and the society at

large. The concept of CSR is not new. However, it only

became a serious academic discipline being taught in most

business schools within the last decade. Companies should be

encouraged, if not forced through regulations, to improve

their operations to become more environmentally sound, to

create programmes that benefit their community and to push

for practices that develop the society.

TERI view

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Stakeholder Model (1990s – Present): The model came

into existence during 1990s as a consequence of organisation

that with growing economic profits, businesses also have

certain societal roles to fulfill. The model expects companies

to perform according to “triple bottom line” approach. The

businesses are also focusing on accountability and

transparency through several mechanisms.

Myth # 1:

Businesses invest the money, therefore they decide the

modus operandi of the CSR initiative

There is a notion that since businesses invest money in

society, they are the ones who will be deciding upon the

modus operandi of the CSR initiative. However this is not

true. CSR driven by the mandate of an enterprise alone may

not generate desired results. Stakeholders must be involved

from the onset in defining an initiative to make it successful.

Corporates must not assume that they understand the needs

of a community by taking them at face value; stakeholder’s

needs must be considered within the local context and

culture.

Myth # 2:

Financial resources alone can meet CSR needs of an

enterprise.

In fact, financial resources are only part of the equation.

Besides financial resources, it is equally or even more

important for the CSR programmes to be well defined and

well accompanied by adequate human resources if they are

to meet the intended objectives.

Myth # 3:

CSR is interchangeable with corporate sponsorship, donation

or other philanthropic activities.

The focus of responsible business practices in the profit

sector is hitherto largely confined to community charity-

based projects. While this may have been relevant for the

historical context in the mid-90s, the current thinking of CSR

has moved beyond philanthropy to in fact encompass all

internal and external segments of business operations:

employees, market environment and community (source:

Corporate Social Responsibility – Towards a Sustainable

Future, KPMG-ASSOCHAM White Paper 2008)

CSR myths

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Downside

CSRof

IT IS SOMETIMES SPECULATED, SOMEWHAT

SKEPTICALLY, THAT THE REASON WHY CSR

IDEAS HAVE FOUND POPULARITY OVER THE

YEARS IS BECAUSE CORPORATIONS,

ESPECIALLY MULTINATIONALS OPERATING IN

SEVERAL COUNTRIES WORLDWIDE WISH TO

PREEMPT GOVERNMENT INTERVENTION AND

REGULATION. BY ACTIVELY PARTICIPATING IN

LOCAL COMMUNITY DEVELOPMENT AND

SPEARHEADING PROJECTS THAT ADVOCATE

SOCIETAL CHANGE, THESE CORPORATIONS

CAN FOCUS ON ONE ASPECT OR

RESPONSIBILITY AND VEER AWAY FROM

OTHERS.

5958

Freeman and Liedtka (Business Horizons, July-August, 1991)

have also pointed to the now-famous argument by Milton

Friedman (Capitalism and Freedom, University of Chicago

Press 1962) that corporations should pursue their economic

self interest and that any attempt to promote corporate

social responsibility, however it might be defined, amount to

moral wrong.

Friedman questioned the logic of CSR as it had developed,

insisting that in a democratic society, the government was

the only legitimate vehicle for addressing social concerns.

Friedman’s thinking on this issue is very conservative,

restricting corporations to the sole economic purpose of

guiding supply and demand. It is the government’s purpose

to act as guardian and create legislation to regulate its

citizens as well as its corporations to impose order and

balance within society. By engaging in CSR, corporations

have found a burrow through which they can escape from the

hound dog sniffing of the government’s regulating bodies.

The response of management thinkers was to develop more

sophisticated models of corporate social responsibility,

variously called corporate social responsiveness, the social

policy process, social issues in management, business and

public policy, corporate social performance and so forth.

While there are real and relevant differences among these

models, they share an important common ground. They seem

to accept the terms of the debate on Friedman’s ground: that

business can (or cannot) or should (or should not) address

social issues in addition to economic ones (Freeman and

Liedtka, 1991).

According to some, the public discourse on CSR has evolved

into a quite stylised debate which tends to focus on one

particular facet of multinational economic behavior. This has

to do with the treatment of workers in manufacturing

factories in the developing world producing goods for

multinational enterprises with particular attention to the

manufacture of textiles, clothing and footwear. This has

brought with it, renewed interest in “sweatshops,” the

concept of extreme exploitation of vulnerable workers in

terms of living wages and dangerous working conditions. The

resultant effect of the focus on this aspect of CSR, especially

by the media, is that more is known about this sector than

just about any other and theoretical work tends to deal with

the subject of corporate self-regulation through the lens of

the production and consumption of these arguably

idiosyncratic goods. For them, it is important to identify the

potential distorting power of this emerging discourse and to

broaden the attention to labour market conditions in general.

In “Corporate Social Responsibility as Business Strategy,”

Rowe (London: Routledge, 2005) basically supports this view

in his treatment of CSR. He thinks that corporations do not

have a genuine intention of being socially responsible and

their CSR programmes are basically designed to prevent

governments from implementing compulsory regulation of

businesses with regards to their contribution to society. By

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implication, there are no truly good corporate citizens, just

clever executives or managers trying to avoid government

regulations. Rowe analyzes the corporate response to the

global justice movement, from intent to impact, over a 40-

year span. For him, CSR isn’t about business ethics. It is

about a business strategy to forestall popular power that

might result in effective regulation. He thinks that if

corporations were serious about social responsibility, they

would support having these responsibilities formalised in

law.

The importance of Rowe’s view is that it outlines an aspect of

CSR history over a four decade – long period. He calls the

global justice movement the “second wave” of public outcry

over corporate malfeasance. The first wave took place in the

1960s and 1970s following revelations about corporate

corruption, tax evasion and involvement in clandestine

political activities, including the U.S. - backed coup that

ousted Chilean president Salvador Allende. These ills fuelled

populist attempts to rein in corporate power and increase

accountability and in 1976 the UN began negotiating a

binding international code of conduct for corporations. The

pro - business Reagan administration created a stumbling

block as they accelerated environmental deregulation.

Corporate profits soared as global markets opened up in the

1990s under free - trade agreements negotiated by the

Clinton administration. Meanwhile, negotiations on the UN

code stalled permanently in 1981, after it had been made

voluntary instead of binding. Since then, the quest for profits

has encouraged corporations to spread across the globe in

search of cheap labour and lax environmental standards.

Social, environmental and human rights protections have

largely been neglected in the absence of strong government

regulation.

Prior to the September 11, 2001 terrorist attacks,

international organisations such as Amnesty International,

Friends of the Earth and the International Confederation of

Free Trade Unions had initiated a programme to develop

voluntary codes of conduct with industry that will focus on

improving wages, working conditions and environmental

degradation. The terrorist attacks shifted attention and

resources away from concerns about corporate behaviour,

but the spotlight is focusing once more on corporations.

According to Rowe, The consensus now is that voluntary CSR

isn’t working and these organisations are ready to bring

government back into the marketplace to protect workers

and the environment.

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The opponents of CSR are not suggesting that firms should

behave irresponsibly or unethically. They acknowledge that,

in a world in which firms’ brands are often their most

valuable asset, unpopular corporate actions can damage

business. But the new concept of CSR is dangerous because it

goes far wider than simply avoiding illegal or unethical

activities.

The problem is that while CSR may sound as obviously a good

thing as motherhood and apple pie, defining how a company

should fulfil the lofty goals of the CSR agenda involves

making value judgements over notions like social justice and

sustainable development. And these decisions should not be

made by unelected businessmen but by politicians who can

be thrown out by the electorate if they don’t like the results.

Moreover, calls for greater corporate social responsibility are

often driven by groups and lobbyists who distrust business

and the market and whose goal is to coerce firms into

adopting costly regulations. Once one firm has adopted the

CSR model it has an interest in demanding that other firms

do as well. They thus become “collaborators as well as

appeasers”.

Supporters of CSR will no doubt argue that its adoption need

not distract managers from their commercial responsibilities.

But all the same, the possibility that new, more elaborate

and less focused ways of conducting businesses will raise

costs and diminish revenues cannot just be set aside. That is

the real horror for the CSR opponents – that firms will burden

themselves with unnecessary costs which reduce their

competitiveness, reducing the economy’s ability to deliver

goods and services and making everybody worse off.

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Profit motive vs CSRAn article written by Charlotte Denny in The Guardian(5 November 2001) typifies the thinking in traditional

business models based on profit motive as the sole driving

force of the economy: The high priests of the Reaganite and

Thatcherite revolutions may no longer be in power, but they

haven’t gone away. Worried that their legacy is threatened

by dangerous notions like corporate social responsibility,

which threaten the supremacy of the market, a coalition of

right-wing think-tanks and commentators are fighting back.

The case against CSR harks back to the classical foundations

of economics – the observation made by Adam Smith in 1776

that overall wealth is maximised when individuals pursue

their own interests. “It is not from the benevolence of the

butcher, the brewer or the baker that we expect our dinner,”

he wrote in The Wealth of Nations, “but from their regard to

their own self-interest. Every individual intends only his own

security, only his own gain. And he is in this led by an

invisible hand to promote an end which was no part of his

intention. By pursuing his own interest, he frequently

promotes that of society more effectually than when he

really intends to promote it.”

In the case of companies, their job is to maximise profits for

their owners, the shareholders. Appeals for companies to

consider the welfare of other stakeholders – their employees,

the local community, the environment – can only distract

from the bottom line. The simplest illustration of this is a

firm which has to sack workers to cut costs. Putting people

before profits is all very well but when it comes to the

crunch, business is about making money, not employing

people and a bankrupt firm can’t afford to hire any workers.

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CSR does not pose any sustainable solutions. It can easily

be reversed if the economic climate changes. As well as

being voluntary, it reinforces rather than challenges the

power of corporations. A genuinely socially responsible

company would look so different from today’s corporations

as to be unrecognisable. Tackling the big issues of over-

consumption, climate change and massive economic

inequality requires major shifts in our lifestyles and systems

of social organisation. CSR seems to present us with an easy

alternative, using corporate power as a lever for social

change rather than seeing it as an obstacle. Ultimately, CSR

is not a step towards a more fundamental reform of the

corporate structure but a distraction from it. Exposing and

rejecting CSR is a step towards addressing corporate power.

Companies engage in CSR because, for a number of

reasons, they think it will be good for their profit margins.

The business case for CSR emphasises the benefits to

reputation, staff and consumer loyalty in addition to

maintaining public goodwill. Reputation management –

Increasingly, corporations are trading not on products or

services but on their reputations, brand value, ‘goodwill’ and

‘intellectual capital’. These are termed ‘intangibles’ and have

an actual numerical value on the company balance sheet. For

example, 96% of Coca Cola’s total value is intangibles and an

estimated 53% of the total value of the Fortune 500

companies, worth $24.27 trillion, is made up of intangibles.

With 85% of consumers reporting that they have a more

positive image of a company that is seen to make the world a

better place, CSR is an essential strategy for ensuring the

company’s reputation.

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What’s wrong with CSR?That is the title of a Corporate Watch report published in

2006, by Claire Fauset, Corporate Structures Researcher.

According to her, corporate social responsibility is a

contradiction in terms. Companies are legally bound to

maximise profits to shareholders. This duty to make money

above all other considerations means that corporations can

only be ‘socially responsible’ if they are being insincere. Any

doubtful social benefits from CSR are outweighed by the

losses to society in other areas. CSR is an effective strategy

for bolstering a company’s public image; avoiding regulation;

gaining legitimacy and access to markets and decision

makers; and shifting the ground towards privatisation of

public functions. CSR enables business to propose ineffective,

voluntary, market-based solutions to social and

environmental crises under the guise of being responsible.

This deflects blame for problems caused by corporate

operations away from the company and protects companies’

interests while hampering efforts to tackle the root causes of

social and environmental injustice.

Corporate Watch is an independent not-for-profit research

and alternative media group, founded in 1996. It aims to

investigate the social and environmental impact of

transnational corporations and the mechanisms by which

corporations accumulate and maintain power. This report is

reproduced in large parts below so that the reader can get

the counter-view on the importance of CSR in the overall

scheme of things.

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Many organisations criticise CSR because they don’t see

business delivering on its promises. However, the problem

isn’t simply that companies aren’t practising CSR very well,

it’s that the corporate structure is not capable of social

responsibility. What is responsibility? Responsibility suggests

responsiveness, obligation, control, authority and a duty of

care. So is the word really appropriate in this context?

Through CSR, companies seek to engage with stakeholders,

but without implying a duty to respond. They claim credit for

positive, or simply less harmful actions, without taking on

any obligation. They prefer the word ‘commitment’ to ‘duty’.

For example, corporate and government definitions

invariably make reference to the idea that CSR means actions

taken by companies which go beyond legal requirements – in

other words, actions which they have no obligation to carry

out. The scope of a company’s ‘responsibility’ is therefore

self-defined and not socially defined. Also, it cannot be

measured, so value can be assigned arbitrarily: perfect PR.

Voluntary codes of conduct don’t work: The Asian

Monitor Resource Centre’s (AMRC) Critical Guide to Corporate

Codes of Conduct echoes in its criticisms the wider problems

with CSR. AMRC argues that, rather than being solutions to

corporate abuses in the workplace, codes of conduct are

generally insufficient to change the industry. Their study,

based on a decade’s experience of studying labour issues in

Asia, including child labour, leaves them undecided as to

whether codes have led to any improvement in labour

standards. Multinationals do not pay the cost of compliance

with codes but pass this on to suppliers and ultimately

workers, who have no guarantee that they will not be

victimised for speaking out. Workers are often forced to do

extra hours to clean up the factory before CSR monitors

arrive. Because the market refuses to pay the extra costs of

non-exploitative labour practices, codes are a threat to

workers and not a tool for their empowerment.

Socially Responsible Investment (SRI) isn’t enough: SRI,

or ethical investment, is used to describe investment that

seeks to have a positive impact on society, or at least to

minimise the negative effects. SRI can mean a range of

things, from investing exclusively in enterprises that have a

positive impact, to screening out companies from the worst

sectors such as the arms, tobacco and oil industries or

companies which test on animals to making no discrimination

as to which companies are invested in but simply trying to

influence companies in their portfolio through shareholder

resolutions and engagement The majority of SRI falls into the

latter two categories. Only a small number of ethical

investors pro-actively seek out genuinely positive social

enterprises. When companies are screened on the basis of

ethics, the criteria are often very crude. For example, funds

that screen on the basis of ethics also frequently invest in

banks, which in turn invest in the industries which were

originally screened out.

Corporations gain more than the society in CSR: CSR is

supposed to be win-win. The companies make profits and

society benefits. But who really wins? If there is a benefit to

society, which in many cases is doubtful, is this outweighed

by losses to society in other areas of the company’s

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mouth or guerilla marketing, for subtly reaching consumers.

CSR also helps to green-wash the company’s image, to

cover up negative impacts by saturating the media with

positive images of the company’s CSR credentials. As

Deborah Doane points out in ‘From Red Tape to Road Signs’,

CSR enables business to claim progress despite the lack of

evidence of verifiable change. Since much of the business

case for CSR depends on corporations being seen to be

socially responsible, CSR will continue to be little more than

PR for as long as it is easier and cheaper to spin than to

change.

CSR is a strategy for avoiding regulation: CSR is a

corporate reaction to public mistrust and calls for regulation.

In an Echo research poll, most financial executives

interviewed strongly resisted binding regulation of

companies. Companies argue: that setting minimum

standards stops innovation; that you can’t regulate for ethics,

you either have them or you don’t; and that unless they are

able to gain competitive advantage from CSR, companies

cannot justify the cost. Companies are essentially holding the

government to ransom on the issue of regulation, saying that

regulation will threaten the positive work they are doing. CSR

consultancy Business in the Community supports corporate

lobbying against regulation, arguing that ‘regulation can only

defend against bad practice – it can never promote best

practice.’ These arguments, however, simply serve to expose

the sham of CSR. Why would a ‘socially responsible company’

take issue with government regulation to tackle bad

corporate practice? Why would this prevent companies from

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operation and by gains the corporation is able to make as a

result? CSR has ulterior motives. One study showed that over

80% of corporate CSR decision-makers were very confident

in the ability of good CSR practice to deliver branding and

employee benefits. To take the example of simple corporate

philanthropy, when corporations make donations to charity,

they want to improve their image by associating themselves

with a cause, to exploit a cheap vehicle for advertising, or to

counter the claims of pressure groups, but there is always an

underlying financial motive, so the company benefits more

than the charity.

CSR diverts attention from real issues, helping

corporations to: avoid regulation, gain legitimacy and access

to markets and decision makers and shift the ground towards

privatisation of public functions. CSR enables business to

pose ineffective market-based solutions to social and

environmental crises, deflecting blame for problems caused

by corporate operations onto the consumer and protecting

their interests while hampering efforts to find just and

sustainable solutions.

CSR is in fact PR: CSR sells. By appealing to customers’

consciences and desires, CSR helps companies to build brand

loyalty and develop a personal connection with their

customers. Many corporate charity tie-ins gain companies

access to target markets and the involvement of the charity

gives the company’s message much greater power. In our

media saturated culture, companies are looking for

increasingly innovative ways to get across their message and

CSR offers up many potential avenues, such as word of

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going beyond the legal minimum? Perhaps the explanation is

that companies want to be selective about which areas of

‘bad practice’ they eliminate and want to use their ‘best

practice’ to divert attention away from the bad, or that

‘socially responsible’ companies need the bad practice of

other companies to be a counterpoint to their own ‘best

practice’. If regulation distracts from best practice, then

companies cannot be acting ‘responsibly’ because they

believe it to be morally right to do so – only because they are

trying to get an advantage over their competitors.

CSR isn’t a sustainable solution: CSR as a tactic will only

last for so long. As the economic climate changes, will

companies continue to value their socially responsible

image? CSR will only enhance a company’s reputation or

access to capital if the public is convinced that they really are

having a positive impact on society. But the public, which is

skeptical at present, will only be fooled for so long, as

companies continue to pollute, profit from wars, exploit

vulnerable workers and exacerbate the gap between rich and

poor. Many companies have famously dropped their CSR

commitments when they hit financial problems. For example,

Littlewoods pulled out of the Ethical Trading Initiative and

disbanded its ethical trading team when it was bought out by

L. W. Investments Ltd in November 2002. What will be the

fate of CSR when we inevitably see a downturn in the

economy as a whole?

The so-called ‘leaders of the field’ in CSR will probably see

the financial rewards of their investment decrease as other

companies catch up with them and CSR no longer gives them

the competitive edge, which is why some are now pushing for

regulation. So, prospects for the long-term profitability of

CSR are probably over-hyped. Once CSR ceases to be ‘flavour

of the month’ with investors, will companies continue to

care? With the exception perhaps of pension funds, which

look for a return on investment over the long term, a

company’s quarterly results are the key benchmark of

corporate performance. This leaves little room for

investment expenditure in long-term shifts towards more

sustainable modes of operation. So is CSR just a bubble that

will imminently burst? Unless corporate power is reined in

through effective regulation, then CSR will fall off the agenda

when it ceases to be profitable

Well, we reproduced the above harsh assessment of CSR not

because we endorse or believe everything that was said, but

because we wanted to be aware of the criticism faced by the

CSR movement. We however believe that the best should not

become the enemy of the good and we should not throw the

baby out with the bathwater. Surely, there are flaws and

deficiencies in the CSR model, but that does not call for

abandoning or boycotting it. On the contrary, we have to

work more towards correcting them than rejecting the

system outright.

7372

CEOSPEAK

IF INDIVIDUALS CAN FEEL THE URGE TO

GIVE, WHY CAN’T CORPORATE

ORGANISATIONS? TO GET A DEEPER INSIGHT

INTO THIS ISSUE, THE MCKINSEY

QUARTERLY CONDUCTED A SURVEY IN

JANUARY 2008 AND RECEIVED RESPONSES

FROM 721 EXECUTIVES AROUND THE

WORLD, 74 PERCENT OF THEM CEOS OR

OTHER C-LEVEL EXECUTIVES. ACCORDING

TO THE SURVEY (MCKINSEY QUARTERLY,

FEBRUARY 2008), CORPORATE

PHILANTHROPY CAN BE AN EFFECTIVE TOOL

FOR COMPANIES THAT ARE TRYING TO MEET

CONSUMERS’ RISING EXPECTATIONS OF THE

ROLE BUSINESSES SHOULD PLAY IN

SOCIETY. HOWEVER, COMPANIES AREN’T

USING THAT TOOL AS WELL AS THEY COULD.

EXECUTIVES DOUBT THAT THEIR

PHILANTHROPY PROGRAMMES FULLY MEET

THEIR SOCIAL GOALS OR STAKEHOLDERS’

EXPECTATIONS FOR THEM.

7574

Companies and consumers have long seen corporate

philanthropy as a way for companies to benefit the

communities where they are located e.g. donating funds to

local schools, hospitals and orchestras, for example. In

recent years. However, as society’s expectations of

companies have risen and as many companies have begun

operating in more far-flung locations, they are expected to

address a growing list of needs. Companies that 20 years ago

were held accountable only for direct, contractually

specified, or regulated consequences of their actions today

find themselves held to account for the consequences of

their actions in areas as disparate as off-shoring, obesity,

excessive consumer debt, environmental sustainability and

the governance of resource-rich, low-income nations.

Although today’s expectations are wide-ranging, three-

quarters of the executives who responded to this survey say

corporate philanthropy is at least somewhat effective in

meeting the expectations.

In addition to social goals, the vast majority of companies

(nearly 90 percent) now seek business benefits from their

philanthropy programmes as well. When respondents were

asked what business goals they try to reach through

philanthropy, they most often say their goals include

enhancing the corporate reputation or brand. And some 80

percent of respondents say finding new business

opportunities should have at least some role in determining

which philanthropic programmes to fund, compared with

only 14 percent who say finding new business opportunities

should have no weight.

It is notable, however, that some 30 percent of the responses

to the question asking about business goals indicate that

some companies are trying to reach very concrete goals,

such as building knowledge about potential new markets and

informing areas of innovation. Respondents from companies

with these goals are likelier than others to say business

concerns should play a role in determining funding for

philanthropic programmes. Also, their philanthropic

programmes are much more likely to address at least some

of the social and political issues relevant to their businesses;

nearly two-thirds say they currently do, compared with just

under half of all respondents.

Strategy and social issues Business leaders are now more inclined to incorporate

society’s expectations into their core strategies but face

many challenges when they do. Chief executives around the

world increasingly believe that they have a strategic

rationale for taking on environmental, social and governance

issues. However, they also understand the challenges that

must be overcome when they do, challenges that include the

difficulty of managing supply chains across countries with

different regulations and norms for corporate social

responsibility.

Debby Bielak, Sheila Bonini and Jeremy Oppenheim, wrote an

excellent review in McKinsey Quarterly, October 2007, which

we share with you here: According to the survey of CEOs at

7776

companies participating in the United Nations Global

Compact, more than 90 percent of them are doing more than

they did five years ago to incorporate environmental, social

and governance issues into their core strategies. Research

shows that while pressure from employees, consumers and

other stakeholders plays an important part in this trend,

some CEOs see the new demands as opportunities to gain a

competitive advantage and to address global problems at the

same time.

According to 95 percent of the CEOs in the survey, society

has greater expectations than it did five years ago that

companies will assume public responsibilities. More than half

predicted that these expectations would increase

significantly during the next five years as well. Low levels of

trust among consumers underscore the pressure to act. In a

2006 McKinsey global survey, for example, only 33 percent

of European and 40 percent of US consumers said they

believed that large global companies acted in the best

interest of society at least some of the time.

A new class of stakeholderMany of the CEOs interviewed observed that satisfying the

shareholders is no longer good enough: consumers will

punish companies that don’t fulfil their public

responsibilities, causing their market shares to decline.

Socially irresponsible business practices could also make it

harder for companies to attract and retain talented people.

“It is important,” said the CEO of a retailer, “for our

employees to know and see that they are working for a

company where these things are held to be important.” CEOs

ranked employees as the stakeholder group that has the

greatest impact on the way companies manage their societal

expectations, with consumers a close second. Both groups

are joining nongovernmental organisations and activists in

making increased demands on companies. Over the next five

years, respondents expect consumers to become the most

influential stakeholder group, with employees dropping to

second place.

Globalisation ups the anteThe terms of the contract between business and society have

undoubtedly become more extensive and complex: difficult

environmental, social and governance challenges have

accompanied the rise of emerging economies, which are both

drivers of global demand and providers of goods, services

and talent. CEOs in the survey identified increasing

environmental concerns as the most important trend

influencing public expectations of business, followed by the

limited supply of natural resources and the emergence of

7978

China and India as powers in the global marketplace. Clearly,

companies operating in these countries will be affected by

local interpretations of environmental, social and governance

norms. They will have to find ways of demonstrating their

local loyalties and, at the same time, build globally

integrated systems of values.

Critical for successThe approach a global company takes in dealing with cross-

border environmental, social and governance issues, many of

which demand both systemic change and sustained

engagement by business, may affect not only its reputation

but also its competitive position. A company that offers

better working conditions and health care benefits than local

norms stipulate, for example, may have an easier time

finding skilled employees in areas with limited educational

systems. Likewise, a company that invests in water

conservation may be protecting vital resources for continued

growth. As the CEO of a consumer-packaged-goods company

said, “Water is the biggest issue for our company right now;

the ability to do business in water-stressed areas is critical to

our growth.” CEOs identified talent constraints, poor public

governance (such as corruption or underdeveloped legal and

judicial systems) and climate change as the most critical

environmental, social and governance issues their companies

must address to succeed in the future.

Barriers to engagementThese challenges seem daunting enough, but the barriers to

implementing strategic approaches to them — approaches

representing sustainable wins for companies as well as for

society – are formidable too. Competing priorities are the

biggest impediment. Shareholder demands for strong short-

term financial performance, for example, compete with

environmental, social and governance investments that are

longer – term by nature. The absence of clear and consistent

metrics that could relate such investments to (or correlate

them with) investor returns exacerbates this conflict.

In fact, fewer than one-fifth of the CEOs surveyed believe that

financial markets account for the way a company approaches

environmental, social and governance issues when they value

it. As the CEO of a financial institution noted, the standards

that do exist have “yet to become benchmarks to look up in

the Wall Street Journal, where we can see, alongside stock

prices, that a company’s ESG (environmental, social and

governance) impact rating went from 2 to 12 and this

somehow becomes a factor in how we value it.”

Another barrier is a lack of consistent industry regulations

(or even norms) that might level the playing field across

countries. One CEO described this complicated state of affairs

by saying, “The world is not flat, but quite hilly.” Companies

that wish to deploy tough international norms (on labour

practices, for example) therefore face a significant risk of

losing out to less scrupulous noncompliant competitors.

8180

Performance gapsSubstantive challenges await any company bent on

translating its good intentions into good deeds. While 72

percent of the CEOs surveyed said companies should fully

incorporate a stance on environmental, social and

governance issues in strategies and operations, only 50

percent said that their own companies actually do. Changing

the practices of suppliers is particularly complex. First, as the

CEO of a manufacturing company said, “There are questions

about how far up and how far down the supply chain

responsibility goes.” Moreover, if a company does decide to

implement a global code of conduct, local suppliers often ask

why they should invest in equipment or more humane

management practices to suit the whims of the customer.

While 59 percent of the survey respondents believe that their

companies should incorporate environmental, social and

governance issues into the management of supply chains,

only 27 percent say that those companies actually do.

The barriers to implementing strategies that benefit

companies as well as society often seem very hard to

overcome. Yet during our research we found that many

businesses are developing creative and commercially viable

solutions for addressing issues such as water conservation,

biodiversity management, finance for the poor and treatment

of HIV/AIDS. These corporate pioneers are redrawing the

global playing field around a new set of competitive

advantages and relationships with consumers.

Despite the downturnWith the recent downturn in the global economy, things may

appear to have taken different turn for corporate

philanthropy but that may not necessarily be the case. In

fact, the financial crisis seems to have increased the public’s

expectations of business’s role in society. Most companies

have maintained or increased their efforts to address

sociopolitical issues and many have already derived better-

than-expected benefits from doing so.

According to the fourth annual McKinsey survey covering

1,179 executives representing all regions, industries,

functional specialties and levels of seniority (McKinsey

Quarterly, November 2009), despite the global economic

downturn, a greater proportion of executives than last year

say large corporations make a positive contribution to the

public good. Although a smaller share of executives than in

2007 say large corporations make a positive contribution to

the public good (59 percent this year versus 67 percent in

2007), executives think the crisis has increased the public’s

expectations of business’s role in society. In response,

companies are maintaining or increasing their engagement

in social and political issues. As a result, most are already

reaping business benefits that far exceed a reputational

boost.

For the fourth consecutive year, executives answered

questions on which social and political issues will gain public

prominence and which will have the greatest impact on

8382

shareholder value. This year, the survey also explored the

impact of the financial crisis on companies’ sociopolitical

agendas and the financial benefits companies have gained

from addressing a variety of social and political issues.

Executives think the environment still commands the most

public attention, but, as a result of the crisis, they expect

executive compensation and companies’ political influence

and involvement to gain prominence. Nonetheless, the crisis

has not changed their own long-term views on which issues

will affect shareholder value the most: the environment

(including climate change), companies’ political influence,

health care and other employee benefits, executive

compensation and privacy and data security.

In last year’s survey, executives, for the first time, were more

likely to view addressing social and political issues as an

opportunity than as a risk (even though the survey was

conducted in mid-September, just as the financial crisis was

beginning to hit worldwide). The 2009 survey supports their

views: at companies with clear criteria about the business

goals of their sociopolitical agendas, executives report a

variety of business benefits, including access to new markets

and improved operational and workforce efficiency. The

specific benefits depend on which issue is being addressed.

Among the 87 percent of respondents whose companies are

addressing environmental issues, for example, executives

report an improvement in operational efficiency (cited by 53

percent), brand loyalty (48 percent) and access to new

markets (39 percent). In contrast, among the 85 percent of

executives who say their companies are addressing privacy

and data security, the proportions reporting business

benefits are much lower.

Improving reputation has long been the main business goal

of engaging with sociopolitical issues. For the fourth year in a

row, executives say the number one most effective action for

improving their reputations is increasing transparency of

business practices, at 50 percent of respondents this year.

However, executives seem increasingly dubious about the

effectiveness of most practices. Compared with last year, a

smaller proportion of respondents rated every practice —

except limiting the growth of executive pay — as effective for

improving reputation. Their responses may reflect the

public’s overall reduced trust in businesses.

Besides the business opportunities that result from

addressing social and political issues, the crisis has

intensified traditional reasons to engage, such as meeting

public expectations. Indeed, 72 percent of executives say the

public’s expectations of business have increased as a result

of the crisis. Most report that their companies have

maintained or increased engagement in social and political

issues as a result of the financial crisis and the accompanying

pressure from government and other stakeholders.

Executives’ long-term expectations about the issues most

likely to affect shareholder value have not changed much.

However, executives see the public’s concerns as more

closely aligned with issues they have long thought affected

shareholder value. For example, in the previous surveys, one

of the few issues executives saw as likelier to affect

85

of the executives who select this issue, the proportion has

fallen to 49 percent, from 57 percent in the 2008 survey.

The relative influence of stakeholder groups on companies’

sociopolitical agendas varies by industry. Overall, board

members have the most impact on the way companies think

about their role in society. However, executives in the

financial and energy industries are much more likely to say

that government and regulators are likelier to affect their

sociopolitical agenda (46 percent and 55 percent,

respectively, versus 36 percent overall), while manufacturers

consider investors to be more influential than other

stakeholders (50 percent versus 39 percent overall).

Clearly, executives, including Chief Executive Officers,

continue to feel the need for a well thought-out CSR plan for

their organisations, despite the downturn in the global

economy. That is indeed good news for the corporate world

as well as the public at large.

84

shareholder value than to receive public attention was the

political influence of companies. This year, many believe the

issue will become top-of-mind for the public too.

Oddly, despite the impact on consumer spending, job losses

represent the only issue to have dropped from the top five in

terms of perceived value creation. Among executives in

North America, health care and other employee benefits rank

number one in terms of perceived value creation — not

surprising, given the public debate on these issues in the

United States; 47 percent (compared with 25 percent

worldwide) say the issue will have high impact and 36

percent (versus 22 percent overall) say their companies’

engagement in this issue has increased

Companies’ political influence is far from the only issue

where executives see growing public concern. The

environment is a perennial leader among issues expected

to attract the most public attention and 52 percent of

respondents say the public’s attention toward the

environment has increased because of the crisis. However,

even more see growth in concern over other top issues: 94

percent see more concern about executive compensation and

78 percent see more concern about corporate involvement in

politics.

Indeed, among issues expected to attract the most public

attention, executive compensation, which has markedly

decreased the public’s trust in business, surged to the

number two spot, from number eight in 2007 and 2008. And

although the environment continues to hold the top position,

87

THAT’S THE TERM USED BY TRACEY KEYS,

THOMAS MALNIGHT AND KEES VAN DER

GRAAF TO POINT TO THE WAY FORWARD IN

CSR (MCKINSEY QUARTERLY, DECEMBER

2009). ACCORDING TO THEM, TOO OFTEN,

EXECUTIVES HAVE VIEWED CORPORATE

SOCIAL RESPONSIBILITY (CSR) AS JUST

ANOTHER SOURCE OF PRESSURE OR

PASSING FAD. BUT AS CUSTOMERS,

EMPLOYEES, SUPPLIERS AND EVEN THE

SOCIETY AS A WHOLE PLACE INCREASING

IMPORTANCE ON CSR, SOME LEADERS HAVE

STARTED TO LOOK AT IT AS A CREATIVE

OPPORTUNITY TO FUNDAMENTALLY

STRENGTHEN THEIR BUSINESSES WHILE

CONTRIBUTING TO SOCIETY AT THE SAME

TIME. THEY VIEW CSR AS CENTRAL TO THEIR

OVERALL STRATEGIES, HELPING THEM TO

CREATIVELY ADDRESS KEY BUSINESS

ISSUES.

86

8988

The big challenge for executives is how to develop an

approach that can truly deliver on these lofty ambitions and

as of yet, few have found the way. However, some innovative

companies have managed to overcome this hurdle, with

smart partnering emerging as one way to create value for

both the business and society simultaneously. Smart

partnering focuses on key areas of impact between business

and society and develops creative solutions that draw on the

complementary capabilities of both to address major

challenges that affect each partner. In this article, we build

on lessons from smart partnering to provide a practical way

forward for leaders to assess the true opportunities of CSR.

There is no single accepted definition of CSR, which leads to

plenty of confusion about what constitutes a CSR activity. We

can begin to develop a working definition of CSR by thinking

about its dual objectives of benefiting business as well as the

society and the range of potential benefits in each case.

Many businesses pursue CSR activities that can best be

termed pet projects, as they reflect the personal interests of

individual senior executives. While these activities may be

presented with much noise and fanfare, they usually offer

minimal benefits to either business or society. In the middle

are efforts that can make both sides feel good but that

generate limited and often one-sided benefits. With

philanthropy, for example, corporate donations confer the

majority of benefits on society (with potential but often

questionable reputational benefits to the business). Similarly,

in what’s best referred to as propaganda, CSR activities are

focused primarily on building a company’s reputation with

little real benefit to society. Some cynics suggest that this

form of CSR is at best a form of advertising and is potentially

dangerous if it exposes a gap between the company’s words

and actions.

None of these approaches realise the opportunities for

significant shared value creation that have been achieved

through smart partnering. In such ventures, the focus of the

business moves beyond avoiding risks or enhancing reputation

and toward improving its core value creation ability by

addressing major strategic issues or challenges. For society,

the focus shifts from maintaining minimum standards or

seeking funding to improving employment, the overall quality

of life and living standards. The key is for each party to tap into

the resources and expertise of the other, finding creative

solutions to critical social and businesses challenges.

Initial questions for any leader should be, “Where have you

focused CSR activities in the past?” and, more important,

“Where should you focus them for the future?” All

organisations have to balance limited resources and effort, so

the challenge is how best to deploy yours to maximise the

benefits to your business (and your shareholders and

stakeholders), as well as to society. Start by mapping your

current portfolio of CSR initiatives on the framework shown in

Exhibit 1 and ask: What are the objectives of our current

initiatives? What benefits are being created and who realises

these? Which of these initiatives helps us to address our key

strategic challenges and opportunities?

The examples in the two accompanying boxes illustrate smart

partnering initiatives at Unilever. Both address long – term

strategic challenges facing the company and help to build

creative partnerships that accrue significant benefits to both

sides.

9190

Addressing rural distribution challenges inIndia

More than 70 percent of India’s population resides in ruralvillages scattered over large geographic areas with very lowper capita consumption rates. For multinationals, the cost ofreaching and serving these rural markets is significant, astypical urban distribution approaches do not work. HindustanUnilever Limited’s Project Shakti overcame these challengesby actively understanding critical societal and organisationalneeds. HUL partnered with three self-help groups, whosemembers were appointed as Shakti entrepreneurs in chosenvillages.

These entrepreneurs were women, since a key aim for thepartnership was to help the rural female population developindependence and self-esteem. The entrepreneurs receivedextensive training and borrowed money from their self-helpgroups to purchase HUL products, which they then sold intheir villages. By 2008, Shakti provided employment for42,000 women entrepreneurs covering nearly 130,000villages and 3 million households every month. In the sameyear, HUL sales through the project approached $100 million.

Dalip Sehgal, then executive director of New Ventures atHUL, noted: “Shakti is a quintessential win-win initiative andovercame challenges on a number of fronts. It is a sales anddistribution initiative that delivers growth, a communicationinitiative that builds brands, a micro-enterprise initiative thatcreates livelihoods, a social initiative that improves thestandard of life and catalyzes affluence in rural India. Whatmakes Shakti uniquely scalable and sustainable is the factthat it contributes not only to HUL but also to the communityit is a part of.”.

Ensuring sustainable supplies of critical rawmaterials

Unilever’s Lipton unit is the world’s largest buyer of tea. In1999, Unilever Tea Kenya started a pilot programme inKericho, in southwestern Kenya, to apply companysustainability principles to the production of tea. Theinitiative focused on improving productivity, sustainabilityand environmental management, as well as energy andhabitat conservation. For Unilever, growing pressure onnatural resources means that securing high-quality suppliesof critical raw materials in the long term is of paramountstrategic importance.

The Kericho initiative had a direct impact on the company’sability to control the supply of tea not just today but also intothe future, while simultaneously enhancing Unilever’scorporate reputation with both consumers and employees.Company leadership felt that higher short-term costs werefar outweighed by the long-term strategic edge Unilevergained for its raw-materials supplies and brands. In 2008, asa signal of its commitment, Unilever expanded the scope ofits sustainable-agriculture programme, pursuing certificationfrom the Rainforest Alliance for all Lipton tea farms by 2015.

For society, the initiative increased farmer revenue through a10 to 15 percent premium paid above market prices.Additionally, it focused on topics of significant concern forgovernments and farmers alike, including improving farmerskills, environmental protection and sustainable productionmethods (such as developing a self-sufficient ecosystem), aswell as enhancing local associated jobs. All these factorscontributed to strengthened rural income, skills and livingstandards.

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Find the right partners.These will be those that benefit from your core business

activities and capabilities — and that you can benefit from

in turn. Partnering is difficult, but when both sides see

win – win potential there is greater motivation to realise the

substantial benefits. Relationships — particularly long – term

ones that are built on a realistic understanding of the true

strengths on both sides — have a greater opportunity of

being successful and sustainable.

Applying these principles to choosing the appropriate CSR

opportunities prompts additional questions, namely: What

are the one or two critical areas in our business where we

interface with and have an impact on society and where

significant opportunities exist for both sides if we can

creatively adjust the relationship? What are the core

long – term needs for us and for society that can be

addressed as a result? What resources or capabilities do

we need and what do we have to offer in realising the

opportunities?

92

Focusing choicesCompanies are likely to have activities scattered across the

map, but that’s not where they have to stay — nor is it how

the benefits of CSR are maximised. Many companies start

with pet projects, philanthropy, or propaganda because these

activities are quick and easy to decide on and implement. The

question is how to move toward CSR strategies that focus on

truly cocreating value for the business and society. The

accompanying examples suggest three principles for moving

toward this goal.

Concentrate your CSR efforts.Management time and resources are limited, so the greatest

opportunities will come from areas where the business

significantly interacts with — and thus can have the greatest

impact on — society. These are areas where the business not

only can gain a deeper understanding of the mutual

dependencies but also in which the highest potential for

mutual benefit exists.

Build a deep understanding of the benefits.Even after selecting your chosen areas of opportunity,

finding the potential for mutual value creation is not always

straightforward. The key is finding symmetry between the

two sides and being open enough to understand issues both

from a business and a societal perspective.

95

business and society. If they are one-sided, be careful you

are not moving into the philanthropy or propaganda arena.

Remember that if the aim is to create more value from

partnering than you could do apart, then benefits must be

shared appropriately.

As you develop a clear array of benefits, a business case and

a story to communicate to all stakeholders, ask : Do we have

a clear understanding of the entire array of benefits and the

associated business case, on which we can focus, assess and

manage the potential CSR activity? Does the activity focus on

fundamental value creation opportunities where we can

really partner with society to realise simultaneous benefits?

Are the opportunities significant, scalable and supportive of

our overall strategic priorities?

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The business caseIn smart partnering, mutual benefit is not only a reasonable

objective, it is also required to ensure long-term success. But

this commitment must be grounded in value-creation

potential, just like any other strategic initiative. Each is an

investment that should be evaluated with the same rigour in

prioritisation, planning, resourcing and monitoring.

Now you need to define the array of potential benefits for

both the business and for society. This will not always be

easy, but a clear business case and story is important if you

are to get the company, its shareholders and its stakeholders

on board. You can assess the benefits across the following

three dimensions:

Time frame.Be clear on both the short-term immediate objectives and

the long-term benefits. In smart partnering, the time frame is

important, as initiatives can be complex and take time to

realise their full potential.

Nature of benefits.Some benefits will be tangible, such as revenue from gaining

access to a new market. Others will be equally significant, but

intangible, such as developing a new capability or enhancing

employee morale.

Benefit split.Be clear about how benefits are to be shared between the

97

This is the tough bit of the process: taking action, rather than

speaking about it and keeping up the momentum even when

targets are far in the future. As you plan the implementation

of your chosen initiatives and follow through, ask: Can we

build the commitment we need across the organisation to

make this happen — and are we as leaders willing to lead by

example? Have we planned effectively to ensure that

implementation is successful, with resources, milestones,

measurement and accountability? How can we manage the

initiative, focusing on the total array of benefits sought, not

just the short-term financials?

When it comes to CSR, there are no easy answers on what to

do or how to do it. A company’s interactions and

interdependencies with society are many and complex.

However, it is clear that approaching CSR as a feel-good or

quick-fix exercise runs the risk of missing huge opportunities

for both the business and society. Taking a step-by-step

approach and following the principles outlined here offers

leaders a way to identify and drive mutual value creation. But

it will demand a shift in mind-set: the smart partnering view

is that CSR is about doing good business and creatively

addressing significant issues that face business and society,

not simply feeling good. And smart partnering is not for the

faint of heart. It requires greater focus, work and long-term

commitment than do many standard CSR pet projects,

philanthropic activities and propaganda campaigns, but the

rewards are potentially much greater for both sides.

96

Consistency and determinationPartnering, as we all know, can be challenging. It requires

planning and hard work to assess potential mutual benefits,

establish trust and build and manage the activities, internally

as well as externally. But is it worth it? Companies at the

forefront of such partnering suggest the answer is a

resounding yes, but an additional two principles need to be

followed to ensure success:

Go in with a long-term commitment.Having a positive impact on societal issues such as living

standards is not a “quick fix” project. Leaders who want to

partner therefore need to have a long-term mind-set backed

by solid promises and measurable commitments and actions.

Your initiative must demonstrate added value to both

shareholders and stakeholders over time.

Engage the entire workforce and lead byexample.Your workforce can be one of your greatest assets and

beneficiaries when it comes to CSR activities. Increasingly,

employees are choosing to work for organisations whose

values resonate with their own. Attracting and retaining

talent will be a growing challenge in the future, so activities

that build on core values and inspire employees are key.

Unilever, along with other leaders in smart partnering,

actively engages its employees in such initiatives, seeing

improved motivation, loyalty and ability to attract and retain

talent as a result. Engaging the workforce starts at the top.

Leaders must be prepared to make a personal commitment if

the activities are to realise their full potential.

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CSEA HIGHLY SCIENTIFIC AND INTELLECTUALLY

PROFOUND PERSPECTIVE OF CORPORATE

SOCIAL ENTREPRENEURSHIP WAS

PRESENTED RECENTLY BY JAMES AUSTIN

AND EZEQUIEL REFICCO (WORKING PAPER

2009-10, HARVARD BUSINESS SCHOOL),

WHICH WE SHARE WITH YOU VERBATIM:

CORPORATE SOCIAL ENTREPRENEURSHIP

(CSE) IS A PROCESS AIMED AT ENABLING

BUSINESS TO DEVELOP MORE ADVANCED

AND POWERFUL FORMS OF CORPORATE

SOCIAL RESPONSIBILITY (CSR).

101100

CSE emerges from and builds on three other conceptual

frameworks: entrepreneurship, corporate entrepreneurship

and social entrepreneurship. CSE’s conceptual roots begin

with Schumpeter’s vision that nations’ innovation and

technological change emanate from individual

entrepreneurs. Schumpeter had projected that the engines

of entrepreneurship would shift from individuals to

corporations with their greater resources for R&D, which did

happen. However, over time, corporate bureaucracy was

seen as stifling innovation. To remedy this, a focus on

Corporate Entrepreneurship within companies emerged, with

Covin and Miles (Entrepreneurship Theory and Practice, 1999

23:47-63) defining it as “the presence of innovation with the

objective of rejuvenating or redefining organisations,

markets, or industries in order to create or sustain

competitive superiority.” In parallel, the concept of Social

Entrepreneurship emerged. Dees (The Meaning of ‘Social

Entrepreneurship. Boston, Harvard Business School.

Comments and suggestions contributed from the Social

Entrepreneurship Funders Working Group, 1998) defined it as

“innovative activity with a social purpose in either the private

or nonprofit sector, or across both.”

CSE integrates and builds on the foregoing concepts and has

been defined by Austin, Leonard, Reficco and Wei-Skillern

(Corporate Social Entrepreneurship: The New Frontier, 2006)

as “the process of extending the firm’s domain of

competence and corresponding opportunity set through

innovative leveraging of resources, both within and outside

its direct control, aimed at the simultaneous creation of

economic and social value.” The fundamental purpose of CSE

is to accelerate companies’ organisational transformation

into more powerful generators of societal betterment.

Carroll (Corporate Social Entrepreneurship: A Historical

Perspective, 2006) provided a rich historical account of the

evolution over the last fifty years of businesses’ approach to

societal responsibilities. Over the past two decades, the

traditional concept and practice of corporate philanthropy

has undergone a significant evolution into Corporate Social

Responsibility with a variety of labels, such as corporate

citizenship, triple bottom line and strategic philanthropy.

While significant progress is being made in involving

companies in CSR, a national survey (Center for Corporate

Citizenship 2004) in the USA revealed that most firms have

not been able to significantly integrate CSR into their

organisations. Googins and Rochlin (Corporate Citizenship:

Top to Bottom. Westport, Praeger. 2006) assert: “What is

clear is the widespread agreement on the need for a more

active and strategic citizenship,” and they also note that

there is no dominant framework or model for bringing that

about. Doing more of the same or making incremental

changes will not bring about the needed change. CSE aims to

provide an approach that will accelerate the CSR journey. It is

not another form of CSR but rather process for invigorating

and advancing the development of CSR

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synergies in their decision-making processes. Thus, they rely

heavily on cross-functional teams which bring to the table all

relevant stakeholders in any given issue. This system helps

the company “think out of the box” and “work across silos.”

While in traditional companies management teams are

constituted exclusively of those who create revenue, when

companies engage in CSE, management teams are also filled

by those with the primary responsibility of creating social

value. This is meant to ensure that organisational values

permeate all units of the company and are thoroughly

integrated into its internal processes. The guidance systems

support entrepreneurial activity in a corporate setting, as

entrepreneurial talent is actively sought and recruited and

autonomous entrepreneurs are empowered and given clear

goals consistent with a solid value-based organisational

culture.

The Corporate Social Intrapreneur. The CSE process is

powered by multiple change agents or Intrapreneurs. Social

and corporate entrepreneurship differentiate the roles of the

social or corporate entrepreneur from the role of managers.

Both are distinct and usually sequenced: the former is a

change catalyst for the launching of start ups, the latter is

critical for seeing these initiatives through and implementing

them. In CSE, on the other hand, both roles coexist

permanently; corporations need to be entrepreneurial in

order to innovate and go beyond their traditional managerial

approaches. This means ultimately transforming the way the

company is managed. The key vehicles for moving the

company in this direction are individuals within the

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Key elements of CSECSE aims to produce a significant and comprehensive

transformation of the way a company operates. The following

elements are central to that process: creating an enabling

environment, fostering corporate social intrapreneurs,

amplifying corporate purpose and values, generating double

value and building strategic alliances.

Enabling Environment: For companies to move from their

old approach to CSR to the CSE approach, they must adopt an

entrepreneurial mindset and cultivate an entrepreneurial

environment that enables fundamental organisational

transformation. This can only happen if top leadership

champions the change. This requires a powerful vision of

where the CSR revolution is taking the company and why it is

vital to the organisation’s success. Orin Smith, former

President and CEO, Starbucks Coffee Company expressed it

this way, “Aligning self-interest to social responsibility is the

most powerful way to sustaining a company’s success.” That

vision and strategy must also be accompanied by changes in

the company’s structures and processes. There must be

performance measurement indicators for the economic and

social value generated and the incentive and reward system

must be aligned with these indicators. Through these

“guidance systems”, top management helps to assure that

operating performance is aligned with professed

commitment to social value creation.

With the entrepreneurial culture these companies seek to

“bring down the castle walls,” and to create internal

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enterprise who are focused on fostering and bringing about

the internal organisational transformation and innovation

that moves the organisation to more advanced state of CSR.

Previous research has identified some defining

characteristics of CS Intrapreneurs. They are internal

champions, continuously advocating for the integration of

social and business value as a central tenet for the company.

They are good communicators, particularly articulate about

the rationale and importance of the transformation. They are

also active listeners to various stakeholders and are able to

speak to these groups in ways that reveal how the social

action is relevant to their needs and interests. They are

creators of innovative solutions: new resource

configurations, actions and relationships. They are not

managers of the status quo, but creators of a new,

sometimes disruptive one. They are catalysts for change, who

inspire and create synergies in the work of others. They are

coordinators, able to effectively reach across internal and

external boundaries, mobilising and aligning interests and

incentives. They are perceived as useful contributors who

support the success of others. Rather than being perceived

as building a new power center, Corporate Social

Intrapreneurs are team players who enable other groups.

Finally, they are shrewd calculators; cognisant of the realities

of the corporate environment, they are cost-conscious and

mindful of the bottom line. Change is not framed in terms of

ideals or intentions, but in terms of aligned incentives. Plus,

as organisational change agents, they need to be able to

assess how fast and far they can move the transformational

process within the realities of the organisation.

Corporate purpose: values-based organisations: One of the

key focal points of CSE is company values. Getting

organisational values right is vital to advancing CSR. The CS

Intrapreneurs need to ensure that social value generation –

fulfilling social responsibilities – is seen as an essential

component in companies’ mission and values statements.

The CSE process aims to ensure that the words are translated

into action. The values-based organisations see themselves

as trustworthy, moral agents, capable of generating trust

based on sustained ethical behavior and innovative solutions

to social problems. Their goal is not just to comply with the

law, or to be responsive to key stakeholders: they seek to

lead through example, to exceed expectations and to set new

standards.

In these organisations, social values are not viewed as a

shiny patina meant to embellish the “real” company, but

rather as a structural component, a cornerstone of their

organisational identities. Values were not adapted to an

existing strategy, but the other way around. This feature

empowers individuals and unleashes their creative energies.

Substantial levels of adherence to shared values bring down

the costs of coordinating the work of different organisational

units and facilitate working across departmental lines.

Timberland, in a fundamental move, formulated a set of

values – “humanity, humility, integrity and excellence” – that

held the company and its people should make a positive

difference in society and that its culture should foster

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one breaks out environmental value as a separate category)

bottom line, or “blended value”. The important purpose of

CSE is to discover ways to make these returns

complementary and synergistic rather than competing. In

this approach, organisations’ social value creation is not

treated as something separate or peripheral. On the

contrary, it is embedded in a larger and transparent

accountability system that reports performance to the

internal and external stakeholders. We are witnessing the

emergence of a multitude of such indicators, standards and

codes. The CSE approach aims to ensure that these measures

of performance have parity with the traditional ones and

become part of the corporate DNA.

CEO Jeff Swartz stated, “I’m convinced business can create

innovative, valuable social solutions that are good for

business and society. Commerce and justice don’t have to be

antagonistic notions.” He explained the company’s approach,

“We operate on the core theory, on the belief that doing well

and doing good are not separate ideas; they are inseparable

ideas. That, in fact, they are inextricably linked and that

everything we do, every business decision we make, every

strategy we promulgate, every speech we make, or every pair

of boot or shoes that we ship, have to be the embodiment of

commerce and justice and that’s a different model.”

Co-generating value: A vital part of the value generating

strategies is collaborating with other organisations –

businesses, civil society, or governmental. These alliances

are the vehicles for achieving what the CSE definition

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involvement in confronting and solving social problems. A

Timberland Human Resources manager noted, “The

awareness of values is what we are trying to raise with folks.

It’s no longer going to be acceptable just to get the business

result.” The company translated these values into action

through supporting employee community service and

became a leading innovator by giving each employee up to

40 hours of company time off for such work, more than any

other company.

Value congruency across the organisation allows for the

infusion of a social entrepreneurship spirit under the

umbrella of a large structure. In the words of Colleen

Chapman, Starbucks Director for Brand Management, their

approach is “continued application of our values inside of

everything we do, from a marketing standpoint, from a

product development standpoint, who we hire, how we hire,

how we treat our people.”

Value creation and the double return: Entrepreneurship is

all about finding innovative ways to create value. CSE aims to

ensure that the very purpose of these corporations migrates

from one of maximising returns to investors to optimising

returns to stakeholders, with those being defined as groups

who are significantly affected by company actions and who

can in turn impact the company. The underlying premise is

that serving such a broader constituency will make the

company more sustainable. This amplified purpose means

that the company is producing both economic and social

value, which some have referred to as a double or triple (if

109108

referred to as extending the firm’s domain of competence

and corresponding opportunity set through innovative

leveraging of resources outside its direct control. Strategic

alliances that combine complementary core competencies

can create new resource constellations that enable

innovative solutions to long-standing social and economic

problems. This leveraging of distinct organisational

capabilities and resources produces powerful co-generation

of social and economic value. Strategic alliances also seem to

be critical to the success of emerging innovative business

strategies with low income sectors at the “base of the

pyramid” (Rangan, Quelch et al. Business Solutions for the

Global Poor: Creating Social and Economic Value. San

Francisco, CA: Jossey-Bass. 2007).

CS Intrapreneurs are also entrepreneurs who are constantly

reaching out to leverage these resources outside their direct

control, building internal and external bridges. Externally,

these companies leverage intensively their relationships with

stakeholders for joint action through partnerships. The

aligning of company agendas with those of external groups

to create social value becomes an institutional habit,

engrained in the company’s culture and carried out through

CSE. Partnerships are considered assets through which

organisations overcome their organisational constraints. By

engaging their external stakeholders decisively, these

companies are able to multiply the impact of their efforts.

In the words of Sue Mecklenburg, Starbucks Vice President of

Business Practices, partnerships allows the company “to

extend our reach to areas where we have interests, but

perhaps not influence or expertise. It’s a real extension of

what we can do and often what we would like to do, or what

our customers expect us to do – issues that are very complex

and difficult to solve.” Starbucks entered into a partnership

with Conservation International to foster environmentally

sustainable coffee production among small farmers in

Chiapas, Mexico. This nonprofit brought to partnership its

environmental expertise and its capacity to work with small

farmers. Starbucks contributed its knowledge of quality

coffee production and its marketing channels. This

entrepreneurial combination of distinctive competencies

created a process that developed new production techniques

and new supply of organic coffee for Starbucks, which in turn

generated significant income enhancements to the farmers

and improved environmental conditions in the growing

areas. This initial partnership expanded to other countries

and even led to the reformulation of Starbucks’ basic coffee

procurement criteria and procedures.

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fundamental change that can be particularly threatening and

resisted. Furthermore, it pushes the corporation’s actions

more broadly and deeply into the social value creation area

where the firm’s experiences and skill sets are less

developed. The sought after disruptive social innovations

intrinsic to the CSE approach amplify this zone of discomfort.

However, these challenges are superable, as experiences in

innovative companies reveal. Furthermore, it is continually

becoming more evident that values-based leadership,

synergistic generation of social and economic value and

strategic cross-sector alliances are key ingredients to

achieving sustainably successful business. The CSE process

will contribute to our collective quest for superior

organisational performance and societal betterment. This is

the great opportunity and action imperative.

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The challenges andopportunities of applying CSEThe penetration of the social realm into corporate strategy

has gathered momentum in recent years. The movement for

CSR has “won the battle of ideas” (Crook, The Economist,

January 20, 2005). By now, most well – managed companies

have adopted the practices and certifications de rigueur in

their industries, having gone through what Zadek (The Path

to Corporate Responsibility. Harvard Business Review. 2004)

calls the “defensive” and the “compliance” stages of CSR.

Managing the social and environmental footprint of

economic activity is generally accepted as part of the cost of

doing business. But much remains to be done. If companies

are to move their CSR activities from satisfying behavior and

take their commitment to society and the environment to the

next level, they will need to rethink their current approaches

to CSR, tapping into the creativity of every individual. CSE,

like all entrepreneurship, is not about managing existing

operations or CSR programmes; it is about creating

disruptive change in the pursuit of new opportunities. It

combines the willingness and desire to create joint economic

and social value with the entrepreneurial redesign, systems

development and action necessary to carry it out.

Accelerated organisational transformation faces a host of

obstacles well-documented in the change management

literature. Because CSE expands the core purpose of

corporations and their organisational values, it constitutes

113112

INNOVATE OR PERISH IS THE STANDARD

SLOGAN IN TODAY’S WORLD. IF SO, CAN

SOCIAL BUSINESS ENTERPRISES SURVIVE

WITHOUT INNOVATION? GREGORY DEES IN

HIS ARTICLE, SOCIAL VENTURES AS

LEARNING LABORATORIES, THAT

APPEARED IN THE SPECIAL EDITION OF THE

JOURNAL INNOVATIONS FOR THE WORLD

ECONOMIC FORUM ANNUAL MEETING 2009,

STARTS HIS CASE BY SAYING IF EVER THE

WORLD NEEDED NEW PATTERNS OF

PRODUCTION, IT CERTAINLY DOES NOW

DURING THE WORST FINANCIAL DOWNTURN

IN DECADES. INNOVATIONS, DEVELOPED

AND TESTED BY ENTREPRENEURS, WILL

HELP US RESPOND TO THE CHALLENGES OF

THE CRISIS AND MOVE INTO A NEW ERA OF

PROSPERITY.

Innovations

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supported, but it is extremely important to the quality of our

lives on this planet. It is particularly important in times like

these, where financial pressures are likely to make social

problems worse. As economies shrink or, in the best cases,

grow much more slowly than previously expected, we can

anticipate increases in poverty and unemployment.

This will exacerbate the many problems associated with

poverty. Fewer people will receive adequate health care.

Because of the financial burden that formal education can

place on parents, fewer children will attend school. Tensions

and violence may increase as the poor compete for jobs and

income opportunities, as they did recently on the border of

Zimbabwe and South Africa. Progress will be lost, as families

that have been successful in moving out of poverty fall back

into it. Though carbon emissions should decline with

declining economic activity (though the dropping price of oil

complicates matters), any decline is unlikely to make an

appreciable dent in the growing problem of global warming.

As government, business and household budgets tighten,

costly environmental protection and clean-up efforts are in

jeopardy. With declining oil prices, the economics of

alternative energy may become less attractive.

Because many social and environment issues are time

sensitive, failure to recognise the importance of social

entrepreneurship and provide adequate support for such

efforts during this downturn would be a serious mistake.

Damage will be done that cannot easily be undone. Social

entrepreneurship is not a luxury that can be suspended while

we wait for the economy to turn around.

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Entrepreneurship is part of the solution to the crisis, but,

ironically, it was also part of the problem. Capital market

innovations, such as interest-only adjustable rate mortgages

and credit default swaps, helped to revolutionise the pattern

of production in credit markets, resulting in permanent

damage. Innovation can be risky business, especially if the

innovators and early adopters are focused only on what is

likely to be profitable for them in the short term. These

capital market innovations present a worst-case version of

Schumpeter’s idea of “creative destruction.” In this case, the

harm from the destruction exceeded the value of the

creation. That is not the kind of entrepreneurship we need

more of. What we need now is entrepreneurship that creates

greater long-term value while drawing on fewer resources

and generating fewer destructive consequences. We need

business entrepreneurs whose innovations will jump-start

the economy, create jobs and cause minimal disruption. We

need more of the non-destructive creation that Columbia

professor Amar Bhide has written about. We also need more

social entrepreneurship.

Pressing problemsNowhere is this kind of value-creating innovation more

important than in our efforts to tackle pressing social and

environmental problems. This is where social entrepreneurs

come in. They reform or revolutionise the patterns for

addressing social issues. They measure their success in social

impact. Social entrepreneurship has not gotten as much

attention as business entrepreneurship and is not as well

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social entrepreneurs have been driving toward the commercialend of that spectrum to reduce their dependence onphilanthropic or governmental subsidies. Commercialstrategies are not optimal for all social ventures. The businessmodel has to align with the strategy for social impact, but whenpossible, social entrepreneurs do work to create sustainable,scalable ventures. For-profit ventures, social business venturesand hybrid ventures that mix elements from the philanthropicand commercial worlds have become common.

For instance, Water Health International is a for-profit socialventure that combines an innovative, relatively low-costtechnology for water purification in rural areas of developingcountries with an innovative business model in which villagesfinance the purchase of the equipment and the villagers pay asmall fee for the clean water they use. Vision-Spring is anonprofit example of creative business model development. Itprovides low-cost reading glasses, a productivity-enhancingproduct, by buying the glasses produced in China and sellingthem through micro-franchisees, who live in the villages of thecountries where it does business. Thus, it provides affordableglasses and creates income opportunities for its visionentrepreneurs.

The emergence of for-profit social ventures and the increase innonprofits generating earned income are controversial, but thiskind of experimentation is essential if we are to find ways toimprove the productivity of the scarce resources we devote tosocial problems. When it works (i.e. aligns with social impact), itleads to a more effective allocation of scarce philanthropic andgovernment funds. These subsidies can be freed up to flow tothe organisations and causes that need them most. Throughcreativity in business model development, social entrepreneursare crafting more sustainable and scalable innovations.

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Learning laboratoriesSocial entrepreneurs offer us a learning laboratory: theydevelop and test innovative solutions to social problems. Aswith any form of innovation, it is impossible to know inadvance what will work. This is especially true when “working”involves reducing or solving a social problem. Only byfostering a wide range of experiments can we hope to findwhich proposed solutions are viable, cost-effective andscalable. This is the beauty of the small, new, resourcefulventures that social entrepreneurs tend to create. As Stanfordeconomist Nathan Rosenberg and his coauthor Birdzell Jr.,have argued, “New enterprises are useful devices forexperimenting with innovation, because they can beestablished on a small, experimental scale at relatively lowcost and therefore in large numbers and their efforts can beintensely focused on a single target.” Independent socialentrepreneurs have greater flexibility to experiment,uninhibited by the biases, standard operating procedures,bureaucracy, cultures, strategic commitments and otherrigidities common in established organisations of all kinds.

Promoting resourcefulnessAs a matter of necessity, entrepreneurs, social or otherwise,have to be resourceful. They become quite skilled at doingmore with less and at attracting other people’s resources totheir ventures, directly or through partnerships. Thisresourcefulness is reflected in their creative and pragmaticapproach to business model design. It is useful to think ofsocial venture business models as running along a spectrum,from fully reliant on philanthropy and government subsidy atone end to fully commercial at the other. In recent years, many

119

effectively. No one likes to admit failure and few are willing

to open their failures to inspection. Even the successes are

rarely analyzed in a critical way that can contribute to a

common body of knowledge. However, the learning

laboratory is more likely to yield effective scalable

innovations in the future if the players in the laboratory

know enough not to repeat past failures and can find ways to

build on past successes. This is a role for universities,

consultants, associations, think tanks and journals.

The current financial crisis will force us to be smart about our

investments in social change. This could be a healthy

development for social entrepreneurship, provided that

philanthropists, social investors, governments, corporations

and other key players actively foster a vibrant learning

laboratory of social entrepreneurs, assess the results of

these experiments, support the scaling or replication of high-

leverage ventures (those that promise greater social impact

per unit of financial investment) and collaborate with efforts

to capture and share knowledge along the way. Leaders in

any society have much to gain from taking the concept of

social entrepreneurship seriously and providing social

entrepreneurs with the same kind of disciplined strategic

support that they provide for innovation in business.

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Impact and knowledgeWhile it is essential to support the early-stage innovations

that make up the “learning laboratory” of social

entrepreneurship, the real value comes in what society does

with the results of that learning laboratory. Value is created

when successful innovations are identified and then scaled or

replicated to maximise their impact. It is important to note,

however, that not every successful social innovation

(successful in the sense of achieving its intended social

impact) is amenable to scaling or replication. Local successes

sometimes depend on rare conditions, scarce skills, or

inefficient business models. Innovations need to be evaluated

not just on their social impact, but also on their

transferability and cost-effectiveness and on the

organisation’s readiness for a scaling or replication effort.

However, with the right kind of rigorous due diligence, key

resource providers (particularly philanthropists, social

investors, potential corporate partners and government

funders) can identify viable candidates for scale or

replication and provide the support they need to achieve

widespread impact. In a time of financial crisis, this

disciplined approach is even more important. It may be hard

to pick a few “winners” for major investment, since everyone

is well intentioned, but it is essential to capture the value of

the experimentation.

The second way to reap value from this learning laboratory is

to harvest the lessons from both the successes (scalable or

not) and the failures and to share this knowledge with those

who can put it to good use. Tremendous waste occurs in the

social sector when knowledge is not captured and shared

121

negotiated flexibly. To increase job quality, people may carry outa number of different roles in parallel or in succession. Strategicdecisions will generally be reached through a process ofconsultation of all stakeholders. Feedback on achievements andresults is to the general meeting of members, as well as tostakeholders more broadly.

The success of social enterprises depends on keeping up goodlinks with a number of different stakeholders. There is a need tomanage their social capital, which is made up of levels of trust,reciprocity, norms of behavior, a sense of belonging andnetworks. This not only involves workers but suppliers, final users,clients in both the public and private sectors and the communitygenerally.

Social enterprises do not rely on conventional, anonymousmarketing techniques. Instead, they focus on social marketingbased on proximity, personal contact and trust.

Finance is often a combination of private finance, publicfunding and voluntary contributions of money or time. Managingthis mix also requires specific skills.

Finally, social enterprises have multiple bottom lines, that is tosay multiple objectives – social and environmental as well asfinancial. They strive not only to ensure their continuity by makingan operating surplus, but also to produce outputs which are notsimple to translate into monetary terms (for instance in terms ofthe improved social welfare of their members, their customersand the local community). Methods of attributing monetary valuesto the costs and benefits of social enterprise are continually beingimproved (for instance their activity may reduce public spendingon unemployment benefit, social security, health and policingservices). Evaluating whether to support social enterprises andmonitoring their performance requires special reporting,monitoring and evaluation techniques that take account of thesocial as well as the economic objectives.

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CSE skillsSocial enterprises support their social objectives rather thanpersonal gain. They provide much-needed goods and services,often where the private sector has chosen not to. Socialenterprises provide health and care services, recycling services,new and recycled goods, transport, community facilities,renewable energy, construction services, housing and access tobroadband telecommunications. This is often combined withproviding on-the-job training in a supportive environment fordisadvantaged people, including people who have a disability orare long-term unemployed.

Because they eschew a “get rich quick” mentality, socialenterprises tend to suffer from low prestige. Yet working in themis not easy; it demands flexibility and multiple skills. Incentivesand career paths are often limited. Social and financial aims mayclash and so do volunteer and paid employee mentalities.Moreover, social enterprises predominantly offer employment topeople who have not gained formal qualifications.

As businesses, they must be well managed if they are to survive.The specific nature of social enterprises means that they needspecific new skills and qualifications in the following areas(wikipreneurship, accessed December 2009):

Working in a social enterprise is not solely a matter of gaininga material reward. In personnel or human resource management,social enterprises therefore depend to a far greater extent on themotivation of their workers. Techniques of participativemanagement are required to maintain this. These depend on theinvolvement of people in deciding the content of jobs and inimproving results, rather than simply carrying them out asinstructed. This relies on a keen appreciation of what it means towork in a team and a commitment to a process of collectiveproblem resolution and decision-making. Positions ofresponsibility may be held in rotation over longer or shorterperiods and jobs may be shared. Working hours may be

123122

AN IMPORTANT COMPONENT OF

CORPORATE SOCIAL RESPONSIBILITY IS

ENSURING SUSTAINABLE GROWTH.

ACCORDING TO WIKIPEDIA (ACCESSED

DECEMBER 2009), SUSTAINABILITY IS THE

POTENTIAL FOR LONG-TERM MAINTENANCE

OF WELLBEING, WHICH IN TURN DEPENDS

ON THE WELLBEING OF THE NATURAL

WORLD AND THE RESPONSIBLE USE OF

NATURAL RESOURCES. SUSTAINABILITY

CAN BE APPLIED TO ALMOST EVERY FACET

OF LIFE ON EARTH, FROM A LOCAL TO A

GLOBAL SCALE AND OVER VARIOUS TIME

PERIODS. LONG-LIVED AND HEALTHY

WETLANDS AND FORESTS ARE EXAMPLES

OF SUSTAINABLE BIOLOGICAL SYSTEMS.

INVISIBLE CHEMICAL CYCLES REDISTRIBUTE

WATER, OXYGEN, NITROGEN AND CARBON

THROUGH THE WORLD’S LIVING AND NON-

LIVING SYSTEMS AND HAVE SUSTAINED

LIFE FOR MILLIONS OF YEARS.

Sustainability

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In recent times, sustainability has been used more in the senseof human sustainability on planet Earth and this has resultedin the most widely quoted definition of sustainability andsustainable development, that of the Brundtland Commissionof the United Nations: “sustainable development isdevelopment that meets the needs of the present withoutcompromising the ability of future generations to meet theirown needs.” This requires the reconciliation of environmental,social and economic demands – the “three pillars” ofsustainability which are not mutually exclusive but mutuallyreinforcing.

The Western industrial revolution of the 17th to 19th centuriestapped into the vast growth potential of the energy in fossilfuels to power sophisticated machinery technology. Theseconditions led to a human population explosion andunprecedented industrial, technological and scientific growththat has continued to this day. From 1650 to 1850 the globalpopulation had already doubled from around 500 million to 1billion people and today the growth is indeed relentless. Theindustrial revolution resulted in an exponential increase in thehuman consumption of resources and an increase in health,wealth and population.

After the deprivations of the Great Depression and World War II the developed world entered a post-1950s “greatacceleration” of growth and population (the “Golden age ofcapitalism”) while a gathering environmental movementpointed out that there were environmental costs associatedwith the many material benefits that were now being enjoyed.Technological innovations included plastics, syntheticchemicals and nuclear energy as fossil fuels also continued totransform society. By the late twentieth century environmentalproblems were becoming global in scale and the 1973 and 1979energy crises demonstrated the extent to which the global

community had become dependent on a nonrenewableresource.

In the 21st century there is heightened awareness of the threatposed by the human-induced greenhouse effect. Ecologicaleconomics now seeks to bridge the gap between ecology andtraditional economics and proposes an inclusive and ethicaleconomic model for society. Many new techniques have arisento help measure and implement sustainability, including LifeCycle Assessment.

Sustainability is studied and managed over many scales (levelsor frames of reference) of time and space and in many contextsof environmental, social and economic organisation. The focusranges from the total carrying capacity (sustainability) of planetEarth to the sustainability of economic sectors, ecosystems,countries, municipalities, neighborhoods, home gardens,individual lives, individual goods and services, occupations,lifestyles, behavior patterns and so on. In short, it can entail thefull compass of biological and human activity or any part of it.As Daniel Botkin, author and environmentalist stated: “We see alandscape that is always in flux, changing over many scales oftime and space.”

Historically, humanity has responded to a demand for moreresources by trying to increase supply. As supplies inevitablybecome depleted sustainable practices are encouraged throughdemand management for all goods and services — by promotingreduced consumption, using renewable resources wherepossible and encouraging practices that minimise resourceintensity while maximising resource productivity. Carefulresource management can be applied at many scales, fromeconomic sectors like agriculture, manufacturing and industry,to work organisations, the consumption patterns of householdsand individuals and to the resource demands of individualgoods and services.

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biologically productive land needed to provide the resources

and absorb the wastes of the average global citizen. In 2008

it required 2.7 global hectares per person, 30% more than

the natural biological capacity of 2.1 global hectares

(assuming no provision for other organisms). The resulting

ecological deficit must be met from unsustainable extra

sources and these are obtained in three ways: embedded in

the goods and services of world trade; taken from the past

(e.g. fossil fuels); or borrowed from the future as

unsustainable resource usage (e.g. by over exploiting forests

and fisheries).

The general trend is for higher standards of living to become

less sustainable. As always population growth has a marked

influence on levels of consumption and the efficiency of

resource use. The sustainability goal is to raise the global

standard of living without increasing the use of resources

beyond globally sustainable levels; that is, to not exceed “one

planet” consumption. Information generated by reports at

the national, regional and city scales confirm the global trend

towards societies that are becoming less sustainable over

time.

At a fundamental level, energy flow and biogeochemical

cycling set an upper limit on the number and mass of

organisms in any ecosystem. Human impacts on the Earth

are demonstrated in a general way through detrimental

changes in the global biogeochemical cycles of chemicals

that are critical to life, most notably those of water, oxygen,

carbon, nitrogen and phosphorus.

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PopulationAccording to the 2008 Revision of the official United Nations

population estimates and projections, the world population is

projected to reach 7 billion early in 2012, up from the current

6.9 billion (2009), to exceed 9 billion people by 2050. Most

of the increase will be in developing countries whose

population is projected to rise from 5.6 billion in 2009 to 7.9

billion in 2050. This increase will be distributed among the

population aged 15 – 59 (1.2 billion) and 60 or over (1.1

billion) because the number of children under age 15 in

developing countries will decrease. In contrast, the

population of the more developed regions is expected to

undergo only slight increase from 1.23 billion to 1.28 billion

and this would have declined to 1.15 billion but for a

projected net migration from developing to developed

countries, which is expected to average 2.4 million persons

annually from 2009 to 2050.

Long-term estimates of global population suggest a peak at

around 2070 of nine to ten billion people and then a slow

decrease to 8.4 billion by 2100. Emerging economies like

those of China and India aspire to the living standards of the

Western world as does the non-industrialised world in

general. It is the combination of population increase in the

developing world and unsustainable consumption levels in

the developed world that poses a stark challenge to

sustainability.

More and more data is indicating that humans are not living

within the carrying capacity of the planet. The Ecological

footprint measures human consumption in terms of the

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levels of about 380 ppm. Above this level and temperatures

could rise by more than 2 °C (36 °F) to produce

“catastrophic” climate change. Reduction of current CO2

levels must be achieved against a background of global

population increase and developing countries aspiring to

energy-intensive high consumption Western lifestyles.

Reducing greenhouse emissions, referred to as

decarbonisation, is being tackled at all scales, ranging from

tracking the passage of carbon through the carbon cycle to

the exploration of renewable energies, developing less

carbon-hungry technology and transport systems and

attempts by individuals to lead carbon neutral lifestyles by

monitoring the fossil fuel use embodied in all the goods and

services they use.

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Human consumptionThe underlying driver of direct human impacts on the

environment is human consumption. This impact is reduced

by not only consuming less but by also making the full cycle

of production, use and disposal more sustainable.

Consumption of goods and services can be analysed and

managed at all scales through the chain of consumption,

starting with the effects of individual lifestyle choices and

spending patterns, through to the resource demands of

specific goods and services, the impacts of economic sectors,

through national economies to the global economy. Analysis

of consumption patterns relates resource use to the

environmental, social and economic impacts at the scale or

context under investigation.

The Sun’s energy, stored by plants (primary producers)

during photosynthesis, passes through the food chain to

other organisms to ultimately power all living processes.

Since the industrial revolution the concentrated energy of

the Sun stored in fossilised plants as fossil fuels has been a

major driver of technology which, in turn, has been the

source of both economic and political power. In 2007

climate scientists concluded that there was at least a 90%

probability that atmospheric increase in CO2 was

human – induced, mostly as a result of fossil fuel emissions

but, to a lesser extent from changes in land use. Stabilising

the world’s climate will require high income countries to

reduce their emissions by 60-90% over 2006 levels by 2050

which should hold CO2 levels at 450-650 ppm from current

131130

WaterWater security and food security are inextricably linked. In

the decade 1951-60 human water withdrawals were four

times greater than the previous decade. This rapid increase

resulted from scientific and technological developments

impacting through the economy – especially the increase in

irrigated land, growth in industrial and power sectors and

intensive dam construction on all continents. This altered the

water cycle of rivers and lakes, affected their water quality

and had a significant impact on the global water cycle.

Currently around 35% of human water use is unsustainable,

drawing on diminishing aquifers and reducing the flows of

major rivers: this percentage is likely to increase if climate

change worsens, populations increase, aquifers become

progressively depleted and supplies become polluted and

unsanitary. From 1961 to 2001 water demand doubled –

agricultural use increased by 75%, industrial use by more

than 200% and domestic use more than 400%. Humans

currently use 40-50% of the globally available freshwater in

the approximate proportion of 70% for agriculture, 22% for

industry and 8% for domestic purposes and the total volume

is progressively increasing.

Water efficiency is being improved on a global scale by

increased demand management, improved infrastructure,

improved water productivity of agriculture, minimising the

water intensity (embodied water) of goods and services,

addressing shortages in the non-industrialised world,

concentrating food production in areas of high productivity

and planning for climate change. At the local level people are

becoming more water–self–sufficient by harvesting rainwater

and reducing use of mains water.

FoodThe American Public Health Association (APHA) defines a

“sustainable food system” as “one that provides healthy food

to meet current food needs while maintaining healthy

ecosystems that can also provide food for generations to

come with minimal negative impact to the environment. A

sustainable food system also encourages local production

and distribution infrastructures and makes nutritious food

available, accessible and affordable to all. Further, it is

humane and just, protecting farmers and other workers,

consumers and communities.”

Concerns about the environmental impacts of agribusiness

and the stark contrast between the obesity problems of the

Western world and the poverty and food insecurity of the

developing world have generated a strong movement

towards healthy, sustainable eating as a major component of

overall ethical consumerism. The environmental effects of

different dietary patterns depend on many factors, including

the proportion of animal and plant foods consumed and the

method of food production.

At the global level the environmental impact of agribusiness

is being addressed through sustainable agriculture and

organic farming. At the local level there are various

movements working towards local food production, more

productive use of urban wastelands and domestic gardens

including permaculture, urban horticulture, local food, slow

food, sustainable gardening and organic gardening.

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Materials, toxic substances,wasteAs global population and affluence has increased, so has the

use of various materials increased in volume, diversity and

distance transported. Included here are raw materials,

minerals, synthetic chemicals (including hazardous

substances), manufactured products, food, living organisms

and waste.

Synthetic chemical production has escalated following the

stimulus it received during the Second World War Chemical

production includes everything from herbicides, pesticides

and fertilisers to domestic chemicals and hazardous

substances. Apart from the build-up of greenhouse gas

emissions in the atmosphere, chemicals of particular concern

include: heavy metals, nuclear waste, chlorofluorocarbons,

persistent organic pollutants and all harmful chemicals

capable of bioaccumulation. Although most synthetic

chemicals are harmless there needs to be rigorous testing of

new chemicals, in all countries, for adverse environmental

and health effects. International legislation has been

established to deal with the global distribution and

management of dangerous goods.

Every economic activity produces material that can be

classified as waste. The average human uses 45-85 tonnes of

materials each year. To reduce waste industry, business and

government are now mimicking nature by turning the waste

produced by industrial metabolism into resource.

Environmental degradation In the second half of the 20th century world population

doubled, food production tripled, energy use quadrupled and

overall economic activity quintupled. Historically, there has

been a close correlation between economic growth and

environmental degradation: as communities grow, so the

environment declines. This trend is clearly demonstrated on

graphs of human population numbers, economic growth and

environmental indicators.

Unsustainable economic growth has been starkly compared

to the malignant growth of a cancer because it eats away at

the Earth’s ecosystem services which are its life-support

system. There is concern that, unless resource use is

checked, modern global civilisation will follow the path of

ancient civilisations that collapsed through overexploitation

of their resource base.

While conventional economics is concerned largely with

economic growth and the efficient allocation of resources,

ecological economics has the explicit goal of sustainable

scale (rather than continual growth), fair distribution and

efficient allocation, in that order. The World Business Council

for Sustainable Development states that “business cannot

succeed in societies that fail”. Sustainability studies analyse

ways to reduce (decouple) the amount of resource (e.g.

water, energy, or materials) needed for the production,

consumption and disposal of a unit of good or service

whether this be achieved from improved economic

management, product design, new technology etc. Ecological

economics includes the study of societal metabolism, the

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throughput of resources that enter and exit the economic

system in relation to environmental quality.

The economic importance of nature is indicated by the use of

the expression ecosystem services to highlight the market

relevance of an increasingly scarce natural world that can no

longer be regarded as both unlimited and free. In general, as

a commodity or service becomes more scarce, the price

increases and this acts as a restraint that encourages

frugality, technical innovation and alternative products.

However, this only applies when the product or service falls

within the market system. As ecosystem services are

generally treated as economic externalities they are unpriced

and therefore overused and degraded, a situation sometimes

referred to as the Tragedy of the Commons.

One approach to this dilemma has been the attempt to

“internalise” these “externalities” by using market strategies

like ecotaxes and incentives, tradeable permits for carbon,

water and nitrogen use etc. and the encouragement of

payment for ecosystem services. Community currencies such

as LETS, a gift economy and Time Banking have also been

promoted as a way of supporting local economies and the

environment. Green economics is another market-based

attempt to address issues of equity and the environment. The

global recession and a range of government policies that

have been connected to that, are likely to bring the biggest

annual fall in the world’s carbon dioxide emissions in 40

years.

Indian scenario“A sustainable organisation runs a profitable operation while

continually contributing towards the betterment of all

stakeholders. If any stakeholder — whether the environment

or your employees — shows deterioration, you’re no longer

sustainable,” says Tata Industries MD Kishor Chaukar.

Corporate India too is being drawn into this new regime of

operating business; at last count, 21 Indian companies had

taken up triple bottom line reporting (which, besides

financial disclosures, includes disclosures on impacts on

society and the environment). “It’s not our chairman’s

(Anand Mahindra) way to shove decisions down people’s

throats but today for us, there is no choice on sustainability,”

says Rajeev Dubey, president, HR & corporate services,

Mahindra & Mahindra.

At ITC’s 2009 annual general meeting, chairman YC

Deveshwar pushed a compelling case for sustainable growth,

emphasising that businesses had no choice but to build

capabilities to address the demands of a low-carbon global

business environment. “For a country like India with millions

below the poverty line this new paradigm of competitiveness

will not only require the creation of “green businesses”, but

also the generation of “green livelihoods,” he added. Being

the market leader in the cigarettes business has meant that

public perception of the Imperial Tobacco Company (ITC) has

always bordered on the pejorative. Today though, the

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company is also lauded for its 6,500 e-Choupals (knowledge

kiosks for farmers) that cover 40,000 villages and its

integrated watershed development initiative that has created

freshwater potential across 46,000 hectares in water-

stressed areas. ITC has also consciously aligned its new

businesses like paperboards and packaged foods with

socially and environmentally responsible practices. Its

paperboards business, for instance, sources fibre from

renewable plantations and has provided livelihoods to

marginal farmers and tribals.

In a world where consumers, employees and other

stakeholders are beginning to ask what role their

organisations are playing in the sustainability crisis,

corporates are finding that investing in sustainable growth

may be a necessary cost of doing business. In fact as Dhaval

Buch, executive director, Hindustan Unilever (HUL) says,

investing in low carbon technology is capital intensive. “Our

challenge is continuing to drive this agenda while ensuring

that our cost structures stay competitive,” he adds. HUL has

chosen to follow a strategy of sustainable growth built on

three levers – its brands (that come with clear messages of

hygiene and sanitation or environmentally friendly

attributes), people (last year its staff put in 49,000 hours of

volunteering) and processes (where it is reducing carbon

emissions of operations). “If you make a positive impact with

your business you connect with the consumer better,” says

Buch.

Sustainability is not do-goodery. “CSR used to work in silos

and issue cheques to the CEO’s favourite charity.

Sustainability today is deeply integrated with business

operations,” says Naina Lal Kidwai, country head HSBC India.

Three years ago HSBC India began lending to microfinance

institutions as a part of its commitment to financial inclusion;

today it’s a business worth at least $38 million. “They’ve

actually been better customers than our credit card

customers,” says Kidwai. Plus there is the intangible rub-off

on corporate reputation. “If your company is seen as a

responsible player in sustainability, it creates a lot of

enthusiasm among employees, vendors and customers,” says

Godrej group chairman Adi Godrej; Godrej Industries is a

signatory to the Confederation of Indian Industry (CII) code

for ecologically sustainable business growth which commits it

to protecting the environment in the pursuit of business

growth.

Interestingly, sometimes it’s the “dirtiest” industries that

lead the charge. Cement making is a highly energy and

mineral intensive process but ACC Cements came out with its

first sustainability report last year and has achieved

considerable results, for instance, in the utilisation of

hazardous industrial wastes to make blended cements.

“There are those who will do the right thing only if driven by

law and others who do the right thing because they believe in

it and see the all-round benefit of doing so,” says Sumit

Banerjee, managing director, ACC Cements. Tata Power, like

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Social & Governance (ESG) analysis as a standard practice in

their investment decisions is growing, compelling disclosure

by Indian companies. “Our assessment of ESG risks

associated with every investment always runs in parallel to

the business and investment due diligence,” says Ritu Kumar,

senior advisor UK at private equity major Actis, adding that

this approach has actually revealed greater opportunities for

value creation and reduces investment and portfolio risk.

What disclosure does is firmly establish a company’s

commitment to sustainable growth, but as Arvind Sharma,

associate director, KPMG Advisory Services says, the journey

is long and “most companies are still grappling with the

enormity of the sustainability challenge”. Footprint reduction

is typically the first step where companies try and reduce

specific energy consumption, recycle waste water or reduce

dependence on fossil fuels. HUL has committed to reduce the

carbon footprint of its operations by 25% from 2004 levels

by 2012. The next step is the greening of supply chains;

Godrej admits this is challenging when there isn’t a well-

defined supply chain but the group is committed to building

efficiencies and promoting sustainability performances

among its vendors. The final stages involve actually

designing new products and services based on sustainability

and eventually transforming the business model itself.

For Indian companies, as Deveshwar points out, social impact

and governance are critical parts of the sustainability puzzle,

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ACC, believes strongly in sustainability stewardship. “In

Australia a law has been passed that by 2020 all power

distribution companies must procure 20% of all power

through renewable sources. Policy framework will catch up

here as well and when it does, we want to have a huge

upside,” says Banmali Agrawala, executive director-strategy

and business development. Given that 25% of the world’s CO2

emissions come from power generation, climate change is a

serious issue for the company. Despite large-scale plans for

expansion of coal-fired generation, Tata Power’s vision for

the longer term is to reduce the carbon intensity of its

portfolio by substantial investments in carbon sequestration,

clean coal technology and renewable sources like geothermal

and wind.

The drivers for sustainability in India are varied — energy

insecurity, regulatory frameworks or even because ethical

work practices and supply chain integrity are suddenly non-

negotiable for export. Independent think tank and strategy

consultancy SustainAbility India’s director Shankar

Venkateshwaran believes that leaders from long gestation

sectors like power tend to be more farsighted on the

business imperative of sustainable growth. “They are able to

recognise the dangers in the future,” he says. For some

companies, like Mahindra & Mahindra, the catalyst comes in

the form of a financial investor that requires disclosure on

the company’s environmental and social impact. In fact, the

volume of mainstream investors that now use Environmental,

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even if the Western discourse on sustainability places a

premium on the environment piece. At Wipro, according to

PS Narayanan, general manager and head – sustainability,

the pillars of sustainability are as much about ecological

impact as they are about health and safety standards and

employment practices. “Business today has to earn the

license to operate both from the social and environmental

perspective,” he says. SustainAbility is helping Tata Power,

through an exercise it calls Materiality, map community

groups displaced by company operations and articulate a

company-wide strategy covering land acquisition and

rehabilitation. “The idea is to ask each of your stakeholders

what their expectation is of the company, what they think are

the biggest risks, build your strategy around that and then

report based on that. That way you worry about what is

important as defined not by you but stakeholders,” says

Venkateshwaran. The Materiality exercise, also conducted at

ACC, generated much awareness. “I think our team is

convinced that sustainability pays in the long run; in some

cases even earlier,” says Banerjee.

Ultimately, sustainability has to go beyond the CEO’s

evangelism to touch every employee in the organisation. The

entire managerial team at Tata Power has just completed the

measurement of their individual carbon footprints using

three simple levers — fuel consumption, units of electricity

used and cooking gas consumed; Agrawala admits he was

embarrassed by his own personal footprint. Experts say

employees are best won over when CEOs position the whole

sustainability strategy as a business opportunity. Indeed,

being socially responsible doesn’t have to be at odds with

being financially profitable. GE led the way in 2005 with

‘Ecomagination’, a portfolio of products that aimed to “solve

the world’s biggest environmental challenges”. By 2008, GE

increased its portfolio of Ecomagination offerings by one-

third and grew revenues of Ecomagination offerings to $17

billion. “Ecomagination is not a campaign or slogan, it’s a

business strategy; how to make sustainable cleaner

technology while making a buck at it,” says Pratyush Kumar,

president & CEO – infrastructure, GE India.

M&M is making inroads into ‘greener’ businesses like electric

cars and three-wheelers. “In every business, we’re looking at

what opportunities are created by our sustainable agenda,”

says Dubey. And Godrej is particularly excited about Godrej

Garden City, a township development in the city of

Ahmedabad, a largescale urban development project that

strives to reduce the amount of on-site CO2 emissions to

below zero. The challenge however is not that there isn’t an

emerging consumer market that seeks products with a lower

carbon footprint, but that consumers still do not want to pay

more for them. But customers are evolving, says Agrawala:

“At every customer meet the standard question is: What can

you as Tata Power do to help me improve my energy

efficiency at home?”

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expectations of society. When you start to think like this, you

see the world differently.” It is becoming increasingly clear

that while corporate executives can ignore the issue of

sustainability, they do it at their own growing risk (Economic

Times 27 November 2009).

It may appear that taking care of sustainability while at the

same time serving the civil society in terms of development

and employment generation may appear to be a

contradiction in terms, at least in developing countries like

India. Long–term environmental goals and short–to–medium

term growth in GDP almost invariably appear to clash with

each other. But somehow, humankind has to learn new

lessons in the years and decades ahead if we want our future

generations to thank us for our foresight.

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The greening of the consumer also requires credible systems

of information to be made available so they can make

informed choices. Last year, IFC and Standard & Poors

launched the ESG India Index, drawn from the largest 500

companies listed on the National Stock Exchange, whose

business strategies and performance demonstrate a high

level of commitment to ESG standards. “We expect that as

ESG becomes more entrenched in company practices, this

index will provide evidence of that and in turn lead people to

really value it as an investment tool,” says Alka Banerjee,

vice president- index services, Standard & Poor’s.

December 2009 climate conference in Copenhagen has come

and gone without much clarity on so many issues. Of course

the fundamental sticking points remain between developing

and developed nations over the balance between the need

for development and the challenges of mitigating climate

change and the transfer of technology and aid from rich to

poor nations. “Ultimately, business in India will have to

enable development but the challenge will be to ensure that

the carbon footprint does not mirror the Western paradigm

of development,” says Venkateshwaran.

Whatever the outcome, it is clear there will be newer

challenges post-Copenhagen that will significantly alter the

paradigm of competitiveness for businesses globally. As

Andrew Witty, CEO, GlaxoSmithKline once said; “With nothing

certain, we (big pharma companies) should never take for

granted our right to exist. We are earning it by meeting the

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THE WORLD BUSINESS COUNCIL FOR

SUSTAINABLE DEVELOPMENT HAS NOTED

THAT A COHERENT CSR STRATEGY BASED

ON INTEGRITY, SOUND VALUES AND A

LONG–TERM APPROACH OFFERS CLEAR

BUSINESS BENEFITS TO COMPANIES AND

CONTRIBUTES TO THE WELL–BEING OF

SOCIETY (CORPORATE SOCIAL

RESPONSIBILITY – TOWARDS A SUSTAINABLE

FUTURE, KPMG-ASSOCHAM WHITE PAPER

2008). AS COMPANIES MOVE FORWARD TO

DESIGN A CSR STRATEGY THAT PROVIDES

THE LEVERAGE POINT AS INTENDED, MANY

KEY SUCCESS FACTORS NEED TO BE BORNE

IN MIND.

Theroadahead

147146

The originally defined concept of CSR needs to be interpreted

and dimensionalised in the broader conceptual framework of

how the corporate embed their corporate values as a new

strategic asset, to build a basis for trust and cooperation

within the wider stakeholder community. Though there have

been evidences that record a paradigm shift from charity to a

long-term strategy, yet the concept still is believed to be

strongly linked to philanthropy. There is a need to bring

about an attitudinal change in people about the concept.

By having more coherent and ethically driven discourses on

CSR, it has to be understood that CSR is about how

corporates place their business ethics and behaviours to

balance business growth and commercial success with a

positive change in the stakeholder community. Several

corporates today have specific departments to operationalise

CSR. There are either foundations or trusts or a separate

department within an organisation that looks into

implementation of practices. Being treated as a separate

entity, there is always a flexibility and independence to carry

out the tasks.

But often these entities work in isolation without creating a

synergy with other departments of the corporate. There is a

need to understand that CSR is not only a pure management

directive, but it is something that is central to the company

and has to be embedded in the core values and principles of

the corporate. Whatever corporates do within the purview of

CSR has to be related to core business. It has to utilise things

at which corporates are good; it has to be something that

takes advantage of the core skills and competencies of the

companies. It has to be a mandate of the entire organisation

and its scope does not simply begin and end with one

department in the organisation.

While conceptualisation and implementation seem firmly

underway, evaluation is still taking a back seat. There is a

need to incorporate an evaluation plan, which along with

presenting a scope for improvement in terms of fund

utilisation and methodology adopted for the project,

measures the short and long term impact of the practices.

While there have been success stories of short–term

interventions, their impact has been limited and have faded

over a period of time. It is essential for corporates to adopt a

long–term approach rather than sticking to short–term

interventions, involving the companies and employees in the

long-term process of positive social transition.

A clearly defined mission and a vision statement combined

with a sound implementation strategy and a plan of action

firmly rooted in ground realities and developed in close

collaboration with implementation partners, is what it takes

for a successful execution of CSR. An area that can be looked

upon is the sharing of best practices by corporates. A

plausible framework for this could be benchmarking. While

benchmarking will help corporates evaluate their initiatives

and rank them, it will also provide an impetus to others to

develop similar kind of practices. Credibility Alliance, a

consortium of voluntary organisations follows a mechanism

of accreditation for voluntary sector. Efforts have to be

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directed towards building a similar kind of mechanism for

CSR as well.

Sustainable development, like building a successful business,

requires taking the long-term view. The KPMG International

Survey of Corporate Responsibility Reporting 2005 showed

that voluntary reporting on sustainability is increasing across

all countries. Sustainability Reporting is emerging as a key

vehicle to implement CSR and measure its progress in

organisations. As we move forward, an increasing number of

companies are expected to issue Sustainability Reports, with

the scope of issues broadening from purely environmental

reporting to a more comprehensive coverage of the

environmental, social and economic dimensions. There is a

strong corporate initiative on joining the Global Compact

Society in India, as well, with 43 Indian companies having

already joined Global Compact as of January 2008 (Corporate

Social Responsibility – Towards a Sustainable Future, KPMG-

ASSOCHAM White Paper 2008).

Incentives for CSR?Should companies get incentives for CSR efforts? That was

the title of an article in the Economic Times (16 December

2009), in which Mr Amit Mitra, Secretary General, FICCI put

forth his case that more benefits will spur voluntary activity:

The Ministry of Corporate Affairs is proactive on corporate

social responsibility (CSR), even as it is responsible for

ensuring corporate governance. Obviously, the two are

different from each other and must not be put in the same

basket. Corporate governance involves regulating a

corporate that has chosen to list on the stock market and,

thus, has major responsibilities towards its shareholders.

Therefore, mandatory laws, statutes and accounting norms

are invoked to bring transparency and accountability. On the

other had, CSR is a voluntary activity by a company, listed or

privately-owned, to serve bigger goals of society, beyond its

routine market functions. In fact, India Inc is taking several

initiatives in the space of CSR for the welfare of society.

FICCI, for the last 10 years, has been encouraging and

supporting industry’s CSR initiatives through an annual CSR

award. The question here is whether the voluntary activity of

CSR can be spurred through fiscal incentives.

Interestingly, many fiscal measures already exist in our

Income-Tax Act. If a corporate donates funds to an approved

NGO for social projects, it is eligible for 50% deduction of

that amount and 100% if it funds a not-for-profit

organisation (registered under Section 25 of the Companies

Act). A stellar example of this nature is the creation of the

FICCI Aditya Birla Centre for Excellence in CSR, paid for by

companies of the Aditya Birla Group. Similarly, if a company

151150

contributes to an approved scientific research association, it

can get up to 125% deduction.

The moot point is: should we have more of such exemptions

to attract more of corporates into the CSR net? Certainly.

We may have to provide weighted deduction of 150% or

125% to encourage corporates for voluntary CSR

contributions. This could possibly be done by inserting a

new clause in either Section 35(2AA) or Section 35(2AB), to

provide for 150% deduction of the amount paid to the

approved institution/NGOs involved in CSR. With such bold

measures to promote CSR, the UPA government will truly live

up to its pledge for inclusion of the underprivileged and

usher in a new paradigm of Public-Private Partnership (PPP).

Mr Anil Sinha, GM, IFC Advisory Services for South Asia

argues that a short-term fund is better than tax incentives.

What started as philanthropy and grew into feel-good or risk-

mitigation initiatives by companies is evolving into business

models that co-create value for themselves and society. CSR

may not be the best term for such a model, but these private

sector initiatives are now becoming central to business

strategy. As part of a group of development professionals

supported by the government that is drafting CSR guidelines

for public dissemination, I find that best practices in such

linkage programmes are still evolving.

A business case should be made to establish financial

benefits for all stakeholders and leverage strengths of all

parties through meaningful partnerships. Experience shows

that such initiatives are successful if they concentrate on

areas where a company has a strong influence, either

business-related or geographical, than initiatives that may be

well-meaning but distant from its core business. With its vast

developmental needs combined with a strong

entrepreneurial spirit, the country is fast emerging as one of

the leaders in innovating such business models. However,

sustainable models of scale are just a few. What can be done

to support such initiatives where costs and risks are high and

financial returns low?

Instead of a tax-based incentive mechanism, a short-term

fund could be set up to catalyse innovation, disseminate

learning and encourage more companies to come forward.

The fund could be set up with contributions from the

government, private sector and donors to be managed by

industry and/or their representative bodies with an

independent investment committee. The funding could be

based on outputs to be agreed, for example, income

increased for a certain segment of society, or part-funded

upfront, while the rest is performance-based with strong

monitoring and evaluation. These fund-sponsored initiatives

should dovetail into other economic and social needs and

programmes, related to skills development or healthcare.

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consolidate, with some efficient organisations gaining scale,

some merging and then growing and some failing to achieve

either scale or efficiency and eventually shutting down.

Entrepreneurial: In a more optimistic future, existing and

new enterprises will apply strategies to achieve and

demonstrate performance, improving efficiency and

effectiveness and attracting new funding sources. More

organisations will enter a reformed, competitive field of

social change with new entrepreneurial models, established

traditional organisations and innovative funding strategies

fuelling widespread success.

Expressive: Rather than focusing exclusively on

performance, financiers and organisations may view their

investment as an expressive civic activity. As much value is

placed on participating in a cause as on employing concrete

measures of impact or efficiency. In this scenario, funding

will flow as social entrepreneurs experiment with new

models based on a range of individual priorities and

relationships.

The March 2008 HBS Future of Social Enterprise Centennial

Colloquium convened at a most opportune time, as the social

enterprise field undergoes several major transformations.

Panelists and participants examined major cross-cutting

themes surrounding the future of social enterprise, including

philanthropic funding flows, organisational capacity and

management strategies for impact.

Philanthropic resources are growing. In the U.S., many

foundations sport enormous endowments while foundations

overall now number more than 71,000, an increase of 77

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HBS speakHarvard Business School (HBS) founded the Social Enterprise

Initiative (SEI) in 1993 to inspire, educate and support

current and emerging leaders across all sectors in applying

management skills to create social value. To achieve this

mission, SEI has taken an integrated approach to social

enterprise research, curriculum enrichment, career

development and community engagement activities. HBS

also made a deliberate decision to interpret the programme

to include the study of enterprises and organisations

engaged in social value creation, regardless of their for-profit

or nonprofit status. With this approach in mind, SEI has

grown significantly in many areas since those early days.

A confluence of forces is shaping the field of social

enterprise, changing the way that financiers, practitioners,

scholars and organisations measure performance. Kasturi

Rangan, Herman Leonard and Susan McDonald trace a

growing pool of potential funding sources to solve social

problems, much of it stemming from an intergenerational

transfer of wealth and new wealth from financial and high-

tech entrepreneurs. They examine how these organisations

can best access the untapped resources by demonstrating

mission performance and then propose three potential

scenarios for how this sector might evolve (The Future of

Social Enterprise, Harvard Business School Working Paper,

2008)

Consolidation: In this scenario, funding will keep growing

in a gradual, linear fashion and organisations will compete

for resources by demonstrating performance. The sector will

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percent between 1995 and 2005 Over the next 50 years, an

intergenerational transfer of wealth is expected to occur

between elderly adults and ageing baby boomers and their

families, with an estimated $6 trillion projected to go directly

to charitable causes. These resources in search of a cause

frequently require proof of concrete social returns, especially

given that many new donors are adopting a high-impact,

entrepreneurial approach to their giving.

Likewise, the social sector is growing. Currently, more than

1.4 million nonprofit organisations in the U.S. generate $1.36

trillion in revenue, constituting at least 5 percent of GDP,

while individual charitable contribution alone has reached a

high of $300 billion.7 As frequently noted, the sector itself is

expanding to include not only traditional nonprofit

organisations but also many for-profit and hybrid entities

operating with strong social missions. The current blurring of

boundaries among sectors means that nonprofits now

routinely engage in profit-seeking activities, for-profits

aggressively seek social value through business and

charitable activities and public agencies form partnerships

with both – all with the goal of reducing social harms and

advancing public benefits.

As the traditional nonprofit sector broadens to include a

range of social enterprise models, the social sector faces

three major transformations:

Changes in the flow of funds, due to commercial activity

by socially minded organisations as well as growing

philanthropic sources, especially the vast sums of anticipated

intergenerational wealth transfer and new wealth from

financial and high-tech entrepreneurs

A shift in the role of government, both in terms of

responsibility and distribution of resources, as traditional

models of grant funding give way to market competition in

which non–profit and for-profit entities compete for

government contracts and consumer subsidies

A transformation of ideas on how to allocate resources

and what results to expect as philanthropy is increasingly

viewed as a social “investment,” especially as more potential

financiers with entrepreneurial backgrounds enter the

philanthropic market

In the face of these challenges, the functional questions for

non–profit leaders and social entrepreneurs are how to

acquire resources, how to build successful organisations and

how to achieve impact – and for those actors and

intermediaries who support the sector with funding and

expertise, how to advance all three goals. In response to

these questions, the social enterprise literature is awash with

claims of groundbreaking innovation, from venture

philanthropy to corporate social responsibility, which offer

the equivalent of philanthropic ‘silver bullets.’ Data trends,

however, suggest a somewhat different story, one of steady

but not remarkable growth influenced by major demographic

and political changes and accompanied by a wealth of new

models whose potential has not yet been fully explored. In

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Beyond charity Ms Naina Lal Kidwai sums it up beautifully when she says

businesses are increasingly making the shift from

philanthropy to being sustainability-driven entities

(Economic Times 20 November 2009). Today CSR has

become a popular initiative for corporates. But how

ingrained and embedded is it in the business of the

corporate? Many years ago Tata’s vision was to build a

world-class city to house their workers even as they built the

first indigeneous steel plant in the middle of nowhere. And so

Jamshedpur was born and continues to run as a model city,

sustainable because it is embedded in the business.

Over the last few years, CSR has assumed centre stage with

an increasing number of companies focusing on it in a bid to

enhance their image as credible corporate citizens. This was

relatively easy prior to the financial crisis when companies

were making record profits and needed to show a humane

side. The real challenge, however, lies now when the going is

tough and profits need to be ploughed back into businesses.

It is at times like these, when every penny is being watched,

when businesses are required to re-invest every rupee back

in the business that the management, board of directors and

investors are likely to question the reason behind spends

that they term unnecessary. So how important is CSR?

In his book Capitalism and Freedom, Milton Friedman wrote

that “a corporation is an instrument of the stakeholders who

own it. If the corporation makes a contribution, it prevents

the individual stockholder from himself deciding how he

should dispose of its funds.” He argued that if charitable

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fact, many innovative approaches and models that have

emerged over the last 10 years remain in their infancy and

await a “quantum” push to exhibit widespread benefit.

Given the apparent challenges and opportunities in

designing, funding, staffing and measuring CSR performance

of organisations, what does the future hold for this sector?

Significant changes are occurring in the field of social

enterprise, including major developments in the flow of

funding, growing but often untapped philanthropic resources

and a shift in the role of government, as well as new social

investment models and impact measurement tools. These

development are occurring against a larger backdrop of

demographic and market change as boundaries blur among

the traditional non–profit, for-profit and public-sector silos.

Currently, the sector remains on the threshold of several

possible developments including consolidation,

entrepreneurial growth and experimentation. The scenario

that unfolds over the next 20 years will depend largely on the

ability of social enterprise leaders to make a leap forward in

thought and action to capitalise on the abundant potential

for social change.

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contributions have to be made, they should be made by

individual stockholders, or by extension, individual

employees — and not by the corporation. He stressed that the

only social responsibility of business is to increase profits.

Warren Buffett tried to emulate this thought when he

decided that individual stockholders could decide where

Berkshire Hathaway would donate money for an amount in

proportion to the number of shares held by them. This was

discontinued because of the conflicting causes that the

donations were made to and the lawsuits or customer

complaints / boycotts that the company had to face for

aligning with certain causes.

For corporate philanthropy to be effective in the best

interests of the company, it needs to have a long–term focus,

with this culture permeating right through the company. The

company has to believe it is an integral part of its business

and it has to build a contingency pool for the bad times.

Companies must address their CSR activity with the same

focus they apply to their business. They decide what is in

their best interest and approach it with the same zeal as

their business objectives.

Unfortunately this is where they run into criticism from the

public. Companies tend to, rightly, focus on only some key

areas and organisations. What they do is decide their sphere

of activity and do a good job of that. The problem arises

when the rejected party feels that such large companies

make such huge profits and are not willing to spend a few

thousands on such a good cause. The expectation is almost

as if they want companies to work like government,

supporting every good cause, forgetting the good work they

do in their focus areas.

Over time, corporate philanthropy has evolved – from

supporting a cause that was close to the CEO’s heart to

strategic corporate philanthropy where businesses support

causes that are aligned to their business objectives. For

example, IT companies donate computers to schools so that

the kids get comfortable using their operating systems and

opt for the same when they are ready to work. Strategic

philanthropy, however, got a bit mixed up with cause-related

marketing where the main aim was visibility for the brand

rather than the cause itself.

In the recent past, many companies have evolved from

corporate philanthropy to corporate sustainability where it is

not just a company trying to be a good corporate citizen but

investing in the future by creating a sustainable environment

in which they can grow their businesses. Those that stand out

are FMCG companies who, in their desire to reach the

bottom– of–the–pyramid markets, have evolved innovative

rural marketing strategies (HUL’s ‘Shakti’, or ITC’s ‘e-choupal’

initiatives) or those of food majors sourcing their raw

materials directly from farmers, thus giving them better

prices and providing consumers with better quality of

product (Nestle’s Moga milk programme). There is a growing

realisation amongst corporates that an emotional and

enduring connect with sustainability can only materialise if

there is a strong linkage with the business.

In this movement to support sustainability, even media

houses and communication agencies are not far behind. We

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A new terminology that has been gaining grounds in the

business community today is corporate citizenship. So

what is corporate citizenship and is this fundamentally

different from corporate social responsibility? Corporate

citizenship is defined by the Boston College Centre for

Corporate Citizenship, as the business strategy that

shapes the values underpinning a company’s mission

and the choices made each day by its executives,

managers and employees as they engage with society.

According to this definition, the four key principles that

define the essence of corporate citizenship are: (i)

Minimise harm (ii) Maximise benefit (iii) Be accountable

and responsive to key stakeholders (iv) Support strong

financial results.

Thus, corporate citizenship, similar to its CSR concept, is

focusing on the membership of the corporation in the

political, social and cultural community, with a focus on

enhancing social capital. Notwithstanding the different

terminologies and nomenclatures used, companies

today should focus on delivering to the basic essence

and promise of the message that embodies these key

concepts – CSR and Corporate Citizenship. (Source:

Corporate Social Responsibility – Towards a Sustainable

Future, KPMG-ASSOCHAM White Paper 2008)

Corporate citizenship: A new way to marketCSR?

have seen how brands can be marketed around a cause, be it

communal harmony, children’s education, hygiene or

sanitation or an appeal to vote. The “Jaago re” campaign by

Tata Tea was timely and a very successful and meaningful

initiative.

The growing practice of the head of Sustainability/CSR being

part of the top team is another measure of the recognition of

the importance of embedding this in the business. We are

seeing a growing number of businesses publishing their

stringently benchmarked sustainability reports along with

their financial reports, possibly borne out of shareholder

activism.

Corporates, along with governments, can play a significant

role in pooling resources for larger national good. And if this

can take the shape of corporate engagement while improving

their business performance, the economic gains ensure

inclusive growth and this leads to the progress of the country

and the company.

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Casestudies

IT IS INDEED HEARTENING TO NOTE THAT

THERE ARE NUMEROUS, WELL-CONCEIVED

AND WELL-EXECUTED PROJECTS UNDER THE

CSR/CSE UMBRELLA IN INDIA TODAY. IT IS

PHYSICALLY IMPOSSIBLE TO GIVE THE

DETAILS OF ALL OF THEM HERE FOR WANT

OF SPACE, SO WE SHALL MERELY SHARE A

FEW EXAMPLES TO GET AN INSIGHT INTO

WHAT ACTUALLY GOES ON IN THESE

PROJECTS. WE WOULD LIKE TO MAKE IT

CLEAR THAT OUR CHOICE OR OMISSION OF

CASE STUDIES IS ENTIRELY RANDOM AND IS

NO REFLECTION ON THE SIZE, IMPORTANCE

OR IMPACT OF THE PROGRAMME ON THE

COMMUNITY. WE RESPECT ALL CSR/CSE

INITIATIVES EQUALLY AND WISH THEM A

GRAND SUCCESS IN THE YEARS AND

DECADES AHEAD.

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The Bill & Melinda Gates Foundation (B&MGF or the Gates

Foundation) is the largest transparently operated private

foundation in the world, founded by Bill and Melinda

Gates. The foundation is "driven by the interests and

passions of the Gates family". The primary aims of the

foundation are, globally, to enhance healthcare and

reduce extreme poverty and in America, to expand

educational opportunities and access to information

technology. The foundation, based in Seattle, Washington,

is controlled by its three trustees: Bill Gates, Melinda

Gates and Warren Buffett. Other principal officers include

Co-Chair William H. Gates, Sr. and Chief Executive Officer

Jeff Raikes. It had an endowment of $35.1 billion as of

October 1, 2008. The scale of the foundation and the way

it seeks to apply business techniques to giving makes it

one of the leaders in the philanthro-capitalism revolution

in global philanthropy, though the foundation itself notes

that the philanthropic role has limitations. In 2007 its

founders were ranked as the second most generous

philanthropists in America.

In 1994, the foundation was formed as the William H.

Gates Foundation with an initial stock gift of $94 million.

In 1999, the foundation was renamed the Bill & Melinda

Gates Foundation. After a merger with the Gates Learning

Foundation in 2000, Gates gave an additional $126

million. During the foundation's following years, funding

grew to $2 billion. On June 15, 2006, Gates announced his

plans to transition out of a day-to-day role with Microsoft,

effective July 31, 2008, to allow him to devote more time

to working with the foundation.

On June 25, 2006, Warren Buffett (then the world's

richest person, estimated worth of $62 billion as of April

16, 2008) pledged to give the foundation approximately

10 million Berkshire Hathaway Class B shares spread over

multiple years through annual contributions, worth

approximately $30 billion in 2006. Buffett set conditions

so that these contributions do not simply increase the

foundation's endowment, but effectively work as a

matching contribution, doubling the Foundation's annual

giving: "Buffett's gift came with three conditions for the

Gates foundation: Bill or Melinda Gates must be alive and

active in its administration; it must continue to qualify as

a charity; and each year it must give away an amount

equal to the previous year's Berkshire gift, plus another 5

percent of net assets. Buffett gave the foundation two

years to abide by the third requirement."

To maintain its status as a charitable foundation, it must

donate at least 5% of its assets each year. Thus the

donations from the foundation each year would amount

to over $1.5 billion at a minimum. The Bill and Melinda

Gates Foundation will give hundreds of millions of dollars

in the coming years to programmes aimed at encouraging

saving by the world's poor.

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The five major CSR themes at Infosys include education,

healthcare, art and culture, rural upliftment and inclusive

growth. They identify partners and beneficiaries based on

their goals, credibility, performance and alignment to Infosys

vision and values. They are the first Indian company to

emphasise strong Corporate Governance practices and they

have expanded their practices significantly beyond the

norms. They complied with the US GAAP accounting

requirements and were first to incorporate a number of

innovative disclosures in financial reporting including human

resources valuation, brand valuation, value added statement

and EVA reports

They are very committed to supplementing government

efforts in branding India in global forums. As a strategic

partner of the World Economic Forum (WEF) they lead

discussions on social and economic issues. They help the

forum shape its agenda by actively participating in the

“Forum of Young Global Leader” and the “Global Growth

Companies” programmes. They are prime sponsors at several

flagship events like Gartner Summit, Sapphire, Oracle

OpenWorld and World Wide Webs Consortium’s W3C

Conference.

They have initiated the Infosys Young Indians (INFYi), the

first corporate chapter of the Confederation of Indian

Industry (CII), which will strive to provide a platform for

social entrepreneurs by undertaking activities in the areas of

economy, education, environment and healthcare and youth

affairs. They also participate actively in pro bono

engagements. Their mission to go beyond business translates

into every Infoscion and the Internal Board of Directors

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Infosys Infosys was founded in 1981 with the view that sustainability

and the success of the organisation would depend on how

much wealth they create for their customers, employees and

the society in which they operate. They have been

responsible for creating multiple frameworks involving

corporate governance, education, infrastructure and

inclusive growth. They believe that corporations must reach

out to the society if they want longevity. It is this belief that

drives their commitment to be fair and transparent to their

stakeholders, to help people and communities enhance their

living conditions and to improve the quality of education and

healthcare through various community development

programmes.

Their CSR activities are carried out at 4 different levels – at

the Infosys group level, through the Infosys Foundation,

through the Internal Board of Directors and by the Infosys

Employees at an individual or team level. Infosys as an

organisation runs global initiatives to develop human capital

by creating sustainable frameworks with educational

institutes for training students and faculty. At the Infosys

Foundation level, Mrs. Sudha Murty, Trustee and

Chairperson, manages a team of dedicated members to reach

out to the underprivileged and enrich their lives. At the

Board level, the members lead by example, by participating

in the advisory councils of NGOs and civil bodies, donating

their time, money and effort to various causes. At the

employee level, there are locational CSR teams to cater to

local requirements.

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(IBOD) the sense of being responsible corporate citizens. The

IBOD serves as member of advisory council / founder trustee

in various government and non-profit organisations to

establish views or codes on corporate governance, global

warming, education and training, social welfare, healthcare,

infrastructure management and rural upliftment.

They have always been the forerunners in providing

asistance when disaster strikes – be it the Tsunami, the

Gujarat earthquake or Katrina. As responsible corporate

citizens, they not only rushed funds but their employees

personally spearheaded relief operations undertaken by

Infosys Foundation and other NGOs. They have been

recognised in fora where CSR is also one of the parameters

to measure a company’s success:

Citizen Award – 2001

Helen Keller Award – 2006, 2007

NASSCOM – India Today award for gender inclusivity –

2007

Ranked the “Business world most respected Company” in

a survey

Named the “Most Admired Company” for the sixth

consecutive survey by Asia Wall Street Journal. They touched

the lives of 150,000 beneficiaries during 2007 and will

continue to conduct business responsibly and ethically in the

years to come (Assocham-KPMG, 2008).

HSBCHSBC in India has evolved to become a sustainability driven

corporate entity, from being a CSR focused organisation. This

is how they now describe themselves: our global focus is on

the environment and education. In our environment vertical,

we realise that to be sustainable we also have to ingrain

sustainability thinking amongst our customers in the belief

that long–term sustainability of corporates is in the interest

of all. We take our commitment to environment very

seriously and ensure that we do not support environmentally

harmful projects. We do this by abiding by the Equator

Principles and our own internal responsible lending

guidelines for industries operating in freshwater, forests,

minerals, metals and energy.

Globally, we were the first bank to demonstrate carbon

neutrality which we have achieved by monitoring our energy

consumption, reducing it where possible and offsetting the

balance by investing in clean energy projects. Our real estate

teams are tasked with the mandate of delivering energy

efficiency and optimising water consumption and waste

generation, which ensures that we have a progressively

reducing carbon footprint across our operations.

We partner with government, research institutions, other

funding agencies and corporates. Through partnerships we

maximise the velocity of the spend, creating a greater impact

with the same expenditure, using the strengths of the

different partners. We encourage our vendors to have

“given” certification favouring those that are environment –

friendly at no extra cost to us. In our education vertical again

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we follow the same principles and also use this vertical to

support our environment vertical. For example, we support

youth and street children projects which bring environmental

awareness into their agendas.

In addition to our focus on the environment and education,

we know that our expertise and strength is in being a

financial institution. Therefore, we align our work around

microfinance in the community and financial inclusion. While

we are in the business of lending to MFIs, we donate and

support NGOs in providing life skills and employability

training for youth and entrepreneurship capacity building for

women self-help groups in rural India. Thus, we have

supported SEWA and Manndeshi bank with their leadership

and skill training schools to help their women members and

self-help groups scale up and grow.

Today, when investors, regulators and citizens are asking for

more accountability and transparency from corporate

entities, businesses who have historically delivered on

sustainability have a clear lead and are much more respected

across stakeholders, compared to those corporates who have

paid mere lip service to community issues. Shareholders and

stock markets too are asking for community accountability

and the investment in socially responsible funds is finding a

growing fan following. Corporate philanthropy’s evolution to

corporate sustainability thus reflects the true manner in

which corporates can make a meaningful difference to

society (Naina Lal Kidwai, Economic Times, 20 November

2009).

ACC Community developmentThe company commenced a round of Community Needs

Assessment studies by external agencies for those living in

the vicinity of all our plants across India. An important

partnership was forged with Development Alternatives, a

reputed NGO, to help launch a Sustainable Community

Development programme for those living near Wadi Plant in

Karnataka.

The time-bound plan spread over three years targets the

building of local institutional and human capacities, creation

of local enterprise-based livelihoods, healthier habitats with

adequate community physical infrastructure, household

services and village institution building.

HIV/AIDS programmeACC’s effort to participate in the national effort against

HIV/AIDS included the establishment of a treatment center at

Wadi and partnership with Christian Medical College, Vellore

both of which address the challenges in the two states where

this virus is most prevalent. The Wadi Anti Retroviral

Treatment Center for HIV/AIDS has a complement of trained

medical and para-medical staff and caters exclusively to the

general public. ACC became the first corporate in the country

to have established a standalone center of this kind. It is also

the first outside the Government sector to be included in the

list of NACO’s approved Art Centres in the country.

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Knowledge developmentThe prestigious Sumant Moolgaokar Technical Institute at

Kymore was opened with a new educational curriculum to

complement the education provided at ITI’s. Similarly, the

focus of the Regional Training Centre in Jamul, Chattisgarh

was redirected to offer professional technical courses of

relevance to manufacturing sectors such as cement. A state-

of-the-art learning centre, ACC Academy, was opened at

Thane complex. ACC began work on partnering with the

government and industry to upgrade the seven ITI’s located

near the plants.

Sustainable constructionWe are partnering with Holcim Foundation for Sustainable

Construction to promote the concept of sustainable

construction in India. We signed an understanding with

Development Alternatives to create a Center of Excellence to

pursue solutions for sustainable housing and rural

infrastructure, by providing innovation support, capacity

building and outreach services to the construction industry

and to enable the creation of livelihood opportunities and

provide support to small rural entrepreneurs in rural habitat

and infrastructure (Assocham-KPMG, 2008).

Ambuja CementAmbuja Cements Ltd established a foundation, called theAmbuja Cement Foundation in 1993. With its cement plantsbeing situated in rural areas, the company realised the need toaddress the needs of the rural people. These people formeddirect or indirect stakeholders of the company and thereforewere important for the company’s sustainability. Consequently,the ACF’s focus has been on integrated rural developmentprogrammes. The Foundation works with the mission to“energise, involve and enable communities to realise theirpotential.” It upholds as its guiding light, the parent company’score values and alongside pays due attention to internationaltrends in social development, expressed through guidelines likethe Millennium Developmental Goals. Poverty alleviation,achieving universal primary education, reducing childmortality, improving maternal health, combating HIV/AIDS andensuring environmental sustainability are all integral to thework of the company and its Foundation.

The Foundation in each location begins by working at the microlevel with the villages impacted by the Company’s operationsand gradually, as partnerships develop, expands its area andscope of work. The Foundation at present reaches out to over1.2 million people in about 670 villages spread across tenstates in India. The large chunk of work of the Foundation iscarried out by a team of well-trained and experiencedprofessionals. The range of work of the Foundation isexpansive / diverse and though there are commonprogrammes run across locations, regional variations due tolocal needs exist. Provision of preventive and curative healthservices including reproductive and child health, promotion ofeducation and generation of alternate sources of livelihoodcoupled with capacity building are some of the key areas ofintervention of the Foundation.

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Natural Resource Management (NRM), by far, forms the largestpart of the community initiatives of the company. NRMincludes activities centred on conservation and management ofwater, land, energy and livestock. Water, being the primemover in rural life and an essential factor for overall ruraldevelopment, presets their work in the area of water resourcemanagement.

In the state of Gujarat, the rural communities are situated alongthe coastal belt in Junagadh and Amreli Districts. Due to over-utilisation and over-exploitation of ground water over years,these areas faced a serious salinity ingress problem. The riversin this area were seasonal and the ponds that were fed by theserivers also dried up by the time winter arrived, making thewater problem even worse. To tackle these problems, ACFadopted innovative techniques like interlinking of water bodies,tidal regulators and rivers through link water channels. Thistechnique proved to be effective in collecting the run-offs of therivers and consequently increased the quantity of water beingsaved and stored. Ground water was recharged and the salinitylevels of the underground water declined to improve the qualityof water. The mined out pits of the company have beenconverted into water reservoirs, creating a store of 11.04 MCMof water for the use of the people.Some salient features of the projects:

Salinity Ingress Mitigation

Interlinking of rivers and canals

Pond deepening and interlinking

Utilising mined out pits

Tidal regulator

Roof Rain Water Harvesting Structures(Assocham-KPMG, 2008)

Aravind Eye Hospital Spearheading the revolution of providing quality healthcare

to the needy, Aravind Eye Hospital (AEH), Madurai, has won as

many accolades from management gurus as from its millions

of patients for its effective business model. And why not?

From a 11-bed Hospital in Madurai to the largest provider of

eye care services in the world, Aravind has come a long way

indeed.

Working with the mission of 'Eliminating Needless Blindness',

the main hospital (paying section) has eight speciality clinics,

seven operating theatres (OTs) and 268 patient beds. Every

day, an average of 100 surgeries are performed and 1,200

outpatients are treated. While the free hospital, situated

adjacent to the main hospital, has four OTs with a capacity for

320 inpatients. Every day, on an average, it handles about

800 outpatients and 200 surgeries are performed. The camp

hospital, situated close to the main hospital, with two OTs

with a capacity for 600 inpatients on an average, handles

about 100 camp surgeries.

It has full-fledged super-speciality clinics including retina and

vitreous, cornea, glaucoma, IOL, paediatric ophthalmology,

neuro-ophthalmology, uvea and orbit and oculoplasty,

manned by highly-qualified specialists. The hospital is the

headquarter for the Madurai Eye Bank Association, which

receives corneas from various institutions in India and the US.

"The hospital was self-supporting for all the recurring

expenditures from the beginning and after five years it had

accumulated surplus for its own development and the

establishment of the new hospitals at Theni, Tirunelveli,

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camps and VSAT-mobile vans to go into the interiors of the

villages about 8-10 times a month," informs RD Thulasiraj,

Director IT and Systems, AEH.

Its self-sustaining model is being copied in at least 30

countries around the world. "The staff is almost 10 times as

efficient as the national average. And the engine of growth is

not a hard-headed businessman, but a 86-year-old

philanthropist called Dr Govindappa Venkataswamy," beams

Dr Srinivasan.

Not a smooth ride One of the main hurdles was getting patients to the hospital.

The often elderly patients required escorts, or could not

afford transportation and the rural-urban divide was more

evident than ever. AEH started an outreach programme using

community organisations to identify and assist potential

patients with the help of tele-opthalomology. Today, the

patient acceptance rate is between 95 to 98 per cent.

Another realisation was that the hospital alone could not do

it and that it would have to facilitate training for other

surgeons and other staff members, such as nurses,

technicians, administrators and managers. "So we started the

training programmes. The direct impact was huge and the

indirect impact is compounding," informs Dr Srinivasan.

Spreading wings AEH has indeed spread its wings faster and higher. In

addition to hospitals, it has an ocular products

manufacturing facility, Aurolab. Its tele-ophthalmology

network has become a global online resource for AEH and for

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Coimbatore and Pondicherry," beams Dr Aravind Srinivasan,

Administrator, Aravind Eye Care System. Around 70 per cent

of its patients are provided free treatment.

Effective model The model of healthcare used at AEH is not only innovative,

but absolutely the most effective model of healthcare. It

operates under the notion of compassionate capitalism. With

good management and a highly efficient fee system, the non-

profit hospital is able to operate with a 40 per cent margin.

This is despite the fact that 7 out of 10 patients pay nothing,

or close to nothing and the hospital does not depend on

donations. This economically self-sustaining model is based

on generating enough revenue from 30 per cent of the

patients to cover the costs of providing free or low-cost eye

care to the majority. Instead of relying on donations and

funding, AEH developed the ability to manufacture all the

materials it needed.

The hospital reduces costs by using ophthalmic paramedical

staff to do all the preparatory and post-operative work on

each patient, allowing ophthalmologists to perform an

increased number of surgeries. Each ophthalmic surgeon has

two tables, which allows a surgeon to perform one 10 to 20

minute operation and then swivel around to do the next.

Post-op patients are wheeled out and new patients wheeled

in. With its efficient strategies, AEH is known to reach the

bottom of the pyramid.

The hospital was also one of the early starters to integrate

ICT in its healthcare services as early as in 1983. "Using Wi-fi,

we created 'vision-centres' to generate awareness about eye

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the entire field of ophthalmology. AEH partners with over a

thousand community organisations and international NGOs

such as the Lions Club International, Sight Savers

International, Seva Foundation and Orbis International. The

World Health Organisation has designated it as a

'Collaborating Centre for Prevention of Blindness'. "Our focus

now is to expand throughout developing countries. The

long-term plan is to grow in capacity to reach out to a larger

population in need through a network of 100 managed eye

hospitals and attain the mission of Eliminating Needless

Blindness," visions Dr Srinivasan.

Looking ahead With 30 years of steady progress behind it, it is in no danger

of fading into obscurity with the passing of its founder.

Having succeeded in building the capacity of over 200 eye

hospitals located all over India through a consultancy

process, AEH is moving one step ahead to provide

management services to eye hospitals in areas of need in

India and other parts of the world. Since it opened, AEH has

given sight to more than 2 million people. The operating

model is open for other hospitals to learn from and help

realise its vision of eliminating unnecessary blindness by

2020 (Express Healthcare, September 2007).

Development Promotion Group(DPG)The Asian Tsunami that struck India and a few other

countries on 26 December 2004 caused unprecedented

devastation in the coastal districts of Tamil Nadu. It is

estimated that over USD 14 billion was contributed

worldwide to various international organisations to assist in

the myriad humanitarian reconstruction efforts.

Development Promotion Group (DPG), a Chennai-based

development agency received support to the tune of INR 277

million to assist in the rehabilitation efforts.

DPG has provided relief and rehabilitation services not only

to the affected fishermen, but also to few farmer and Dalit

communities. DPG, in the past three years, has provided

support to 1,894 families across 12 villages. The biggest

challenge during the first 6 months, especially between

March and June 2005 was the restoration of traditional

livelihoods of the affected families especially among the

fisher folk community. Eventually, the efforts of the

government, NGOs and others resulted in fisher folk

venturing into the sea from June 2005. DPG completely

replaced all the damaged boats in our working villages

Vanavanmahadevi (Nagagappitam), Thomiarapuram

(Tirunelveli) and Puthur (Kanyakumari).

Since 2005, every year, in May, more than 150 children

between the age of 4 to14, both boys and girls attended a 20

day summer camp. They were exposed to the art of glass

painting, fabric painting, etc. In our working villages, till date,

425 youths / girls / married women underwent vocational

training of different kinds – tailoring (embroidery), making

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seashell products and repairing of outboard motors, food

processing and domestic appliance mechanics.

DPG has handed over 652 new homes measuring 409 – 456

sq.ft, as part of the shelter programme. 170 more homes will

be handed over by January. 2008. Those families who have

already moved into their DPG homes are happy with the

standard of the housing, which was designed in consultation

with the local communities. The government is now providing

other basic amenities like internal road, water and electricity,

among others. The families are given joint ownership by

government. The shelter cost, depending upon the locality,

varies from INR 2.25 lakhs to INR 2.75 lakhs. DPG has also

constructed one Community Hall at Vilunthamavadi costing

INR 26.55 lakhs and two small ones in Mapillaioorani costing

about INR 9 lakhs.

Lessons learnt: Do we, as INGOs, NGOs and corporates need

to wait for a disaster? Instead, if possible, should we not

make efforts to arrest the occurrence of these disasters? DPG

in particular, has realised the importance of anchoring relief

and rehabilitation efforts in long-term development

programmes, which focus on improved community, creating

an environment that supports restoration of sustainable

livelihood, gender equity in all initiative and growth.

According to a study, “while the tsunami had given visibility

to the fishing communities, it had simultaneously degraded

a highly independent and self-reliant community to the level

of aid-seekers.” In view of the above DPG, has realised the

need to collaborate with corporate houses to make the

programme more sustainable with local support

(Assocham-KPMG, 2008).

JSW SteelThe JSW Group of Companies has interests in core

manufacturing, energy and infrastructure areas. In almost all

areas, the manufacturing facility/operation is in remote

locations, far from the cities. The primary source of income

in these areas is farming. As new manufacturing facilities are

built in these areas, the skill sets of the population around

the facilities do not always meet the requirements of the

operations. Providing meaningful employment to the local

population is thus seen as a challenge.

In order to provide a sustainable and alternate livelihood to

the population around the facilities, JSW Foundation, which

manages the CSR activities of the JSW Group, embarked upon

a novel approach of building a BPO at these remote

locations. This gave an alternative employment avenue to the

rural men and women, thus empowering them socially and

economically. The idea was spearheaded by Mrs. Sangita

Jindal, Chairperson of JSW Foundation. The first BPO at

Toranagallu was inaugurated on 15th August 2006. The BPO

focuses on non-voice activities and is located adjacent to the

JSW Steel Ltd’s Toranagallu facilities, near Bellary,

Karnataka. Starting with a mere 40 men and women, the

BPO now employs about 200 women.

The concept of a rural BPO sounds unique and challenging,

primarily because BPOs are typically associated with cities.

This unique innovation turns this concept on its head and has

demonstrated that the stigma associated with BPOs can be

challenged and proven otherwise. Considering the location

and activities carried out at the BPOs, the name Data Halli

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BPO to develop the requisite skills.

The rural BPO has had a positive impact on many persons. As

the nature of the initiative suggests, this impact has been

significant on the employees of the BPO. Some of the impact

areas are:

Transformed simple village girls into matured, positive,

confident and economically independent professionals who

hold a respectable place in their homes and are looked upon

as examples of transformation in the villages

Encouraged villages girls to continue their education up to

the 10th or 12th Standard, an impossible task prior to the BPO

Has given them the courage to postpone their marriages

which would have otherwise made them wives and mothers

at the young age of 14 or 15

Teaching of English and personality development boosted

their self-confidence and made them socially known figures

in their society as they are now affiliated with a large entity,

namely, the JSW Group

Sowed the seeds of leadership in these ladies by giving

them job responsibilities of supervisors and trainers among

others, through which they lead their respective teams which

has in turn helped in showing them a career path

Equal employment opportunity is given to quite a few

physically challenged ladies who have carved their own

identity

Providing a springboard to look for better work

opportunities in the vicinity

Along the way, there have been many challenges: social

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was selected. Halli, in Kannada, means village. Focusing on

womenfolk in the rural areas, where education levels are also

lower than in the cities, the rural BPO provides an avenue for

these womenfolk to work outside their conventional

livelihood and enrich their lives, with the aim of empowering

women socially and economically.

Jsoft Solutions Ltd, the IT and ITES company in the JSW

Group, currently runs a non-voice BPO at Toranagallu, next

to the JSW Steel Ltd’s integrated steel plant at the same

location. The BPO focuses on data entry activities for multiple

clients and employs about 200 women. Plans are afoot to

open more such BPOs across the country. Most women come

with little or no exposure to computers. A Computer skill is

therefore not mandatory. The eligibility criteria are simple –

should be 18 years or above and should have passed the

SSLC examination. Upon joining the BPO, the women are

given training for three to six months, depending on their

grasping ability, on basic typing and English reading among

other skills that enable them to be productive, earn a decent

living and deliver value at the BPO. In addition, professional

training, specific to the projects on hand, is provided for up

to two months.

Most women come from the near-by villages, from up to a

radius of about 60 km. Buses are provided for pick-up and

drop from the village to the work spot. In order to take the

skills development to the doorsteps, the requisite software is

also installed at the village schools where JSW Foundation

runs Computer-aided Learning Centres (CALCs). These are

supervised by the BPO women from the same village.

Potential candidates therefore do not need to travel to the

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barriers, resistance from the men folk at home, training,

technology, quality of work, transportation and shift working

among others. Some of the challenges faced were:

Internal challengesSkepticism about viability of the concept: Overcome by

focused efforts to streamline the processes, attack the issues

on hand and hire managerial talent with BPO experience. All

this led to a turn-around in the operations and show-casing

of the BPO for every one to see the success

Lack of infrastructure (IT, space, people, etc.) to handle

the daily stream of potential candidates: Overcome by taking

the skills development to the villages via the CALCs, thus

building a resource pipeline

External challengesLower quality and throughput: Overcome by providing

adequate training, dummy projects and hand-holding. With

the implementation of a batch–tracking software, individual

performance and throughput is also monitored and tracked

Hesitation by the village folk to send their women folk

away from their villages: Overcome by arranging for

transport up to the villages and making the BPO an all-

women centre (Assocham-KPMG, 2008).

Multi commodity exchangeGramin Suvidha Kendra (GSK) is an innovative Public-Private

Partnership (PPP) model leveraging on the strength of one of

its partners i.e. India Post, to serve the basic objective of

creation of the other partner i.e. Multi Commodity Exchange

of India Limited (MCX), to disseminate the futures prices of

relevant commodities discovered on its platform while

making the entire model self-sustainable by creating

commercial activities to add value to the rural masses that it

caters to.

MCX provides a nation-wide electronic platform for players to

buy or sell the commodity futures contracts, whereby it aids

in efficient price discovery mechanism as all the information

available in the public domain is rganisa by the players to

arrive at the futures price of a commodity. It improves the

quality of decision-making process of all the participants in

the commodity chain. The GSK model benefits the small and

marginal farmer by helping him decide which crops to sow

and when to sell the harvested produce, by providing him

with the best available price-trends of commodities at a

future date.

GSK endeavors to create futures price-sensitivity among the

commodity eco-system participants and build a credible agri-

decision support framework in the rural arena to improve

returns to farming in areas where they are present. This

initiative caters to the fundamental and advanced needs of

the farmers for market information, services such as

warehousing, advisory and agriculture inputs. Operating on

trust and credibility, it also works on the principle of taking

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The project began in June 2006 at Jalgaon and was later

spread over Dhamangaon too in Maharashtra, Unjha

(Gujarat) and Itarsi in MP. Beginning with a registration of

mere 300 farmers, today, more than 2,200 farmers avail of

the services offered by GSK across four locations in three

States. Currently, it is an evolving model with National Bulk

Handling Corporation providing the warehousing services,

DCM Shriram, Mahyco, Syngenta and UPL providing

agricultural inputs and Krishi Vigyan Kendra, Baramati

providing the query redressal services.

They expect that many more partners are likely to join the

GSK platform to add value to it. Impact analysis and

economic assessment of the model shows positive trends

with 57 percent of farmers saying MCX futures prices help

them in deciding the crop to be sown in the coming season. It

means that looking at profitability indications in advance, the

farmers were willing to diversify into non-traditional crops.

66 percent of the farmers surveyed claim that their farm

productivity has gone up on account of the quality agri-input

services available through GSK. The needs–based assessment

tool helps increase the scope of the model and bring in

value-added services (Assocham-KPMG, 2008).

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goods and services from reliable partners to the doorsteps of

farmers, offering them a basket of services and providing

market linkages.

At MCX, it was their vision to partner with an organisation

that could help them reach out to farmers located in far flung

remote areas of the country with an infrastructure that is

available locally to overcome constraints such as power,

telecommunication, cost of price dissemination, etc. With a

network of 1,55,516 post offices (with 1,25,148 in rural areas)

across nearly 5,94,000 villages across the country, India Post

provides unparalleled reach and depth to take across any

offering right to the doorsteps of the farmers. As the

minimum level of infrastructure remains available with each

post office, it helps control the project cost because of

established and time-tested systems and processes with

India Post, besides making scalability much easier. Last but

not the least, it minimises the efforts required on various

government agencies to get their support and compliance for

the project.

GSK operates from the taluka level to village level in order to

cater effectively to the varying needs of the rural farmers.

Towards operational set-up, hub and spoke model is utilised.

The Sub-Post office (Sos) is made the hub and MCX provides

it with a PC, fax-copier-printer-scanner, web-cam, internet

connection and a centre-coordinator. Branch-Post offices

(Bos – usually one for a few villages) reporting to Sos,

function as the spokes of the hub. To display the

informational content of Gramin Suvidha Kendra, the Bos are

provided with the Blackboards along with necessary

stationery, suiting to the power-reality in rural India.

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for transportation, plastic bags to fibre optics, syntheticfabrics to name a few. Continuing this strategy is their planto provide a cleaner fuel to millions of households by way ofnatural gas.

On the health front, they have the distinction of being thefounder member of the India Business Alliance of the WorldEconomic Forum. They have resolved to share theresponsibility of combating diseases such as Tuberculosis(TB) and HIV/AIDS. To achieve this, they have collaboratedwith a large number of agencies working on these issues tocreate some rather unique Public-Private Partnerships (PPP).In addition to setting up hospitals at some of theirmanufacturing locations, they offer medical services at alltheir manufacturing facilities and offices. These include freeoutdoor medical services for nearby communities, outreachmobile medical services, family planning camps, blooddonation drives, antenatal check-ups, vaccination centres,pulse polio camps, school health check-ups, diagnosticmultidisciplinary camps, eye camps and other outreachprogrammes.

On December 28, 2006, over 40,000 villagers and otherstakeholders located near their Dahej ManufacturingDivision, Gujarat State, got a unique ‘Gift of Life’ from thismanufacturing facility. In a unique Public-Private Partnershipinitiative, Dahej Manufacturing Division in partnership withthe State Government of Gujarat adopted the existing PublicHealth Centre (PHC). This is the only public health centrelocated in this vicinity. The other nearest one is at least 45 to50 kms away, located at district Bharuch.

Aligned with the goals and vision of the management, severaleducational initiatives have been proposed / established as

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Reliance Industries LimitedReliance Industries Limited has embraced sustainability as acore business strategy and regards sustainability as afoundation for lasting economic success. After all,sustainability is about meeting the needs of the presentgeneration without diluting the ability of the futuregeneration to meet their needs. Their commitment tosustainability is backed by active initiatives on the ground,together with a detailed reporting system with third partyexternal assurance certification. Further, they activelyengage with their stakeholders (along with their partnerswho are associated with their various CSR projects) to taketheir feedback and monitor the progress of the work.

Their maiden Corporate Sustainability Report (2004-05) wasthe first Corporate Sustainability Report from the Indian Oil &Gas sector. Further, this report obtained “in-accordance”2002-guidelines status from the Global Reporting Initiative(GRI) – the official collaborating centre of the United NationsEnvironment Program (UNEP). Pursuing their goal ofcontinual improvement in their reporting, the report for FY2005-06 has an enhanced scope based upon the feedbackreceived for its maiden CSR. Further, it focuses on “issues”and “stakeholders” and includes numerous case studies fromdifferent locations and divisions. This report is the only “GRIChecked A+ level” rating report from India.

Their belief, “What is good for India is good for Reliance”,drives their effort in positively impacting the life of morethan one billion Indians. They will use sustainability to driveprocess innovation, new product development, improvingmanufacturing efficiencies and reducing material and energyconsumptions. They manufacture products that have made apositive impact on millions of people in the country, i.e. fuels

191190

leaps into the future. These ventures aim at buildingconfidence, capacity, global mindsets and communicationskills among young people. Their growth will shape and givedirection to the growth of our country.

Reliance Rural Development Trust has undertaken a uniquecorporate initiative to create infrastructure facilities in ruralareas. The projects undertaken in rural areas areconstruction of roads, anganwadis (kindergarten school),panchayat offices and community halls. These are some basicdevelopment priorities of rural areas.

In order to give focused attention to the needs ofsurrounding rural communities, Baroda ManufacturingDivision, Gujarat State, initiated a collective actionprogramme by setting up a voluntary society SVADES withthe co-operation of all the neighboring industries inVadodara. SVADES is a collective endeavour that bindsindustry and rural community together towardssocioeconomic development in the rural areas surroundingthe industry. SVADES works in 40 villages covering apopulation of nearly 200,000.

Dhirubhai Ambani Foundation (DAF) – founded under thePatronage of Shri Dhirubhai Ambani (registered under theBombay Public Trust Act in August 1995) – has been workingin partnership with RIL in most of its social initiatives.Shrimati Nita Mukesh Ambani leads the CSR initiative at DAFand RIL. The overall objective of the Foundation is to makephilanthropic interventions for the welfare of Indian Societyand promote sustainable development of its people throughinitiatives in the fields of: health, hygiene and sanitation,education. community revitalisation, promotion of social andeconomic welfare of and upliftment of the people;

conservation of natural resources, environmental andecological protection; rural development and assistance toother organisations with similar objectives.

The DAF joined hands with the management of SirHurkisondas Nurrotumdas Hospital and Research Centre inDecember 1997 with the commitment to restore the hospitalto its erstwhile glory. Consequently, the hospital serviceswere restructured and state-of-the-art healthcaretechnology, conforming to international standards was setup. Project Drishti, launched in 2003, in association with theNational Association for the Blind (NAB – a non-profitinstitution serving the blind in India for over five decades), isa nationwide corneal grafting drive to bring light in the livesof visually challenged from the underprivileged segment ofthe society – has illuminated lives of over 5,000 Indians – allfree of cost. This project is the largest (corneal graftingsurgery) project undertaken by any corporate entity in thecountry. Till date, this project has conducted corneal graftingsurgeries in over 16 cities in India and efforts are on tospread to far-flung mofussil areas of the country.

Dhirubhai Ambani International School, Mumbai, providesinternational educational opportunities in the context of theemerging educational needs of students. The school preparesstudents for the Indian Certificate of Secondary Education(ICSE), Cambridge University’s International GeneralCertificate of Secondary Education (IGCSE) and theInternational Baccalaureate Diploma (IB) examinations.Faculty members with rich experience in national andinternational curricula educate, mentor and guide thechildren through these developmentally critical years ofgrowth (Assocham-KPMG, 2008).

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TCL believes in partnering with the government and other

NGOs to bring resources and expertise for the benefit of the

community. Capacity building and training of village

committees, user groups, self-help groups etc., cash or kind

contribution and transferring the asset created to the

community through a withdrawal phase ensures

sustainability.

Water and water management: Three complementary

programmes viz. Integrated Watershed Development, Water

and Sanitation Management and Salinity Ingress Mitigation

programme target augmenting water-holding capacities,

recharging ground water and drinking water supply at the

doorstep focusing on availability, quality and sustenance.

Land and agriculture: An integrated agriculture growth

programme targets improvement in crop quality and variety,

crop yields, land quality and promotion of latest technology.

More than 100 farmers are annually trained. More than 300

farmers benefited from loans and inputs. Around 273

hectares have been brought under Diversification of

Agriculture Programme and more than 350 hectares of saline

lands reclaimed.

Animal husbandry promotion: Through providing support

for breed improvement, animal healthcare, fodder

improvement and creating market linkages through dairy co-

operatives, training of paravets for healthcare at doorstep,

pond management and pisciculture

Environmental programmes: Biodiversity Reserve

Plantation across 90 acres. Save the whale shark campaign:

Launched in 2004-05 in partnership with Wildlife Trust of

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Tata Chemicals LimitedThe community is an important stakeholder for TCL and

engaging with and support to the key community is a well-

established process and includes:

Understanding their needs: Includes diverse methods like

participatory appraisals (PRA) and open discussions – formal

and informal, verbal and written requests/ grievances raised,

output from impact assessments/ surveys, inputs from

national / global concerns

Prioritisation of programmes: Through correlation of

needs with specific projects, ranking them in their order of

importance and highest impact on a larger section of society

Community development programmes: Programmes

under three heads – Natural Resource Management (NRM),

Income Generation Programmeme (IGP) and Health,

Education and Infrastructure (HEI)

Listening and learning: Evaluation of Effectiveness is

done through periodic monitoring, impact assessments, third

party audits, community satisfaction surveys and self-

assessment by CS protocol (Tata group wide) process. Gaps

are identified and recommendations are made for future

action for short and long–term planning

Sensitisation of employees: A robust volunteering

programme for employees and their families is guided by the

“volunteer policy.” Employees volunteer in all community

development programmes. The guiding principles enshrined

in the community development policy include: sustainability,

transparency, participatory approach, partnering with

others, sharing knowledge and promotion of volunteerism.

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India (WTI), sensitises communities living along the coast to

prevent the killing of the whale shark – the largest fish in the

world–leading to proactive action by fishermen to release

and save them.

Income Generation ProgrammeSelf-help groups: 240 self-help groups covering

approximately 2,500 households

Rural Entrepreneurship Development Programme:

Training of youth and women to equip them with skills

needed to start small enterprises on their own. Around 350

have been trained and more than 150 enterprises were

improved/ started

Handicrafts development: Branded as “OKHAI”, 450 rural

women earn up to Rs. 2,500 monthly

Vocational Training: Trades include typing, tailoring

classes, Khadi weaving, Sarkanda furniture making, house

wiring, diesel motor repairing and computer education

Health“Mithapur Hospital” caters to the community through

subsidised services at the hospital and free mobile clinic

services in 42 villages.

Other programmes include awareness activities, polio

drives, health camps, AIDS awareness programmes, eye

camps, Life line express camps, Vision 20/20 programme and

trainings.

Intensive family welfare programme, in collaboration with

PFI, aims to improve infant and maternal mortality rate and

reduce the crude birth rate. Around 7,500 patients are

treated every month, covering 96 villages.

EducationQuality schools for all (60 percent of the students from

nearby community)

Infrastructure support and facilities in the rural schools

“Desh ko Arpan Programme” where 0.10 INR from every

packet of salt sold during a specified period is used to

promote education

More that 20,000 children have benefited

90 scholarships are given every year to the children of

salt workers

Adult education programmes

Bal Mahotsav, informal education for rural children

InfrastructureRepair and construction of schools/ anganwadis, roads, brick

pathways, roadside drainages, culverts, toilets, community

health centres, community cattle sheds, low–cost housing,

new community wells and water storage Rural Energy

Programme e.g. solar water pumps, solar cookers, solar

lights, biogas plants and electrification (Assocham-KPMG,

2008).

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timelines mutually agreed with the partnering organisationswith due diligence and monitored closely throughcomprehensive and periodic project reports. Times Foundationuses long–term reporting and statistics on campaigns to tracevariance and impact. In some cases the impact is immediateand easily gauged. Times Foundation has been activelyinvolved in the writing of various policies including theNational Compact on Voluntary Sector, bringing into play anenabling environment in the Voluntary and Civil Society Sector.

Times Foundation has implemented large projects in the socialsector arena. Highlights of Times Foundation’s achievementsinclude:

Successful building of 94 homes for Tsunami affectedpeople in Nagapattanam with support from the Government ofTamil Nadu and an NGO. The houses were handed over to theneedy and affected, bringing relief and respite to thoseaffected by the disaster. Successful initiation of socialdevelopment projects with the Governments of Tamil Nadu andJammu & Kashmir

On the international front, Times Foundation participated inthe Global Assembly on Measuring Civil Society andVolunteering in Bonn, the INTRAC Conference on CounterTerror Measures in Damascus, the LSE lecture series, the 8th

International Conference on Corporate Governance organisedby the World Council for Corporate Governance in London anddialogue with European Union, donor agencies and foundationsin Maastricht, among others

Public Policy Advocacy by bringing together focus groups ofstakeholders for a series of interactive sessions with Mr. ShaoQiwei, Chinese Minister for Tourism, Mr. Brad Adams, AsiaDirector, Human Rights Watch and Ms Daniele Smatja, Head ofDelegation of the European Commission to India, Nepal and

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Bennett, Coleman & Co. LtdCSR has always been an inherent part of the company;reporting on issues of social relevance is an inseparablecomponent of its character as a media organisation. FocusedCSR activities through Times Foundation were a naturalevolution after recognising the importance and future impactof CSR on development in India.

Times Foundation was set up as a ‘strategic organisation’,working on a macro canvas – connecting, highlighting,facilitating – creating effective bridges among stakeholdersof civil society. Thus, Times Foundation’s role encompassesfacilitating, networking and effectively bonding with allstakeholders in their pursuit of an inclusive society wherepeople and their concerns are mainstreamed and effectivelyaddressed. Times Foundation is a central organisation; it actsas a catalyst primarily through Public-Private Partnerships,public policy advocacy, csr, capacity building and informationdissemination.

Times Foundation is a point of convergence for governmentagencies, NGOs, the corporate sector and individuals tosynergise initiatives for inclusive and equitable socio-economic development. Partners are chosen on the basis oftheir defined mandates, credibility, financial accountabilityand scope of initiatives. Times Foundation has formedenduring relationships with organisations such as HumanRights Watch, London School Of Economics, World Bank,INTRAC, John Hopkins University, Corporate Foundations,Government of India, governments overseas and grassrootorganisations, among others.

Times Foundation’s operational philosophy is that of anoutcome driven approach; campaigns are executed to

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Bhutan. Times Foundation is also part of CII’s NationalCommittee on NGO-Industry Interface

Times Foundation initiated Legal Literacy sessions incommunity Centres and an advocacy drive on women’s issueswith Mumbai colleges. ‘YouVa’ and ‘Impressionable Minds’ –value based education programmes, were initiated along withan Economic Empowerment Programme for women

The Times Centre for Disaster Management was inauguratedin Mumbai. The institute has commenced offering full and part-time courses for professionals and students. Times Foundationalso signed an MoU with SNDT’s Women’s University for theestablishment of Times Centre for Youth Development andResearch at Palghar, Mumbai. This initiative is specificallyaimed at women

Anti-smoking campaign was launched in Mumbai, aimed atsensitising the youth. Interactive theatre was used as amedium to communicate the message of the programme.‘Paramarsh’ a comprehensive corporate health programmefocusing on holistic well-being of employees began in NewDelhi for ToI employees and has been incorporated as apermanent initiative

Launch of ‘CONCERN PLANET’ – an initiative in schools andcolleges in India – to sensitise young Indians on ClimateChange. Times Foundation also partnered with organisations toconduct events on various fronts: The Times-IMF adventureworkshop, the FMS Annual Convention, FICCI Workshop forWomen Leaders, to name a few.

Launch of Times Foundation Communiqué – The TimesFoundation Communiqué, a civil society monthly e-newsletteraimed at dissemination of information in the civil societysector.

Times Foundation’s CSR initiatives have made measurable

impacts to the company, as a ‘doer’ rather than a mereobserver. As a media organisation, it has taken the importantstep of consciously making a difference rather than justexhorting and reporting on it. In addition, the CSR has alsocreated goodwill for the company, which believes in goingbeyond the bottom line and impacting people on the groundpositively. The company is perceived widely as a sociallysensitive and responsible organisation, promotinginclusiveness and benefiting all its stakeholders – internal andexternal.

Times Foundation has initiated and completed numerousprojects and campaigns in the span of the last six years acrossthe country. Topically speaking, significant inroads ineducation via Public-Private Partnerships were made in 2007.Times Foundation, in association with the Government of TamilNadu, initiated building of houses for Tsunami affectedfamilies. Times Foundation has, with the Governments of TamilNadu and the J&K, undertaken the task of creating socialassets including schools, health centres and multi-purposecommunity centres in disaster prone and affected areas.

All such work is being carried out in consultation with localself-government after ascertaining local needs and after duediligence. The projects also aim at providing local communityvocational training, health-check-ups and sustainablelivelihood options at the local level. Times Foundation has alsobeen assisting John Hopkins University, USA and UnitedNations in implementation of the UN handbook guidelines inIndia, a move which underscores Times Foundation’s presenceand credibility globally (Assocham-KPMG, 2008).

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Post-script

“MAN SHALL LIVE, NOT BY BREAD ALONE”

(MATTHEW 4:4). BACK TO ANU AGHA. MONEY IS

NECESSARY FOR BUSINESS TO SURVIVE BUT IT

CAN’T BE THE SOLE REASON FOR BUSINESS TO

EXIST. WHAT INDEED IS THE REASON TO EXIST?

NO MARKS FOR GUESSING THE ANSWER. NOT

AFTER READING THIS BOOK ANYWAY.

EXISTENCE BRINGS WITH IT RESPONSIBILITY AS

WELL AS RIGHT. RESPONSIBILITY TO ONESELF IS

NOTHING TO WRITE HOME ABOUT.

RESPONSIBILITY TO OTHERS IS. ANDREW

CARNEGIE FAMOUSLY SAID, “HE WHO DIES RICH

DIES DISGRACED.” FOR CORPORATES, THE SAYING

MAY BE REPHRASED: MERELY LIVING RICH IS

LIVING DISGRACED. IF CARNEGIE COULD PUT IT TO

PRACTICE AT ALL LEVELS A CENTURY AGO, WHAT

PREVENTS US FROM DOING IT NOW? SURELY NOT

JUST A FEW DOLLARS AND RUPEES.

THE BUSINESS COMMUNITY HAS FACED

NUMEROUS CHALLENGES IN THE PAST AND COME

OUT WITH FLYING COLORS. WILL IT DO IT NOW

FOR THE SAKE OF HUMANITY? THE ANSWER IS A

RESOUNDING YES WITH A CAPITAL Y.

203

intrapreneur, 103

CSE, corporate social

entrepreneurship, 98, 120

CSR, corporate social

responsibility, 40, 57, 87,

92, 97, 101

CSR myths, 54

D

Dalip Sehgal, 90

Daniel Botkin, 125

Debby Bielak et al, 75

Desh ko Arpan programme, 195

Determination, 96

Deveshwar, 135, 139

Dhaval Buch, 136

Dhirubhai Ambani

Foundation, 190

Double return, 106

Downturn, 81

DPG, 179

Dutch East India Company, 3

E

e-Choupals, 136

Ecomagination, 141

Enabling environment, 102

Enlightened self-interest

school, 14

Environmental deregulation, 60

ESG (environmental, social and

governance) impact, 79

EVA (economic value added), 17

Ethical model, 53

Exploitation, 34, 59

Ezequiel Reficco, 99

F

Focusing choices, 92

Food, 131

Friendly visitors, 7

Friends of the Earth, 61

G

Gaurav Datt, 37

Get-rich-quick mentality, 120

Globalisation, 77

Godrej Garden City, 141

Good samaritan, 4

Golden age of capitalism, 124

Gospel of Wealth, 10

Gramin Suvidha Kendra, 185

Great Depression, 124

Great acceleration, 124

Gregory Dees, 113

Gurcharan Das, 37

H

Hague Palace of Peace, 10

Harvard Business School, 152

Hindustan Unilever, 90, 136

HSBC, 137, 169

Homo economicus, 14

Human consumption, 128

I

Incentives for CSR, 149

Industrial Revolution, 7, 124

Infosys Young Indians, 167

Institute of Directors, 49

Intangibles, 65

Intellectual capital, 65

International Confederation of

Free Trade Unions, 61

202

IndexA

ACC, 137, 138, 140, 171, 172

Adam Smith, 62

Adi Godrej, 137

Aditya Birla Centre for

Excellence in CSR, 149

Aeschylus, 6

Amar Bhide, 114

Ambuja Cement, 173

American Philosophical

Society, 9

Amit Mitra, 149

Amnesty International, 61

Anand Mahindra, 135

Andrew Carnegie, 10, 11, 12, 13,

51, 201

Andrew Witty, 142

Anil Sinha, 150

AMRC, Asian Monitor

Resource Centre, 66

Archie B. Carroll, 49

Aravind Eye Hospital, 175

Arvind Sharma, 139

Asongu, 43, 44

Aurolab, 177

B

Banmali Agrawala, 138

Barriers to engagement, 79

Benjamin Franklin, 8

Bennett, Coleman & Co, 196

Beyond Charity, 157

Bill Gates, 164

Bill & Melinda Gates

Foundation, 164

Blended value, 107

Body Shop, 48

Breaking bread together, 44

Brundtland Commission, 124

Business ethics, 15, 16, 50,

60, 146

Business philosophy, 13

C

Capitalism, merits and

demerits, 25

Carnegie Endowment, 10

Charlotte Denny, 62

Child labour, 66

CII, Confederation of Indian

Industry, 137, 167

Claire Fauset, 64

Co-generating value, 107

Coca Cola, 65

Colleen Chapman, 106

Computer-aided learning

centres, 182

Conservation International, 109

Consistency, 96

Constantine, 6

Corporate paternalist, 13

Covin and Miles, 100

Corporate citizenship, 43,161

Corporate DNA, 107

Corporate purpose, 105

Corporate social

205204

ITC, Imperial Tobacco

Company, 135

J

Jaago re, 160

James Austin, 99

Jeff Swartz, 107

John W. Gardner, 8

JSW Foundation, 181

Junto, 9

K

Kasturi Rangan et al, 152

Kericho, 91

King Hammurabi, 3

Kishor Chaukar, 135

KPMG-ASSOCHAM White Paper,

55, 161

L

Learning laboratories, 116

Lester Salamon, 8

Liberal model, 53

Liberation theology, 4

Life cycle assessment, 125

Lipton, 91

M

Mahindra & Mahindra, 138

Mark Wierzbinski, 41, 57

Martin Ravallion, 37, 39

Marxist theory, 21

McKinsey, 73, 75, 76, 81, 87

Mesopotamia, 3

Michael McComb, 49

Milton Friedman, 14, 53, 58, 157

Moga milk programme, 159

Multi commodity exchange, 185

N

Naina Lal Kidwai, 137, 157, 169

Nathan Rosenberg, 116

‘New Prometheus’, 9

Noam Chomsky, 34

Non-destructive creation, 114

Norman Bowie, 16

O

Orbis International, 178

Orin Smith, 102

P

Paul Streeten, 34

People, planet, profit, 43

Performance gaps, 80

Peter Drucker, 15, 17

Philanthro-capitalism, 164

Philanthropic ‘silver bullets’, 155

Philanthropos tropos, 6

Population, 126

Poor Law, 7

PPP, Public-Private

Partnership, 150, 185, 189, 196

Prodigal Son, 4

Project Shakti, 90

Profit motive, 22, 39, 62

Profit vs greed, 27

Prometheus, 6

R

Rajeev Dubey, 135

Reliance Rural Development

Trust, 190

Ritu Kumar, 139

Robert Bremner, 8

Robert Payton, 8

Ronald McDonald House, 47

Rousseau, 14

Rural distribution challenges, 90

S

Sangita Jindal, 181

Schumpeter, 100

Seva Foundation, 178

Shaftesbury, 15

Shakti, 90

Shankar Venkateshwaran, 138

Sight Savers International, 178

Social Enterprise Centennial

Colloquium, 153

Social enterprise initiative, 152

Socialism, 21

SCSR, strategic corporate social

responsibility, 47, 48

Smart partnering, 87

SRB, sustainable responsible

business, 43

SRI, socially responsible

investment, 51, 67

Stakeholder model, 54

Starbucks, 102, 106, 108, 109

Statist model, 53

Sumit Banerjee, 137

Sustainability, 123, 127, 133,

135, 137

SustainAbility India, 138

T

Tata Chemicals, 192

Tata Power, 138, 140

Tele-opthalmology, 177

TERI, Tata Energy Research

Institute, 53

Timberland, 105

Times Foundation, 196

Toxic substances, 132

Tracey Keys et al, 87

Trickle down effect, 34

Triple bottom line, 43, 54,

101, 135

V

Value based organisations, 103

Value creation, 106

W

Water, 78, 117, 130, 174, 193

Wallace Donham, 13

Warren Buffett, 158, 165

Wealth of Nations, 62

Wildlife Trust of India, 193

Will of nature, 15

World Business Council for

Sustainable Development, 46,

133, 145

Z

Zeus, 6

207206

It is indeed extraordinary that at an early stage of his career,

Huzaifa Khorakiwala decided to dedicate his entire life to

serving humanity through Wockhardt Foundation which he

heads as CEO. An MBA from Yale University, USA and

Executive Director of Wockhardt Ltd, Huzaifa now spends all

his time, effort and energy on disseminating human values

especially amongst the youth through lectures, seminars,

workshops and group events. He has authored many books

on human values and he travels widely in India and abroad in

pursuit of his mission.

S Srinivasan enjoys a four-decade experience in healthcare

and human resources. A former member of the faculty at

CWRU School of Medicine, Cleveland, Ohio and former Senior

Vice President, Aventis, Mumbai, he has authored many

books on behavioural issues and is actively supporting

Huzaifa Khorakiwala in his noble mission through live

interactive sessions and communications.

“Mankind is one family”

About the authors

208

To order copies contact

Poonam Hudar, 09820421039

phudar@wockhardtfoundation.org