There are several theories floating around as to what caused this recession and some of the arguments keep focusing on the theory of lack of responsibility on part of the companies combined with the individual greed that has resulted in the suffering of laying off people around the world. An important question that comes to the mind then is: had the businesses been responsible, would we have even landed in such a situation?
Do companies have to be socially responsible?
Economic recession is taking its toll even on the biggest of charities like Bill and Melinda Gates Foundation or even faith based charities. However, as Bill Gates in his annual letter has rightfully said, “The wealthy have a responsibility to invest in addressing inequity. This is especially true when the constraints on others are so great. Otherwise, we will come out of the economic downturn in a world that is even more unequal, with greater inequities in health and education, and fewer opportunities for people to improve their lives.” If companies want a long life, they have to be socially responsible. We need not necessarily look at the west for role models. The Tata Group of Companies has set benchmarks for sustaining the profits and respect by being socially responsible. Hence, companies can chose to not be responsible at the cost of their own longevity.
CSR, as a theoretical concept, is less than a decade old but is being defined and strategised and has come to be defined only recently. While companies in India are taking a hard look at their plans, restructuring budgets and cutting costs, they are firmly holding on the commitments they have made to the on-going projects supported through Corporate Social Responsibility. Recession is also the time when the focus is shifting on not just looking at it as a fancy frill but as an essential business strategy which will add value to all the stakeholders.
With consumer spending having reduced, resulting in reduction of spending by companies, there is tremendous pressure on government to deliver services for which companies are not fully equipped. Hence, any responsible corporate must ensure that while trimming the budgets in these times is good, it makes complete business sense to align and focus on strategy for CSR on operational efficiency and ensure that every penny spent goes to the end user. CSR is not purely about giving donations and contributing to the social causes through charity giving, but is primarily about values of empathy and honouring commitments. It is also about supporting the government and making a difference to the lives of people who would otherwise remain on the periphery of development.
Any company’s long-term future depends on it being responsible to the society and environment. CSR is not only about financial philanthropy but also about transparency and ethical governance. It is also about setting standards where quality of service and benefit goes directly to the beneficiary especially the one that is most marginalised.
The author is the head –CSR, MphasiS