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CSR reflects human side of companies
Article published in Financial Express dated 25/09/2017, Pg. No. 7
GlaxoSmithKline established in 1715 which has entered its fourth century in business bases its drug pricing on the gross national income per capita in all 150 countries where it does business, in dozens of the underdeveloped nations, it reinvests 20% of its profits in local health care infrastructure and worker training. The company believes in serving the patients in poor countries alongside the wealthier nations of the West. CEO Andrew Witty addresses them “the other 6 billion” people in the world. GSK conducted three decades of painstaking research for developing a vaccine for malaria, which has distressed major part of sub-Saharan Africa; it is the hardest-hit area of malaria. GSK has partnered with the Government of Botswana on an ambitious HIV treatment program. It is also working continuously on a vaccine for the Zika virus. GSK ranks at number one position of the Fortune Change the World List in 2016.
Nike’s CEO Mark Parker likes to ask his team a single question: “Can we double our business, while halving our environmental impact?” The world’s major athletic gear company is the first one to kick off a recycled shoe program back in 1990. It’s worth noting that 71% of its footwear and apparel uses “Nike Grind,” which is made of recycled polyester and other materials. Grind can be found in yarn and basketball shoes. Grind is also incorporated in more than 1 billion square feet of sports surfaces—including running tracks, playgrounds, and football fields replacing surface materials like virgin rubber.
Nike’s popular Flyknit shoe line, debuted in 2012, is both innovative and eco-friendly. Their teams of engineers have reduced waste by about 60% on average for every Flyknit shoe compared to what’s used for traditional shoes, saving nearly 2 million pounds of fabric-scrap waste since 2012. It 2020 targets include sourcing 100% of cotton more sustainably and reducing landfill waste. For Nike there’s no finish line to becoming a more sustainable company. The sportswear maker is certainly gung ho in the race of impacting positive practices to save Mother Nature. Nike ranks at number six in the Fortune Change the World List of 2016.
The Fortune ‘Change the World’ highlights leading companies that are innovating to solve the world’s biggest challenges through core profit-making strategy and operations. Building on the concept of shared value, the list identifies companies not for their philanthropy, corporate social responsibility (CSR), or other business approaches, but for innovative activities that create material business value while contributing to community impact.
Customers respond much positively to environment sustainability practices adopted by businesses. Today’s, educated customers appreciate business organization adopting pro-environment practices, and when they see it, and businesses adopt them legitimately, it only helps organizations gain tangible benefits. Smart organizations have also understood that adopting sustainable business practices can also improve business processes and help in cost cutting.
India is the first country in the world to make the corporate shell out from their annual revenue to charity from April 2014. There are quite a few areas in which organizations can invest. The major problems are hunger, poverty, healthcare and education. A survey by KPMG found that 52 of the country’s largest 100 companies failed to spend the required 2% in previous two years. A minor proportion of companies only has done sincere contribution to CSR; corporate are allegedly deceiving the system by giving donations to charitable foundations those later returns the amount minus a commission.
Prof. Michael Porter who is a doyen of Strategic Management, feels why should companies turn to NGOs and governments to solve society’s major problems? It is need of the hour for business organizations to address societal needs and challenges while doing business. When business solves an external problem, they grow bigger and stronger in proportion with the rise of community standards. The shared value concept enhances corporate policies and practices which adds to the competitiveness of a company. By working on societal issues, companies automatically start innovating including the business plan and strategies. The innovations impact the living standards of consumers.
India’s Jain Irrigation Systems Ltd. is the only Indian company to make it into the list of Fortune change the world list in 2015. Jain Irrigation System’ referred to as JISL, ranked 7th in the list! JISL’s drip irrigation, micro-irrigation, tissue culture (TC) is a boon to farmers: high yields can be obtained with minimum usage of water. JISL has also entered the business of automation and solar pump. It is leading in the setting up of greenhouses as well.
The 2016 list saw two Indian companies in it – Cipla and Godrej Group of Companies. According to Prof. Porter, India is land of opportunities and sky is the limit for Indian organizations to start profitable ventures related to societal problems such as climate change, water management, education, healthcare, rural upliftment etc.
Business managers need an approach of engaging with the external environment with an eye of expanding business through finding solutions to some pressing problems. Organizations need to look at how good they are at external engagement, they must be prepared to innovate something to do better externally. Business organizations are not monolithic entities, they don’t exist in vacuums. Organizations are governed and lead by individuals and are anchored in the societies in which they conduct their businesses. Corporate social responsibility schemes reflect the human side of organizations.
Prof. Dr. Vidya Hattangadi