Companies that focus only on the '2 per cent mandate' but cannot find the balance for their core business could be driven to extinction
As July faded into August, India Inc. abruptly moved its subject of heated discussion away from CCD to CSR.
While Cafe Coffee Day (CCD), whose founder had committed suicide, was crashing on the bourses, the Companies (Amendment) Bill was passed in Parliament.
The Bill says businesses must spend 2 per cent of profits on corporate social responsibility (CSR) - and violations can attract a fine and up to three years in jail for every officer of the company. That changes this social responsibility to a tax that management will worry deeply about. (This provision is likely to be reviewed.)
Which makes the premise of this book even more important: Social and environmental responsibility must be integrated into business. It is not about the '2 per cent' CSR mandate. It is about your business.
Balance uses real-life stories to analyse businesses caught in the middle of technological disruption and climate change. A few have managed to find the balance; most are struggling to find it.
This balance is not about charity or public good. Legal compliances for most business areas are increasing. Take the automobile industry, getting disrupted in the US by electric vehicles and in India by emissions regulation.
India's top carmaker Maruti Suzuki will phase out its diesel cars - one quarter of its sales revenue - by April 2020, when new Bharat Stage VI emission standards would demand big investment to upgrade diesel engines. So, the company's focus will shift to CNG and electric or hybrid vehicles. It is being 'driven' to the balance, and not by the 2 per cent 'CSR tax'. Automakers who found the balance earlier would have a competitive edge, anticipating, and staying ahead of, regulations that force you to the brink as it did Maruti Suzuki.
Or take the global concerns about single-use plastic. There could be more pieces of plastic in the ocean than fish by 2050. Still, in the global medical industry, 80 per cent of items are single-use. Disposable syringes, catheters, gloves and blood bags transformed medical safety, hygiene and mortality, but all that plastic is killing the earth. Pioneers looking for the balance are focussing on finding answers in biodegradable material or reusable alternatives.
Often, economics drives this quest rather than environmental concerns. As with sanitary pads in India. Disposable pads, the norm for global female hygiene, are often out of reach of India's poor. Local innovation is finding cheaper and reusable alternatives such as silicone menstrual cups and even washable, reusable cotton pads. Reusable pads are now big. You can buy a dozen brands off Amazon. American women are also using them because they reportedly do not contain the chemicals which the disposables have been found to have.
We are facing real environmental challenges - cancer-causing pollution, unprecedented floods, drought and earthquakes, and they dovetail with businesses, co-author Namrata Rana tells me. "If India has to attract FDI, we have to be seen as a country where the impact and risk of climate change can be mitigated. We are a long way off. Why are we using plastic wrap and a thermocol (polystyrene) tray to sell a banana? Why are Delhi offices at 19 degree Celsius?"
Business exists not for charity but to make profit, she adds. Finding the balance means aligning business goals with, for instance, sustainable development goals (SDGs). "Else, you just get stuck on compliance around the 2 per cent, and someday your larger business is disrupted," says Rana.
The insights in this book come from research by IIM-Udaipur and Futurescape, a consultancy founded by Rana, into Indian firms' sustainability and CSR activities. The authors studied strategies of Indian and multinational firms to arrive at this "new way of thinking about business and CSR". While good governance and far-reaching policies help, firms now need to factor in a new reality where reputation, responsibility and risk are connected.
Data is a key part of this balance, say the authors. Every sector of the economy is busy capturing data and using it for increasing sales. Data personalisation is central to business models across industries - education, healthcare, insurance and banking - and ordinary people are targeted, identified, manipulated. Ad-tech gives us constant reminders to complete the purchase. We accept terms and conditions without reading them. We freely allow apps to access our camera and mic and messages. As India grapples with data storage and privacy regulations, and a lack of awareness as 100 million lower-literacy users come online, we could be "sitting on a time bomb".
If companies do not find the balance but are forced to it by law, there is resistance. When Maharashtra banned plastic, complaints piled up, and the government backtracked in some areas. But most realised the reprieves were temporary; alternatives must be found. Growth cannot be at any cost. A balance is necessary.
Finding that balance is not just "the prime directive our planet needs", but what corporations need to survive, compete, and thrive.
The reviewer is a policy consultant and technology writer