Dr Mukund Govind Rajan participated in the Corporate Social Responsibility panel at the LSE India Summit 2017, where he discussed the benefits and drawbacks of ‘forced philanthropy’ brought in as part of the Companies Act (2013). After the session, he spoke to Alexander Spalding about Tatas’ longstanding commitment to using its expertise to achieve effective CSR and social change.
AS: Does the forced allocation of funds towards corporate social responsibility (CSR) compromise the sincerity with which these initiatives should be conducted?
For forward-looking corporations, this new legislation has not negatively impacted the integrity of their CSR work. Tata finds itself in a unique situation because we were investing heavily in CSR long before this new legislation was introduced. The one potential issue that I can foresee for other companies is that under the current legislation if you do not have any profits in any given year, you would theoretically not be obliged to contribute to CSR initiatives. It may be that there are some, who would otherwise be inclined to contribute regardless of legislative mandates, that decide not to spend any money on CSR because they are not profitable. This would be a real tragedy.
Beyond that risk, I think that the law has had a positive impact. I would like to emphasise the significance of two benefits in particular. One is that there is now a much greater emphasis being placed on the role of governance. In the past, CSR was often relegated to the sidelines of companies; it wasn’t necessarily seen as a core function of their strategic operations. CSR was done if and when you had the time, as and when you had the necessary profits, subject to the inclination of your CEO and the various other priorities of the business. I think this has now changed significantly. The discourse surrounding CSR has been elevated almost overnight from an activity that is happening without much oversight or transparency to an activity that is taken seriously by those who have to answer to these independent committees and regulatory boards tasked with evaluating the impact of the respective companies’ CSR initiatives. The people staffing these committees are seasoned corporate representatives who are accustomed to asking probing questions about the value that this particular activity is generating and the tangible impact that it is creating for its various beneficiaries.
The second outcome is that many organisations (particularly some of the smaller ones) are finding that pooling CSR funds together with other corporates is a more effective way of approaching the various logistical issues that the new legislation poses for companies. This CSR initiative is therefore creating the necessary thrust to get more companies to work with each other. They could, for example, be companies that operate in the same geographies, which would therefore maximise the kind of impact that they are able to have in their immediate operational vicinity. This kind of cooperative behaviour could also have a common mission around a theme, such as skills development.
Does the new mandatory corporate social responsibility law facilitate the potential of private sector companies to replace the Indian state in the provision of public goods?
We have debated whether the government’s ‘forced philanthropy’ legislation is a good thing in terms of the provision of services that have traditionally been viewed as the domain of the government, and it could be argued that this is not necessarily the best approach to take. At the same time, it is important to understand the reality of the society within which we live in here in India. It is impossible in this country to ignore the fact that you are in a community that has extremely high levels of inequality and diversity. Regardless of the role that you play in the functioning of society, whether you are a householder or a landlord for example, one needs to be able to demonstrate a fundamental sense of empathy and sensitivity to the reality that some people are simply not able to meet their basic needs. This sense of empathy must therefore translate into a concerted effort to do something so as to alleviate this situation.
For the next two or three decades, it will be impossible, simply as a matter of conscience, for corporate managers and executives to ignore the stark realities that are inherent to the contexts that they operate in. If and when India reaches the stage of development where many of these basic needs can be taken care of, then you can begin having a more constructive discussion around whether the intervention of corporates, in lieu of the government, in the provision of public goods is necessary. Let’s face it, the government has often stumbled in delivering services; this is not necessarily always the case, but it is true in most contexts. So, if there is value that a corporation can add to the provision of a particular public service, then I cannot see a problem with private companies intervening in these governance practices.
Corporates, in an ideal world, should focus on areas where they have the most expertise. To me, it seems like a bad investment for corporates to simply write a cheque. If this were the case, you might as well term the new law a tax as opposed to a genuine CSR initiative. If I have a software company, writing pieces of code or helping to create a website for a non-profit (which could not do these tasks on its own because of a dearth in technical expertise) represents a constructive use of my employees’ professional skills in a CSR capacity.
Skills development is one of the most useful CSR initiatives that any corporation can undertake. We are particularly cognisant of this at Tata as demonstrated through our investment in first-class professional development facilities. Through these initiatives we not only invest in critical infrastructure (which is obviously also something that the Indian Government has the capacity to do) but also, and perhaps more importantly, we consider how best to deliver vital educational services to the next generation of professionals. The real contributions that companies like Tata can therefore make are in the realms of professional development pedagogy and technological innovation. These are spaces wherein corporations are typically far ahead of the government.
I would personally like to see much more allocation of CSR in this way: people investing into sectors and industries wherein they have the necessary capabilities and can really change the future.
Tata runs a social internship scheme with international universities including LSE, providing foreign students with professional development opportunities in India. Could you tell me more about Tatas’ experience with organising these internships?
Tatas’ overall experience with these initiatives has been absolutely terrific. The young students from these elite universities are engaging with the opportunities and issues that exist in developing countries, which, in turn, may make them more sensitive to the kinds of debates that tend to take place on the international level. For our companies, it is always helpful to have a fresh pair of eyes for looking at a situation and providing commentary on how their services are being perceived by their intended beneficiaries. This provides insights into how these services can be improved, which operates as an invaluable tool for the company that wishes to maximise the efficacy of these services.
One of things that you have to understand, however, is that these students typically only come to India for around eight weeks, which is not a long period of time. The students also often experience a culture shock, even if they have been provided with orientation prior to their arrival, so it takes some time to adjust. So, when the students finish their eight to twelve weeks of work they have only begun to scratch the surface of what is really going on. Nevertheless, I think that both Tata and the students walk away feeling as though they have learnt something important and valuable.
Can CSR initiatives be used for the socio-economic emancipation of women as well as members of the Scheduled Tribes, the Scheduled Castes, and the Other Backward Castes?
Absolutely, we are very concerned with addressing these kinds of issues. There is a lot of positive work that corporations can do by embracing affirmative action initiatives. At Tata, we recognise that the Scheduled Tribes and the Scheduled Caste communities have been the worst affected as a result of the widespread socio-economic changes occurring in India. We are addressing this by embracing the ‘4 Es’ in our affirmative action programme, i.e. education (in the form of scholarships and grants that allow members of disadvantaged communities to finish their school education and to move onto college), employment (in the form of stable employment in a Tata company so as to afford the chance of maintaining a stable livelihood), employability (in the form of skills development that will allow members of these disadvantaged communities to stand apart from the rest when seeking employment from other companies), and entrepreneurship.
On the question of gender, let me give you a concrete example of our work, which took place during the last General Election in India in 2014. It was initiated by Tata Global Beverages, which manufactures tea. For many years this company has been running an initiative called ‘Jaago Re!’ which refers to the kind of awakening that you experience in the morning after your first cup of tea. In a more metaphorical sense, the campaign was intended to get people to free themselves from their stupor so as to get them excited about an initiative or issue that they truly believe in.
During the 2014 general election, we decided to incorporate the ‘Power of 49’ cause, which is specifically aimed at the socio-economic and political emancipation of women, into our CSR programme. We wanted to have a better understanding of the underlying dynamics around why women vote in the way that they do, and commissioned a study that found that many women, particularly in smaller rural communities across India, tended to vote in line with their husbands or the patriarchal head of the family. As a result, they would often not vote for candidates who were genuinely interested in addressing the concerns of women. We also found that a lot of women had not even registered to vote.
As a result of the findings of this study, Tata Global Beverages consulted the board of Tata Sons to ask whether Tata could run a corporate-wide initiative to highlight women’s empowerment and their responsibility of voting. We subsequently ran a major television and social media campaign where we invited women from all across India to share the principal issues that they faced. This campaign was eventually able to solicit responses from over 1.5 million women, which, at least according to our sources, is the largest survey of its kind in India. The issues that came up were typical, such as the lack of toilets, lack of security, poor public lighting, inadequate transport, and so on. We took these findings and created a succinct manifesto that reflected the issues that women would like to see discussed in the realm of Indian politics. We delivered this to the largest political parties in India and, during televised interviews, we asked their key representatives what they were going to do to tackle these issues.
The campaign had an extremely positive impact on Tata Global Beverages’ sales in light of the increased marketing. But more importantly, the 2014 General Election saw the highest turnout of women ever – around 66 per cent of the adult female population voted. So even though this initiative started out as a marketing campaign, it ended up becoming a socially responsible initiative that sought to boost the political participation of women.
This campaign is therefore a strong example of a way in which socio-economic change can be bolstered using corporate resources, social media, and television presence. You back this through the solicitation of feedback from the general public and through constructive dialogue with influential policy-makers. In this way, I think that business enterprises are looking beyond issues that are beneficial from a corporate perspective so as to also instigate real and meaningful social change.
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About the Authors
Dr Mukund Govind Rajan serves as Chief Ethics Officer of the Tata group, oversees the foreign offices of Tata Sons, and chairs the Tata Global Sustainability Council. Dr Rajan has held a number of senior executive positions through his 22 year career with the Tata group, including member of the Group Executive Council at Tata Sons, head of private equity at Tata Capital, and MD of one of the group’s telecom businesses. He currently serves as a Non-Executive Director on the boards of Vistara, Tata AIG, and the TCS Foundation, and is a member of the Advisory Board of the Tata Opportunities Fund.
Dr Rajan received a Rhodes Scholarship to study at Oxford University, where he completed a Master’s degree and a Doctorate in International Relations. In 2007, the World Economic Forum honoured him as a Young Global Leader.
Alexander Spalding is a third year student of Social Anthropology at LSE. He spent a summer working with the Observer Research Foundation as a policy research intern with the think tank’s cyber security team in Delhi, and also formed part of the Communications team at the LSE India Summit 2017