CORPORATE SOCIAL RESPONSIBILITY
Compiled by Savithri Rodrigo
THE CORPORATE CONUNDRUM
Rienzie T. Wijetilleke does his best to overcome a challenging hurdle
Q: How would you describe Corporate Social Responsibility (CSR)?
A: Historically, it was developed for organisations to do social good and improve societal conditions, while fulfilling the primary objective of deriving profits and increasing value for shareholders.
In the past few decades, while capitalist organisations created tremendous value for shareholders there were calls to do more for all stakeholders – including employees, the immediate community and society.
Q: What are the challenges to implementing CSR?
A: The challenge is obvious – sometimes you cannot do good and make money! In some industries, a company’s inherent economic operation creates a negative social impact.
The public is not satisfied with lip service and stakeholders start demanding answers from local politicians. This system works when valid complaints reach the legislature and action is enforced upon organisations.
CSR goes much deeper: it can involve wider issues including gender equality, women’s rights and data privacy.
In Sri Lanka, a lack of information and education is a challenge, whereby corporates are only held to higher standards by an informed and educated public. The public is sometimes guilty of only observing the immediate surroundings and not beyond. This insulated thinking can lead to unchecked corporate greed.
Q: So what would a more sustainable business model look like?
A: This is a modern-day corporate conundrum. Organisations instinctively look to profit first, and society and sustainability later. But corporates are shifting from the conventional capitalist business model probably required by a more socialist arrangement.
People no longer accept the top-down approach – they will not accept the fruits of their labour being enjoyed by the board, management and shareholders alone. Capitalists take enormous risks with personal funds that create value for stakeholders. There must be a better balance between profit and social responsibility with companies considering more sustainable business models for long-term survival.
But these business models will lead to a compromise or contraction of margins, sometimes in the short to medium terms or maybe even indefinitely.
Q: Who should take the lead, in your opinion?
A: I’m not a fan of top-down policy although it’s an imperative in the corporate world. Ideally corporates, stakeholders, the public and state must work together to achieve this.
Perceptions are important. If the government passes regulation, it’s viewed as burdensome to business; if the public protests, it is burdensome to the state and public themselves; and if we rely on profit focussed entities to suddenly consider a larger set of stakeholders and do so genuinely, we could well be waiting indefinitely.
It needs to be a concerted effort instigated by the public, who have that rare power as they are important to corporates as consumers and the state as voters. Sometimes, the public is unaware of how much sway they hold.
Q: How do national policies complement CSR?
A: Sri Lanka must be more disciplined and aware of its responsibility to all stakeholders, and understand that corporatism is an important growth driver. But that growth comes at a price.
We can’t continue to neglect the people at the bottom of the rung – national policies should always aim to improve and enrich the lives of the public.
National policy support for the corporate sector is essential although today, it appears to protect only the rights and privileges of corporates that have access to the corridors of power – they are able to bend legislation at will and have more seats at the proverbial table than other stakeholders.
This should not be the case. Special interests and political influence must not undermine the greater good.
Q: And whom can we emulate as role model nations?
A: It is difficult to point to role models as every nation and industry has positives and negatives. Often presented as a benchmark for Sri Lanka, Singapore has national minded and disciplined citizens who aren’t overtly nationalist.
But Singapore has specific advantages and its culture is different to ours, which means that it can’t be directly emulated – although one would welcome the discipline of the public, and state and private sectors, in line with Singapore.
Europe is famous for consumer protection and safety standards, but that comes at a price with bureaucracy, regulations and high taxes.
So we shouldn’t seek to emulate but rather, improve what we have by targeting it to all stakeholders.