Financial Times

The importance of “real” CSR
Corporate Social Responsibility (CSR), the latest buzzword in the private sector, was the focus of the Ceylon Chamber of Commerce's recent business convention. The chamber certainly deserves praise for making CSR the theme of its convention which is timely given its growing importance in the corporate world.

This corporate focus on CSR comes at a time when public confidence in big business is at a low ebb, both here as well as internationally. In recent years we have seen how some of the icons of Western capitalism have been found to be crooks.

Here at home we have the spectacle of millionaire businessmen paying off market watchdogs not to have their alleged crimes investigated - all in the guise of a fancy legal term called 'compounding' which seemed to be reserved for white collar criminals. Pity the ordinary pickpocket who does not have the same privilege.

Some of the top companies in the world are also the top polluters and even here it was not too long ago that some of our top manufacturers and exporters were known for discharging untreated effluent into the environment, although most of them have cleaned up their act and are now respectable corporate citizens.

Last July, the UK Environment Agency announced that some of the biggest and best-known companies in the UK were continuing to commit serious environmental crimes. It said: "Many are UK stock market-listed companies and claim to be leaders in corporate social responsibility."

It is in this context that we would like to point out that while CSR may have become 'sexy', it could easily degenerate into meaningless and empty gestures, often done purely for the sake of publicity or being able to claim that a company is fulfilling its social responsibility. In his opening remarks at the business convention, John Keells Holdings chairman Vivendra Lintotawela makes a good point, saying that if the main objective of an organization for having a CSR programme is to optimize returns to shareholders, "then that organization has definitely missed the essence of CSR." Companies, he declared, should engage in CSR predicated on the core objective of uplifting communities and safeguarding and enhancing the environment. CSR's core objective is not profit generation, even though there are organizational benefits that flow from it, Lintotawela said. He draws attention to one such spin off benefit of CSR, namely a good press.

The irony is that good media publicity may not be just a spin off benefit for some companies - they may do CSR with the sole aim of getting publicity.

Here it seems that part of the selection criteria for the best corporate citizen awards might be flawed. In the first place, companies that wanted to win the award had to submit their applications only a few weeks or so before the event, giving rise to the question how their claims could be investigated in such a short time. Secondly, applicants had to fulfil a minimum of three out of five categories, which meant that they could suppress a poor track record in one category and highlight something else.

Furthermore, the awards were based partly on annual reports and newspaper clippings of CSR activity. The latter does not seem a very adequate or accurate selection method precisely because of the reservations we expressed earlier - the craze for publicity among some of our corporate citizens. There may be many firms which do a lot for the community but do not boast about it in the media or prefer a low profile. As it happened however, the award for best corporate citizen went to a company well known for being media shy and it fully deserved the recognition.

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