‘Corporate’ – its origin is from a 16th century Latin word ‘corporare’ – to form into one body. On its formation, it starts thriving as a microcosm in the overall societal body mass – the macrocosm. Its production units wherever located draw natural resources from the ecosystems there, while simultaneously introducing certain foreign elements/ new chemicals into them, that are not necessarily beneficial. If it doesn’t behave responsibly, in due course, soil gets degraded, water turns toxic, and air becomes polluted. Its combined effect increases the cost-to-yield ratio of the primary sector activities, which in turn affects the economic conditions of the locals especially for whom agriculture, animal husbandry, fishery and minor pastoral/ forest produce collection continue to be of primary significance in their livelihood patterns.

The creation of an industrial unit in an area also brings about a structural shift of the local economy. Secondary and tertiary sectors start contributing more to its GDP. Since the social customs and mores don’t change that fast, women’s participation in these sectors doesn’t rise proportionately. This puts them in a comparatively disadvantageous position in terms of access to financial resources.

Moreover, when the secondary and tertiary sectors expand, given the limited natural resources – particularly land and water, the primary sector is constrained to operate on a shrinking resource base. On the other hand, the accompanying rise in incomes in the former exerts pressures on the produce of the primary sector. Its cascading effect pushes up the general price level of the area.

Coupled with this is the higher expenditure on countering measures or sometimes on health which the presence of ‘new’ elements in the ecosystem entails, and the inevitable urbanization and subsequent lifestyle change that trails every industrialisation. As a net result, the area registers a high cost of living, thereby aggravating the problems of the people on the margin.

What then a responsible behaviour demands on the part of a corporate? It has to integrate environmental management and social responsibility issues as part of its core business policies and operating processes. Some corporate bodies may deny that they have any such responsibility. They hold that the business of business is business, i.e., simply to optimize input-output ratio and make profits. However, in the long run, their myopic view costs them severely in not being able to sustain profit or grow beyond a point.

An unusual perspective of profit is that it is an antithesis to the ‘Law of Cosmos’. We have been taught from our school days that energy can neither be created nor destroyed. Sum total of energy is always constant in the universe. Only its forms vary at different points of time. As such, sum of output from a system has to be equal to the sum of input. If business units earn profits/ surpluses in their enterprises, it means much more is going ‘in’ to the business than ‘out’/ back to society. This is a result of the mediating factor called ‘technology’. The term ‘Technology’ simply means the ‘technique of doing something’. By leveraging an appropriate technology, a business unit can uniquely tap, organise and administer resources to privatize benefits more than the input cost. The uncovered costs are those that are externalized to the environment and society. If a business unit was also made to pay the full environmental and societal costs of its enterprise, following the ‘Law of Cosmos’, it would be left with no surpluses/ profits!

Therefore, a company’s sense of accountability for the created wealth doesn’t end with reporting and distributing it among shareholders. Environment and society at large are also legitimate claimants of its profit. And when it shares profits on environment management on an ongoing basis, it is only indirectly protecting its wealth creating assets lying strewn throughout the ecosystem of the microenvironment concerned and ensuring their continued availability to its business in a sustained manner.

Similarly, when a corporate shares its profits in funding activities that promote socio-economic well-being of the disadvantaged, the women, and others on the margin, it is only indirectly addressing whatever conflict of interests its appearance on the scene might have given rise to between it and the locals. These acts of corporate generate sufficient goodwill among the people in the area and the communities there start treating it as an integral part of their life and livelihood. And what more does a corporate in information age with raised public consciousness need for the long-term sustainability of its core business activities other than a tension-free environment for its production units with a favourable public opinion?

There is a definite change in global corporate mindset towards CSR – particularly after the ‘Earth Summit’ of 1992 in Rio de Janeiro. From an earlier approach of just complying with certain legislative or regulatory requirements, doling out funds to the agents providing leadership to the marginalized stakeholders and buying peace anyhow or containing tensions somehow, giving donations to some chosen organizations and publicizing, building temples and setting up of some religious and educational foundations, charitable dispensaries and hospitals, etc., corporates the world over have been increasingly moving up in the CSR-responsive activity hierarchy in terms of exploring their true relationship with the environment and proactively engaging in doing things that bring their proper integration with local communities. A realization has dawned on them that by this, they can make profits and yet be good citizens!

 

http://rkdas.sulekha.com/blog/post/2008/07/corporate-social-responsibility.htm