New Delhi: Manfred Haebig, director of private sector development for Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), an international cooperation and capacity building enterprise for sustainable development, talks about the advantages of adopting corporate social responsibility (CSR) as a core business strategy rather than as a purely philanthropic endeavour.
Why should companies be concerned about adopting sustainability in their business practice?
You can say in general terms that we have thrown a big party in industrialized countries, and then something happened in 1989 in the centre of Europe when the wall came down and suddenly we had three billion new guests to the party. That’s three billion new clients, three billion new consumers and three billion capitalists, and they all wanted to go to the same party—but there isn’t a multiplication of resources. We all have to eat the same food, and drink the same drinks. And what is worse, we have to share it with future generations also—so the pressure on efficient use of resources is tremendous. And every problem, of course, is also a solution. It’s a solution for the entrepreneur that can grasp it. Producing products or delivering services that can have the same impact and benefit in terms of development, and in terms of consumption with a lot smaller input of resources would of course be a solution to that problem—and an opportunity that is already there tomorrow. In the CSR discussion, often people reduce the whole agenda to a risk-management agenda—which is there also, but much more than a risk management agenda, it’s an opportunity.
Strategic philanthropy: Manfred Haebig.
How does adopting CSR in your core business values differ from the traditional version of CSR?
When we came here, we noticed that when we said CSR, we would mean different things. Most people if you interview today, most people still would say that anything that is philanthropy would use the word “CSR”. We would use the word “CSR” to describe the responsible behaviour of its business in the core of its business. Today, when we talk about responsible business behaviour on the enterprise level and we talk about the competitiveness that is not driving on the exploitation of the people or the planet—so we would today rather prefer the business responsibility concept than the word CSR. When we say business responsibility, we mean the responsibility of business to not only care for their long-term financial sustainability—but also for aspects that have to do with ecology and social and stakeholders; which in the end all come down to social sustainability. Because it’s not just about the enforcement and resources—it’s about looking at resources that aren’t renewable and about looking at how much we are consuming today and how much are you leaving for future generations, which again becomes a social issue.
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Are many Indian companies adopting such CSR strategies in their core business?
It isn’t common yet, but India is definitely walking in the right direction, that is being driven by some four or so drivers—one is that the public sector and government are increasingly embracing the subject and the idea of sustainability. The other one is that India is still an economy that is mostly family-owned businesses, and that is an opportunity in a way—because family-run businesses are not under the pressure of quarterly reports and stock markets and can have longer-term visions, and may also have values and connected-ness with their environments that stock markets may not have. So there is quite some substance to build upon.
So shifting from detached philanthropy, to strategic philanthropy, towards core business-oriented changes, is probably something that will happen more and is already happening today.
What opportunities does such an approach offer Indian businesses?
This is a very Indian opportunity and that has a lot to do with the size of India and the composition of the pyramid of its income. It has a lot of people at the base of its pyramid, a lot of people that are quite poor. A lot of them are already consumers, and will be consumers in the future. A lot of them are parked in rural areas and are looking for employment—so looking for employees, and workers, as consumers, they will want to take part in this market game, and that will create a lot of opportunities for other companies in terms of finding clients and finding employees and workers. There is no other country in the world with that same dimension—just China and India, and they are the ones that have the size of market, where you can really recover your costs... Another thing is the tremendous creativity and entrepreneurship of the Indian people—and if you’re comparing these two things, I bet there will still be a lot of surprises to everybody in terms of innovative approaches to products and services that can be delivered with less inputs and resources.
This is the third in a series on corporate social responsibility.