Is it CSR or just business as usual?

The June 2008 issue of ‘The Director’ Magazine of the IoD, included a well researched feature on the subject of CSR. It was to me, an informative, yet bewildering overview of the subject. Informative because it is a comprehensive and well researched feature, bewildering because in many cases, the businesses that practice this ‘corporate social responsibility’ – apparently with the aim of helping people and the environment – are taking a very un-businesslike approach to the matter.

The difference between businesses and charities – in general of course – is that the former usually has clear, measurable and efficiently implemented outcomes, whilst the latter are often limited in their relevance by their adoption of inappropriately focused and sometimes impractical methodology. The combination of the two, using businesses – and businesslike methods – to help people and the environment may therefore offer a potent solution to the ills of our 21st century society. CSR should therefore be achieving a lot more.

A great man’s great statement defines why individuals or corporations should help those less privileged – what ought to be the foundation of CSR. he said:

A great man offers insight that may help more private sector businesses to understand. He said :

“Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life.”

Nelson Mandela (London, 2005)

Yet, what emerges in this and so many other analyses of CSR is that the potential for developing effective solutions by harnessing the private sector is clouded by commercial, marketing and political objectives. There is a lack of clarity amongst decision makers on the reasons why businesses should be involved in charity – it is usually founded on the debunked theory that social and environmental problems are ‘external’ to the business process.

Yet, the role of the state is receding as business assumes greater prominence. The theory that ‘the business of business is business’ usually results in a CSR policy that is an extension of marketing. That is both inhuman – for it allows entities that have the ability and bear the obligation to ease the suffering of others, to ignore that obligation – and a tremendous opportunity lost. The private sector has the resources, the reach and the systems to make an enormous difference to the lives of poor people and to environmental sustainability. In failing to do so big business is only highlighting and aggravating cracks in the economic system which created it.

There should be no doubt that business must incorporate social and environmental considerations in its operation given its growing role in the world. CSR as it is practiced today appears to embrace a variety of sins, usually linked to entities which cause harm and then use CSR to whitewash or greenwash that damage with a disproportionately small but highly publicized ‘act of responsibility’. This may be an utopian dream, but assuming that by some means the obligation that businesses have, to act with integrity and to share their success with less privileged people and the environment is understood, the flip side of this is that there lies unimaginably large potential in a pure form of CSR involving its application with the same commitment and methodology as the act of doing business itself. Social and market pressures are changing the way business operates – money and resources are being committed by businesses around the world to human and environmental issues like never before – sadly though in most cases the management of those CSR efforts is diluted by other factors – mainly self interest.

To explain further, I would like to share with you my family’s experience.

Since the 1960’s, when my father, Founder of Dilmah, shared the benefits of a small, but growing business with a staff of 18, he made every effort to ensure that our business is a matter of human service. That is, to recognize and fulfill the obligation that every individual or business has towards its staff, the wider community and to the environment.

This is not based on any particular theory but on the simple family values that he learned from his parents. As our business grew, necessarily so did our assistance towards colleagues and workers without whom he could not have succeeded. Eventually in 2001, the business had grown to such a scale and the Dilmah social justice obligation proportionately that our budgets exceeded Rs. 100 million, requiring that our humanitarian service obligation be formalized into the MJF Charitable Foundation (a government approved charity incorporated by Act of Parliament).

My father’s objective though the MJF Foundation was to apply the same principles that made us successful in the tea business, to achieving the objectives of humanitarian service. In prisons in Sri Lanka, we have succeeded in implementing a programme which we refer to as the ‘Small Entrepreneur Programme’. It offers prisoners on parole, assistance in the form of material and equipment, to utilize their own talent, initiative and desire to free themselves from their impoverished circumstances. As Jo Owen implies in his article ‘Unlocking Potential’ (The Director, June 2008), prisoners who are released after serving their term or on parole, often continue in a different form of imprisonment caused by social stigma and lack of opportunity. Our objective was to free them from this and thereby reduce the unacceptably high rate of repeat offence.

We did not even consider placement of these individuals in jobs – the option Jo describes as having been pursued for years by Government – for this would certainly not free them from the stigma of being former prisoners. Jo correctly points out that the key to the matter lies not in creating employment but in facilitating self employment, where free from bias and suspicion the reformed prisoner could channel his or her energy and creativity into tangible and unimpeded benefit for his or her future. With a little research and understanding, a business which sought to apply business methodology to solving the issue of reoffending rates amongst prisoners who have served their time, would know that. The millions of pounds spent on various schemes which have tried and failed over the years in finding a solution could have been saved and used effectively.

In the first stage of implementation of our ‘Reform & Reintegrate’ project in October 2007, then Minister of Justice, Honourable Dilan Perera hailed the MJF Foundation ‘Small Entrepreneur Programme’ as a landmark event in the rehabilitation of prisoners. Strangely it was the first time the private sector has become involved in such an activity. At the second such event in June this year, the Deputy Minister of Justice did likewise. Those accolades however are, I believe, misplaced, since what we have done is something very basic, humane and something that should be instinctive to every person. As a charity we lack the special qualifications that many NGO personnel might have, but what we do have is a team of people from our Dilmah business who understand the relevance of business methods, accountability and performance criteria to humanitarian service. Our target is 100% success in facilitating at least 500 Small Entrepreneurs in the Prisons and other sectors by 2009.

Through a personal interview, prisoners coming up for parole are individually screened by the MJF Foundation and their particular talent and dreams understood in context of parameters we have established for the Small Entrepreneur Programme. They are assisted in building their own ‘business plan’ based on their capability, or provided training in a certain vocation. They are advised on how to manage cash, reinvest, approach banks, conduct themselves generally and thus facilitated in fulfilling their dream. Importantly it is done with minimum publicity to preserve the dignity of the recipients and help them understand that they succeed through their own efforts and perseverance, not on a handout by a charity. All this is founded on basic business sense. We have a 100% success rate from the first batch of 13 parole prisoners with all reporting and evidencing monthly income levels several times higher than the national average and more than adequate for them to take care of themselves and their families. The result is that from a reformed prisoner an entrepreneur emerges, and that entrepreneur has no inclination to re-offend. He is too busy building a future for himself and his family.

The Small Entrepreneur Programme has over 300 small businesses established to date, an additional 35 consisting of paroled prisoners with a target of 300 parole prisoners in business by the end of 2008. This is only a small part of the programme that the MJF Charitable Foundation undertakes in easing the poverty of underprivileged communities in Sri Lanka.

Our formula is quite simple as I have explained, and the purpose of this blog is to demonstrate the opportunity for effective solutions to humanitarian issues through public-private sector partnership and a businesslike approach. These are supported by our own contention, that every individual and business has an obligation – not an option – to undertake humanitarian service through whatever activity they are engaged in. Business and human service are not incompatible; certainly the profits your company states at the end of the financial year may be less than what they might be if human service were ignored; that difference however pales when considered against the immorality of ignoring our obligation to less privileged people. A business that does not understand the importance of being sustainable in this context, is a parasite on civilization.

That obligation extends to businesslike diligence in its fulfillment as in whatever primary activity that individual or business is engaged in. The shortcomings in moral behavior and CSR that are referred to by Jane Simms and Sarah Hanson (The Director, June 2008) are caused by a dilution or diversion from the main objective; this stems from the immoral belief that CSR is an option and deserves praise and the favour of customers. There is a tremendous amount of fanfare, discussion, even conferences, seminars and courses on CSR. Yet the effectiveness of CSR would best be served if all this effort was replaced by a purer vision and more diligent implementation because the requirements of effective human service are no different from those of effective business. Moreover, the act of humanitarian service is so basic to our nature that it is embodied even in the very definition of being human. It is therefore not a subject to be studied and learned in seminars and courses but rather something that can better be achieved, if simply considered as a part of the business process and with the same vision and commitment to succeed.

From any perspective other than the purely selfish or pathologically commercial, this is too good an opportunity to pass up. Imagine the potential in co-opting business and business methodology to social, economic and environmental problems. We must collectively work towards that ideal – even if it seems an ideal today – for the urgency of the need is not receding and the scale of the problem is growing – exponentially.

Sadly even the process of being humane seems to be commercialized in our 21st Century society, and that is a dangerous thing since it creates the misconception that CSR is an option, and something that should be considered to be exceptional and worthy of consumer support – rather than what it really is – the norm, and necessarily part of being human.

Dilhan

Dilhan is the younger son of Dilmah Tea Founder Merrill J. Fernando. Together with brother Malik, Dilhan has taken on the passionate commitment of his father, for tea, ethics in business and the concept of business as a matter of human service.