Corporate social responsibility (CSR) has long been a hot topic globally. Prime Minister Manmohan Singh has lectured companies on it. Some corporations have won acclaim and awards for CSR. Two of them were BP, the oil giant, and Goldman Sachs, the big investment bank. Every year, the World Economic Forum lists the "Global 100 Most Sustainable Corporations". BP has made the list many times. So has Goldman Sachs, for its work on climate change and carbon trading.
But BP has just created the greatest environmental disaster in history at its out-of-control Macondo deep-sea well, ruining bird and marine life as well as the livelihoods of fishermen and beach hotels. So, all the CSR was mere image-manship by a company with a horrendous record of cutting corners and neglecting safety. In 2005, a poorly maintained BP refinery exploded in Texas, killing 15 and injuring 180. In 2007, a BP pipeline, corroded through neglect, leaked 200,000 gallons of crude into the pristine Alaskan wilderness. The company paid a fine of $303 million to settle a charge that it had conspired to manipulate the price of propane gas. According to the Center for Public Integrity, Washington, BP refineries in Ohio and Texas in the last three years ran up 760 "egregious, willful" safety violations, while rivals Sunoco and ConocoPhillips each had eight, Citgo had two and Exxon had one comparable citation. So, BP accounted for 97% of all corporate refinery violations.
Goldman Sachs has just paid a whopping fine of $550 million for wrongful investment advice that trapped its clients. Many observers complain that Goldman virtually captured successive governments, and thwarted prudential measures that might have prevented the financial crisis.
Clearly the whole concept of CSR needs to be recast. It must be delinked from philanthropy: after all, even the Taliban and Lashkar e-Taiba have well-functioning philanthropic activities. CSR should really mean observing high standards in the core business of corporations, in dealing with shareholders and clients and the communities they operate in. By all means let corporations also make green and philanthropic efforts. But don't confuse these with social responsibility. That will only encourage BP-style cynicism.
For the full text of the column by Swaminathan Aiyer in the Sunday TOI, click here
This will indeed sound like music to the ears of the Socialists. So, do we go back to relying on our PSU's? That will be an even bigger disaster. And, the track record of our PSU's in general, in aspects of environmental care, has not been something that one can gloat about. May be the scale of damage may not have been as big. But, again, that's because they believe only in the Hindu rate of growth, even in areas where rapid growth is the crying need.
That's where one would like to believe that capitalism would re-invent itself along the lines discussed here. Also, even as a BP, and a Goldman Sachs were upto large scale hood-winking, many other large players were by and large playing by the rule. The question that arises therefrom is how come the regulatory bodies allowed themselves to be hood-winked by the BP's and Goldman Sachs, all along? The answer as such lies in tightening up the regulatory (not control) mechanisms, which is obviously where the government's concentration needs to be - check this
Muralidhar Rao
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The question that arises
The question that arises therefrom is how come the regulatory bodies allowed themselves to be hood-winked by the BP's and Goldman Sachs, all along?
Ask Henry Paulson. He can teach even our politicians a thing or two.
The regulatory mechanism should work independent of govt also. So that the govt will not use it for it's own benefit.
EC and judiciary are supposed to be independent, but we know how they are manipulated sometimes by the parties in power.
Recasting CSR - Overdue
You can also add Total, Oil tanking, Shell, Chevron, Amoco, Petrofina, etc. etc. -- all the oil majors that have been calling the shots in US energy policy & keep oil burning in America, a country that is finding it very hard to come to terms with caring more for the environment.
This aside, business is always a competition that pitches one against many others in the ring & the temptation to use unethical means to gain advantage on the ground is very strong -- similar to vehicles driving on the streets !
As long as we have private cos competing for business, there will be malpractices just as there always will be crime when individuals have to compete for living better than others.
Furthermore, govt or regulators will also be subject to temptations for individual gain since there is competition within govt with parties & individuals.
I think the suggestion for developing new parameters that weigh CSR initiatives more objectively is overdue since we have heard of so many global MNCs that have been found in violation of laws. Perhaps a set of standards that deduce how compliant a co is with law & ethics weighed far ahead of other CSR parameters would make better sense.