The concept of corporate citizenship

ALTHOUGH CORPORATE bodies have always been held accountable financially and legally, it is only in recent times that their operations have come in for social and environmental scrutiny. Quite apart from statutory enforcement, companies will be well advised to take the initiative to meet their community obligations, because failure to fulfil such commitments is likely to create problems even in their operational areas Corporate citizenship consists in meeting a company's social responsibilities and moral management with as much devotion and dedication as in its commercial agenda.

Corporate citizenship concerns all organisations, whether a large manufacturing company, a local school, a national charity, or a small family-run shop. While all organisations must be viable and operate within their financial limits, they must also work within the law of the land and comply with the health, safety, and environmental norms and parameters

Corporate citizenship is an idea and a philosophy which has both ethical and economic dimensions. It advocates doing the right thing. It gives more importance to the means, than the ends. It expects business organisations to conduct themselves in an upright and straightforward manner. Companies have rights and responsibilities vis-a-vis the community which they seek to serve

When we talk of corporate citizenship, we are drawing a parallel between the individual member of a community and a corporate entity in that community. A key feature of individual citizenship is that it involves a mutually reinforcing bond between the individual and the society. So also, corporate citizenship involves a two-way relationship between the business house and the society. Just 30 years ago, till the 1970s, corporate social responsibility was considered a fringe issue and received little attention. Today, corporate citizenry is a mainstream topic, permeating the whole organisation from the board room down to the shop floor

Business leaders in the past have always maintained that prosperity for all is best achieved with minimum regulation of business activity and maximum flexibility and that any nexus between business and the rest of the society best takes place through the market. But this laissez faire stance seems to be undergoing a change. Managers who used to pay lip-service to the social commitments of a company, whose attitude has been indifferent, reluctant, and recalcitrant hitherto are now seen to be keen on meeting the obligations of the company. But, why this change?

Consumers today are interested in more than just the price they pay and the quality of the piece they buy. They are asking hard questions about the internal management practices behind the brand name. They boycott products of a company which fails to follow moral and ethical standards. Managements around the world are, therefore, concerned about these issues. They want to protect their reputation and image. They see the stark reality of social accountability as a competitive and imperative sine qua non.

More than an ethical issue.

For most people, corporate citizenship may appear merely as an ethical issue. But it is beyond that and more. There are compelling reasons to adopt a responsible approach simply because it is good business to do so. For instance, what happened in Bhopal on December 2, 1984. In the Union Carbide factory, 42 tonnes of toxic gas leaked by accident, causing about 2,000 immediate deaths, over 4,000 subsequent deaths, and permanently impairing more than 60,000 people. The plant was closed immediately after the accident.

One of the main factory gates has been painted outside with a large skull under the caption ``Killer Carbide". Across the street, a 2.5 metre high statue of a woman in anguish clutching the corpse of a baby has been erected. Eight months after the accident, another plant of Union Carbide in West Virginia (U.S.) suffered a major mishap in which 120 people were hospitalised. Between 1984 and 1992, the company had to reduce its workforce to 12,000 from 98,400. Sales fell from $9,900 million to $4,800 million. The cost of better risk management would have been smaller than the cost of the clear-up. The cost of social and ethical damage, of course, is immense and irreparable.

In 1978, Ford was convicted for deliberately selling a car {logicalnot} shy the Pinto {logicalnot}shy with a fuel tank that was likely to explode on rear impact. The court verdict was criminal homicide against Ford. The Pinto model was rushed to the market with a clear complicity in order to beat the influx of less expensive cars from Japan and Europe into North America. The company wanted to save time and gain money, but eventually lost money, morality, and the market

Managing today is akin to flying an aircraft. It requires the ability to monitor constantly new information, to adapt quickly to changing circumstances, and to develop organisational structures which are not fixed but flexible. As individuals, we wear different hats {logicalnot}shy as consumers, investors, and employees. No doubt, we are victims of economic changes and forces which are beyond our control. But it is the managerial fraternity which has to bear the cross, and face the music of managing in the global economy

Business today needs a new brand of manager, who is sensitive to the demands of the contemporary, competitive economy. The competencies of this new breed of global managers are crucial to implement the needs of responsible corporate citizenship

Business nowadays has to deal with: (i) the global economy {logicalnot} shy the movement of goods, money, and people around the world; (ii) a technological revolution {logicalnot} shy underpinning the global economy with information technology, transportation, and refrigeration; (iii) a plethora of sources of information {logicalnot} shy from cable TV to the Internet; we have more information available now than at any other time in history (whether we are any wiser is debatable); and (iv) a phenomenal growth in the dimension and magnitude of international business; the 100 largest companies in the world have turnovers higher than the GDP of half the countries in the world

The traditional notion of philanthropy is no more adequate or relevant. Campaign groups and activists are able to enforce transparency on companies. The business climate has become more complex and volatile. Corporate citizenship has become a strategic component in all organisations. It is no longer optional. It is not wise to approach the social problems of a community with the financial leftovers of the business houses. Companies must integrate their social obligations into their business strategies such that they provide them with the long- term sustainability that will safeguard the social causes even during hard times. The objective is to harness business and the society in an enduring, everlasting, and evangelistic manner.

In today's business environment, the speed of transportation and communication has increased, and costs have come down considerably. Investment is facile and mobile, production anywhere in the world is possible and advantageous. It is the other side of the coin which is depressing. The ILO estimates that about 120 million children are working worldwide, under dangerous, unhealthy, and inhumane conditions. Public awareness and outrage are growing day by day, and corporate image increasingly at stake, thanks to the TV, and the Internet

Companies find it difficult, sometimes impossible, to introduce and maintain the same level of standards of corporate consciousness and responsibility, with a network of vendors and suppliers across the globe. The transnational supply chain, and the enormous amount of outsourcing have tremendous problems of reach, compliance and control of the standards and stipulations, in respect of the social responsibility domain, which companies ought to comply with. The silver lining in the cloud seems to be the introduction of a system, similar to ISO 9000, which is used and recognised for quality assurance

The Council of Economic Priorities Accreditation Agency (CEPAA) in New York launched in October 1997, what is known as SA 8000 (Social Accountability 8000). The purpose was to bring together fragmented codes of conduct, and provide clear definitions of terms, and create a comprehensive system on the same lines as ISO 9000. The need for external monitoring, transparency of results, creating a benchmark, and standardisation of parameters were some of the objectives behind this movement. SA 8000 has now become an international third party social accountability system.

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