Tuesday, 1 September 2009

CSR in the developing world - alleviating poverty

If you are a company doing business in the developing world, chances are that you are not far away from poverty in a very basic form. You cannot, and should not, be an island behind electrified fences. And at the same time, its not your job to solve global hunger. What can you do ? What should you do ?

You are doing something, by the very fact of your existence. You provide jobs to people. There is no better way of fighting poverty than that. This is the greatest good that companies can do. Locational choices on where to operate are dictated by a whole host of considerations – nearness to market, availability of inputs, government incentives, cost structures, etc etc. I suggest that one more criteria be added – poverty around the location. Other things being equal, go to a place with higher poverty. Perhaps go to places where others haven’t been. Go outside of the big cities. This isn’t an ideological rant. In my business life, I’ve been part of many many locational choices. Our best decisions have been when we have gone to unlikely places. My greatest emotional satisfaction from many a job has been the job opportunities we have given to people who otherwise might have had none.

Having gone there, a company would do well to get involved in the local community. Not give money – in my experience nothing destroys a community more than sudden wealth. But link up in ways that are natural to your business. Encourage your employees to volunteer in building skills in the community. If you run a factory and have a captive power plant, sell electricity at cost to the neighbourhood (all too often they have none). Give water from your borewell. Source inputs, if you can, locally. Train them to get you those inputs. Fund local entrepreneurs as a venture capitalist to set up ancillary industries to supply you inputs. Extend the health education you give your employees, to the local community. And so on. Above all, don’t build electrified fences !

The greatest good that a company can do to the community is to further economic activity. For there is no way out of poverty than to create economic opportunities. Help local government create the right climate for attracting more industries. Be a vigorous spokesman for your community in attracting others to come. Run the business on highly ethical lines – it rubs off on everybody around. For decades, Tatanagar in India, was an oasis of calm right in the heart of a violent region, largely because of the values Tatas brought to that place.

And one of the best acts you could do is to encourage volunteerism by your employees. That’s a theme I’ll pick up tomorrow.

But please, oh please, do not become an island of wealth, bounded by a 15ft high wall, in the midst of abject poverty. Quite apart from it being morally difficult to stomach, it is also not sustainable. One day for sure, somebody will torch your fence.


thethoughtfultrain said...

Awesome ... Your ideas are so sensible and practical! Poverty stricken places will undoubtedly get a major boost from a couple of company's setting up operations there. And yes, companies which aren't too busy riding their high horses will be great for all!

If and when I start a company, will you please be my guide!! ;-)

athivas said...

I have been reading your daily posts for a week now...I have always been a dumber in business, and your blogs are enlightening(even this dumb!)!! "Not give money – in my experience nothing destroys a community more than sudden wealth. "---Aptly said, and the post was in all so good to read..Thank you!!

Srivats said...

//For there is no way out of poverty than to create economic opportunities//

Words of wisdom! Very enriching posts u have, I wish you wider audiences! for this stuff need to reach people!

Preeti Shenoy said...

Yes--really good suggestions.
There are many companies that do this.More should follow suit.

Ramesh said...

@thoughtful train - See who makes the most uplifting comments. I am not a patch on you. Thanks so much. I would be honoured to join your company when you start one ...

@savitha - Thanks for visiting and your very kind comments

@srivats - Thanks mate. You made my day

@preeti - Yes many companies do them indeed.

Ravi Rajagopalan said...

One observation and one data point. The observation I would like to make is that multinationals should take a "paternal" approach to the third world, particularly with respect to its environmental resources. I know quite a few Nigerians who grew up in the delta along the shore, who curse the oil companies that make it impossible for them to swim in the water any more. The violence seen today in that region directed against the oil companies has much to do with the destruction of the environment, possibly giving rise to "eco-terrorism" of a different kind. Multinationals should help the host country understand how to look after the environment. Given the number of Indian and Chinese companies (a good number of whom could not care less about the environment) landing in Africa or Latin America, this should be part of corporate ethos.

The data point is that for several years, in London, I was part of an organisation called Pilotlight. My company became a member of Pilotlight by giving a small donation and allowing a designated number of executives to provide management bandwidth to non-profits or NGOs that chose to work with Pilotlight. Pilotlight would specify the assignment, manage the project, and co-opt the executives and assign them tasks - like get a proper cash flow projection for a non-profit providing services in the Tower Hamlets, etc. It costs the NGO nothing - but they must sign covenants agreeing to work with Pilotlight. I participated in several such assignments and found it hugely and immensely satisfying. There is no reason why this idea cannot be replicated in India or elsewhere.

Ramesh said...

@Dada - A very good observation and data point. Its things like the environment, which are not so very obvious to a local community seduced by the growth opportunity that a socially responsible organisation can truly care for and make a difference.

Great example on the data point. Subject matter for my next post.

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