Last updateSat, 22 Jul 2017 6am

You are here: Home | Agenda | Role of civil society | The CSR charade

The CSR charade

There is nothing in the make-up of the corporation that imposes an obligation on it to behave responsibly or in the public interest, says Nityanand Jayaraman. So civil society actors who may be appealing to the corporate conscience may be barking up a non-existent tree

How should progressive ‘civil society’ relate to corporations? To answer this, one needs to understand corporations for what they are and are not. Human they are not. So, using adjectives like responsible, considerate, evil, selfish is, strictly speaking, meaningless. If corporations were human, they would be diagnosed as psychopaths, says Dr Robert Hare, a renowned criminologist and one of the FBI’s top consultants on psychopathy. Dr Hare applied his checklist for psychopathic tendencies to corporations and concluded that corporations, like psychopaths, are superficial, grandiose, manipulative, predatory, unable to empathise or feel remorse, don’t accept responsibility for their actions, and will put others at risk. That a corporation by definition lacks responsibility should not be dismissed as the rantings of an anti-capitalist. In the celebrated film The Corporation, capitalist guru Milton Friedman says: “If a building can’t have responsibility, what does it mean to say a corporation can? A corporation is simply an artificial legal structure. It is neither moral, nor immoral.”

There is nothing in the make-up of the corporation that imposes an obligation on it to behave responsibly or in the public interest. The corporation’s primary legal obligation is to maximise profits for its shareholders. And if that means externalising certain costs -- labour welfare, safety, environmental protection -- then doing that within the framework of law, where necessary, and violating the law if that were a safe risk is what a corporation is programmed to do. Robert Monks, an investment manager interviewed in The Corporation says it simply: “The corporation is an externalising machine, in the same way that a shark is a killing machine. There isn’t any question of malevolence or of will. The enterprise has within it, and the shark has within it, those characteristics that enable it to do that for which it was designed.”

People who work in corporations, however, are not all psychopaths. But, they cannot allow emotions to guide their performance while working within corporations. A compassionate CEO who refuses to fire workers because of his empathy with their mid-life obligations will be considered irresponsible, and promptly replaced.

If corporations do not have a soul, appealing to them is pointless. So, civil society actors who may be appealing to the corporate conscience may be barking up a non-existent tree. Scaring the management that their profits could take a beating may help improve your bargaining position, but one would still need to contend with the fact that a psychopath doesn’t value promises too highly. Any promises you get from a corporation would have to be ratified by a government or a court for it to have a chance of being fulfilled.

Engaging in stakeholder dialogue with corporations may be an option, just as clutching at straws is an option. The stakeholder framework is itself a product of the much used, little understood concept of ‘civil society’. The phrase ‘civil society’, grounded as it is in western citizenship notions of individualism and private property rights, may not be well suited to the Indian context. Here, the starkest conflicts involving corporations and people are being played out amidst communities that are seeking to retain community control over resources -- land, water, forests and minerals. Guhagar, Kashipur, Kalinganagar, Singur, Nandigram, Chengara, Bhopal, Raigad, Mettur, Jadugoda, Plachimada, Narmada valley, Niyamagiri. Many people from each of these places have died violent deaths as a result of their conflicts with the state or the corporate sector, or both.

By conceding a ‘civil’ dialogue among stakeholders, ‘civil society’ actors willy-nilly legitimise the existence of the externalising machine. That machine can very simply address the rights of the stakeholder: through stakeholder consultations, promised extension of compensation to stakeholders. But all this is conditional; one or more of the stakeholders must give up his stake over the resources. Not giving up the stake is not an option.

The corporation too, by perpetrating the stakeholder concept, insinuates itself as a stakeholder on a par with citizens and communities asserting an equal if not greater right to resources that were never its to begin with.

When a corporation or the government makes a bid for the land used by indigenous peoples, peasants, landless agricultural labourers, forest-dwellers or cattle-herders, the latter are not given a chance to reject the proposal. Indeed, in the instance of Tata’s Singur car factory, the Calcutta High Court ruled that the peasants could not refuse to yield their land because the land was being acquired for a “public purpose”. Tata Motors’ Nano factory had been transformed into a national project.

The phrase ‘civil society’ is seldom used by community groups in conflict with corporations or the state over resources -- land, water, forests, minerals. Such groups describe themselves as ‘community groups’, ‘grassroots organisations’ or ‘struggle groups’, and usually articulate demands to retain community control or wrest control for the community over natural resources. Eminent social scientist Partha Chatterjee sets apart such groups as part of ‘political society’ rather than ‘civil society’. This distinction may be vital to those who consider themselves part of ‘civil society’.

The dynamics between members of political society seeking to assert rights over resources and corporations looking for the same resources is, broadly speaking, confrontational. Instances where such interactions seem cordial and resemble a consultation or negotiation often happen only after the former has lost a lot.

Civil society, even progressive civil society, is not a homogeneous entity. Many members of civil society ally themselves very closely with community struggle groups, to the point of dissociating themselves from civil society and identifying only with political society.

Among those that identify themselves as ‘civil society’ groups, there are some that believe that corporations can be reformed, and others that believe that corporations have to be rejected and redefined.

Groups like the World Wide Fund for Nature openly collaborate with corporations. Groups like Greenpeace confront corporations through dramatic action, do not touch corporate or government money and seek legitimacy by raising their funds largely through individual donations. At the same time, they are also comfortable occupying the same stage and congratulating corporations for small acts of mercy. For instance, if Coca-Cola -- a company accused of robbing communities of scarce groundwater -- were to refrigerate the cola made using the allegedly stolen groundwater without using ozone-depleting refrigerants, Greenpeace would congratulate the company and call it a “tactical move”. It actually has.

Companies like Tata and Infosys may have CSR mission statements that would put Mother Teresa’s Missionaries of Charity to shame. “As a corporate citizen with a conscience, Infosys strives to cultivate a sustainable approach to conducting business. In our interactions with stakeholders within and beyond the sphere of business, we recognise that we shoulder a larger responsibility,” Infosys says on its website. The company also donates liberally to rural education, extending computer facilities to educational institutions. People love these acts of charity. Then, how do members of civil society react when they read a headline that says ‘5 killed in mishap at Infosys campus’? The article is about five construction workers who were killed while fixing the glass facade of an Infosys building. Construction workers are the marginalised among the marginalised; construction accidents with loss of life or injury are a daily affair. Most of them are migrant workers, living in worse-than-prison makeshift shanties. For risking life and limb, they often fail to get paid even the minimum wage. Children of construction workers are very unlikely to get any formal education.

If the media were taken to be a representation of civil society’s views, one finds a disturbing level of comfort with corporate charity. Demands for corporate responsibility are seen as unrealistic or unreasonable. Responsibility in the Infosys example would be to ensure that your construction is carried out in a safe manner, with workers earning living wages, and living in liveable conditions, with facilities for clean water, drainage, children’s education and healthcare as a minimum.

Doing this doesn’t take much, and is well within the discretion of Infosys to ensure. Companies exercise tremendous diligence in hiring candidates; they invest in the capacity-building and oversight of their employees. So why don’t they apply the same due diligence in their choice of building contractors? The answer is simple: one act contributes to the bottomline, the other takes away from it.

The government that should ensure that labour laws and environmental laws are enforced is usually in bed with the corporation, or totally absent in its role as regulator. How else would you explain the fact that companies that tout glowing CSR credentials operate unlicensed factories?

Even as I write this, the UPA government is adding the final touches to an amended version of the Atomic Energy Act. The key purpose of the amendments is to allow the private sector to participate in atomic energy projects. The draft on which the Bill is said to be fashioned was crafted by FICCI, with representatives of Gammon India (of Delhi Metro notoriety), NPCIL, L&T, Tata and Reliance as the lead authors. The proposed amendments will not only allow the private sector to participate in nuclear energy projects, it will also immunise equipment suppliers and construction companies from any liability in the event of a nuclear disaster. The main beneficiaries of such an Act will be companies like the authors of the FICCI report, GE and Toshiba Westinghouse, which can now peddle products and services to the nuclear industry without worry. Flaws, even fundamental defects in their products, will not translate into financial liability for the companies in the event of a disaster. The proposed law would require taxpayers to shell out the bulk of the compensation if a nuclear meltdown happens.

What I’m getting at is this. If you want to engage with the corporate sector with a view to making this world a better place, do it with an intent to dismantle this uncontrollable behemoth and reclaim our democracy. Anything that we put in place of the corporation must be amenable to public control, not merely control by shareholders. 

(Nityanand Jayaraman is an independent journalist and researcher based in Chennai)

Infochange News & Features, November 2009