From the Trusteeship Model to the New Vehicles of CSR

In the 21st-century corporation, a trusteeship-based framework that blends business with technology, environment, people, economics, and culture, can be the primary paradigm for value creation.

‘Supposing I have come by a fair amount of wealth – either by way of legacy, or by means of trade and industry – I must know that all that wealth does not belong to me; what belongs to me is the right to an honorable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community.’

– Mahatma Gandhi

The socio-economic philosophy of Trusteeship propounded by Mahatma Gandhi essentially believes that it is the responsibility of the rich to use their wealth for the benefit of the under-privileged. It is in the enlightened interest of businesses to strengthen the societies they operate in. In India, even after over six decades of independence, 65 per cent of our population still lives in poverty. Social transformation remains very much work in progress. Unless we redefine the role of business in our society, we will continue to have structural problems that create conflict.

The Gandhian model of Trusteeship, while being uniquely Indian, provides a means of transforming the present unequal order of society into an egalitarian one. Along with the principle that surplus wealth needs to be kept in trust for the common good and welfare of others, it also specifies that everything we do must be economically viable as well as ethical – at the same time making sure we build sustainable livelihoods for all.

Do the challenges of the 21st century – economic turmoil, diminishing values, need for sustainable growth, call for a relook at this model, perhaps tweaked to meet contemporary needs?

Several corporates are today larger than many countries. Given their size and the lives they impact, they can engineer fundamental structural changes to solve the conflicts of society. This sheer responsibility calls for proper systems of corporate governance and finance in order to create more sustainable, distributive and responsible economies.

Business, done right, can generate social reform. It provides employment, leads to higher incomes, builds productivity, opens up opportunities for social mobility, breaks down caste barriers, puts a premium on education, etc. And for this ‘right’ kind of business, people are the core of all values.

I believe that people will put their energies in an enterprise, of course, for financial considerations, but at a deeper level, for the pride in being part of the enterprise. For the meaning that the enterprise lends to their lives. The values that it embodies.

So, each enterprise needs a social vision, to attract the talented, and to enable them to keep enhancing their sense of professional and personal fulfillment. This is not limited only to employees. It encompasses suppliers, distributors, and even customers.

There are plenty of examples in our country of an enterprise exuding a social vision. I believe that this is not an option but is essential for a successful enterprise. Dig deeper into the success of any enterprise, and you will strike a social chord. Be it Infosys or HDFC or Jain Irrigation. Or ‘Hamara Bajaj’ (I am not given to modesty!).

We, in Bajaj, were lucky. Given our roots in the freedom struggle, industry was chosen, and I repeat chosen, as the vehicle to build the country. We were founded on a social vision. Trusteeship was not a concept that we adopted, but which my grandfather Shri Jamnalal Bajaj, in Gandhiji’s judgment, exemplified. We are nowhere as great as Jamnalalji, but we do try that even though we cannot add to his greatness, we should not lower the family name.

I am proud that my grandchildren go to the company school set up for our employees, just as my children did!

From inception, we have practiced some principles. First, be independent and make our own destiny. Second, be fair but firm, in our dealings with all we deal with. Third, gun for volumes based on technology, quality and cost competitiveness. Fourth, continue the tradition of philanthropic work and support for constructive activities of Gandhiji, especially those benefitting the poor. This very much pre-dates the mandatory Corporate Social Responsibility (CSR) regulation!

Successful companies contribute greatly to society. Be it in taxes, salaries and profits to all in their value chain, or dividends and share appreciation to their shareholders. They have to ensure that in their operations, and those of their associates, justice is done in letter and spirit to their obligations towards labor, environment and the government.

All over the world, and especially in a country like ours, with ineffective governance and considerable poverty and inequalities, there is a need and an opportunity for the well-off to help the less-advantaged, and support important social causes which are under-funded.

The Government has recognized this, and has expressed its appreciation and validation of the Trusteeship concept through the CSR legislation resulting in the omnipresence of this in today’s India. So, while in the past the idea of Trusteeship was optional and practiced by a few evolved companies, it is now an inevitable element in the form of CSR.

It is also an opportunity for industry to prove that innovative thinking and commitment to both outcomes and their quality can yield good results and make the rupee spent travel further.

In this, having one’s own core organization, built around one’s core program, together with partnering with reputed NGOs, is a good way to proceed. At Bajaj we have focused on education, health and livelihood issues, primarily in rural areas. But there is no magic bullet. All around us, there are companies meeting the CSR mandate with strategic thought and innovative solutions. In my view, diversity of approaches is a good thing: It is heartening to see one industrial group running hundreds of its own schools, another supporting health camps, and yet another teaching women to drive tractors!

As Mahatma Gandhi said, ‘True economics stands for social justice; it promotes the good of all equally, including the weakest, and is indispensable for a decent life.’ This view sees equitable distribution of wealth as a measure of success. It also builds the case for CSR being embedded within the business values of an organization.

Four core principles define the essence of corporate citizenship; however, every company can customize them to meet its own distinct needs: minimizing harm, maximizing benefit, being accountable and responsive to stakeholders, and supporting strong financial results.

So today, while we all agree with the concept of improving stakeholder value, let’s redefine value to incorporate much more than profit. It is in this context that the 21st century corporation should see itself. Let a trusteeship-based framework that blends business with technology, environment, people, economics and culture be the primary paradigm for value creation.

The model can be anything that works, companies alone, in partnership with each, in collaboration with communities, in cooperation with government.

What’s important is a forward-looking boardroom agenda that develops responsible leaders, creates positive environmental value, positive social value and positive economic value in every aspect of business and its related supply chains, sees value in not just the products created, but the lives impacted; solves genuine, universal problems like hunger, livelihoods, education and healthcare, and drives innovation, not just in products, but in processes and new management thinking.


 

The article is an excerpt from the CII Foundation book ‘The Privilege of Responsibility: Perspectives from Corporate India’. The book has contributions from eminent industry leaders who have shared their thought leadership on themes of development, CSR and philanthropy.

The book covers issues ranging from the Trusteeship Model, Philanthropy & CSR as the sustainable way to SDGs, CSR economy & Creating Premium by Creating Value. The eminent authors, who are also the Trustees of CII Foundation Board (2015-16), have shared their outlook on corporate responsibility towards society, governing factors, the economy & business strategy of CSR, and the future of CSR in the country.

The book was brought out in April 2016 to commemorate five years of CII Foundation. CII Foundation, a trust set up by CII in 2011, works with member companies towards CSR implementation by channelizing efforts towards designing, developing and managing customized and high impact development projects. Know more on CII Foundation at www.ciifoundation.in

This article is penned down by Rahul Bajaj, President, CII (1999-2000) and President, AIEI (1979-80) Chairman – Bajaj Auto Limited

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