Mumbai: Management guru Nitin Nohria today asked Indian businesses to seize the opportunity provided by mandatory corporate social responsibility (CSR) spending, but warned people will become “extraordinarily cynical” if the provision is misused by companies.
The India-born Dean of the prestigious US-based Harvard Business School (HBS) said the government's new policy on CSR allows corporates to do good for the society. “I am delighted because it creates an opportunity for businesses to do remarkable good in society. I am terrified because it creates an opportunity for society to become extraordinarily cynical of people who abuse this policy,” he said, delivering a lecture here.
If implemented in the right spirit, mandatory CSR is a welcome step and businesses should embrace it, said Nohria, considered one of the most influential global thinkers. “This is a great opportunity for businesses, but if we fail this opportunity then of course cynicism will follow,” Nohria later told reporters.
A recent amendment in the Companies Act makes it mandatory for consistently profitable corporates to spend a portion of their profit on CSR schemes every year. “It is in our hands to decide whether we generate trust in society or we generate cynicism because this policy can be used with great effect or can be used to great disadvantage,” Nohria said.
He also touched upon the issue of corruption in India and stressed that businesses have an important role to play in managing the perception that the menace can't be tackled. “We have literally come to accept that there is no escape from corruption,” he said, adding this is a “terrible state”.
“If you go to a company and you are taught to be ethical everyday, I think you are more likely to be an ethical citizen. On the contrary if you go to a company and the values of it say why didn't you cut corners, then we should not be surprised that society itself becomes corrupt.” Stating that a lot of importance is being paid to the sustainability aspect for businesses, he said now there is a need to devote energies towards the ethical and moral aspects.
There is a greater need for business people to do philanthropic activities and also regain the lost trust, the noted academic added.
