Demystifying CSR

Corporate fads come and go. Some stay, gain traction, and become mainstream. Consultants make a lot of money. Other fads fade away into the fog of corporate history. Whistle -blowing is one fad —introduced in the early 1980s. So far with mixed results.

Although the backup philosophy is good, the overall reaction of the corporate elite has been reactive, defensive, and in some cases outright hostile. Julian Assange is a global icon of the fad going wrong. Omerta (a code of silence) has been around for a millennia.

A much better option if you wish to enjoy your next vacation in Palermo, Italy. Some fads are currently floating around. Gathering momentum. Supported by gale-force winds. The climate compact. Social compliance, environmental protection, etc. More about this trend later. The precursor to all this is Corporate Social Responsibility (CSR), which emerged in the late 1970s.

Accordingly, to the old school of corporate management (to which I belong), a corporate entity has 3 main stakeholders:

1. The Customers

2. The Shareholders

3. The Employees

This compact emerged with the British Invention of the joint stock company (16th century) and stayed steadfast till the 1970s. The English have made two other great contributions — the English language and that ageless beauty of Elizabeth Hurley.

In the 1970s, the sedate world of corporate governance was shaken up by activist investors, corporate turmoil, political pressure, consumer demands, and the likes of Ralph Nader. New Communities staked claim — the likes of vendors, suppliers, citizens, and environmental activists. CSR emerged and gained traction. Became all-powerful.

Once CSR became part of the corporate agenda, good and bad things happened — see my earlier article in the newspaper: “The curse of the celebrity CEO”. In the 1970s the much-celebrated banker, Mr. AHA of BCCI (Bank of Credit and Commerce International), became a CSR star. He lost sight of his job description — which was to run BCCI along prudential lines and generate a profit for the stakeholders.

He diversified into travel agency, real estate, and hospital management (remember Cromwell Hospital). He also became a spokesperson for the “South” through his various foundations. His vast management team went along, harvesting immense fortunes. Eventually, BCCI was taken down, through its own misdemeanors.

Discard the conspiracy theory. Staying with the CSR. The Honorable President, the late General Pervez Musharraf, had a penchant for CSR, especially in Karachi.

A vote multiplier. When he ordered KPT (Karachi Port Trust) to build overpasses, underpasses, and bypasses the KPT team went to town (pardon the pun). It would have been better if KPT had improved its own internal governance and plugged in its revenue leakages.

Conversely, some of the big private corporates of Pakistan have been more successful and circumspect in CSR. ICI in Khewra, Exxon (Engro) in Dharki, Sheikhupura, PTC in Jhelum & Akhaura, Al-Ghazi Tractors in D.G. Khan and many others. A Job well done. Kudos.

Copyright Business Recorder, 2023