TAMIL NADU

“Comply with laws before focussing on corporate social responsibility”

In discussion: Nachiket Mor, president, ICICI Foundation for Inclusive Growth (centre), with T.V. Somanathan, Secretary to the Chief Minister (Monitoring), at a meeting in Chennai on Wednesday. Manikam Ramaswami, chairman, CII-Tamil Nadu State Council, is in the picture.

In discussion: Nachiket Mor, president, ICICI Foundation for Inclusive Growth (centre), with T.V. Somanathan, Secretary to the Chief Minister (Monitoring), at a meeting in Chennai on Wednesday. Manikam Ramaswami, chairman, CII-Tamil Nadu State Council, is in the picture.   | Photo Credit: — Photo: M. Vedhan

Special Correspondent

CHENNAI: Corporate Social Responsibility (CSR) is a useful paradigm for social development, but corporates would do better to first concentrate on complying with their legal requirements as business entities, T. V. Somanathan, secretary to the Chief Minister (Monitoring), said on Wednesday.

At a meeting organised by the Confederation of Indian Industry (CII) on ‘Understanding CSR in its totality,’ Nachiket Mor, president, ICICI Foundation for Inclusive Growth, presented different perspectives on CSR. He argued that altruistic CSR was actually bad corporate governance, as companies were only shells created by individuals for a specific purpose.

Value creation

Instead, a more robust use of CSR would involve companies taking a long-term perspective of their strengths and looking at value creation, instead of profit maximisation, as their goal. This would tie their business strategy and social strategy together, resulting in social development along with corporate growth.

However, Dr. Somanathan said that any CSR activity aimed at benefiting the company in the long term was not necessary.

“The business of business is business,” he said. The government could take care of social development.

The social laws in India were well ahead of their practice, and social development goals could be achieved by strictly adhering to them. The first duty of companies would be to follow all the laws in letter and spirit before embarking on CSR ventures. While discharging their functions as corporate entities, companies were already benefiting society, and if they decided to do more, it would be welcome, he said.

He said companies could not trade off incentives from the government to fund such activities. But, this was more of a governance issue. While companies wanted to maximise stakeholder returns and could demand concessions and try to subvert market forces, it was the government’s duty to understand which incentives were necessary.

Earlier, Manikam Ramaswami, chairman, CII-Tamil Nadu State Council, said that the CII was looking forward to participating closely with the government in various social ventures including skill development and public health.

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