A CSR (Stock) Exchange: The Case for Doing Good as an Economic Imperative?
Published: Feb 22, 2010
Heard the phrase before that if you know how to sell, you can pretty much sell anything? Here's the latest commodity up for sale: CSR. So far, there has been a lot of talk and some action on trading carbon credits, especially in Europe, and more recently, attempted in Chicago via the Chicago Climate Exchange. Carbon credits have been quantified and the Exchange has made it possible for companies and individuals to make up for their carbon footprints by buying and selling in carbon credits.
But how does the same principle apply to something as intangible and unquantified as CSR? Well, India seems to be toying with the answer. And their answer seems to lie in the direction of carbon credits. Introduced by India's Corporate Affairs Minister Salman Khurshid at a conference of the country's business leaders, the idea seems to have surprisingly struck a chord with the audience. Citing the need for "internalizing CSR as an ethical way of doing business and making profits," he added, "CSR is about the way we conduct our business, and not about keeping something apart for community welfare."
While corporate America continues to discuss and dither on the need for implementing CSR strategies within their long term plans, the section of the world that we, the western hemisphere, have called "under-developed" and more recently "developing" for decades is recognizing this urge and reacting to it much faster. President of the Federation of Indian Chambers of Commerce and Industry (FICCI), Harsh Pati Singhania put it well, "India needs not just growth, but inclusive growth and the corporate sector is increasingly concerned with and supportive of inclusive growth as much an economic imperative as it is socially desirable." Keywords there being "inclusive growth" and "economic imperative."
The strategy behind quantifying CSR has some interesting aspects: One, it will act as enticement for companies to take up CSR initiatives because in the numbers game and especially, on the trading market, everyone wants to be No. 1. Second, when a new "tradeable" product is introduced in the market that promises to divert attention from a company's negativity, interest is likely to be high. And if corporate and social responsibility via philanthropy, employee well being, ecological initiatives and energy efficiency are some of the after-effects, then the trading is a success.
So far, CSR has been an after-thought for businesses, a checkbook mentality for corporate giving. Will this opportunity to redeem their business's unsustainable practices, once formalized, have enough cache to catch on and spread to the erstwhile developed world as well?