Jul 02

Our bigger companies, in their Annual Reports, boast of their contributions to Corporate Social Responsibility (CSR) programmes.  The reality is that their idea of social responsibility is to respond to the requests of their friends and important acquaintances by spending a small proportion of their revenues on projects which make the directors look good in the eyes of the beneficiaries and interested members of the public.

The significant feature of the more common CSR programmes is that they work on the premise that it is acceptable to give contributions to your old school, to institutions which deal with the elderly and the physically disadvantaged, to look after company employees, to protect the environment, to encourage sports, and similar causes.  What they do not do is to give anything at all to institutions or movements which work to promote the Rule of Law, democracy, human rights, anti-corruption and other ingredients of good governance.  Furthermore, our companies believe quite mistakenly that, if only better fiscal and taxation policies are followed, and the ethnic problem is solved, everything else will look after itself.  No call is made upon the People’s representatives to account for the way in which they utilise the powers and the resources which the People have entrusted to them.

The principal privately-avowed reason of company directors for ignoring their responsibility to help establish good governance is that they are reluctant to incur the possible displeasure of the politicians and the administrators with whom their companies maintain warm relations for the purpose of business advancement.  Whether the benefits of these relationships are secured lawfully or otherwise is not discussed.  Their position appears, at best, to be that it would not be in the interest of shareholders to get involved in matters of governance.  It is our view that, since their loyalty to their shareholders takes blanket precedence over their responsibility to society at large, it is wrong for companies to use the term ACorporate Social Responsibility to identify the type of programmes that they currently support.

If we go a little deeper into this subject, there can be seen to be other issues which are more serious than the mere failure of companies to participate actively in working towards good governance.  For example, certain revelations were made recently by the Committee on Public Enterprises (COPE) broadly to the effect that a few big household names in the private sector, including prominent fiduciary professional firms, working in collusion with powerful political and administrative figures, have employed far from ethical methods to undervalue and acquire, or to help others to acquire, public assets at manipulated low prices.  In other words, misappropriation of the people’s wealth is not the prerogative of politicians alone.

Another example is the VAT swindle.  Whether the amount lost to the State be in the region of Rs 6 Billion (the figure favoured by some in the Treasury) or Rs389 Billion (the figure computed by the Auditor-General’s Department), or anywhere in-between, who benefited from these scams?  Mostly public and private companies, some of whom are very proud of their CSR programmes.

The list of company activities which are inconsistent with genuine social responsibility does not end with these two examples; well-informed readers will undoubtedly be able to come up with hundreds of other examples, both big and small. In short, CSR, as practised currently, is totally self-serving and cannot be considered to be an instrument which is used for the general benefit of society.  If companies want to stick to the term ACorporate Social Responsibility, what is required is for them to redistribute their CSR expenditures in a different way.

If, say, a company sets aside Rs5 Million to build 10 houses, at a cost of Rs500,000 each, in order donate them to 10 families which do not have houses, the company may feel reasonably proud about what it is doing.  The reality is that perhaps about 40 citizens (at an average of four persons per family) would benefit from this exercise but the rest of the population would get no significant benefit.  If, on the other hand, say, only 8 houses are built and the balance Rs1 Million is spent towards setting up or helping autonomous organisations which are active in public interest litigation, lobbying for right to information legislation, anti-corruption activities, lobbying for press freedom, the establishment of independent non-governmental bodies to monitor public expenditure concurrently, establishing the Rule of Law and so on, these companies would be doing something that would benefit all 20 Million citizens of this country.  Furthermore, by the resulting reduction of corruption and the increase of public sector efficiency, there would be savings of many times the Rs1 Miilion originally diverted to establish good governance, leading to a Awin-win situation.

Now, if we look at the statistics on the 10 leading companies in Sri Lanka, their net annual revenues add up to a total of over Rs150 Billion.  If just one-hundredth of one per cent of this total were allocated to set up or to help organisations which are geared to give the public accurate and timely information regarding major national projects and problems, and to get voters from all areas of the country to lobby the MPs from their districts to work in accordance with good governance requirements, there would be a huge pressure built up on Parliament to strengthen the Rule of Law, democracy, accountability and so on.  Predictably, change will not occur overnight but there would be irresistible progressive improvement because MPs would not be able to ignore sustained, organised public opinion in the way they disregard the sporadic, lone voices which now plead for the re-establishment of legislative, executive and judicial accountability.

There are several NGOs which are currently working in some of the areas which are related to good governance but they are all funded from foreign sources and attract a great deal of criticism implying that they are working traitorously to non-national programmes, and that too much of the funds are spent on expensive vehicles, 5-star hotels and foreign travel.  If the private sector were to set up an autonomous organisation, funded and monitored locally, the more facile types of criticism would be eliminated from the outset and public acceptability would undoubtedly be higher.

The most satisfying aspect of implementing the proposal made here would be that the shareholders of companies would find that, whilst they are individually unable to help create change, they would be able to participate collectively in doing so.  The present sense of hopelessness of shareholders – as citizens – to try to reverse Sri Lanka’s downward movement in the Afailed states index would become a thing of the past.


  1. Rasika Niroshani Says:

    would like to joing with your programme

  2. shantha Indrajith Says:

    I agree with you except the fact that the contribution should be 1% of revenue. If is is mentioned as a percentage of profit.

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