Storm the norm episode 05

Narayan Devanathan: Welcome to Episode 21 of storm the norm the fortnightly podcast where we pick up norms that come in the way of businesses succeeding in a disruptive world. I'm narayan,

Anisha Motwani: and I'm Anisha Motwani

Narayan Devanathan: Storm the norm is now brought to you in association with Grant Thornton Bharat and include GT insights, a special capsule from a GT expert. Onto today's episode now, Anisha, I dare say this time around that we could look at the norm as one that examines whether businesses come in the way of a successful world, one that enables progress for not merely one that comes in the way of businesses succeeding in a disruptive world.

Anisha Motwani: That's just reading and thought provoking. What do you have in mind narayan

Narayan Devanathan: the norm is that CSR has become corporate social regulation, rather than corporate social responsibility, especially with the recent updates to the law in India. But I have a lot of fundamental questions, even before we get to the norm.

Anisha Motwani: In other words, you're saying that the Corporate Social Responsibility has become more of a burden than a responsibility? Is that what you're saying?

Narayan Devanathan: Yeah, and I'm gonna sound a little militant here. And so pardon me for that. Anisha. But this is a theme that does get me riled up, especially because, again, I'm in the thick of it. But let me get back to my questions. In no particular order, but let me just reel them off. is the notion of CSR. Even if we say that the hour is about responsibility, is the notion of CSR itself inadequate, currently, popular mantra is Do well by doing good, but it's doing good enough. And the model of capitalism is under question sometimes being equated to corporate greed, and while on this are brands going too far with the whole purpose marketing thing? Our brands really going to help eradicate global hunger, poverty in the refugee crisis, and it can't even seem to solve their own customers complaints about their products and services. Sometimes, you see CSR being used as a convenient shield for reputation laundering..

Anisha Motwani: All tough, but super pertinent questions narayan. A crisis usually brings out the best and worst in human nature. And I guess both government and corporates are avatars of human nature at some level. After all, it's the people that make up complex and government with all their biases, weaknesses and strengths. And the current COVID-19 induced crisis has the entire world, particularly India, reeling right now under it, and it's well worth asking the question if doing good is enough. And that brings me to the norm. Would you say that in fact, CSR becoming corporate social regulation is better than it being a quasi voluntary corporate social responsibility.

Narayan Devanathan: So before I offer my perspective on this, let me introduce our guest expert for the day to throw light on this difficult subject. Joining us all the way from London UK is Bhawani Singh Shekhawat. Bhawani has led large MNC organisations like Nielsen Beckett, Coca Cola internationally, in various capacities as senior or regional Managing Director, global director in multiple geographies. Currently, he is based in London and is now dedicated to the not for profit sector. He co founded a chai m foundation and is also a trustee and CEO with Akshay Patra Europe. Bhawani it is a pleasure to have you here on this episode of Storm the norm.

Anisha Motwani: Thank you, Bhawani, for joining us, and a very, very warm welcome. As you know, for today's norm, we couldn't have found a better person. So I'm going to straightaway begin by asking your take on the norm. First. CSR today is no more a corporate social responsibility. It's become a corporate social regulation, with India being the first country to mandate CSR. So the Companies Act by making sure that 2% of the average profits are getting into a CSR pool. No other country has done that. This very prescriptive, almost hardwired approach to CSR takes the almost the sole out of the way we understood CSR. What's your take on that?

Bhawani Singh Shekhawat: Well, Anisha First of all, thanks for having me. It's absolutely a pleasure to be on this podcast and of course, to relook at some of the norms that we may have been engulfed by. Sometimes just because the nomenclature and I think you asked a very fundamental question and we must ask more of these, you know, and to me, it really begins with when common sense needs to be prescribed. You know, that's really fundamental and, and to me, it's been always interesting that most systems around the world were legislated because someone abused the freedom that that went way before the legislation. In other words, you know, we see a lot of legislation around us, which at one point in time was not required. So when does something that this common sense become need to be legislated? And to me, that's a fundamental question around CSR. So the reason why we probably have a norm of CSR is because people, organisations and entities were acting irresponsibly, you know, the fact that over the last decade or so, in India, we've seen close to a 48%, close to 50% growth in how companies are spending their money towards what might be within quotes, called social causes, perhaps to some might be an indication that, look, CSR is good. But to me, I think it's only really a part of the solution to what is an increasingly bigger problem. So yes, it is, it seems like a more like a regulation. Definitely, it's treated and responded to by a lot of organisations more like regulation, and I wouldn't paint everyone with the same brush. But yes, there is a sense of legislation that allows people to say, okay, we need to divert a certain amount of our profits. But I think you must ask this question is that, why do the entities that are mandated with CSR, act irresponsibly to begin with, because you know, at the end of it, if you act responsibly every day, you don't need a regulation. And there is that fundamental tension between corporate profits and social goods. Now, rather than having this overhang of CSR, if we could find ways in which with which we could resolve this tension, that corporate profits and social good cannot co exist together. Now, to me, it's again, very interesting, because if you look at any corporate organisation, at a purpose level, they will talk about transforming the societies, you know, transforming the kind of lives of people that they serve. At the fundamental level, that's what they all profess. But then the metric that they use to, to determine whether they've achieved that purpose or not, is actually more product sales. And therefore, you know, we have this tension between some people being value consumers, and some people being value creators, and they have what they need to be a bridge between the two, I think that's a fundamental question that rather than ask a question that a CSR is good or bad, I think you must to ask this question around, how can we resolve this tension between private profits and public good? And is there a new set of metrics, therefore, we could introduce that will then transform into a certain amount of investment. And of course, you know, there are lots of people smarter than me who've talked about it, people like BCG have talked about total social impact. But I think it's more it's to me, it's a lot more than that, it's to me a lot beyond that, that, that CSR, by itself will never going to be enough, you know, and I'll just give you one statistic, and then we'll probably move the discussion along. And if you look at the 16 SDGs. And the one that is around partnerships, we have 17 SDGs. And if you look at the amount of funding that is required to be able to meet the goals that these SDGs have set out for themselves, that gap a few years ago, was close to $100 trillion. And they will be never enough money to solve our big problems. And the fact that if you look at our SDGs, the top few SDGs, almost all of them have been around for such a long time, you know, and to me, this is quite a travesty that on the one hand, we are still solving for the same problems that people are solving 100 years ago, hunger, malnutrition, poverty, inequality, and we have created climate change as another problem. So all of this has remained over the last 100 years when over the last 100 years, our GDP is and corporate profits have galloped away. So there is this disconnect. And we need to resolve that disconnect. And therefore probably we need to really start thinking around moving beyond corporate social responsibility to something which is which is around creating a bigger systemic impact for this society. And to me, that's when one plus one becomes a lot more than two.

Anisha Motwani: So, you know, I don't want to interrupt you because you started on a trail, which is something very, very unique. That could be this bigger systemic shift. A lot of my thoughts, you know, being in this space, social space for so long, what comes to your mind,

Bhawani Singh Shekhawat: and before I entered or ventured, as a student of the social space, a lot of my life was dedicated in the corporate for profit world with large multinational I

Anisha Motwani: am aware of that. Yes.

Bhawani Singh Shekhawat: So I think you know, the shift really is about a bit from, say, doing CSR or doing responsible things to being responsible, Now how does an organisation become responsible through the line, there is little point in polluting the planet, and then spending a percentage of your profits to then create a some services around the, to mitigate the effects of that pollution. That just doesn't make sense. Because the funny thing is, if you look at GDP calculation that becomes incremental to the GDP. So if you have messed up, and then you spend money to clear that mess, you are adding to the GDP of a nation. That's, that's exactly what I meant by, you know, the travesty around around why it is really very important to look at the largest or better defined set of metrics. So to me, it is really around around there about being responsible, and therefore being responsible, not just in a philosophical sense, you begin in that philosophical sense, but being responsible with the kind of metrics that you create for yourself. So rather than say that I have polluted and therefore I have spent so much money on CSR, I will start by saying that I will not pollute, and I'm willing to take a hit on my profits, whether it's short term, medium term, long term, then do that, to me, that shift is absolutely fundamental,

Anisha Motwani: at a very basic level, from doing good to being good. When it comes to corporates. corporates are the collective of humanity in many ways, how can organisations cultivate that not at a system and a process level, but also at an individual human employee? By employee level?

Bhawani Singh Shekhawat: Absolutely wonderful. I think that's often overlooked, because it actually begins with the leadership. I think it begins with.. for a long period of time, we believe that the role of leadership is to take a particular entity, be it a, you know, a corporate organisation, or or the government or any other enterprise, towards its, its committed goals. And I think therefore, the purpose of leadership then becomes what really are my committed goals? And what committed goals Am I really wearing my organisation towards, and therefore, it is, then there is no tension between what the government does and what a corporate organisation does, because if they're committed goals are actually shared goals. And there are different pathways leading to those shared goals. I'm not a believer that companies should make profit, and the government should simply lead companies to do what they want to do, and therefore, take a share of that profits and trickle down. I'm not at all a fan of that, because clearly, around the world, and as demonstrated by the SDGs, we haven't solved any problem over the last 100 years, we are still chasing the problem, we are still running behind the problems. So if we were to do that, I think we need to look at leadership. And we need to look at what exactly is the leadership chasing? What truly are the metrics, I keep going back to that, you know, it's not about the stated purpose, it's not about good intent. My mother used to often say to me, as a child, that good intent is only the beginning good deed is an transformation of that deed into intent is where you make a difference. So the fact that you thought well, is, is actually even more dangerous, then you acted poorly, because he actually thought well and acted poorly. So I think that's really where leadership plays a very, very important role. And the matrix that the leadership chases plays an even more important role.

Anisha Motwani: So let's let's make it a little more practical. Yeah, leadership is committed. But having said that, leadership also has the responsibility of delivering to shareholders the value that it's expected to deliver. Because when it comes to the short term versus the long term, the short term needs of business always takes over. How do you solve that dilemma?

Bhawani Singh Shekhawat: And that's exactly the question Anisha that what are the needs of the business? What are the stated goals? If for example, we had better metrics around what should be the multiple between CEO pay and average worker pay? And we track that at a national level, and organisations reported it in their annual reports. And that was mandated by the government that you cannot go beyond a certain multiple? I think these are the kinds of challenges and now that's one metric. What if another metric was that in the your stakeholders, we had the community that we are trying to impact as an important stakeholder. So what if people who didn't buy from us had a stake in what we do? But what if we had stacks what we had a says on financial transactions or stock market transactions? Therefore, you incentivize long term value creation, you disincentivized short term trading and the algorithmic training with which allows companies to move around their quarterly profits and really impact their quarterly profits to generate What they call long term shareholder value. So I think it's all three of these, who really is your stakeholder? Can the community impact not be a shareholder be what metrics you want to engage with, which allows you to act responsibly. And the third, what sort of advocacy you as a corporate organisation engage with, so that you are not susceptible and succumb to short term market volatility and reports that really govern your everyday work, whether it's quarterly reports or quarterly earnings,

Anisha Motwani: Bhawani, your organisation, Akshay Patra at the forefront of this movement, and so much to learn from there. I just want to give the mic over to you and tell us, you know, how does the whole model work at such a large scale? What can corporates learn from you know, what, Akshay Patra does you know, what are some of the pitfalls they should watch out for?

Bhawani Singh Shekhawat: Well, thank you thats very kind and very generous, and I'm extremely proud of what we do at Akshay Patra not because of the fact that it is solving a big problem and at scale and with speed, but where all of these things that we are talking about are core to the organisation. In other words, innovation is integrated within the organisation, we don't do innovation, we attempt to be innovative. And also that is the principle that we then deploy with our partners. So I'll give you an example. When we work with sort of CSR funding. We are of course, very happy to take some of that funding and use it towards feeding our children. But at the same time, we say, you know, Akshay Patra is a manufacturing NGO, there are not very many manufacturing NGOs around the world because we cook a huge quantity of food every single morning. And what that means is we have to call

Anisha Motwani: For our audience just give us some stats.

Bhawani Singh Shekhawat: Well, we serve more than 1.8 million children every single day of hotly prepared, freshly prepared plate of food that beats all of the World Food Programme norms. That is that has zero additives, zero preservatives, where the menu rotates every two weeks, where the food is designed to feed the mind, not just you know, satiate the tongue or the body. And most importantly, the kind of impact that this simple meal is created over for nearly 4 billion meals is that millions of families and lives have been transformed. There are stories in Akshay Patra, where the the son or a daughter of someone who was six or seven generations illiterate has gone on to become a scientist and astrophysicist and many doctors lawyers and, and to me, one of the biggest sort of joys out of all of this is what has happened in the pandemic where 1000s and 1000s of Akshay Patra alumni came forward to create hugely transformational impact. And just in the last 14 months, we've served more than 125 million meals just in India. And then again, we are doing a similar project in the United Kingdom where we serve a huge number of people every single day, who are in food poverty, so But what's even more fascinating is how all of this really works with external entities, corporate organisations, but equally within the organisation. So I'll give you an example that you're talking about corporate social responsibility, when we would go to a corporate organisation, we would not simply say we want a donation, what we would do is the question is very different. What is it that you do best? If it was to brought, we brought into Akshay Patra, we would together create transformational impact.

The world needs to not just simply say X amount of money for X amount of work that is important and I'll never discount the value of it. But if you were to reframe that question and ask this very, very fundamental question, what is it that you are good at, if we were to do together would unlock a lot more value than either of us tried to do it independently. So Akshay Patra has got no capabilities in blockchain, no capabilities in really disaggregating supply chains and but Accenture labs have. And together, we introduced that technology. And that's why today, we are working with artificial intelligence, we are looking at robotics, we are looking at, we are one of the world's largest implementers of Kaizen, we have all of the elements of good manufacturing practices, our kitchens are ISO certified. And all of this is to produce a meal for a child, so that they can go to school and 1000 rupees of donation, you could serve a child for an entire year. This is the value it unlocks in contemporary India, in 10 pounds, or $15 or 1000 rupees plus minus 5%, you could then serve more than 300 to 250 to 300 meals. And what those meals then do is bring children to school, they stay in education, and then they're able to then go on and do some of these amazing things that they want to do in their life. So, things that cannot be done just by self help groups, things that cannot be done by the government, things that cannot be done by the corporate organisation, when they combined with things that cannot be done by Akshay Patra. But then together, you unlock the value. So the government does what they do best. The corporate enterprise do what they do best. And Akshay Patra do, what they do best. And I just call it the tri sector model. And that when the supply sector comes together, one plus one plus one is 10.

Anisha Motwani: Beautiful. Thank you so much. bhawani. You know, there are so many takeaways here, an integrated model, a demonstrable model that is working on positivity and hope. It's actually talking about saying, make it don't make it a charity, make it a responsibility, don't make it a burden, make it a responsibility, make sure that it begins at the top leadership walks the talk, and every single word that you said the world really needs it. And what better time than this bhawani to get that message across to the world. Thank you so much.

So as always, Narayan, what is the single most important insight you're taking out of everything? Bhawani said,

Narayan Devanathan: No, absolutely. Anisha. I mean, as much as I was riled up in the beginning, I have served as like a kid in a toy shop. And I heard that perspective from Bhawani. And as unwieldy as an analogy might seem in this context, I wanted to grab every single insight he was offering and find ways to implement them. They were so fundamental and so groundbreaking. There's something I've been saying lately, based on a bunch of things I have been reading and practising. The world does not have an innovation shortage. Bhawani spoke about how Akshay patra is partnering with the likes of Accenture labs state and it's brilliant , and it's addressing this point, the world does not have an innovation shortage. What it has is a progress shortage. And Bhawani I asked that question so eloquently. How can we deploy innovation in the service of progress, and in the process, stating the most obvious and basic of tenets to corporates? First, do no harm. With this, whether it is first instance or without standing sample, Akshay Patra seems to be Bhawani offered too many insights for me to pick just one. So let me flip it back to you. Anisha. How would you storm this norm? What hacks do you have for our audience?

Anisha Motwani: I believe real value of mandatory regulation will only get unlocked with Indian companies integrate their CSR efforts into a sustainable business strategy, and not merely see it as a duty to earmark financial outlay. So if I look at my hacks, here are five of them in no particular order. First one is actually what the current crisis actually brings me to talk about it much more than anything else. human social responsibility, not just corporate social responsibility. One of the cool components of CSR is about putting a human face on business entities by communicating empathy, extending a support, both moral and financial, for those who need it most. At this time of uncertainty and anxiety. These are the most critical organisational values. We're experiencing a very unique and unprecedented situation in our country, going by the multiplicity nature of the COVID-19 the Indian resources are not sufficient to fight against the pandemic. Philanthropy and civil society need to all respond to COVID-19 together, but financial support alone is not the answer. Corporates have to roll up their sleeves and get down to the last mile execution effort. Most CSR in businesses is executed through outsourced NGOs but under the current circumstances conventional methods will not work. We want all employees and their hands on the deck at this point in time to come and support as on human grounds, the crisis that the country is facing. Our employees and their families are going through several mental and emotional issues. Can we provide them with services such as confidential listening lines to give them emotional support? Can we help unemployed people find transitory work opportunities? Can we use a might to bring about policy level changes that will help the country with much needed reforms, especially in the area of health infrastructure. This is an opportunity for corporates to offer the human resources by turning these into virtual opportunities. So that employees can find it easy to volunteer and feel a personal impact that can be really rewarding for both employees and recipients and community at large. So this is an opportunity for businesses to make CSR that truly inclusive effort and shift it from a current 2% financial support mindset to a larger human face of CSR.

Narayan Devanathan: human social responsibility, not corporate social responsibility. I mean, if corporates are to just implement this one hack makes such a huge difference. Anisha.

Anisha Motwani: My second hack is about divorcing the corporate from the social responsibility about releasing the business pressure from CSR activities. There is increasing pressure to dress up CSR as a business discipline, and demand that every initiative deliver business results. That's asking too much of CSR and distracts from what must be its main goal to align a company's social and environmental activities with its business purpose and values. If in doing so CSR activities, mitigate risks, enhance the reputation and contribute to businesses, that is all to the good. But for many CSR programmes, those outcomes should be spillover, not the reason for being. Despite the widely accepted ideal of pursuing shared values, creating economic value in ways that also create value for society is the true potential of CSR. And that's what I was started saying, you know, how do you integrate it to your business strategy, you know, not necessarily as a business measure outcome? These are that runs the gamut from pure philanthropy to environmental sustainability to the active pursuit of shared value aligned to your larger organisation

Narayan Devanathan: in such a fresh perspective, Anisha. I mean, most of the time in trying to align with this larger purpose driven organisation. Companies end up muddling both, rather than clarifying both. What's number three,

Anisha Motwani: connect the dots cohesively consistently. There are many companies that have embraced this broad vision of CSR, but they're hampered by poor coordination or a lack of logic connecting the various programmes. So it's become very tactical in nature. Although numerous surveys have touted the increased involvement of CEOs in CSR, we have found that CSR programmes are often initiated and run in an uncoordinated way by a variety of internal managers, frequently without the active engagement of the CEO. Coordinating activities does not mean that they all address the same social or environmental challenge. It means they form a coherent portfolio in keeping with the firm's purpose and values. So don't treat it like a tactical activity. You know, where there are different NGOs approaching different managers asking for personal favours and personal requests while on humanitarian grounds. They may all be justified. But even if you agree to that, how are you connecting and joining the dots? How are you at an organisation level, reviewing this and making sure that it is actually creating some impact? So that's what is the most important thing.

Narayan Devanathan: Alright, What's number four.

Anisha Motwani: I think spreading the word is very important, you know, while CSL should never be about bragging and self promotion, companies have a responsibility to communicate to their stakeholders what they are doing, and knowing how to effectively do so is a crucial part of a successful CSR strategy. Because if you communicate, you find partnerships, you find like minded people coming and joining in today's day and age that's equally important to amplify your CSR efforts. To begin with unify with a stakeholder vise communication strategy and be consistent. To ensure your giving campaign runs as smoothly as possible. Make sure everyone has the tools, guidance and resources needed to fuel the message. Provide materials, posters and templates with messaging and social media plans. You will be surprised if a good effort is communicated well. You will have so many other people both individuals and private organisations and government wanting to join forces and that is what will create the amplification and a large impact. So spreading the word, onboarding other people, is what is very important.

Narayan Devanathan: Here we get a little creative here Anisha. I think, you know, we've spoken about the importance of corporate, we've spoken about the importance of responsibility. But maybe it's time we interpret the word social in the current way that Gen Z interprets it, which is actually socialise it use the power of social, to you take advantage of what you do. All right, what's the last one?

Anisha Motwani: It's very basic. It's very hygiene. But like I said, you know, CSR is not a corporate function, it's a company wide responsibility, we have to get all hands on the deck early, ask for help for many diverse hands throughout the organisation. I've seen many, many employees wanting to participate in CSR activities. But these become like one of camps that are organised or the tactical activity where employees are taken for plantation of trees, or they will be taken for some teaching sessions to a village and stuff like that. But that stays as a one off, how do we have our CSR programme in a manner that our employee participation is continuous activity, not a one off. So that's what I meant by make it a company write responsibility.

Narayan Devanathan: You know what Anisha. I love how you brought these hacks to the table. And yet they all stem from the basic concepts that we've been speaking about CSR, right. Make the responsibility human, divorce the corporate from the social responsibility, connects the dots, spread the word and make it a company wide responsibility. Those are just five of the most fundamental but even possibly groundbreaking acts that one can use to find the balance between regulation and responsibility. So as usual, insightful, practical and may I add urgently wise in Anisha,

Anisha Motwani: We do have a knack for picking up the right norms at the right point in time.

Narayan Devanathan: Yeah, but that also gives us a good place to segway into our GT insights module. For today we have GT expert, Rohit Bahadur, tell us how business can specifically help storm this norm. Rohit is partner not for profit and CSR advisory having set up this business within GT Bharat six years ago. What practical advice do you have for businesses in navigating the storm between regulation and responsibility.

Rohit Bahadur: Well, in the sense of Corporate Social Responsibility continues to remain a corporate social responsibility. The purpose of corporate social responsibility is to give back to the community take part in philanthropic causes and provide positive social value. This has not changed. And of course, it continues to be a regulation in India since the introduction of the CSR law in 2014. The change that has really happened is that while there have been minor tweaking to the CSR rules, via notifications, this time, the amendments to the law effective January 22 2021, do provide clarity on various aspects and are quite detailed. So yes, it is more regulated now. And there is a shift from directional to mandatory corporate social responsibility. Earlier the law was a comply or explain law. So in a sense, if you did not spend 2% of average net profits of the last three years, you could explain why. Now you have to spend it, if not in the current year, over the next three years through an unspent CSR account for ongoing projects. And for annual projects, you need to transfer the money to a fund specified in the law. Further, there is a strict penalty within the act itself for not complying. In a sense, the Act and the law was a bit half baked earlier. And now there is more clarity on how to treat capital assets, more public disclosures, more ownership on the board, a mandatory Impact Assessment over a certain threshold, and the CFO being more responsible through a certification to be provided to the board. Many things have been now specified in the law itself, which otherwise were voluntary and implied. I think what is more pertinent here to discuss is which of these changes are potentially good, and which potentially could be adverse and or difficult to implement? Few good points in my view, is the accent on greater governance and making CSR measurable through an impact assessment. On the flip side, things have been unnecessarily been made more complex. There is the piece on unspent amount accounting division of projects into ongoing in India, which are going to lead to interpretation issues. Also, there is some confusion and duplication on the responsibilities of the CSR committee and the board. On a closing note, responsible corporates will always do the CSR responsibly. And the law with its changes is just a framework in which to operate.

Narayan Devanathan: That's so succinct. Thank you so much. If I may paraphrase what you said what it sounds like is instead of looking at the act as constraining input, what is saying is that there is very little one can say is responsibility without accountability and the regulation aids and adding that element of accountability to corporate social responsibility, that would be accurate.

Rohit Bahadur: Absolutely, I think you've, you've got it bang on.

Narayan Devanathan: Brilliant, thank you for laying that out and thank you once again for being an expert from GT Bharat today on this.

A norm that is perhaps more relevant than ever today, a deeply insightful and expert guest perspective, hacks to storm the norm and a business perspective. That's a full plate to wrap up Episode 21 of storm the norm now powered by Grant Thornton Bharat. As always, there are multiple places you can catch us on, on Spotify, apple podcasts, SoundCloud, and JioSaavn by just searching for storm the norm. We were actually ranked number six on Spotify, top 100 Business and Technology podcast. So maybe you can find some value in what we have to discuss as well. So we're also on saregama erven 2.0 devices on channel 453. This is Narayan.

Anisha Motwani: and I am Anisha,

Narayan Devanathan: signing off for now. We'll be back with a new episode shortly. Thank you and talk to you soon.