Good company vs good business: The bar is low, but change is afoot

India is probably behind the curve when it comes towards a voluntary principle and values led approach to business and investing

Updated: Jul 8, 2019 03:38:56 PM UTC
Image: Shutterstock

While Corporate Social Responsibility (CSR) began as a campaign to get corporations to do good and give back to the society, the incessant pull of capitalism and a laissez-faire approach by a majority of the consumeristic population meant that most companies didn’t really care. While the US, Europe and Australia all have their ways to ensure disclosures on diversity and other issues, India became the first country to actually enact CSR into law and a mandatory policy came into force in 2014; and while there has been progress, reports suggest it could be less about commitment to the cause and more about doing what needs to be done.

But even if companies didn’t pay attention to or care about being socially responsible, diverse and inclusive earlier, change is afoot, led by companies as well as driven by people. Today it’s not so much about mandatory activities, a younger demographic has woken up to the realisation it is imperative to be socially conscious for a business to ensure a sustainable earth. They’ve started realising the power of consumer and the values with which they make both their buying decisions as well as investing decisions.

Patagonia, an outdoor wear company in America decided to focus its partnership with ‘mission driven companies that prioritise the planet’. Burger King, the international fast food chain which prides itself on its beef burgers is rolling out a meatless and plant based burger across their outlets in the US. In India, Domino’s Pizza decided in late 2018 to serve only vegetarian pizza in many outlets in Gujarat which they said is to respect the sentiments of the predominantly vegetarian state. In 2017, Dong (Danish Oil and Gas), a 45 year old company completely pivoted with a name change – to Ørsted Energy – and sold off it’s oil and gas business to embrace renewables. And even as Apple CEO Tim Cook tweeted in 2018 that Apple was powered by 100 percent renewable energy; Vijay Shekhar was quick to commit to the same at Paytm.

And sometimes the value line can be a bit blurred. Nike featured Colin Kaepernick, the former NFL star and activist in their ad with a bold message about belief and sacrifice and while the move alienated a lot of people (including US President Donald Trump), it also was a calculated risk and boosted sales. But on the other hand, they've been accused of paying low wages and mistreatment of factory workers. H&M has a conscious collection which is eco-friendly but questions have been raised about the treatment of workers at their garments factory. Iceland Foods, a UK supermarket chain ran an ad during the Christmas of 2018, highlighting the loss of habitat for orangutans due to palm oil deforestation; however, reports showed that even at the start of 2019, they sold products which contained palm oil. While Unilever is not completely cruelty free, PETA has classified them as 'working for regulatory change' and their brand Dove has been certified to be so. Netflix killed off Kevin Spacey's character in their hit original series 'House of Cards' after allegations of sexual misconduct against him in light of the #MeToo movement but continued with the 'Sacred Games' in India (after their internal investigations) despite allegations of harassment against Varun Grover and then Nawazuddin Siddiqui. And in India, we have V-Guard whose corporate office in Kochi is as green and sustainable as it gets and its water use is met by rain water harvesting, but the CEO of the company has promoted the culling of stray dogs. Consumers and socially responsible investors who care will have to think twice before taking a decision because it seems to be quite a mixed bag.

Other times, it has not been voluntary but companies have been forced to make the choice. Amazon had to appoint a Director of Social Responsibility among a growing wave of criticism regarding their cloud cleanliness and treatment of workers in their fulfilment centres. Google (Alphabet) was pulled up for the way they dealt with sexual harassment which prompted mass walkouts the world over and an apology from the CEO. We've even had people-led movements such as a petition to get toothpaste manufacturers such as Colgate-Palmolive to ditch the cardboard boxes for their toothpastes and be more environmentally responsible.

Despite making CSR mandatory, India is probably behind the curve when it comes towards a voluntary principle and values-led approach to business and investing. But how do you go about figuring out if the companies you're investing in have shared values? While the data in smaller Indian companies might be opaque, it's not impossible to find such information about the larger companies that are constantly in the limelight. Asking everyone to read the annual reports may be taking it too far but social media today offers a lot of clues to the values of a company and it's a start. Suddenly, it's not as simple as choosing a stock for investing, instead it's about calibrating your moral compass and choosing from that universe.

And I think this is where, you differentiate between a good company and just a good business.

The author is Co-Founder of Investography, a financial wellness company based in Bengaluru.

The thoughts and opinions shared here are of the author.

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