It's wonderful to hear that Azim Premji is donating a huge chunk of his personal wealth to a charitable trust that is working in elementary education, among other things. However, it is not so good to read and hear his act being termed as an example of 'Corporate Social Responsibility', or to hear comments on how corporates must do more on CSR. Firstly, what Mr. Premji has done is emphatically not an instance of Corporate Social Responsibility. He is giving away his own personal wealth. CSR, on the other hand, generally involves company managements giving away shareholders' wealth-which is an entirely different thing..
The purpose of Mr. Premji's donation is to help elementary education across the country. However, the purpose of most CSR appears to be to generate publicity photographs of managements' family members inaugurating events like blood donation camps, the blood in question normally being that of employees.
It would be unfortunate indeed if Mr. Premji's generosity with his personal wealth is used to talk up the concept of CSR, which is a completely wrong-headed notion at many different levels. The social responsibility of corporates should be limited to generating employment, paying taxes honestly and creating wealth for shareholders. These three activities redistribute the economic value created by businesses as salaries to employees, taxes to the government and as capital gains and dividends to shareholders.
Almost of all of what is promoted as a fit agenda for CSR should actually be done by the government out of the taxes it collects. On top of that, individual employees and shareholders can do charity or social work out of their personal wealth, as dictated by their beliefs and inclinations, which is what Mr. Premji has done. All this talk CSR being mandated in an 'institutional framework' is hypocrisy. It's nothing but backdoor taxation. It just allows politicians to pretend to the public that things that should have been done out of the tax revenues are somehow the direct responsibility of businesses.
Mr. Premji's action is a shining example of how social responsibility should actually be fulfilled, and it's a very different model from CSR.
This column first appeared in the Hindustan Times on 6 December, 2010