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Past Issue • Jul-Sep 2015

Philanthropy, CSR are passé, now it is time for CSA, Kailash Satyarthi

Philanthropy, CSR are passé, now it is time for CSA, Kailash Satyarthi

Soft spoken, articulate and amiable, the Nobel Peace Prize winner, Kailash Satyarthi, stresses responsive consumers and responsive industry would eventually lead to a responsive market and supply chain system. In an exclusive interview for ISBInsight the Nobel Laureate spoke to Pradeep Singh, CEO Mohali Campus and Deputy Dean, ISB, on the sidelines of the Class of 2015 Graduation Day, where he was the Chief Guest.

Pradeep Singh: During the many decades of your wonderful work, what has been your relationship with business?

Kailash Satyarthi: Commerce, businesses and industries are an integral part of society. When I realised that a large number of children were languishing under slavery not only in India but all over the world. I initiated a campaign against child slavery in India in 1981. It was quite tough to convince people. I explained that child slavery meant collapse of human rights and violation of many other fundamental rights. In this context I have had very direct relations with the business community. Business people who were hiring or engaging child labour and child slaves many a time were unaware of the legal consequences. I took up the cause of child rights and child labours labour even with big companies – both Indian and international ones. I realised that these companies didn’t have much knowledge of the issue. Companies were unaware about child labour in their supply chains. So, I campaigned to generate awareness amongst the businesses and industry folks. They understood that my campaign was not against their business interests. So I shared a relationship of mutual understanding with the business.

So, was there no conflict between your campaign for the cause of child labour and the business interests?

There was a conflict, but it was at the lower levels of management— at the level of those who were directly employing children. The fact is that people at higher level of management were not hiring child labourers; they also didn’t want such unethical practices in their production chain. So it was a challenge for both for the top management and also for me. As the campaign took off, the people who were directly employing children reacted,reacted retaliated, at times even violently, since their profits were getting affected.

We must understand that children are the cheapest form of labour and sometimes child labour is also free as slave labours. One could make them work for long hours – 18 hours, sometimes even 20 hours; they could be forced to stay at the workplace, could be confined in small badly ventilated workshops, mines and factories. So it was tough at one end, but on the other hand I was able to persuade business folks of things like ethical awareness of consumers. I translated the consumers’ power, and used the consumer’s ethical sense to change the business practices.

In this context, I will can share with you my experience with the carpet industry. Though we were freeing some 100 children, at the same time, elsewhere thousands of children were being trafficked. So we approached the carpet industry and also spoke to the consumers. Some of them accepted that it was a problem and we must solve it. We built on those ‘some’ and we tried to build trust in them, so that eventually we could collectively fi nd a solution to the problem. As I mentioned before, I spoke to the consumers and explained to them the need for being responsive consumers. The idea was that responsive consumers and responsive industry would eventually lead to the responsive market including distribution.

Companies were unaware about child labour in their supply chains. So my campaign generated awareness amongst the businesses and industry folks. They understood that my campaign was not against the business interest. So I shared a relationship of mutual understanding with the businesses.

What contributed the most of all to your success? Would you say that physical intimidation, fear, or coercion and then threat of legal consequences helped you the most?

Threats, physical intimidation, fear, or coercion, and threat of legal consequences don’t work for too long. These are mere tactics, not full-fl edged strategy. While strategies tend to work better since they are sharp, clear and focal and most importantly time bound. Of course tactics have to be there, after all, the world has never functioned without the rule of law. People do fear the rule of the law, that’s why they do certain things in a disciplined manner.

But I used the strategy of responsive consumers. After all, the business folks can’t afford to look away from the power of responsive consumers. Now it was up to us how we interpret this fear and convert it into responsible actions. So in the carpet industry, I didn’t blame or point fi nger–instead, we provided a solution to all the stakeholders – consumers, industry and the entire market.

Did the consumers support you?

Consumers supported me and the cause a lot. Consumers asked me whether I was asking them to buy rugs and carpets which were not made by children as in child labour. I said yes. Then they asked me who will guarantee that.

So that’s how and when the inception of RugMark happened?.

Yes, but we had to work really hard because such social labeling didn’t exist anywhere in the world. There was no social monitoring mechanism anywhere in the world, in any business sector or in any industry. So we had no examples to learn from. Though quality control systems were very much there, however the mechanism to save humanity had still not been formulated. So it was a very diffi cult task. I didn’t want to kill the industry; I didn’t want to kill the children particularly their childhoods. So time and again I said, ‘We are not against you, but we are merely fi ghting the evil which is being preserved by your industry. We must come together and fi nd a solution to it.’

How did you build upon RugMark’s creditability?

When industry people were ready – in India, some in Pakistan, and some in Nepal – since these three countries were the biggest producers of carpets. We were constantly in talks with consumers and the industry. We also spoke to the German, British, American companies. We proposed that when the European consumers can stop using animal fur products and use only guaranteed products, why not social labelling? People were not sure how this idea could connect people from different segments. But eventually it connected people – brought them together in support of the cause. Then we introduced a full-fl edged monitoring mechanism – certifi cation, licensing and labelling. It was independent as well transparent monitoring, which eventually evolved into a proper professional process. And thus we founded RugMark.

So what is RugMark’s position in the market?

Now, RugMark’s name has changed to GoodWeave. The change in name was because more and more people and countries and players joined the movement and the scope of the movement widened beyond child labour to include ecology. Say for instance, we became apprehensive about the dyes being used to colour the rugs – those must be environment friendly. Washing and tanning of rugs was causing severe environmental damage – the Ganges’ water was absolutely polluted near Mirzapur. It was unacceptable. Thus, we linked the cause of environment to the cause of child labour. And so the name evolved into GoodWeave.

RugMark’s name has changed to GoodWeave. The change in name was because more and more people and countries and players joined the movement and the scope of the movement widened beyond child labour to include ecology.

The net result of GoodWeave or RugMark in tangible terms is that about 15 years ago the US Department of Labour did a study in South Asia and it was revealed that at least one million children were working as carpet weavers in the rug industry. Most of them were bonded labourers—trafficked children. Again four to fi ve years ago, the same Department of Labour did the same study and to everyone’s great surprise the numbers had declined from one million to less than 300,000. And according to the latest figure it’s less than 200,000. This means that about 800,000 or 8 lakh children were saved. And since the initiation of our campaign, new children didn’t join the industry, so we were probably able to save another 5 to 10 lakh children. And the best thing is that the production of carpets didn’t see a decline, rather it increased. Thus carpet industry’s net profits jumped. And the other good thing was that, employment was generated for adults. So much good happened!

How did the availability of funds impact it? How did you manage to build such a big and successful campaign?

It was a constant struggle. See, I founded RugMark – I worked really hard to establish it as a brand. But I didn’t continue with it. Once it was an established brand in the market, I slowly passed it on to others. Similarly, I founded many international organisations – made them into movements and prepared second level leadership and I passed the baton. This is another problem with our society; once we are in position of power which is getting us respect, money and authority – we tend to get static, fixed to that position. And we don’t want to start from scratch again because it is very challenging to do so over and over again.

I kept on launching new movements – be it the Bachpan Bachao Andolan or the Global Partnership for Education, which is regarded as the single largest platform for education in the world today. We work in 180 countries as part of Global Partnership for Education. For 8 to 10 years, I remained associated with it as Founder-President, but once I left, still people are managing it very well.

I did the same with the Global March Against Child Labour. It was also an international level campaign. For a while I remained associated with it as Founder-President, but just sometime back I passed the baton to others. I did the same with RugMark/ GoodWeave. So the point is that every time I had to raise funds from scratch, every time I started afresh.

So what are the struggles you underwent every time you launched a new movement? Did you ever have to compromise?

Compromise is something that I will never do, no matter what. I believe that we need to have good qualities, which will make us powerful. What have we learnt from our gurus and maharishis, Buddha and Mahatma Gandhi? Their teachings are not mere preachings– those are values that we need to inculcate in our personal lives. There were many instances when I could have compromised. For instance, when I became a little famous, people asked me to join politics. When I left my engineering job to work for this cause at the age of 26, then I was married, I had a son. I didn’t have much money but I still had big dreams. I had faith in the strength of my conscience.

Now, we shouldn’t measure success and failures on the basis of whether we were always able to get what we desired in life. I will tell you how to measure success – say you made an effort to ride a horse ten times and you fell off it but if you are able to ride it the eleventh time then that counts for being successful. And history is made based on the success stories. The previous ten times won’t count. So what I am trying to say is that be prepared to fail ten times.

How did you handle this issue of funds?

In the initial years, friends helped. TAfter three or four 3 or 4 years, I learnt about these foundations which could help the cause. We also got the support of the Trade Unions and Teachers’ Unions – people from these unions started donating money to the cause. However, lot of fund was available for the purpose of charity. Somehow, people love to do charity – everyone will touch your feet and treat you like a saint. One tends to feel good to be associated with humanitarian causes. Charity is defi nitely a good quality, but it can’t solve the real problems – the problem of inequality, the problem of the violation of laws, the problem of discrimination. How can charity solve such complex problems? The ‘good feeling’, which one tends to have while doing charity is nothing but pampering of ego. I actually have a different perception about this entire business. When you see a needy child or needy person, just giving money or donating does very little to lessen their plight. of the recipient.

What have we learnt from our gurus and maharishis, Buddha and Mahatma Gandhi? Their teachings are not mere preachings– those are values that we need to inculcate in our personal lives. There were many instances when I could have compromised.

So things seem to have been very difficult for you given these circumstances. How did you manage?

Yes, things were very difficult, but my wife supported me a lot. She turned to be the braver one of the two of us. My children also saw very difficult times. When I left engineering, everybody made fun. My friends advised me that I should have my own business, maybe I should open an educational institution which will help me to serve the community and at the same time help me earn money. They had never heard of such a cause as child slavery till then. In fact, there existed no study or research till 1980-81 on the problem of child slavery or child labour in India. These phrases were unheard of.

India didn’t have its own law. People like us had to fight for four, five years to get a law to be enacted. And the law was enacted in 1986. The United Nations didn’t have a clear notion about child rights. The international community had never articulated their thoughts on the matter.

But we did have a law on bonded labour, isn’t it? So why did we need a separate law for children?

Yes, we did have a law on bonded labour. The thing is that all child labourers are not bonded, some are just child labourers. It was during Indira Gandhi’s Prime Ministership, the Bonded Labour (Abolition) Act was enacted – in 1976. So after another ten 10 years, the child labour law was enacted because we couldn’t declare all child labourers to be bonded labourers. The Bonded Labour System (Abolition) Act could only help the child slaves but not the rest. A legal framework for juvenile justice didn’t exist. In fact, the Juveniles Justice Act came into being much later. This was because the UN Convention on the Rights of the Child was conceived in the late 1980s.

Funding started with friends and then I could raise some fund from foundations both Indian as well as international ones. We also got the support of the Trade Unions and Teachers’ Unions – people from these unions started donating money to the cause.

We were talking about child rights in 1980s here in India; abroad it happened only in 1990s. And laws were enacted across the globe for child rights post the United Nations Convention. So there was big knowledge gap that existed over a period of 10 years. It was a very difficult time. People were not ready to donate. It was only after the United Nations Conventions, many NGOs on child rights were founded – thousands were founded in India alone. I hear that apparently some 2 lakh NGOs work on child rights in India, which is a great thing. Some of them will be good and must be doing genuine work; while there will also be some with doubtful credentials.

Of late, there is a lot of emphasis on Corporate Social Responsibility (CSR). As you are aware the Companies Act has been amended and now it mandates that companies spend 2 percent of their net profits on CSR. What are your thoughts on this? Do you think it will make a real difference?

We must realise that the world is changing very fast. It all had begun with charity, then it moved on to philanthropy and then to Corporate Social Responsibility. Now the demand is for Corporate Social Accountability (CSA). So we have to understand that ‘accountability’ is going to be the major thing in the coming 5 to 10 years. This means transparency in business. And there is an inherent conflict between transparency in business and the competitive model of business – this is big thing; we need to prepare ourselves for on and move forward.

How optimistic are you about CSR?

CSR is still dragging on with the notion of philanthropy. So what’s happening is that under the new amendment the companies or the corporates have to contribute 2 percent of their net profit for social good! Now many businesses have established their own philanthropic foundations and are spending that 2 percent on that foundation – thus they are doing apparent philanthropic work and are also using the same opportunity to do some social advertising for their business.

What we need to understand is that by harming the environment, by encroaching on tribal lands and by using child labour, some of these businesses are making profi ts of which they may spend 2 percent on some philanthropic activity – say for instance to dig a well for the community or distribute some necessary items to the poor or spend the 2 percent on swachata abhiyan because that’s also a form of community service. This isn’t corporate social responsibility. These days, it’s being taught in certain places even that RugMark of Carpet Consumers Campaign was the fi rst ever CSR initiative, though the CSR phrase had not yet been coined. So the first CSR initiative happened in the carpet industry. when it was founded

So just giving away 2 percent of the net profit won’t help much?

That won’t bring about the desired change. Social responsibility should be a culture; it should be the way of life.

Now, that it has been mandated, so the companies will have to spend. But then, the governments – the state governments are asking the businesses to fund their projects Now, that you have legislated – do allow these people to spend rightly. Give them the opportunity to fi x the wrongs that are happening in their businesses or companies.

How can we make this law more effective and meaningful?

The businesses have to decide that— in their entire production chain nothing illegal will happen, nothing that violates international laws and treaties, and nothing that harms the environment. If any business is done at the cost of the people and planet, it won’t be able to survive. You can’t work against the sustainability of the world. Today everybody is talking about sustainable development, but how can you bring about sustainable development and ensure it without the corporate social responsibility in real terms!

So we must push for Corporate Social Accountability?

Accountability is going to happen, would soon be part of the law. I have been working towards Corporate Social Accountability for the past 3-4 years. In California, the California Supply Chain Transparency Law has been enacted. Now similar demands are being made in other American states. This has also been taken up at the European Commission. The matter of Accountability is closely related to Transparency.

So you have elevated the matter of Corporate Social Responsibility to a very higher level. Let’s limit it to Indian businesses making money available or investing for development. Instead of just paying tax to Government which takes care of development, corporates themselves do some development work. How can we make that happen?

See, there is a very clear division between the tasks. When we talk about fundamental human rights, say education is one of them, when we talk of health the very fi rst principle of our constitution is based on the right to life with the dignity – that cannot be compromised. These are State’s responsibility. If someone says let the private sector ‘be in charge of military’ – that’s not possible. The country needs military for national security and safety. Similarly, health and education actually should be the government’s responsibility. The private sector can defi nitely put money in it through government; they can also fund activities as part of their social responsibilities but not as a commercial venture. Education today has become a commodity, so those who can buy expensive commodities can buy expensive education. And that’s not in keeping with the spirit of the Indian Constitution or the law. Similarly, even NGOs are also doing business – I’m not in complete agreement with them either. In the name of social work you have taken up the government’s job. It is Government’s job to implement fundamental rights, prepare its provisions and ensure that citizens honestly follow those. It’s not enough if the Ssocial Ssector or Bbusiness Sector takes care of it. They should assist, contribute – you can be critical policy partners, you can set examples as social partners; similarly the businesses can bring in a lot of resources for the resource crunched education sector. Currently, the biggest challenge for governments everywhere is fi nancing education. Financing for education has been reduced signifi cantly in the last four to fi ve years. On account of that there has been a reduction of $1.3 billion in educational fi nances. Governments across the globe are not able do much because of the economic slowdown and the recession. Recession had its impact not on educational fi nancing but also on employment. Employment generation has become a major concern for countries like Spain and also for many other countries of Europe. Even America is facing the same problem. So because of this people everywhere want Governments to use resources to generate employment instead of fi nancing education. So now we will have to look for alternative means of financing and that can definitely come from the private sector.

It all had begun with charity, then it moved on to philanthropy and then to Corporate Social Responsibility. Now the demand is for Corporate Social Accountability (CSA). This means transparency in business.

What will you have to say about us (ISB), a management institute, and how can we contribute?

You are producing the best brains, you already intake the best brains from the country and you return even better brains. Students who pass out from ISB tend to be better equipped and more confi dent. And of course they are going to become mangers, general managers, CEOs – corporate leaders. So if they understand the real spirit of Corporate Social Responsibility, – that it’s not just about philanthropy, buit that it’s about being humanitarian. These corporate leaders will understand the true meaning of CSR. They won’t do business at the cost of people and planet. Thus they will be leaders and partners in a sustainable economy and in the process will enable sustainable development and growth. Growth was happening, we were thrilled; but then there was a slowdown. So we must work towards sustainable growth. Sustainable growth needs a lot of factors, lot of inputs, which the students of ISB should be prepared to deal with. The other thing is that, as an institution you have a big name. You can also try to inculcate the values of CSR and the spirit of CSR, and most importantly the capacity to be able to run CSR activities properly for the entire business sector of the country. For this you can use your connections and network. There is tremendous dearth of capacity- capacity to understand that the donations must reach the right NGO, because your donation is an investment which must result in social return.

I have also been thinking of developing an approach of holistic policy thinking towards solving the problems of the children in the country and globally. This will need strong networking connections at different levels and of course strong participation. I’m seeing this across the world as well as in India – there is a serious trust deficit between the civil society and businesses, and between the governments and businesses, and between government and civil society. The three have to come together and take things forward.

I intend to build bonds based on faith in each other’s capacity and participation.

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