Trusteeship, Gandhi, and Business in the 21st Century

I have been watching the debate around ‘the case against CSR with interest’. The fundamental point where we all seem to get stuck is around – ‘the role of business’. Economists and many CEO’s argue that the role of business is to maximise shareholder profits, whereas the CSR community talks about contribution to society for the greater good.

I believe that the essential problem about the role of business cannot be resolved within our current framework of thinking unless we add another element – ‘The element of Trusteeship’.

The TATA group of companies is based around this principle. Trusteeship is the model of responsibility that best describes the group founder – JRD Tata’s view of himself and his role in the world. It was a view that JRD essentially derived from Gandhi. Gandhi talked frequently about the role of business as being that of a trustee or a steward for what you hold. Gandhi’s view of trusteeship was based on the belief that we do not really ‘own’ our wealth but are only trustees of it, meaning that we have to administer our wealth for the benefit and betterment of the community. In the trusteeship model, wealth does not automatically go to the family members but only to those who can function as its trustees. Thus, this idea of trusteeship challenged the fundamental principles of a capitalist society. JRD adopted this framework any implemented it in a practical way within the TATA ethos. (Dr. Sarukkai)

Some of the key tenets of trusteeship that I believe are applicable today are:

  • Surplus Wealth needs to be kept in trust for the common good and the welfare of others.
  • To fully adapt the concept of trusteeship a non violent approach needs to be adopted.
  • Everything that we do must be economically viable as well as ethical at the same time making sure that we build sustainable livelihoods for all.
  • Economic equality through trusteeship will thus ensure an equitable distribution of wealth amongst all.
  • Absolute trusteeship is unattainable – but if people behave as trustees then we can develop institutions that are economically viable yet benign.

Not many rued the demise of this concept in the 50’s and 60’s and this view had more or less been shelved for the latter half of the 20th century. However, this concept is making a steady comeback as economic collapse, absence of values and challenges of sustainable growth face the world today.

While there are many aspects to trusteeship in it’s ideal Gandhian form, the fundamental concept of trusteeship is about equity and sustainable growth. When viewed from this lens a Trusteeship approach puts emphasis on reconfiguring social and business structures so that people feel both individually empowered and inclined to act in the common interest. (Ref – India of my dreams – Gandhi)

My view is that if CSR departments and organisations could designed around this unique principle of Trusteeship, most of the debate around the role of business would get resolved.

In the debate around CSR Professor Karnani and others argue that CSR implies a deviation from the core objectives of a business. This is valid from the perspective that businesses have largely seen themselves as distinct from society and as hubs of production and distribution.

However, the world around us is seeing some fundamental changes and senior executives in most companies are aware of these.

According to the UN Global Compact CEO study, 93% of the CEO’s believe that sustainability will be a key issue in defining the future of their business. Many of them are rightfully concerned because a shortage of key natural resources is looming on the horizon. In addition the move from a constantly upwards moving graph that typified the 20th century company is now changing towards a circular structure involving cradle to cradle(zero waste) production.

The same UN Global Compact report goes on to say that many CEO’s believe that businesses will now have to move beyond profit as a measure of value to metrics that take non financial aspects into account – putting a new onus on the ability to measure progress.

If we examine the role of business in this context and apply the principles of Trusteeship to todays corporations we can devise a new way of integrating social responsibility within the DNA of the business. This will ensure that our companies no longer need to set up CSR departments to showcase our efforts, instead CSR will be built into everything we do.

The Gandhian perspective is more relevant today that it was ever before. Gandhi wanted to ensure distributive justice by ensuring that business acts as a trustee to it’s many stakeholders and specified that economic activities cannot be separated from other activities. Economics is part of the way of life which is related to collective values.

Gandhi says ‘true economics stands for social justice, it promotes the good of all equally including the weakest and is indispensable for a decent life’. This has implications at the macro economic level as well as at the micro level, as it talks of equitable distribution of wealth being a measure of success, rather than the current form which as high income disparities. It also builds the case for CSR being embedded within the business values of the private sector as Gandhi clearly states that distribution of wealth is not about charity but about ensuring basic human dignity.

Inherent in this philosophy are entrenched solutions to many of the challenges of the 21st century:

  • Sustainable consumption – consume what is enough for your needs without doing harm to others.
  • Utilization of natural resources in a sustainable way – you are a trustee and you need to take care of what has been freely provided by nature.
  • Dignity of labour and equitable distribution of wealth – wealth alone is not the answer, to feel happy you need to ensure that the people who work for you and society at large is taken care of.
  • Sustainable livelihoods – and not charity are a key to ensuring human dignity, growth and satisfaction.

So today, while we all agree with the concept of improving stakeholder value, lets redefine value to incorporate much more than profit. It is in this context that the 21st century corporation should see itself.

 

The article was originally posted on The Living Principles.

2 responses

  1. Pingback: Redes de Sustentação para a Sustentabilidade « Idéias pra Inovar

  2. Dear Namrata,

    In my opinion, Desires and greed in society can be either curtailed through laws / regulation or by building a strong moral fibre.

    Our country is too big, diverse culture-wise, too vast considering each state is big enough to size up to a small country.

    With the given challenges – population, poverty levels – lack of governance is the 1st thing that can bring some sort of stability. As we stop to struggle with the system for daily needs – a rythme is required for even well to do people like us to think about the society at large within our working environment. This is otherwise a challenge or requires a strong life-force to ‘want’ to do something that incorporates the ‘social needs’ that have been explained beautifully by you quoting Gandhi and JRD. 

    Besides building morality by punishing the weak and errant, greedy and fraudulent persons / entities – A regulation / law that controls distribution of market shares – that does not allow concentration of market power in the hands of few ( in a duopoly or oligopoly ) who could exploit it by abusing their dominance in the market  – requires strengthening. India has recently adapted this law called the ‘Competition Law’ or ‘Antitrust’. Today the Merger Control Regulation has come into force – which would make it mandatory for companies merging / acquiring to notify the transaction to the Competition Authority ( Thresholds for such transaction being 1500 cr. or more of combined assets – and/or 4500 cr. or more of combined turnover of undertakings concerned ).

    For instance, Airlines ( Kingfisher / Jet ) and Telecoms ( Reliance / Airtel ) or any other company in any industry would have to justify their mergers/ acquisitions by showing clearly the efficiencies / benefits more than the adverse effect on effective competition in the market – This would bring about a level playing field, take care of the harmful impact that consumers can suffer in terms of price and supply of such products.

    Once we are in tune with being regulated – while wealth is fairly distributed – we learn to respect the other parties and develop a culture of sharing. The lack of this discipline is the reason why despite having Gandhies and TATAs we are still stuck in disparities.

    Your response / views are welcome !

    pamsanghi@gmail.com

%d bloggers like this: