April 19, 2014

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Can a Trusteeship Model Redefine Business in the 21st Century?

The Gandhian Model of Trusteeship: a standard to ensure the CSR Bill in India will benefit all stakeholders, including the poor.

Namrata_rana

By Namrata Rana

As we reach the end of 2013 and begin to welcome yet another year, I cant help but think about the many challenges India still needs to overcome. While much is said about India’s growth numbers, it is equally true that this growth has not been inclusive. India, the emerging economic giant, is equally the land of the impoverished. Home to about 360 million people living below the poverty line.

2013 was a landmark year, in which the Indian Governments legislation mandating the compulsory spending of 2% of the company’s net profits on CSR shook up many. While many opposed this, others said that fund allocation alone is not enough.

My view has been optimistic, that for every company that may struggle through the CSR mandate, there will be othersIndia-flag who will raise the bar with strategic thought and innovative solutions.

However, I also believe that unless we redefine the role of business in our society we will continue to have structural problems that create conflict.

The Gandhi Model

The time has come to initiate a more holistic approach that defines progress.

The Gandhian Model of Trusteeship is one such approach that, while being uniquely Indian, provides a means of transforming the present unequal order of society into an egalitarian one. Under this principle surplus wealth needs to be kept in trust for the common good and welfare of others. It also specifies that everything we do must be economically viable as well as ethical – at the same time making sure we build sustainable livelihoods for all.

While this model was debated in the 1940s and ‘50s, for most of the 20th century this view didn't find any takers. However, the challenges of the 21st century such as economic collapse, absence of values and challenges of sustainable growth necessitate another look at Trusteeship.

Several corporates are today larger than many countries. Given their sheer size and the lives they impact, should we not be thinking of fundamental structural changes? Trusteeship in that context can function as a long-term solution to solving the conflicts of society. The world of big business and finance after the economic crisis and scandals has come to understand that we need to redesign the systems of corporate governance Gandhiand finance in order to create more sustainable and responsible economies.

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

Gandhi said: “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 the micro level, as it talks of equitable distribution of wealth being a measure of success, rather than the current form which has high income disparities. It also builds the case for CSR being embedded within the business values of the private sector as Gandhi clearly stated that distribution of wealth is not about charity but about ensuring basic human dignity.

Inherent in the Trusteeship 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.
  • Utilizing 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 the community you work in is taken care of.
  • Sustainable livelihoods – not charity – are key to ensuring human dignity, growth, satisfaction and well being.

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. Let a Trusteeship-based framework that blends design with technology, environment, people, economy and culture be the primary framework for value creation.

Can We Come Together in 2014 to Develop this New Era of Trusteeship?

A TRUSTEESHIP MANIFESTO trusteeshipfor 2014:

  1. Lets not train managers for organizations that operate within 20th-century logic. Let us create Responsible Leaders who lead with a manifesto of Responsible Growth rooted in a systems thinking approach.
  2. Let us not merely be ruled by quarterly results and short-term thinking. Let us create positive environmental value, positive social value and positive economic value in every aspect of our business and its related supply chains.
  3. Let value be not just the product but the lives we impact positively.
  4. Let us start looking at solving genuine problems and not those created by the irrelevant and artificially created scarcity model. Hunger, livelihoods, education and healthcare are universal needs that must be addressed.
  5. Let us play an important role in driving innovation in not just products but processes and new management thinking.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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