Individual governance (Region)   March 2009

The general consensus seems to be that the ‘system’ is flawed and requires urgent change.

Judging others before setting your own house in order is all too common amid the current cacophony of discussion over issues of corporate governance and corporate social responsibility (CSR). In the frenzied finger-pointing, however, notably few are being pointed in the mirror. The blame is being placed on flaws of the system, which we have come to realise can be an excuse to do nothing while making a show of beating one’s chest. Indeed, locating exactly where the responsibility can be found is at times as complex as Satyam’s bank accounts.

The contemporary notion of corporate governance and CSR has been subject to much debate and criticism, and rightly so. Proponents say that corporations can benefit in multiple ways when they operate with a vision more profound than of mere short-term profits; critics, meanwhile, argue that CSR diverts from the fundamental economic role of businesses and provides a cop-out for government and development agencies. Yet how can these values be integrated into our prevalent ‘system’ of governance – one that is made up of speculative market mechanisms, corrupt socio-political governance, short-term environmental policies, and ‘development’ in all its various flavours? When we talk about this system, what exactly are we talking about? This is the system that was born of the Industrial Revolution of the late 18th century, one which engineered wars, divided nations, and systematised socio-economic and cultural discrimination across the board, even while ushering in the social safety net, welfare for the destitute, and advancements in a multitude of social, medical and industrial sciences. In a system of such broad and deep complexities, righteousness and morality, whether of corporations or governments, is difficult to locate but cannot be denied.

Many would argue that systemic responses are the only way to deal with such large and overarching issues. In the current discussion over how to reform corporate regulation, however, it is important that this discussion assess the idea of responsibility as broadly as possible – specifically, to internalise individuals’ responsibility towards each other and their environment. Without taking on board such matters in their entirety, berating the non-compliance of basic accountability and communal responsibility will remain righteous in all of the narrow-sighted, ineffectually hypocritical connotations of the word. “The bank deposits were handled directly by Raju,” shrugged Satyam Chief Financial Officer Vadlamani Srinivas, referring to his boss. “And I was specifically asked not to look into it.” Thus is a man – a highly titled one at that – turned into a machine, neatly and retroactively sidestepping all responsibility.

Maintaining responsibility within the corporate system, beyond the regulations and the watchdogs, required the assumption of personal accountability. Allowing for the continued evolution of the systems by which our world works must continue, including with regards to policies, laws and regulations. But in the search for a workable system – corporate, regulatory or otherwise – we must not allow the focus on others’ actions to cloud the base issue at hand: the responsibility of humans, on both individual and systemic bases, towards the communities we create and the socio-economic, political and biological environments we inherit.