Strategy

Q&A: Global Institute for Tomorrow’s Founder

A critic of many corporate social responsibility programs, Chandran Nair believes it's more effective to go after corporate-law scofflaws.
Tom LeanderDecember 29, 2006

The very idea of a think tank seems a throwback. That’s because so many—read American—smack of the mentality of the Cold War, whether they be neo-con or liberal. Most were born when business’s playbook seemed written from a US slant—and before the economic rise of China and India accelerated globalization. Chandran Nair sees Hong Kong-based Global Institute for Tomorrow (GIFT), which he founded in 2005, as a counterbalance appropriate to the rise of Asian interests in the world, weighing the role of business in society, governance and ethics, and leadership development from an Asian point of view. A former Asia-Pacific chairman of global consultancy Environmental Resources Management, Nair is a visiting scholar at the Hong Kong University of Science and Technology’s School of Business, an advisor to the Prince of Wales Business Leaders Forum and the World Wildlife Fund in Asia, and a director of the Jane Goodall Institute.

What is the Global Institute for Tomorrow?

It is essentially a platform to spread ideas and actions; we’re not a single-focus organization. I like to think we reflect the rich and nuanced world that we live in. We explore ideas, but we do more than just think and talk—we get out and come up with actions.

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My goal is to create an intellectual forum for the next generation of Asian business leaders. At GIFT we run the Young Leaders Programme. One of its goals is to provide an alternative education for young Asian business leaders. MBA programs are great and can provide real value, but unfortunately they can also breed arrogance. I think many MBA programs are aware of this, and also acknowledge there’s a need to go beyond teaching functional skills in a classroom. Our goal is to help shape their thinking through engagement with these tough issues as Asia emerges from so-called “developing world” status.

Quite apart from practices like corporate social responsibility—a favorite cause of corporates and non-government organizations (NGOs)—we encourage a return to fundamentals, like the responsibility of business to obey all laws, avoid running roughshod over public interests, stop exploitative practices in grey areas such as violations in transfer pricing, and to become wholly transparent.

Aren’t there think tanks for that already?

Go and find a home-grown Asian think tank that tackles these issues with international recognition. There aren’t many, if any. When will we have a think tank here in Asia bold enough to say to the Heritage Foundation, “We don’t need you to tell us who’s free”—and that the international media takes seriously?

I set up GIFT when I had reached the top of my business career and had excellent job offers outside the corporate world. But they all required me to move to the US or Europe. Every attractive job with a large multilateral agency or international NGO needed me to move to Geneva, London, or New York. I thought at the time, “What a shame. Too many Asians who are good at what they do leave the region. Or they get lost within large multinationals.” Yet, the region and the world need good people to provide voices to reflect what’s happening here, and from an Asian point of view—don’t confuse this with promoting some sort of Asian values, whatever that means. The two things are different.

This lack of voice is an indictment of us now. Asians are silent. We don’t voice strong opinions. We’re asleep at the wheel. It’s true that most think tanks as we know them tend to be built around a personality. But the world has reached a stage where you don’t need to be big and powerful to wield influence. You can be small and thoughtful and still make your point of view heard.

Why do you feel equipped to do this?

I’m not sure that I am, really, but I feel a strong sense of responsibility to give it a go. It’s an exciting journey; it should be fun. I suppose my attitude, my perspective, has been influenced by certain events. My parents moved from Kerala in India to Malaysia before the Second World War. At the age of 20 I went to university in the UK. I’d studied bio-chemical engineering, and first worked in London doing R&D on ultra-pure water systems for industry and nuclear reactors.

But I wanted to do more that would help. I went to southern Africa setting up rural water systems, working for an NGO. That made me first appreciate how complex and unfair the world was—and is. We were setting up a water supply for a village two hours down a dirt track. After we’d set up the standpipe a very old woman tried to offer a gift of money, because, she said, this was the most amazing thing that had happened to her: that she could turn on a tap and get fresh water.

At that time, the struggle against minority (apartheid) rule was going on in neighboring South Africa. It hit home with me, since growing up in Kuala Lumpur, we all just got on, Indians, Chinese, Malays. It incensed me, but it opened my eyes politically, and that was something I took back to Asia with me. Eventually, I did leave Africa. Seeing all the aid that got squandered made me a little disillusioned with Africa, NGOs, and the donor agencies.

You clearly feel that business people should take a role in public affairs.

I often question why business is so cautious when it comes to engaging on civil society issues. Sixty percent of trade in the world happens between multinational corporations. The idea that these corporations don’t have a major say in political decisions is completely bogus. In the months before the Iraq war, the global business community remained quiet. It was a deafening silence. But within three months of the invasion, the World Economic Forum convened its great “global reconciliation summit” under the theme “Visions for a shared future”. It was an extraordinary annual meeting, held in Jordan in June 2003, by the Dead Sea ironically, attended by representatives of the most powerful companies in the world.

Why didn’t they do something before the invasion? A “Let’s not destroy Iraq!” conference? In my view international business and the media could have done more to stop the war from happening. Well down the road, still no one’s being held accountable for it. What does that say about international legal institutions, and the respect that people, governments, have for them? I fear it’s set a dangerous precedent.

As for Asian leaders, I believe they’ve failed to adopt a stance or strategy in keeping with the region’s influence in the world. What would it take to have Manmohan Singh and Hu Jintao, who together represent half of humanity, to say to the US and the UK, “You have to stop this”, and then present a plan? They’d get strong support; many in this region and the Middle East see the Iraq war as a sort of return of Anglo-Saxon imperialism. Many in Asian societies resent this. They just don’t say so.

The Iraq tragedy has discredited the Western point of view regarding its superior values, freedom, democracy and this is bad, because the West has a lot to offer. But the war, conducted in the name of bringing freedom to the Middle East, has eroded the credibility of the Anglo-Saxon model of government and governance. It’s also discredited the idea that free-market capitalism and democracy are necessarily intertwined and somehow superior in terms of having the necessary checks and balances.

You’re a believer in the responsibility of corporations to improve the social good, but also a critic of many corporate social responsibility (CSR) programs. Why?

I think a lot of the CSR debate misses the point. Companies exist to create prosperity. Society in turn decides what limits to impose on how companies behave and thus we have laws to protect the common good. In Asia, we’re at the stage when we have some pretty good laws, but poor enforcement and unfortunately much of that has its roots in corruption and weak institutions. My argument is that one should first get every company to obey these laws, everyday and everywhere they operate.

There’s no point in urging companies to be saintly; they’re not. They’re there to make money and that is not a bad thing. Let them do what they do, and let them do it well. But let them do it under the laws of the land and hopefully the laws reflect societal aspirations. This, of course, applies as much to local companies as to international ones. But in this part of the world Asian business leaders need to show the way, stand up and be counted. Once companies meet all the laws they can then decide if they want to do more—call it CSR, charity, or philanthropy.

Are you saying that many companies violate the laws?

Many operate in grey areas where it’s difficult to get caught. This can happen in areas as diverse as polluting, violating worker safety regulations, or evading tax under the name of transfer pricing.

I have proposed something called a corporate externalities report, or CORE report, to replace CSR reports. Its logic is that laws exist to protect common good and that means minimizing the negative impact of the externalities created in the provision of goods and services. By producing this report, a company’s board would be making a statement to society to the effect that, “We understand that we have a license to operate, and this is granted by the laws of the land. Every year we will report on how we meet all of our legal obligations.” In my view this would be a great starting point before we get into all the spin that has come to surround CSR.

We should stop producing CSR reports which highlight programs that are essentially part of corporate public relations exercises. A corporate externalities report should say: This is what we do as a business, how we do it, and this is where we meet every law of the land every day and everywhere we operate. And where we do not, this is what we are doing to improve our performance. And where we do not agree with certain laws, here is where we’re lobbying to change them or working with regulators and civil society to find a happy medium. It’s okay for companies to say that they’re lobbying against a law. If it is a legal effort, then be open about it. Some companies have been quite devious, as when some of the oil companies funded research to discredit the global warming argument.

Companies should be very clear, of course, both to shareholders and stakeholders. They should be clear about managing externalities, where social good is captured or destroyed. Appendices in their CORE report could detail how those externalities are managed on an operating level. They could also explain how and why, from their standpoint, a law is unfair, making an argument for their case and being as transparent as possible about where they stand. That for me is the hallmark of a modern company.

What if companies operate in places where they can pollute with impunity and without violating local laws?

There are very few places where companies can do that. Most countries have anti-pollution laws. Follow them, even if you can get with away without doing so because of weak enforcement or rampant corruption. When did a company last ask its shareholders whether it’s okay to destroy the estuarial ecology in a country by dumping tons of mercury into its river systems? Most shareholders have no knowledge of how companies operate. Many—I’d say most—wouldn’t stand for it. And chances are, nowadays, some of them will find out if there are violations. It’s not like the 1950s, when you could operate in Papua New Guinea, say, without threat of disclosure. A Papuan can now take a photo on a mobile phone and have it on the internet within hours.

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