Providing clean drinking water to impoverished communities in India adds nothing to his firm’s bottom line, said Ratan Tata, who heads Tata Sons. Ltd. and the Tata group of companies, India’s largest business conglomerate. But it does create the sort of goodwill that no corporate ad campaign could ever achieve.
Tata made the remarks at the inaugural Thomas J. Bata Lecture Series on Responsible Capitalism hosted by the Schulich School of Business last Friday at the Art Gallery of Ontario.
Right: Schulich School of Business Dean Dezsö Horváth (left) with Ratan Tata
The lecture series was established in 2008 with funding from the Bata Shoe Foundation to commemorate the late Thomas J. Bata, who built the Bata Shoe Organization into the world’s leading footwear retailer and manufacturer and became known as “shoemaker to the world”. The series honours the Bata family's strong belief that business is a public trust that should contribute to the well-being of the communities in which it operates.
“The inauguration of this important lecture series is a landmark occasion,” said Schulich Dean Dezsö Horváth. “But it is also a nostalgic one. Thomas J. Bata was a valued member of the Schulich community.” Bata served as the founding chair of the Dean’s International Advisory Council at Schulich until his death at the age of 93 in September 2008.
“The Schulich School and the Bata family share the same commitment to responsible business and the stakeholder model,” said Horváth. “Ratan Tata also shares these values. Through his dedicated efforts in the field, he has become the symbol of his companies’ commitment to sustainable business and responsible capitalism.”
Under Tata’s leadership, the Tata group of companies has earned a reputation for being a global leader in corporate social responsibility. “However you look at it, irresponsible business practices are a global problem,” said Tata. “When investors invest in short-term gains, they are perpetuating the problem. To be responsible, we must converge our objectives so ethics and values matter. If we did, the world would look much different.”
Left: Tata with Sonja Bata, founding chair of the Bata Shoe Museum
According to Tata, his company spends four per cent of its annual net profit on building infrastructure in the Indian communities in which they operate. Projects include running mobile medical facilities that offer treatment and services to people who otherwise could not afford it, as well as providing communities with proper nutrition and clean water. These initiatives instil “a sense of trust from the community and, in turn, from our customers,” said Tata.
His remarks were followed by a panel discussion that featured W. Edmund (Ed) Clark, president & CEO of TD Bank Financial Group; Jacques Lamarre, former president & CEO of SNC-Lavalin Group; and panel moderator, former deputy prime minister John Manley, president & CEO of the Canadian Council of Chief Executives.
Right: Tata delivers his master class
When it comes to corporate social responsibility, Clark said that the TD Bank Financial Group is guided by a simple philosophy: “What’s good for Canada is good for TD.” As evidence, he pointed to the fact that his firm advocated new federal policies that would tighten mortgage lending rules in order to prevent homebuyers from falling into financial difficulty when interest rates rise. “We must ask ourselves, ‘Is this good for society?’ Customers today will not choose to buy from irresponsible companies anymore,” said Clark. “You cannot run a good franchise without responsible capitalism.”
The panel discussion was followed by a question-and-answer session involving the audience.
In conjunction with the Bata Lecture Series, the Schulich School of Business announced its recent establishment of a new Centre of Excellence in Responsible Business. The centre will provide a focal point for research, teaching and outreach activities in the field.