Uday Salunkhe - Emerging Competitiveness Paradigms

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CONFERENCE THEME:

Emerging Competitiveness Paradigms

TITLE:

India’s Competitiveness Edge - A Study of the Role of

Corporate Social Responsibility ________________________________________

Author Details: Prof. Dr. Uday Salunkhe Director

Welingkar Institute of Management

L.N. Road, Matunga (E), Mumbai – 400019

Tel.Nos: 022 – 2417 8300 Extn: 705

Email Id: [email protected]

Prof. Ms. Ketna L Mehta Editor & Associate Dean, Research

Welingkar Institute of Management

L.N. Road, Matunga (E), Mumbai – 400019

Tel.Nos: 022 – 2417 8300 Extn: 705

® - 022 – 2407 1952

Email Id: [email protected] /

[email protected]

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India’s Competitiveness Edge - A Study of the Role of Corporate Social Responsibility

ABSTRACT The theme of corporate social action assumes pivotal significance in the world wide debate on

sustainable development. Modern corporation exert considerable influence on the economy,

polity & society of the nation. The world over increasingly, there is an evidence of extraordinary

economic power exercised by mega corporations, their impact being more severe in the case of

developing countries. As more of the developing countries in the world opted for a democratic

framework, the issues of economic & social governance became very important; these subsume

issues like human rights, labour standards, health care and poverty among others. Secondly the

competitiveness index in India is very low due to the existing social problems & there is a need

for companies to join in to raise the competitiveness level of the country.

The paper firstly examines the trends in the area of CSR over the years from cheque

philanthropy to community projects to corporate governance. Continues by providing an insight

in the space of CSR in India and highlights the research done on the initiatives undertaken by

different companies in this regard. It also includes a detailed study of the current CSR policies &

initiatives of one of India’s pioneering companies in this field, Tata Steel.

The paper concludes with a few thoughts on what is the future & the need of the hour i.e.

a tripartite action on part of government, public enterprises and the corporate sector to face the

challenges put forth by the changing economy.

Lastly the focus is on the proposal of building a CSR Index for India which will help

improve corporate responsibility by providing a systematic process that compares companies’

management processes and performance with those of others in their sector. It would provide a

benchmark for companies who are committed to managing, measuring and reporting their

impact on society. It will also help companies who want to venture into a certain area of CSR to

know how much work has been done there and what has been their experience.

Research Assistance: Altaf Patel and Ramit Munshaw are Welingkar students pursuing

PGDBM (Year 2005 – 07)

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CORPORATE SOCIAL RESPONSIBILITY: The role of business in society has been debated in economic literature for a long time. By the

term ‘Corporate Social Responsibility’ (CSR), what is generally understood is that business has

an obligation to society that extends beyond its narrow obligation to its owners or shareholders.

This idea has been discussed throughout the twentieth century, but it was Howard R. Bowen’s

book on “Social Responsibilities of Businessman” published in 1953, which was the origin of the

modern debate on the subject. Bowen reasoned that there would be general social and

economic benefits that would accrue to society, if business recognized broader social goals in

its decisions.

Corporate Social Responsibility is nothing but what an organization does to positively influence

the society in which it exists. It could take the form of community relationship, volunteer

assistance programmes, healthcare initiatives, special education / training programmes and

scholarships, preservation of cultural heritage and beautification of cities. The philosophy is,

basically to give back to the society, what it (business) has taken from it, in the course of its

quest for creation of wealth. Social responsibility becomes an integral part of the wealth creation

process - which if managed properly should enhance the competitiveness of business and

maximize the value of wealth creation to society.

The World Business Council for Sustainable Development in its publication "Making Good

Business Sense" by Lord Holme and Richard Watts used the following definition. "Corporate Social Responsibility is the continuing commitment by business to behave ethically

and contribute to economic development while improving the quality of life of the workforce and

their families as well as of the local community and society at large."

Another definition is "CSR is about capacity building for sustainable livelihoods. It respects

cultural differences and finds the business opportunities in building the skills of employees, the

community and the government."

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CORPORATE SOCIAL RESPONSIBILITY – A BROADER PERSPECTIVE Since 1990, a number of developments such as increasing democratization of governments,

creation of newer social and economic institutions, rapid growth of volunteerism in the form of

non-profit organizations, increasing consumer awareness, focus on the need for reducing

poverty, dealing with the human rights issues, among others have reinforced the need to

articulate policies and actions to incorporate responsiveness.

CSR is concerned with treating the stakeholders of the firm ethically or in a socially responsible

manner. The aim of social responsibility is to create higher standards of living, while preserving

the profitability of the corporation. (Michael Hopkins 1998)

Expected outcomes of social responsibility are: improved financial performance, increased

customer loyalty, higher ability to attract to attract and retain employees, reduced regulatory

oversight, workforce diversity, product safety and decreased liability, employee volunteer

programmes, and greater use of renewable resources.

Simon Zadek (2001) describes the development of CSR broadly in terms of three generations: The 1st generation of CSR showed that companies can be responsible in ways that do not

detract from commercial success. The most prominent changes include adoption of strategic

approach to philanthropy, expansion of the geographic focus of corporate, and evolving of

measurement tools.

The 2nd generation is focusing on CSR as an integral part of long term business strategy

The 3rd generation of CSR is expected to make a significant contribution to address issues

such as poverty, exclusion and environmental degradation. This will involve both

partnerships with civil society and changes in public policy.

Today we find that as more and more industries are setting up their factories, they are

encroaching on the land which belonged to the community residing there, and therefore through

their activities they end up affecting the existing lifestyles of the community members.

For maintaining cordial relations between the members of the community and the organization it

is essential for the organization to depict a fair behavior and must give back to the community

through various community related initiatives. This strategic move is of mutual benefit and is

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critical for the success of the organization as it can gain a competitive advantage as it is seen as

an organization which is concerned for the people and all its stakeholders.

To illustrate the convergence between the community and the corporation the use of the

‘The London Group Benchmarking Model’ is valuable. The LBG seeks to develop and

expand the reporting of company activities in the community so that they are more

transparent and can be judged by the impact they achieve.

Philanthropy: Intermittent support; wide range of causes; in response to needs and appeals of charitable and community organizations; in partnership between companies, employees, customers and suppliers.

Social Investment: Long-term and strategic involvement in community partnerships; limited range of social issues chosen by the company; to protect long-term corporate interest and to enhance its reputation.

Commercial Initiatives in the Community: Activities in the community led by commercial departments; directly support company success, brands and other policies; in partnership with NGOs

Business Basics: Core business activities; meeting society’s needs for cost-effective goods and services; in a manner that is ethical, socially and environmentally responsible.

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‘The London Group Benchmarking Model’ The Philanthropic component: This is typically what all companies, including Indian

companies do. The distinctiveness of this component is that it satisfies the lowest level need

of the organization i.e. it provides a reputation of being a ‘caring company’. Here companies

not only make donations of money or kind but also employee volunteering.

The Social Investment component: Here the company looks at a more systematic and

strategic activities with its community involvement with a view of attaining business benefits in

the medium term. Such activities are typically aimed at communities, but at times both

employees as well as their families can be the beneficiaries.

The Commercial Initiatives: Here while addressing social issues the company is also

focusing on the commercial benefits it can derive from the activity undertaken. Typical

examples include Cause-related marketing or event sponsorship.

Triple-bottom-line’. The company studies the impact of its activities on the society and planet

i.e. societal and environmental returns, apart from the financial returns.

The relative sizes of the components are meant to reflect the impact of that activity on the

community. Hence here we see that ‘business ethics’ impacts the society more than the

‘philanthropic’ activities.

This model is very useful as it is a good representation of the strategic community involvement,

the business links with the community and the stakes emerging from the accountability, ethical

and management perspectives.

In India we have not yet witnessed significant development in these fields but steps are being

taken towards addressing the rights of communities across the business landscape.

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CORPORATE SOCIAL RESPONSIBILITY - TODAY CSR can affect a variety of stockholders, including customers, employees & their families,

investors, local communities, environmental groups, government, suppliers & competitors.

Accordingly, CSR involves a wide range of practices in the area human rights, employee

relations, diversity, consumer protection, environmental protection, fiscal responsibility &

accountability, market practices & philanthropy.

Indian MNC’s like the, ITC, Ranbaxy & DuPont India, have endeavored to create a better social

order. What is significant with these companies is that they initiated the process of CSR from

their doorstep by providing a better & healthy work atmosphere to their employees.

Part of the wealth created should be made available for the benefit of the nation.

In creation of wealth, care must be taken to not only protect the environment but also enhance

it so that this world, which we have borrowed from our children, is left in better shape for them.

Leadership in business is living by these ideals and leading by example.

In today’s world, the only constant is change. Leaders must anticipate change, drive it, make

acceptable to all stake holders, and turn threats into opportunities through their vision & their

actions.

People argue that there must be legal provisions for CSR, just like the concept of corporate

governance in structuring the board of a company. It is seen that the company name

independent directors in their board of directors as a statutory requirement. The very notion &

goal of protecting shareholders’ interest is defeated as in many companies independent

directors are “friends” of promoters and act as rubber stamps. The point of submission here is

not to formalize CSR in a legal boundary. Let it come from within the company, let it evolve as a

company’s philosophy, something attached to the company’s brand…and let society be the

judge of its sincerity of purpose and honesty of action.

A survey by the Capital Care of the London business community points out “Over three quarters

of the business here agree that organizations should do more than the law requires on

environmental concerns & over half think that they should do so on social objectives.”

Of course, all companies must conform to the basic legal requirements pertaining to CSR, such

as environmental norms, labour welfare requirements, and advertising laws. But they must

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55strive beyond the legal requirements. Here I would like to cite the example of DuPont’s India

Safety Standards where all employees have a prescribed code of conduct – something beyond

the legal requirement.

There must be a set of ethical & moral values to guide all business processes at the workplace

as well as the market place. In the words of Kofi Annan, U.N. Secretary General: “We have to

choose between a global market driven only by calculations of short term profit, and one which

has a human face……Between a selfish free-for-all in which we ignore the fate of the losers,

and a future in which the strong and successful accept their responsibilities, showing global

vision & leadership”.

CORPORATE SOCIAL RESPONSIBILITY - GROWTH OVER THE YEARS: In India, the term CSR might be new but the concept is not. It has been there since the earliest

times, going back to an age where society itself was in its formative stages. It has incorporated

in the various religious laws where a part of one’s earnings are donated for the benefit of the

poor and community welfare. The Hindus call it ‘Dharmmada’, the Muslims ‘Zakatah’, the Sikhs

‘Dashant’; call it by whatever name you will, the concept has been imbibed in the society from

the very beginning. As individuals joined hands to form organizations, the same concept

became embedded in the originations.

Gandhi’s philosophy of trusteeship is similar to the CSR of the modern business world; the

Gandhian notion of trusteeship has been followed by the Tatas and Birlas ever since their

inception.

Jamshedji Tata with his vision to create the Indian Iron & Steel Industry transformed an

unknown village ‘Sakchi’, later named as ‘Jamshedpur’ into a model town of planning &

community care.

The National Dairy Development Board (NDDB) has transformed huge areas in Indian

villages by empowering producers & creating a manufacturing outlet for their produce. Dr.

Kurien’s AMUL-led Operation Flood was the forerunner of this initiative, which has spread to

many states & similar operations.

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The Tata’s under the chairmanship of S.P.Kotwal conducted a social audit, the aim of which

was to find out areas where Tata was not able to discharge its responsibility towards society.

The reason for all this hectic society is not far to seek. CSR adds value to the social

environment, the work environment, and ultimately to the company. According to a report, nine

of the top ten Forbes 500 firms have something in common besides success: CSR

programmes. Corporate philosophy is undergoing a change, from “Profit making” to

“value creation”- something far more enduring.

‘Operation Muskan’, this Smile Train project was flagged off in October by Tata Steel Rural

Development society (TSRDS) - Tata Steel’s NGO community service arm. The TSRDS

realized the urgent need for this form of reconstructive surgery at various health camps. At one

week long camp in Ghatshils, doctors treated 108 cleft palate cases; in Deoghar, 149 people

requested for the surgery.

While India Inc. still calculates the plusses & minuses of good corporate conduct, corporate

social responsibility for the Tatas & Birlas is an old tradition. The Tata Group invested more than

150 crore on the social sector in 2002, the A.V. Birla Group Rs. 57 crore, Reliance Rs. 30 crore,

& Infosys Rs. 5 crore. Tata Steel set aside as much as 12-14% of its profit after tax (PAT for

2003-04 is Rs. 1746.22 crore) for welfare activities.

The Infosys Foundation supports disadvantaged people directly or through organizations. The

foundation prefers to work through smaller organizations & donates in kind father than in cash.

For instance, recently gave books in Kannada worth Rs. 10,000 to a village library, so that it

could help strengthen the local language.

The middle class founders of the mega-successful Infosys believe that wealth must be equitably

distributed “Unless you create wealth by legal means, you cannot distribute it. And without the

two, you don’t have progress” says N. R. Narayanmurthy of this celebrated & brilliantly

successful IT company. “Putting public good ahead of private good in every decision you

make, will in fact, result in reaching the private good.”

To distribute its substantial wealth & formalize its social support initiatives Narayanmurthy & his

wife Sudha set up the Infosys Foundation in March 1997 which receives 1% of the

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company’s after tax profit. All financial assistance to the needy is given in the form of rule-

based distribution of money.

In the field of education, the foundation has instituted 26 scholarships for Ph.D scholars in 13

prestigious institutions. It has also anchored the ‘train & trainee program’ in which computer

science students form engineering colleges are exposed to the latest IT trends. The foundation

has also played an important role in setting up science centers & libraries and to date, 1001

libraries have been inaugurated with assistance from this foundation.

The Infosys Foundation is committed to giving 30% of its funds to old people, the

destitute & the handicapped, 15% for rural development, 30% for education of poor but

talented children, 15% for cultural activities & 10% for health care, both in village and in

cities.

Dr. Irani propounded five basic tenets of CSR at the 27th annual meet of the US-India business

council meeting: “The aim of the industry should not be to make money. The aim should be to

serve customers & other stake holders and the result would surely be more money. And

pursuing excellence would enable it to create even more wealth”. Companies are increasingly

required to apply corporate social responsibility by balancing the economic, social &

environmental dimensions of their operation whilst building shareholder value. Corporate

Governance is about promoting corporate fairness, transparency & accountability.

Companies used to see this area of corporate social philanthropy as the last thing on their

agenda ten years ago, but now they agree that social & economic issues are intertwined.

Corporate philanthropy - or corporate social responsibility – is becoming an ever more important

field for business. Today’s companies ought to invest in corporate social responsibility as a part

of their business strategy to become competitive. Corporate success depends on the local

environment: an appropriate infrastructure, the right types & quality of education to future &

current employees, cooperation with local suppliers, quality of institutions, local legislation & so

on. In this corporate competitive context, the company’s social initiatives can have great impact

no only for the company but also for the local community.

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CSR BUDGETS OF SOME OF THE TOP COMPANIES IN INDIA

Sr. No.

Name of the company Total Funds Deployed on CSR Last Year (2004-05)

1. ABB Ltd. Rs. 0.9 crores

2. Amway India Enterprises Rs. 0.45 crores

3. British Gas Rs. 1 crore

4. Hindustan Lever Ltd Rs. 24.6 crores

5. Infosys Technologies Ltd. Rs.18 crores (1.5% of PAT)

6. Jankidas Bajaj Gramvikas Sanstha (Bajaj) Rs. 0.45 crores

7. Tata Steel Rs. 189 crores

8. Tata Sons Rs. 144.9 crores

9. Titan Rs. 1.75 crores

10. Wipro Corporation Rs. 0.3 crores

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TATA STEEL – THE PIONEERS IN CORPORATE SOCIAL RESPONSIBILITY Organizational Profile

Organization type: MNC

Number of employees: 39,646

Areas of operation: Mainly in Jharkhand & Orissa

Gender Balance: (M: F): Non officers m/f ratio: 20:1

Officers m/f ratio: 14:1

Products: Steel products from wire rods, cold rolled

sheets, blooms, slabs, bearings, agricultural

implements & minerals etc.

Gross income/Turnover FY 2004-05: Rs. 16,663 crores

Net Profit FY 2004-05: Rs. 3604 crores

Total Funds deployed for CSR: Rs. 189 crores

Main Stakeholders: Shareholders/investors

Customers

Employees

CSR Interface / Responsibility Tata Steel relates itself to CSR as a service provider.

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CSR Affiliations Tata Steel is a signatory or member of:

United Nations Global Compact

Global Reporting Initiative

CII-UNDP

Global Business Coalition for HIV/AIDS

CII SDCA National Committee

STOP TB India Business Alliance

SA 8000

THE Mining Geological & Metallurgical Institute of India

CSR Policies Founder & Group Chairman first articulated Tata Steel’s explicit CSR policy in 1904. It was later

formalized as various policies from 1980 onwards. It is monitored & enforced through the Tata

Business Excellence Model.

Tata Steel has an entire organizational structure to enforce/monitor the policy. Formal

departments & divisions (Environment & safety, Public Health, Medical Services, Social

services, & family initiatives, community development & social welfare, ethics, HR & IR) are

responsible for CSR reports to the managing director through deputy managing director

corporate services & deputy managing director steel. Deputy managing director corporate

services is also a Tata Steel Board member.

The company claims to have lined compensation of the board members & senior management to sustainability performance:

1. Anti-corruption or bribery Tata Steel covers concerns of bribery through the Tata Code Of Conduct (COC), which has

specific clauses on Gifts & Donation & Conflict of Interest. Moreover, it has an explicit Gift

Policy, which is step towards abating rivalry. The Tata COC was implemented in 1998-1999,

Gift Policy on 1st January 2005. The company has an ethics structure, with ethics counselor

(Ombudsperson) and departmental ethics coordinators for enforcing & monitoring

complaints of COC. The Ethics Counselor has been implemented since 1997-1998.

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2. Antidiscrimination or rivalry While recruiting also its press advertisements always specify, “We are an equal opportunity

employer. Women candidates are encouraged to apply.” The company appoints fresh

professionals from reputed campuses that have an all India selection pattern. This ensures

diversity amongst its employees.

3. Grievance Redressal For any complaint, the employees can approach the ethics counselor. There is an individual

grievance handling procedure, which handles any deviation from the standardized rule. An

IT based grievance handling procedure called “Samadhan” is also in place.

Issues relating to any biases & unfairness can reported to the ethics counselor who reports

to the managing director. A “whistle blower committee” ensures to maintain confidentiality of

the employees making complaints in this regard. A service rule & standing order laid down

the procedure and policies of the company by which all employees are guided. Any

deviation from this is dealt by the management. Grievance handling procedure is in place

since 1920s.

4. Transparency or disclosure Tata Steel provides access to company’s policies through its website.

5. Corporate Governance Tata Steel complies with the requirements under clause 49 of the listing agreements entered

into the stock exchanges of India. It also discloses compensation required by the Board

members/Senior management.

6. Environmental Management

Tata Steel’s environmental policy has been implemented since 1994 and

monitored/enforced through environment management system which also provides for a

known complaints procedure.

7. Human Rights

Tata Steel does not have an exclusive human rights policy, however the social

accountability policy is keeping with the principle of SA 8000. Standard includes

commitment to conventions such as Universal Declaration of Human Rights, Rights of Child

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& ILO. This has been implemented since December 2003, monitored/enforced through the

SA8000 MR System, with a known complaints procedure.

CSR Practice (Internal): 1. Employee Benefits

Tata Steel seeks to create a world class development environment through processes such

as performance management, talent review, recruitment through skills assessment,

succession planning & leadership development etc. Training & development plans are in

place across the organization for worker & officer cadres. The ISO 9000, ISO14001, and

OHSAS 18001 certification have clauses taking care of employee welfare.

2. Gender The HR Policy is committed to equal employment opportunity. About 3.5% of the senior

management executives are women. There are no women executives in board level. As per

statutory norms all women employees are provided the facility of maternity leave & crèche.

The facility provided are more than what has specified in the act.

3. Employee Union

Tata Steel allows for the unionization of the employees. There are in all ten unions across all

locations with which the management interacts. Interaction takes place through joint

departmental council & joint consultative of management having equal representation from

both management & union.

4. Environment & Safety Tata Steel has a formal environment policy in place. It provides internal environment

awareness trainings and health & safety. The company does not have a zero emission

policy, but endorses to complaints with regulations and going beyond it as per its

environmental policy. 100% of its production is recyclable & therefore environment friendly.

5. Products & services

Tata Steel’s products are used by all sections of the society including the weaker ones. The

company has products & services extended to rural areas as well.

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6. Suppliers Screening The company does not screen its suppliers on suitability parameters. However it has started

capturing details against some parameters for each supplier.

CSR Practice (External)

1. Social/Community/Charitable contributions Tata Steel’s top 5 community development projects in terms of priority:

Issue Supporting since

Integrated Rural Development 1979

Reproductive Health 1957

Education & Vocational Training for

Marginalized Communities

1980

HIV/AIDS Prevention 1990

Sport’s Training 1990

Relief during Natural Calamities 1974

2. Infrastructure Development

Year Project Location

Year 1995 onwards Rural Road (300 kms

approx), school (312

assisted, 171 early child

education centers).

Irrigation projects, check

dams (86 allied projects,

190 water harvesting

structures) Houses after

natural calamities.

Bihar, Jharkhand, Orissa,

Gujarat, Tsunami victims

etc.

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3. CSR Socio-Economic Impact Social Audits survey is conducted once in every ten years by eminent panel of independent

judges. Report on the survey conducted last year is awaited.

CSR & Media Tata Steel believes that publicizing its CSR activities can be an effective way of raising

standards in its sector, mobilizing public opinion in favour of CSR, and boosting the company’s

profile. Tata Steel’s efforts for promotion of CSR through CII has motivated new company’s to

adopt CSR policies and initiatives.

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RESEARCH UNDERTAKEN - INITIATIVES TAKEN BY OTHER CORPORATE:

Company Domain Project (s) Partner (s) Special Features

Allianz Bajaj Life Insurance

Sustainable Finance

Micro Insurance

Allianz Bajaj has launched a “Invest Gain”, a life insurance plan where sustenance of income is combined with a lumpsum payment. The plan offers a monthly family income benefit (1% of the sum assured) guaranteed for a minimum period of 10 years. This allows the family to cope with loss of regular income

Ambattur Clothing

CSR CSR (Internal)

The company has been pioneering concepts of employee welfare, human rights & adhering to anti child laws. It is a FLA (Fair Labour Association) compliant and its facilities are WRAP (Worldwide Responsible Apparel Production) certified. Employees benefit from a wide range of facilities including a child care centre, a primary health clinic, subsidized/free vacancies & free transport.

America Intnl Group

Micro Finance

Micro Insurance

Self Help Groups

AIG has a joint venture TATA Group for its insurance business in India. TATA AIG sells micro insurance to the rural poor by leveraging existing distribution networks. It uses SHGs (Self Help Groups) and community enterprises as low-cost delivery and servicing channels which also help in creating livelihood for the poor.

Asian Paints

Water Management

Rainwater Harvesting

Glen Croft The company has implemented a rainwater harvesting project at Glen Croft housing society in Mumbai. The society has benefited by reducing its fresh water intake from the BMC (Brihanmumbai Municipal Corporation). The residents are not required to order water tankers during water shortages. This has also reduced the health hazard of residents from contaminated tank water during seasons.

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Bajaj Auto Basic issues NGOs The company supports

environment, health, education & rural development initiatives through the Janki Devi Bajaj Gramvikas Sanstha. The trust oversees integrated development of 24 villages adjoining the locations of Bajaj Auto factories in Pune & Aurangabad. The activities include improvement of natural resources, increased productivity of land, empowerment of women, health, education, sanitation & income generation programmes.

BG India Education NGOs The company supports the local communities in which it operates. It is also involved in a number of educational & charitable development projects. The group has an integrated health, safety & environment (HS&E) management upstream for its international upstream & downstream businesses & conducts its businesses with due regard for environment, health & safety of employees, those involved in its operations & the public at large.

Bharti Yuva Shakti Trust (BYST)

Entrepreneurship

Business & Industry Associations

BYST develops entrepreneurs by providing people in the age group of 18-35, who are either unemployed or with loans against no collaterals. Business potentials from potential entrepreneurs are screened by an Entrepreneur Selection Panel (ESP) comprising experts from the industry in marketing, finance, management etc. On approval, BYST provides a range of business development services along with a mentor, who gives guidance until the venture takes off. Presently BYST is operational in Delhi, Chennai, rural Haryana, Pune, Hyderabad & rural Maharashtra. Out of these six regions, four regions run the urban program, while two regions run the rural program.

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Cadbury India

Women Women’s Empowerment & Female Infanticide

NGOs The company launched the ‘Gurikha Project’, close to its factory at Malanpur near Gwalior at Madhya Pradesh. The project’s key focus is on various aspects of women’s inequality, female infanticide & rights of a girl child. According to a survey (2003), the project has succeeded in giving a sense of direction & confidence to a large number of women of the area & a marked improvement has been noticed in the general well being of the girl child. Apart from this, the company is also working on issues like primary education, health & vetenary care, women’s income generation activities & strengthening of the village council. Under the income generation program nore than 10 SHGs with monthly savings ranging from Rs.20,000 to 50,000 are functional in the area. Besides this, Cadbury has also helped build a pre-school section to the village school building for the girl children & a set of classrooms in another village under the same panchayat.

Cadence Design Systems

NGO Partnership

CRY, Sai Kripa, Tapovan

Supports Child Relief & You (CRY) and its various projects across geographical locations. Supports two NGOs in its neighbourhood Sai Kripa & Tapovan.

Colgate Palmolive India

Health, Education

Oral Care Elementary Education

Pratham Movement

The IDA-Colgate initiative to educate school children on the basics of oral care has covered over 26 million children in more than 50,000 schools spanning 120 towns. Colgate partners with Pratham Movement on the issue of Universalisation of Elementary Education.

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Citigroup Marketing

Cause-related

FWWB, SPARC

Out of its cards business, Citigroup contributes some amount of earnings for community development. For instance each time a consumer uses her Citibank women’s card, Citibank contributes a percentage of its earnings to two NGO partners of the women’s micro credit programme- Society for Promotion of Area Resource Centers (SPARC) & Friends of Women World Banking (FWWB). Similarly collaborations are made with WWF & CRY on its other credit card types.

Charities Aid Foundation (CFA)

Cause-Related

CAF mainly focuses on primary education by providing better learning facilities to primary schools. It provides a one time grant to primary schools without basic needs such as toilets, drinking water, black boards, & a better learning environment. It also provides financial & technical support to increase the enrollment rate & decrease the drop out rate in some of the most backward states such as Bihar, Madhya Pradesh, Uttar Pradesh, Rajasthan & Orissa. Primary schools are identified by a Primary Group survey of facilities available with them.

Cummins India

Education, Environment

Cummins India Foundation (CIF)

CIF has undertaken various initiatives like ‘School on Wheels’ wherein they educate children and adults on cleanliness, environmental issues, education etc. They have also established the Cummins school of engineering for providing higher education to girls. Apart from this they have donated hearing aids to deaf people and established models for channeling water in areas troubled with water shortage.

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CRISIL Corporate

Governance Rating In order to evaluate the behavior of

corporates towards all of its stake holders, CRISIL has devised a tool called “Governance & Value Creation Rating.” It also measures the tangible value such behaviour creates for stake holders. By combining these two elements of corporate practices and the tangible output that gets generated as a result, Crisil seeks to directly link the input side parameters of government practices with the value created on the output side. For good measure both the governance and value creation are captured for all constituents that form the stakeholders community for the entity that is being rated.

Fabindia Education The FabIndia school in Rajasthan subsidizes tuition fees for girls and instills in them the competency to perform as well as their male counterparts. It also works to develop a sense of pride and belongingness in their local heritage and exposing them to issues of the larger world.

Forbes Marshall

Health, Education

Skills Development

The social initiatives of Forbes Marshall are located in three main geographical areas of Pune, mainly: Kasarwadi, Morwadi & Pimpri. These initiatives are in the areas of health and education, legal rights and awareness building for women and skill building for women so that they can earn an additional income.

Gokuldas Images

CSR CSR(internal) The company follows stringent international laws on human rights and child labour. Employees benefit from health insurance, pensions, bonuses, gratuity, paid sick leave and day care centers.

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GlaxoSmithKline (GSK) Consumer Healthcare

Basic Issues NGOs, Government

The company has partnered with NGOs, government organizations and the local communities and has started various initiatives in the areas of urban community development, rural development, disaster relief, workplace initiatives and medical fraternity initiatives. It regularly conducts health camps, provides cattle insurance, free supply of portable water and is engaged in rain water harvesting. It has also started a programme called ‘positive action’ to create awareness of HIV/AIDS and to support people suffering from the disease.

HDFC Sustainable Finance

Micro Finance HDFC operates as a wholesaler in micro-finance and weaker section housing while advancing the reconstruction activities in Gujarat.

Hindalco Industries

Poverty Alleviation

Integrated Rural Poverty Alleviation

The integrated rural poverty alleviation programme is initiated in Uttar Pradesh, Jharkhand, Chattisgarh and Dadar & Nagar Haveli among the most backward areas of India. The company has adopted 340 villages for poverty alleviation in a phased manner over a decade. In the 1st phase 71 villages have been zeroed in on where the focused projects will run for 3 years.

HSBC NGO Partnership

Education 40 NGOs in 18 cities

Support those organizations which concentrate on primary and secondary schooling of the underprivileged, impart informal learning to foster an understanding of hygiene, health & nutrition and help children who are mentally and physically handicapped.

ICICI Lombard General Insurance

Sustainability Micro Insurance

The company offers rainfall insurance schemes tailored to provide protection against deficient/excess rainfall and low temperatures to farmers not covered by government’s crop insurance schemes.

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ICICI Prudential Life Insurance

Sustainable Finance

Micro Insurance

ICICI Prudential offers insurance protect to low income members through schemes like MITR and Suraksha

IOCL Culture Heritage Sites ASI and NCF

Created a non-profit trust name The Indian Oil Foundation (IOF). The objective of their initiatives is to protect, preserve and promote India’s national heritage and culture and built a corpus of Rs. 25crores and an annual recurring contribution of Rs. 10crores.

Jet Airways Fund Raising ‘Magic Box’ Save the Children

Runs an in-flight collection programme, the ‘Magic Box’ in association with the NGO Save the Children India. The initiative contributed above Rs. 25million till end April 2002. This fund has been used in the development activities at Kargil in Kashmir, improvement of education & health care facilities in quake affected Osmanabad district in Maharashtra, and in the fight against trafficking of women & child prostitution in the Indian sub continent.

Kanoria Chemicals & Industries

Basic Issues NGOs Community Services: Contributions to various schools & medical relief camps, tree plantation schemes, safety, health & environment groups & disaster management centers. Social Development Schemes: educational programmes, health & medical programmes, cultural, games & sports programmes. Agricultural & Environmental Schemes: fruit tree plantation programmes, distribution of free saplings, vegetable cultivation programmes & water resource development. Self Employment Schemes: execution of training programmes for tailoring, basket making & sealing wax farming, amongst others.

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Lupin Rural Welfare Lupin

Human Welfare & Research Foundation

Lupin’s community involvement is carried out through the Lupin Human Welfare & Research Foundation. The foundation’s rural construction activity, till date, has been said to have benefited over 1900 villages in 11 districts of 4 Indian states covering nearly 1.45 million people, in areas of infrastructure, rural industry, agriculture, animal husbandry, health & sanitation & education & social welfare.

Mahindra & Mahindra

Education K C Mahindra Educational Trust

K C Mahindra educational trust is involved in & contributes to various education initiatives. These are: Providing interest free loan scholarships to post graduate students going abroad for higher studies. Mahindra Search for Talent Scholarships in schools in India to encourage & reward students who have achieved academic excellence. KC Mahindra Chair at the Institute of Science, Mumbai, to encourage students in nuclear chemistry.

Nokia India Environment Employee volunteering for social services

Helping Hand Packaging of all Nokia phones is done from recycled paper. With every handset clear instructions are provided for correct disposal of used batteries. Keeping in line with their international programme of employee volunteering called ‘Helping Hand’, Nokia India is involved with NGOs working with disabled children in Delhi. Nokia’s employees provide support in terms of help & training in accounts, human resources, IT, working with children & other activities.

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Nestle Basic Issues NGOs Supports various community

projects in education, health, welfare & infrastructure around its factories. In Moga, Punjab, the company established milk collection centres with cooling tanks, milking machines & providing farmers with training in breeding & feeding practices to increase the yield of their herd. This has helped improve the quality of milk produced in the region, which in turn helped local farmers increase their income. The company has facilitated various initiatives to provide clean drinking water for students of local schools around its factories & also organizes projects with the Indian red cross, which include blood bank services, immunization & health awareness.

Panalpina World Transport (India) Pvt Ltd.

Children Literacy Charity Aid Foundation

It runs a computer literacy programme for the underprivileged in the Pahar ganj area of New Delhi. It works in partnership with charity aid foundation & Salam Balak Trust. Under this programme the company teaches 25 children in three batches. The company also helps other charities & NGOs by buying Christmas cards from CRY, UNICEF, Helpage India, & crafts from visually & Physically Handicapped people.

Philips India

Strategy CSR Philips India has rolled out its supplier declaration on sustainability in 2003. It outlines minimum behavioural expectations in the areas of environment, health & safety & labour conditions. Social audits of suppliers are carried out by a social responsibility agency & quaterly reports are submitted to Philips global headquarters. This data is subject to external audits as well.

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Pizza Corner India

Under-privileged Children

Food for Good A part of the profits of every pizza sold at pizza corner goes to a fund called ‘Food for Good’ which is meant to benefit lesser privileged children. Beneficiaries of the programme include 20 street children in Bangalore who receive term deposits by the company. These term deposits will fund the higher education of these children who will then complete 10th grade & age 18.

Polaris Software Lab

Education Education-Financial Support

Akanksha, Pratham Movement

Setup the Ulhas trust to help & support the education of economically backward children through scholarships of Rs. 1500 which takes care of their annual educational expenses. Career counseling and training sessions also happen throughout the year to mentor the progress of these children. About 1500 students were awarded in 2003.

Star TV Awareness- Social Issues

Public Service Announcements & Children related

Children Runs public services announcements on a range of social, health & environmental issues such as child labour, polio, AIDS, pollution & conservation. These announcements have been effective in disseminating information. Donations from the Star Care Payroll programme go to two registered charities working on children’s primary education- Akanksha & Pratham Movement.

Tata Consultancy Services

Education Support & Improvement of Adult Literacy Programme

Central & State Government

Set up the Audit literacy programme (ALP) to help the Indian Government eradicate illiteracy. The ELP uses the Computer Based Functional Literacy (CBFL) model, an innovative teaching method designed by TCS, where the instructor uses multimedia software to teach the adults to read. Adult illiterates can learn to read after 40 hours of instruction of over 8 to 10 weeks.

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Tetrapak Health School Milk Programme

The idea behind School Milk Programme (SMP) is to deliver tasty, nutritious and safe milk using Aseptic Technology. The SMP is designed for addressing health & nutrition needs school going children. The programme encourages milk consumption amongst children. It also focuses on actions that would contribute to the educational & overall development of the children.

Titan Industries

Women Empowerment of women in Dharampuri

Myrada Titan are looking at avenues to enhance the standard of living of women in Dharampuri village & those near Hosur in Karnataka. Titan started by getting the women to make chappatis for the factory workers. Later, they were asked to take care of the Laundry. In 1995, Titan joined hands with Myrada, an NGO that works on social causes & started a bracelet making unit. Satisfied with the professionalism displayed by these women, Titan then decided to convert the bracelet unit into a privately held company called Meadow, owned & run by the women themselves. Today, about 200 women own meadow.

Wockhardt Health HIV/AIDS WHARF Wockhardt had established WHARF (Wockhardt HIV/AIDS Education & Research Foundation) an NGO, with the help of Harvard medical international, a Harvard university affiliate to control the spread of HIV/AIDS in India. WHARF provides training to clinicians, nurses, paramedics & counselors in areas of HIV/AIDS.

Yes Bank Sustainable finance

Project financing

USAID With support from USAID, Yes Bank has increased financing of small & medium enterprises for energy efficiency. The aim is to commercialize renewable energy, energy efficiency & water technologies related products & services. The U.S. guarantee covers upto 50% new principal loss

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in case of default. This lowers the risk for YES Bank to invest in small & medium scale enterprises.

Just to give a broad idea of the areas in which Indian companies are practicing their CSR

activities, a small graph has been made showing the areas of concentration & the

number of companies (from the above stated) who are working for it.

0

5

10

15

20

25

30

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LC CV EW RD EM H & E NGO CG W & C R HIV/AIDS PIC

Number of Companies

LC Local community development

CV Customer Value through CSR

EW Employee Welfare

RD Rural Development

EM Environment Management

H & E Health & Education

NGO NGO Support

CG Corporate Governance

W & C R Women & Children’s Rights

HIV/AIDS HIV/AIDS awareness & rehabilitation

PIC Protecting Indian Culture

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THE FUTURE: The theme of corporate social action assumes pivotal significance in the world wide debate on

sustainable development. Modern corporation exert considerable influence on the economy,

polity & society of the nation. The world over increasingly, there is an evidence of extraordinary

economic power exercised by mega corporations, their impact being more severe in the case of

developing countries. As more of the developing countries in the world opted for a democratic

framework, the issues of economic & social governance became very important; these subsume

issues like human rights, labour standards, health care and poverty among others. There is

sufficient evidence to show that in many countries of the developing world governments have

not been able to provide investible resources for the social sector development, and further

where the government has been able to do so, they have not been able to create requisite

institutional framework for the implementation, monitoring and evaluation of such endeavours. It

is therefore recognized that developing countries need to create alternatives for social sector

development, and of the suggested routes for doing so is to develop viable & strategic public-

private partnership.

It is also increasingly acknowledged by the academics & the public policy makers that the

beginning of withdrawal by the state in many developing countries signifies the potential onset

of an era full of opportunities for developing public-private partnership. It is also because neither

the public nor the private sector alone can counter effectively the challenge of social sector

development. The government on its own cannot get involved any further in several sectors

simultaneously as it did in the last four decades in many countries. One of the biggest

challenges for governments in the developing countries like India is to create and nurture a

durable framework of institutions who will translate public policies into deliverables. India needs

a strong institutional framework for meeting the multiple objectives of economic growth and

development. The second requirement is the commitment of the top management of the public

enterprises and the corporate sector to move away from a mere philanthropy to corporate social

action. In the public enterprises, corporate social responsibility is practiced largely as per the

mandate of the controlling ministry and is based significantly on the basis of commercial

considerations such as displacement and rehabilitation of communities due to large scale site

development of newer projects. In the corporate sector also one of the primary drivers for the

introduction of corporate social responsibility is commercial such market access to rural

hinterland. However, what is needed is some commonality and continuity of themes for

sustainable development.

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There is a need for training and development of a large pool of voluntary sector personnel and

co-operatives so that they can get substantively involved; non-governmental organizations in

many cases have played an important role in initiating several innovative programmes and

activities in the social sector; however, a lot more is required to have them further involved in as

professional a manner as possible.

It is therefore, suggested that all the agencies and institutions including the multilateral

institutions assisting social sector development in India world re-look at the cumulative

experience of promoting corporate social action in as transparent and accountable manner as

possible. The public enterprises need to do more than the mandated corporate social

responsibility programmes and the corporate sector should aim at involving the multiple

stakeholders. The larger issues and long run ramifications of public policy on corporate social

action for stakeholders and society need to be integrated into a coherent plan of action in the

future. There has been a lot of debate on the impact of the 73rd and 74th amendments to the

Constitution of India; one of the disturbing aspects of the debate is the uneven and tardy

progress in respect of several schemes of public welfare due largely to such issues as

corruption and deficiencies in institutional infrastructure. Therefore, there is an urgent need for a

tripartite action on part of government, public enterprises and the corporate sector. There is

fortunately no dearth of talented opinion makers and social activists but they need to be

harnessed and put in place to create a suitable platform such that the movement for

internalizing and institutionalizing corporate social responsibility becomes a durable one.

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THE CORPORATE SOCIAL RESPONSIBILITY INDEX FOR INDIA: At this point of time there is no authoritative, voluntary, CSR (corporate social responsibility)

initiative that is business-led and engages with companies from all sectors, publicly ranking their

CSR activity, whilst consolidating information demands made on companies. Thus what is

required is a Corporate Social Responsibility Index which would help meet this need in India.

The Index will help improve corporate responsibility by providing a systematic process that

compares companies’ management processes and performance with those of others in their

sector. It would provide a benchmark for companies who are committed to managing,

measuring and reporting their impact on society. The Index would be based on a framework of

four components shown in the following model:

The Corporate Strategy section looks at how the nature of a business’ activities influence its

company values, how these tie into strategy and how they are addressed through risk

management, development of policies and responsibilities held at a senior level in the company.

The Integration section looks at how companies organize, manage and integrate corporate

responsibility throughout the operations. Is it part and parcel of the company culture? Is it

integrated into the strategic decision-making processes of the company and linked through into

internal governance and risk management systems?

Corporate Strategy

Integration Management Performance

& Impact

Community Environment Marketplace Workplace

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The integration is assessed through the Management section where the processes for

managing different stakeholder relationships are reviewed. This section looks at what the key

issues are for the business in the Community, Environment, Marketplace and Workplace, the

objectives and targets set to manage these issues and how it communicates, implements and

monitors its policies, objectives and targets.

Community relates to the interface between business and society that can be both positively

and negatively affected by a project, product or investment on a local or global level.

The Environment comprises the world’s ecosystems and natural resources and is affected

directly and indirectly by a company’s operation, products and services. Being responsible

means safeguarding both the systems and resources for future generations.

Responsibility in the Workplace is the creation of a working environment where personal and

employment rights are upheld.

Responsibility in the Marketplace is maintaining the highest standards of business practice

when developing, purchasing, selling and marketing products and services.

The Performance and Impact section looks at companies’ performance across a range of social

and environmental impact areas.

The Corporate Responsibility Index would be a strategic management tool to enhance the

capacity of businesses to develop, measure and communicate best practice in the field of

corporate social responsibility. It would do this through benchmarking corporate social

responsibility strategy and implementation process.

The Index would be created by the support of leading businesses in the country as well as

leading NGO’S who would be committed to continually improve their positive impact on society.

Every year more & more successful companies would be invited to participate in the Corporate

Responsibility Index by completing an online survey accessible via individual and secure

usernames and passwords.

Even though the Corporate Responsibility Index will be a self-assessment exercise a central

agency will have to monitor the whole process. This central agency will not be involved directly

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in the task of rating companies, but will act as the 'trustee' overseeing the integrity of the

process.

The implementation of the Corporate Social Responsibility Index

The Corporate Responsibility Index survey will be made available to companies once they have

registered to participate in the Index. The survey would be a web based electronic tool and

would also be password protected for each individual company.

Comprehensive guidance notes would also be provided with the survey in the form of separate

documents. These would provide definitions, and help notes to support the understanding of

why a particular aspect is important and how this may be applied within a business. Together

with the survey this would also provide a roadmap for integrating corporate responsibility within

the business.

The Corporate Responsibility Index would be a self-assessment process. Each submission

would have to be signed off at CEO or main board level to ensure director-level commitment to

the credibility of the responses.

A market research company like ORG-Marg would be required here to take up the responsibility

for the collection, analysis and aggregation of participant responses as well as add expertise to

the validation process; it will examine all responses for completeness and consistency. In

addition it will also be needed to meet with selected participants to check their understanding

and interpretation of the questions and seek further substantiation when necessary.

The robustness of the survey would be demonstrated by the ongoing consultation and

engagement with participants after their surveys are submitted. It is critical that participants

have understood and interpreted the survey correctly.

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HOW & WHAT WILL THE INDEX MEASURE: The Corporate Responsibility Index will measure responsible business practices through

evaluating four main areas:

The corporate responsibility strategy of the business How this strategy is implemented across the business

The management of corporate responsibility within the business

The performance in a range of social and environmental impact areas

Each Of The Four Components Of The Index Model Would Be Weighted As Follows:

Section 1: Corporate Strategy 20% of total score

Section 2: Integration 20% of total score

Section 3: Management 25% of total score Section 4: Performance and Impact 35% of total score

In addition each management section of Community, Environment, Marketplace and Workplace

would be equally weighted (5.625%).

Companies would be given credit for what they implement across their business and questions

within each section will again be generally equally weighted.

Once the validation process has been completed by market research company, the results will

be electronically generated by the survey databases.

To ensure the ongoing sustainability of the Index, a nominal fee for participating companies to

cover part of the validation cost will be charged at a later stage in the life of the index.

Publishing The Index Results of the index will have to be published in the leading publications for the index to gain

acceptance by more and more companies.

Participating companies will not be named until the results are published. It is at the company’s

own discretion should they wish to publicize their involvement on their own websites or if they

wish case studies of their corporate social responsibility practices to be reported in the

contacted newspapers.

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BENEFITS FOR THE COMPANIES: By completing the Corporate Responsibility Index, the company will be using a proven business

tool that enables you to most effectively incorporate best business practice through your

strategy and implementation processes across the whole organisation.

Completing the Corporate Responsibility Index will drive overall performance through enhanced

reputation, the retention and attraction of talented staff, lower costs through eco-efficiency and

building upon existing company profiles for investment purposes.

There will be a confidential individual feedback report which will provide companies with their

position- overall in the Index, in their sector, economic group and leading Indian businesses. It is

a powerful internal management tool helping to engage board members and raise awareness of

the complete range of corporate responsibility issues across the business whilst highlighting

areas of strength and weakness.

The Index will be an important external communications tool enabling companies to underwrite

the public statements that they make on responsible business practice. It is an important

communications tool during a time when stakeholders are becoming increasingly skeptical.

FUTURE OF THE INDEX & SUSTAINABILITY: The process will improve (less of a time constraint, etc) if this gets through the first cycle. With

enough goodwill and trust from the business community, the belief is that a foundation can be

established which will eventually see companies voluntarily coming forward to be a part of this

index.

However, for this to happen, the need is of business is to embrace the given opportunity. That is

why this is seen as being a collaborative process - in which the central agency will have to be as

flexible as possible in responding to the day-to-day needs of participating companies.

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REFERENCES: The London Group Benchmarking Model – Partners in Change Strategy Paper 2001-0; Pg42

Who’s Who in CSR in India – A Resource Guide – 2006

Harish Srivastava and Shankar Venkateshwaran, The Business of Social Responsibility,

Books for Change, Bangalore 2000 Harward Business Review – Articles on CSR

R. Aga: Embracing CSR – the saner alternative, Forum of Free Enterprise

Corporate Social Responsibility: Concepts, Practices and Country Experiences – C. V. Baxi

& Nazy Chadha Corporate Responsibility: Dipankar Gupta

Stakeholder Engagement: The Concept and Practice – Ravi Puranik & Viraf Mehta

CSR Debate in India: From Philanthropy to Public – Private – People Partnerships, Jagdish

Gulati Management Education and Value Based Curriculum – Ajit Prasad

The Role of Social and Societal Responsibility as a Core Value of the University and

Corporate Sectors – R. Natarajan Surveys: ACNielson 2005 Corporate Image Monitor results

http://www.acnielson.co.in/news.asp?newsID=144 The state of CSR, Partners in Change (PiC), Indian Market Research Bureau (IMRB) 2003 Centre for Social Markets (CSM). Corporate Social Responsibility – Perceptions of Indian Business

Websites: Centre for Social Markets

http://www.csmworld.org CSR World

http://www.csrworld.org Indian Chamber of Commerce Online

http://www.indianchamber.org

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Author’s Profile

Prof. Dr. Uday Salunke Director - Welingkar Institute of Management is a mechanical

engineer with a management degree in 'Operations', and a Doctorate in 'Turnaround Strategies'.

He has 12 years of experience in the corporate world including Mahindra & Mahindra, ISPL and

other companies before joining Welingkar in 1995 as faculty for Production Management.

Subsequently his inherent passion, commitment and dedication toward the institute led to his

appointment as Director in 2000. Dr. Salunkhe has been invited as visiting fellow at the Harvard

Business School, USA and European University, Germany. He has also delivered seminars at the

Asian Institute of Management, Manila and has been awarded "The Young Achievers Award-

2003" in the field of Academics by the Indo American Society recently.

Uday Salunkhe - Emerging Competitiveness Paradigms

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