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Finance - CSR and Sustainability Insights (Preview)


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Finance - CSR and Sustainability Insights

The Financials Sector contains companies involved in banking, thrifts & mortgage finance, specialized finance, consumer finance, asset management and custody banks, investment banking and brokerage and insurance.
This report looks at CSR and sustainability measures of 48 banks and finance companies in the context of
- Material issues
- Governance
- Disclosures
- Stakeholders
- Sustainability

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Published in: Economy & Finance
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Finance - CSR and Sustainability Insights (Preview)

  1. 1. 2 0 1 5 F I N A N C I A L S CSR and Sustainability Insights
  2. 2. Futurescape CSR and Sustainability INSIGHT 2 Preface Corporate India has seen in the last decade that the path towards growth is not linear. Constant expansion also means a constant hunt for resources invariably leading to a conflict between man and nature. There is a need to balance opportunity and responsibility. While good governance and far reaching policies are part of the answer, much more needs to be done to manage Risk, Responsibility and Reputation. The study series investigates CSR and sustainability in select industries in India. 1. We start the discussion on materiality – issues that have significant impact on CSR and sustainability in the industry. Sustainability reports are the primary communication tool for companies and we link materiality to outcome communicated though sustainability reports. We highlight the key materiality issues by linking the material issues to industry value chain. Each material item is then examined in detail and critical questions raised. We then compare key material issues across industries. 2. This is followed by a discussion of key elements of CSR and sustainability – governance, disclosure, stakeholders and sustainability. Having raised material issues we examine how the sector performs on these issues. Detailed insights follow on governance, disclosure, CSR and sustainability. A key feature of our study is an investigation of comparison of key industry sustainability parameters for the industry. India’s CSR rules list areas that companies can invest in for the purpose of mandatory CSR spend. We evaluate industry performance on these parameters. as well Data in this report is based on websites, annual reports and sustainability reports of companies in 13-14. as well as India’s top companies for CSR and Sustainability report 2015.
  3. 3. Futurescape CSR and Sustainability INSIGHT 3 In the 2 years since we started examining CSR and Sustainability initiatives of Indian companies we have found a positive movement towards integrating CSR and Sustainability into core business.  However, this is only true of the top companies. As we go down the Economic Times 500 list we find that firms in the lower half have not looked at these areas strategically and are just starting out on their responsibility journey. The   findings of this report should inspire companies to examine their own progress and identify where they stand on the path to creating a responsible future. Investors can examine where companies stand and how likely are they to gear up to the challenge of a world where risk, reputation and responsibility are increasingly interconnected. Business will need be part of the solution on issues like climate change, endemic poverty, obesity and so on. Smart companies are looking for ways to play expectations to their advantage, to find solutions to the challenge that are profitable. Leading businesses are exploring how to combine profit with creating a sustainable future. Business strategies that address this challenge at a profit will define the successful business of the next 10 years. This report helps companies look at their companies sustainability programmes in relation to the industry and  raise questions like: 1. How can this company build on its p a rt i c u l a r s t re n g t h s t o p ro fi t f ro m sustainability?  2. What are the specific impacts of sustainability issues on its markets, supply chain, staff and so on? 3. What are the innovations which will enable customers to meet their needs, within environmental limits?  4. What are the markets, current and potential, where the company create a profitable, sustainable offer?  5. How must the business shape its context to make sure there is a sustainable base to its competitive advantage? 6. What are the values and activities that brands needs to support that will add value to the business, its customers and society? About the Report Namrata Rana is a Director at Futurescape. Sustainability, CSR and Healthcare are her primary focus. An alumni of IIM Ahmedabad and Cambridge, she works to build customer experiences that integrate CSR, Sustainability and digital. Utkarsh Majmudar is a professional with experience encompassing academics and administration at IIM Lucknow, IIM Udaipur and IIM Bangalore. His interest areas include corporate finance and CSR.  
  4. 4. Futurescape CSR and Sustainability INSIGHT 4 Contents Page 5 - The Study Page 7 - Material Issues Page 14 - Sector Overview Page 15 - Insight - Governance + Disclosure Page 16 - Insight - Sustainability Page 18 - Insight - CSR Stakeholders Page 22 - List of India’s top companies for CSR and Sustainability 2015 Disclaimer: The publisher is not responsible in any manner since the data and studies published here are based on available data, reports, and interpretation thereto and not based on their personal opinion. The report reflects the situation as of the date of the report and is thus subject to continuous modification. The information herein was obtained from corporate and third-party sources.
  5. 5. Futurescape CSR and Sustainability INSIGHT 5 The Study The Financials Sector contains companies involved in banking, thrifts & mortgage finance, specialized finance, consumer finance, asset management and custody banks, investment banking and brokerage and insurance. This report looks at CSR and sustainability measures of 48 banks and finance companies in the context of - Material issues - Governance - Disclosures - Stakeholders - Sustainability
  6. 6. Futurescape CSR and Sustainability INSIGHT 6 Financials Allahabad Bank ING Vysya Bank Ltd. Andhra Bank Jammu & Kashmir Bank Ltd. Axis Bank Ltd. Karur Vysya Bank Ltd. Bank of Baroda Kotak Mahindra Bank Ltd. Bank of India Oriental Bank of Commerce Bank of Maharashtra Punjab & Sind Bank Canara Bank Punjab National Bank Central Bank of India South Indian Bank Ltd. Citibank State Bank Of Bikaner and Jaipur Corporation Bank State Bank of India Dena Bank State Bank Of Mysore Federal Bank Ltd. State Bank of Travancore HDFC Bank Ltd. Syndicate Bank ICICI Bank Ltd. UCO Bank IDBI Bank Ltd. Union Bank of India Indian Bank United Bank of India Indian Overseas Bank Vijaya Bank IndusInd Bank Ltd. YES Bank Ltd. Other Financials Bajaj Finserv Ltd. Mahindra & Mahindra Financial Services Ltd. Housing Development Finance Corporation Ltd. Muthoot Finance Ltd IDFC Ltd. Power Finance Corporation Ltd. Indiabulls Housing Finance Ltd. Reliance Capital Ltd. L&T Finance Holdings Ltd. Rural Electrification Corporation Ltd. LIC Housing Finance Ltd. Shriram Transport Finance Company Ltd. Companies covered in this report
  7. 7. Futurescape CSR and Sustainability INSIGHT 7 The sector got the lowest rank in our analysis of overall performance led by relatively weak scores in all the parameters studied. Governance is weak because only around 60% companies disclosed board and managerial oversight of CSR activities and fewer (around 50%) mentioned the presence of key corporate policies such as those on non- discrimination, human rights, working conditions and sustainable practices. Over 90% companies disclose a formal CSR policy. Similar to governance, disclosures were weak (least across sectors) as only around 50% companies reported their sustainability performance in the year of study. And less than a fifth of the companies studied disclosed participation in carbon and industry specific sustainability initiatives. Sustainability scores too were the least across sectors. Sustainable finance (as a financial product) was the most talked about sustainability initiative (by over 50% companies). Energy, water and waste management programs were stated by around a third of the companies. The focus in waste was on reducing paper consumption. Digitization was stated as a preferred route for the same but only about 25% companies disclosed an e-waste policy. CSR stakeholder scores were weak because while a good proportion of companies disclosed programs for community and customers, the initiatives for employees and suppliers were few. Diversity in employees was mentioned by almost all companies, but only around 30% stated policies for employee education/training, pre/post retirement initiatives and employee family. Within customer initiatives, almost all banks disclosed the geographical coverage and the range of services offered as part of RBI’s mandate for financial inclusion. All community initiatives that were studied were mentioned by one or more financial companies in their reports hence the breadth was 100%. The focus however was on six areas of education, health & wellness, vocational training, rural development and environment where over 50% companies disclosed programs. Governance weak Disclosure weak Sustainability weak Stakeholders weak Performance relative to other sectors Financials Overview Financials sector performance Scores 0 13 25 38 50 Parameteres Governance Disclosure Sustainability Stakeholders Total Financials Average of all industries
  8. 8. Futurescape CSR and Sustainability INSIGHT 8 Community Initiatives by Finance companies Community - Others: The sector has investment in all the 17 community areas studied and 6 of these had investment from 50% and more companies. A majority of banks provide funds for setting up Rural Self Employment Training Institutes (RSETI) in association with State governments to provide training to rural youth, and to help women set- up micro enterprises. Bank of India: To address the issues of electricity paucity, the bank has prepared and launched a scheme on Solar Energy Home Lighting System for financial assistance to the prospective borrowers for purchase and installation of Solar Energy Home Lighting System. ICICI Foundation signed the Millennium Alliance Charter on 22 Oct 2013. It is an initiative to support Indian innovations that will benefit the BoP population in India in areas of education, water & sanitation, healthcare, agriculture & food security, and clean energy & climate change. Community Initiatives by Finance Companies and Banks %companies 0% 23% 45% 68% 90% Capacitybuilding womenempower. Livelihood DrinkingWater Nationalcalamities Education Health&Wellness Protectnat.heritage Others Environment Seniorcitizens Hunger&Poverty Artist/sports/music Ruraldev. Armedforceveterans/WarWidows Donation Voc.Training