Uday Salunkhe - Emerging Competitiveness Paradigms


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This article talks about India’s Competitiveness Edge - A Study of the Role of Corporate Social Responsibility. It has been co- authored by Dr. Uday Salunkhe, Director of the prestigious Welingkar Institute of Management and Research.

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Uday Salunkhe - Emerging Competitiveness Paradigms

  1. 1. CONFERENCE THEME: Emerging Competitiveness Paradigms TITLE: India’s Competitiveness Edge - A Study of the Role of Corporate Social Responsibility ________________________________________ Author Details: Prof. Ms. Ketna L MehtaProf. Dr. Uday Salunkhe Editor & Associate Dean, ResearchDirector Welingkar Institute of ManagementWelingkar Institute of Management L.N. Road, Matunga (E), Mumbai – 400019L.N. Road, Matunga (E), Mumbai – 400019 Tel.Nos: 022 – 2417 8300 Extn: 705Tel.Nos: 022 – 2417 8300 Extn: 705 ® - 022 – 2407 1952Email Id: director@welingkar.org Email Id: ketna@vsnl.com / ketna.mehta@welingkar.org 1
  2. 2. India’s Competitiveness Edge - A Study of the Role of Corporate Social ResponsibilityABSTRACTThe theme of corporate social action assumes pivotal significance in the world wide debate onsustainable development. Modern corporation exert considerable influence on the economy,polity & society of the nation. The world over increasingly, there is an evidence of extraordinaryeconomic power exercised by mega corporations, their impact being more severe in the case ofdeveloping countries. As more of the developing countries in the world opted for a democraticframework, the issues of economic & social governance became very important; these subsumeissues like human rights, labour standards, health care and poverty among others. Secondly thecompetitiveness index in India is very low due to the existing social problems & there is a needfor 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 chequephilanthropy to community projects to corporate governance. Continues by providing an insightin the space of CSR in India and highlights the research done on the initiatives undertaken bydifferent 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 thechallenges put forth by the changing economy.Lastly the focus is on the proposal of building a CSR Index for India which will helpimprove corporate responsibility by providing a systematic process that compares companies’management processes and performance with those of others in their sector. It would provide abenchmark for companies who are committed to managing, measuring and reporting theirimpact on society. It will also help companies who want to venture into a certain area of CSR toknow 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) 2
  3. 3. CORPORATE SOCIAL RESPONSIBILITY:The role of business in society has been debated in economic literature for a long time. By theterm ‘Corporate Social Responsibility’ (CSR), what is generally understood is that business hasan 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’sbook on “Social Responsibilities of Businessman” published in 1953, which was the origin of themodern debate on the subject. Bowen reasoned that there would be general social andeconomic benefits that would accrue to society, if business recognized broader social goals inits decisions.Corporate Social Responsibility is nothing but what an organization does to positively influencethe society in which it exists. It could take the form of community relationship, volunteerassistance programmes, healthcare initiatives, special education / training programmes andscholarships, 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 itsquest for creation of wealth. Social responsibility becomes an integral part of the wealth creationprocess - which if managed properly should enhance the competitiveness of business andmaximize the value of wealth creation to society.The World Business Council for Sustainable Development in its publication "Making GoodBusiness Sense" by Lord Holme and Richard Watts used the following definition."Corporate Social Responsibility is the continuing commitment by business to behave ethicallyand contribute to economic development while improving the quality of life of the workforce andtheir families as well as of the local community and society at large."Another definition is "CSR is about capacity building for sustainable livelihoods. It respectscultural differences and finds the business opportunities in building the skills of employees, thecommunity and the government." 3
  4. 4. CORPORATE SOCIAL RESPONSIBILITY – A BROADER PERSPECTIVESince 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 ofnon-profit organizations, increasing consumer awareness, focus on the need for reducingpoverty, dealing with the human rights issues, among others have reinforced the need toarticulate policies and actions to incorporate responsiveness.CSR is concerned with treating the stakeholders of the firm ethically or in a socially responsiblemanner. The aim of social responsibility is to create higher standards of living, while preservingthe profitability of the corporation. (Michael Hopkins 1998)Expected outcomes of social responsibility are: improved financial performance, increasedcustomer loyalty, higher ability to attract to attract and retain employees, reduced regulatoryoversight, workforce diversity, product safety and decreased liability, employee volunteerprogrammes, and greater use of renewable resources.Simon Zadek (2001) describes the development of CSR broadly in terms of threegenerations: 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 areencroaching on the land which belonged to the community residing there, and therefore throughtheir 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 itis essential for the organization to depict a fair behavior and must give back to the communitythrough various community related initiatives. This strategic move is of mutual benefit and is 4
  5. 5. critical for the success of the organization as it can gain a competitive advantage as it is seen asan 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 andexpand the reporting of company activities in the community so that they are moretransparent 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. 5
  6. 6. ‘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 thecommunity. 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, ethicaland management perspectives.In India we have not yet witnessed significant development in these fields but steps are beingtaken towards addressing the rights of communities across the business landscape. 6
  7. 7. CORPORATE SOCIAL RESPONSIBILITY - TODAYCSR 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, employeerelations, 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 socialorder. What is significant with these companies is that they initiated the process of CSR fromtheir 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 corporategovernance in structuring the board of a company. It is seen that the company nameindependent directors in their board of directors as a statutory requirement. The very notion &goal of protecting shareholders’ interest is defeated as in many companies independentdirectors are “friends” of promoters and act as rubber stamps. The point of submission here isnot to formalize CSR in a legal boundary. Let it come from within the company, let it evolve as acompany’s philosophy, something attached to the company’s brand…and let society be thejudge of its sincerity of purpose and honesty of action.A survey by the Capital Care of the London business community points out “Over three quartersof the business here agree that organizations should do more than the law requires onenvironmental 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, suchas environmental norms, labour welfare requirements, and advertising laws. But they must 7
  8. 8. 55strive beyond the legal requirements. Here I would like to cite the example of DuPont’s IndiaSafety Standards where all employees have a prescribed code of conduct – something beyondthe legal requirement.There must be a set of ethical & moral values to guide all business processes at the workplaceas well as the market place. In the words of Kofi Annan, U.N. Secretary General: “We have tochoose between a global market driven only by calculations of short term profit, and one whichhas 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 globalvision & 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 earliesttimes, going back to an age where society itself was in its formative stages. It has incorporatedin the various religious laws where a part of one’s earnings are donated for the benefit of thepoor 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 fromthe very beginning. As individuals joined hands to form organizations, the same conceptbecame embedded in the originations.Gandhi’s philosophy of trusteeship is similar to the CSR of the modern business world; theGandhian notion of trusteeship has been followed by the Tatas and Birlas ever since theirinception.Jamshedji Tata with his vision to create the Indian Iron & Steel Industry transformed anunknown 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 Indianvillages 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 tomany states & similar operations. 8
  9. 9. The Tata’s under the chairmanship of S.P.Kotwal conducted a social audit, the aim of whichwas 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 socialenvironment, the work environment, and ultimately to the company. According to a report, nineof the top ten Forbes 500 firms have something in common besides success: CSRprogrammes. 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 RuralDevelopment society (TSRDS) - Tata Steel’s NGO community service arm. The TSRDSrealized the urgent need for this form of reconstructive surgery at various health camps. At oneweek long camp in Ghatshils, doctors treated 108 cleft palate cases; in Deoghar, 149 peoplerequested for the surgery.While India Inc. still calculates the plusses & minuses of good corporate conduct, corporatesocial responsibility for the Tatas & Birlas is an old tradition. The Tata Group invested more than150 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 for2003-04 is Rs. 1746.22 crore) for welfare activities.The Infosys Foundation supports disadvantaged people directly or through organizations. Thefoundation 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 itcould help strengthen the local language.The middle class founders of the mega-successful Infosys believe that wealth must be equitablydistributed “Unless you create wealth by legal means, you cannot distribute it. And without thetwo, you don’t have progress” says N. R. Narayanmurthy of this celebrated & brilliantlysuccessful IT company. “Putting public good ahead of private good in every decision youmake, will in fact, result in reaching the private good.”To distribute its substantial wealth & formalize its social support initiatives Narayanmurthy & hiswife Sudha set up the Infosys Foundation in March 1997 which receives 1% of the 9
  10. 10. 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 13prestigious institutions. It has also anchored the ‘train & trainee program’ in which computerscience students form engineering colleges are exposed to the latest IT trends. The foundationhas also played an important role in setting up science centers & libraries and to date, 1001libraries have been inaugurated with assistance from this foundation.The Infosys Foundation is committed to giving 30% of its funds to old people, thedestitute & the handicapped, 15% for rural development, 30% for education of poor buttalented children, 15% for cultural activities & 10% for health care, both in village and incities.Dr. Irani propounded five basic tenets of CSR at the 27th annual meet of the US-India businesscouncil meeting: “The aim of the industry should not be to make money. The aim should be toserve customers & other stake holders and the result would surely be more money. Andpursuing excellence would enable it to create even more wealth”. Companies are increasinglyrequired to apply corporate social responsibility by balancing the economic, social &environmental dimensions of their operation whilst building shareholder value. CorporateGovernance is about promoting corporate fairness, transparency & accountability.Companies used to see this area of corporate social philanthropy as the last thing on theiragenda ten years ago, but now they agree that social & economic issues are intertwined.Corporate philanthropy - or corporate social responsibility – is becoming an ever more importantfield for business. Today’s companies ought to invest in corporate social responsibility as a partof their business strategy to become competitive. Corporate success depends on the localenvironment: an appropriate infrastructure, the right types & quality of education to future &current employees, cooperation with local suppliers, quality of institutions, local legislation & soon. In this corporate competitive context, the company’s social initiatives can have great impactno only for the company but also for the local community. 10
  11. 11. CSR BUDGETS OF SOME OF THE TOP COMPANIES IN INDIASr. Name of the company Total Funds Deployed onNo. CSR Last Year (2004-05)1. ABB Ltd. Rs. 0.9 crores2. Amway India Enterprises Rs. 0.45 crores3. British Gas Rs. 1 crore4. Hindustan Lever Ltd Rs. 24.6 crores5. Infosys Technologies Ltd. Rs.18 crores (1.5% of PAT)6. Jankidas Bajaj Gramvikas Sanstha (Bajaj) Rs. 0.45 crores7. Tata Steel Rs. 189 crores8. Tata Sons Rs. 144.9 crores9. Titan Rs. 1.75 crores10. Wipro Corporation Rs. 0.3 crores 11
  12. 12. TATA STEEL – THE PIONEERS IN CORPORATE SOCIAL RESPONSIBILITYOrganizational ProfileOrganization type: MNCNumber of employees: 39,646Areas of operation: Mainly in Jharkhand & OrissaGender Balance: (M: F): Non officers m/f ratio: 20:1 Officers m/f ratio: 14:1Products: Steel products from wire rods, cold rolled sheets, blooms, slabs, bearings, agricultural implements & minerals etc.Gross income/Turnover FY 2004-05: Rs. 16,663 croresNet Profit FY 2004-05: Rs. 3604 croresTotal Funds deployed for CSR: Rs. 189 croresMain Stakeholders: Shareholders/investors Customers EmployeesCSR Interface / ResponsibilityTata Steel relates itself to CSR as a service provider. 12
  13. 13. CSR AffiliationsTata 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 IndiaCSR PoliciesFounder & Group Chairman first articulated Tata Steel’s explicit CSR policy in 1904. It was laterformalized as various policies from 1980 onwards. It is monitored & enforced through the TataBusiness Excellence Model.Tata Steel has an entire organizational structure to enforce/monitor the policy. Formaldepartments & divisions (Environment & safety, Public Health, Medical Services, Socialservices, & family initiatives, community development & social welfare, ethics, HR & IR) areresponsible for CSR reports to the managing director through deputy managing directorcorporate services & deputy managing director steel. Deputy managing director corporateservices is also a Tata Steel Board member.The company claims to have lined compensation of the board members & seniormanagement 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. 13
  14. 14. 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 14
  15. 15. & 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. 15
  16. 16. 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 sinceIntegrated Rural Development 1979Reproductive Health 1957Education & Vocational Training for 1980Marginalized CommunitiesHIV/AIDS Prevention 1990Sport’s Training 1990Relief during Natural Calamities 19742. Infrastructure DevelopmentYear Project LocationYear 1995 onwards Rural Road (300 kms Bihar, Jharkhand, Orissa, approx), school (312 Gujarat, Tsunami victims assisted, 171 early child etc. education centers). Irrigation projects, check dams (86 allied projects, 190 water harvesting structures) Houses after natural calamities. 16
  17. 17. 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 & MediaTata Steel believes that publicizing its CSR activities can be an effective way of raisingstandards in its sector, mobilizing public opinion in favour of CSR, and boosting the company’sprofile. Tata Steel’s efforts for promotion of CSR through CII has motivated new company’s toadopt CSR policies and initiatives. 17
  18. 18. RESEARCH UNDERTAKEN - INITIATIVES TAKEN BY OTHER CORPORATE:Company Domain Project (s) Partner (s) Special FeaturesAllianz Sustainable Micro Allianz Bajaj has launched a “InvestBajaj Life Finance Insurance Gain”, a life insurance plan whereInsurance 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 incomeAmbattur CSR CSR The company has been pioneeringClothing (Internal) 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 Micro Micro Self Help AIG has a joint venture TATAIntnl Group Finance Insurance Groups 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 Water Rainwater Glen Croft The company has implemented aPaints Management Harvesting 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. 18
  19. 19. Company Domain Project (s) Partner (s) Special FeaturesBajaj 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 Entrepreneur Business & BYST develops entrepreneurs byShakti ship Industry providing people in the age group ofTrust Associations 18-35, who are either unemployed(BYST) 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. 19
  20. 20. Company Domain Project (s) Partner (s) Special FeaturesCadbury Women Women’s NGOs The company launched theIndia Empowerment ‘Gurikha Project’, close to its factory & Female at Malanpur near Gwalior at Infanticide 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 NGO CRY, Sai Supports Child Relief & You (CRY)Design Partnership Kripa, and its various projects acrossSystems Tapovan geographical locations. Supports two NGOs in its neighbourhood Sai Kripa & Tapovan.Colgate Health, Oral Care Pratham The IDA-Colgate initiative toPalmolive Education Elementary Movement educate school children on theIndia Education 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. 20
  21. 21. Company Domain Project (s) Partner (s) Special FeaturesCitigroup Cause- FWWB, Out of its cards business, CitigroupMarketing related SPARC 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 Cause- CAF mainly focuses on primaryAid Related education by providing betterFoundation learning facilities to primary(CFA) 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 Education, Cummins CIF has undertaken variousIndia Environment India initiatives like ‘School on Wheels’ Foundation wherein they educate children and (CIF) 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. 21
  22. 22. Company Domain Project (s) Partner (s) Special FeaturesCRISIL Corporate Rating In order to evaluate the behavior of Governance 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 Health, Skills The social initiatives of ForbesMarshall Education Development 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 CSR CSR(internal) The company follows stringentImages international laws on human rights and child labour. Employees benefit from health insurance, pensions, bonuses, gratuity, paid sick leave and day care centers. 22
  23. 23. Company Domain Project (s) Partner (s) Special FeaturesGlaxoSmith Basic Issues NGOs, The company has partnered withKline (GSK) Government NGOs, government organizationsConsumer and the local communities and hasHealthcare 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 Micro Finance HDFC operates as a wholesaler in Finance micro-finance and weaker section housing while advancing the reconstruction activities in Gujarat.Hindalco Poverty Integrated The integrated rural povertyIndustries Alleviation Rural Poverty alleviation programme is initiated in Alleviation 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 Education 40 NGOs in Support those organizations which Partnership 18 cities 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 Sustainability Micro The company offers rainfallLombard Insurance insurance schemes tailored toGeneral provide protection againstInsurance deficient/excess rainfall and low temperatures to farmers not covered by government’s crop insurance schemes. 23
  24. 24. Company Domain Project (s) Partner (s) Special FeaturesICICI Sustainable Micro ICICI Prudential offers insurancePrudential Finance Insurance protect to low income membersLife through schemes like MITR andInsurance SurakshaIOCL Culture Heritage Sites ASI and Created a non-profit trust name The NCF 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 Runs an in-flight collection Children 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 Basic Issues NGOs Community Services: ContributionsChemicals to various schools & medical relief& camps, tree plantation schemes,Industries 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. 24
  25. 25. Company Domain Project (s) Partner (s) Special FeaturesLupin Rural Welfare Lupin Lupin’s community involvement is Human carried out through the Lupin Welfare & Human Welfare & Research Research Foundation. The foundation’s rural Foundation 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 & Education KC K C Mahindra educational trust isMahindra Mahindra involved in & contributes to various Educational education initiatives. These are: Trust 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 Helping Hand Packaging of all Nokia phones is Employee done from recycled paper. With volunteering every handset clear instructions are for social provided for correct disposal of services 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. 25
  26. 26. Company Domain Project (s) Partner (s) Special FeaturesNestle 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 Children Literacy Charity Aid It runs a computer literacyWorld Foundation programme for the underprivilegedTransport in the Pahar ganj area of New(India) Pvt Delhi. It works in partnership withLtd. 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 Strategy CSR Philips India has rolled out itsIndia 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. 26
  27. 27. Company Domain Project (s) Partner (s) Special FeaturesPizza Under- Food for Good A part of the profits of every pizzaCorner privileged sold at pizza corner goes to a fundIndia Children 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 Education Education- Akanksha, Setup the Ulhas trust to help &Software Financial Pratham support the education ofLab Support Movement 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- Public Service Children Runs public services Social Issues Announcemen announcements on a range of ts & Children social, health & environmental related 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 Education Support & Central & Set up the Audit literacy programmeConsultancy Improvement State (ALP) to help the IndianServices of Adult Government Government eradicate illiteracy. Literacy The ELP uses the Computer Based Programme 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. 27
  28. 28. Company Domain Project (s) Partner (s) Special FeaturesTetrapak Health School Milk The idea behind School Milk Programme 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 Women Empowerment Myrada Titan are looking at avenues toIndustries of women in enhance the standard of living of Dharampuri 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 Project USAID With support from USAID, Yes finance financing 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 28
  29. 29. 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 CSRactivities, a small graph has been made showing the areas of concentration & thenumber of companies (from the above stated) who are working for it.35302520 Number of Companies1510 5 0 LC CV EW RD EM H &E NGO CG W & C R HIV/AIDS PIC 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&CR Women & Children’s Rights HIV/AIDS HIV/AIDS awareness & rehabilitation PIC Protecting Indian Culture 29
  30. 30. THE FUTURE:The theme of corporate social action assumes pivotal significance in the world wide debate onsustainable development. Modern corporation exert considerable influence on the economy,polity & society of the nation. The world over increasingly, there is an evidence of extraordinaryeconomic power exercised by mega corporations, their impact being more severe in the case ofdeveloping countries. As more of the developing countries in the world opted for a democraticframework, the issues of economic & social governance became very important; these subsumeissues like human rights, labour standards, health care and poverty among others. There issufficient evidence to show that in many countries of the developing world governments havenot been able to provide investible resources for the social sector development, and furtherwhere the government has been able to do so, they have not been able to create requisiteinstitutional framework for the implementation, monitoring and evaluation of such endeavours. Itis therefore recognized that developing countries need to create alternatives for social sectordevelopment, 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 thebeginning of withdrawal by the state in many developing countries signifies the potential onsetof an era full of opportunities for developing public-private partnership. It is also because neitherthe public nor the private sector alone can counter effectively the challenge of social sectordevelopment. The government on its own cannot get involved any further in several sectorssimultaneously as it did in the last four decades in many countries. One of the biggestchallenges for governments in the developing countries like India is to create and nurture adurable framework of institutions who will translate public policies into deliverables. India needsa strong institutional framework for meeting the multiple objectives of economic growth anddevelopment. The second requirement is the commitment of the top management of the publicenterprises and the corporate sector to move away from a mere philanthropy to corporate socialaction. In the public enterprises, corporate social responsibility is practiced largely as per themandate of the controlling ministry and is based significantly on the basis of commercialconsiderations such as displacement and rehabilitation of communities due to large scale sitedevelopment of newer projects. In the corporate sector also one of the primary drivers for theintroduction of corporate social responsibility is commercial such market access to ruralhinterland. However, what is needed is some commonality and continuity of themes forsustainable development. 30
  31. 31. There is a need for training and development of a large pool of voluntary sector personnel andco-operatives so that they can get substantively involved; non-governmental organizations inmany cases have played an important role in initiating several innovative programmes andactivities in the social sector; however, a lot more is required to have them further involved in asprofessional a manner as possible.It is therefore, suggested that all the agencies and institutions including the multilateralinstitutions assisting social sector development in India world re-look at the cumulativeexperience of promoting corporate social action in as transparent and accountable manner aspossible. The public enterprises need to do more than the mandated corporate socialresponsibility programmes and the corporate sector should aim at involving the multiplestakeholders. The larger issues and long run ramifications of public policy on corporate socialaction for stakeholders and society need to be integrated into a coherent plan of action in thefuture. There has been a lot of debate on the impact of the 73rd and 74th amendments to theConstitution of India; one of the disturbing aspects of the debate is the uneven and tardyprogress in respect of several schemes of public welfare due largely to such issues ascorruption and deficiencies in institutional infrastructure. Therefore, there is an urgent need for atripartite action on part of government, public enterprises and the corporate sector. There isfortunately no dearth of talented opinion makers and social activists but they need to beharnessed and put in place to create a suitable platform such that the movement forinternalizing and institutionalizing corporate social responsibility becomes a durable one. 31
  32. 32. 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 theirCSR activity, whilst consolidating information demands made on companies. Thus what isrequired 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 thatcompares companies’ management processes and performance with those of others in theirsector. 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 offour components shown in the following model: Performance Corporate Integration & Management Strategy Impact Community Environment Marketplace WorkplaceThe Corporate Strategy section looks at how the nature of a business’ activities influence itscompany values, how these tie into strategy and how they are addressed through riskmanagement, development of policies and responsibilities held at a senior level in the company.The Integration section looks at how companies organize, manage and integrate corporateresponsibility throughout the operations. Is it part and parcel of the company culture? Is itintegrated into the strategic decision-making processes of the company and linked through intointernal governance and risk management systems? 32
  33. 33. The integration is assessed through the Management section where the processes formanaging different stakeholder relationships are reviewed. This section looks at what the keyissues are for the business in the Community, Environment, Marketplace and Workplace, theobjectives and targets set to manage these issues and how it communicates, implements andmonitors its policies, objectives and targets.Community relates to the interface between business and society that can be both positivelyand 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 affecteddirectly and indirectly by a company’s operation, products and services. Being responsiblemeans safeguarding both the systems and resources for future generations.Responsibility in the Workplace is the creation of a working environment where personal andemployment rights are upheld.Responsibility in the Marketplace is maintaining the highest standards of business practicewhen developing, purchasing, selling and marketing products and services.The Performance and Impact section looks at companies’ performance across a range of socialand environmental impact areas.The Corporate Responsibility Index would be a strategic management tool to enhance thecapacity of businesses to develop, measure and communicate best practice in the field ofcorporate social responsibility. It would do this through benchmarking corporate socialresponsibility strategy and implementation process.The Index would be created by the support of leading businesses in the country as well asleading 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 CorporateResponsibility Index by completing an online survey accessible via individual and secureusernames and passwords.Even though the Corporate Responsibility Index will be a self-assessment exercise a centralagency will have to monitor the whole process. This central agency will not be involved directly 33
  34. 34. in the task of rating companies, but will act as the trustee overseeing the integrity of theprocess.The implementation of the Corporate Social Responsibility IndexThe Corporate Responsibility Index survey will be made available to companies once they haveregistered to participate in the Index. The survey would be a web based electronic tool andwould also be password protected for each individual company.Comprehensive guidance notes would also be provided with the survey in the form of separatedocuments. These would provide definitions, and help notes to support the understanding ofwhy a particular aspect is important and how this may be applied within a business. Togetherwith the survey this would also provide a roadmap for integrating corporate responsibility withinthe business.The Corporate Responsibility Index would be a self-assessment process. Each submissionwould have to be signed off at CEO or main board level to ensure director-level commitment tothe credibility of the responses.A market research company like ORG-Marg would be required here to take up the responsibilityfor the collection, analysis and aggregation of participant responses as well as add expertise tothe validation process; it will examine all responses for completeness and consistency. Inaddition it will also be needed to meet with selected participants to check their understandingand interpretation of the questions and seek further substantiation when necessary.The robustness of the survey would be demonstrated by the ongoing consultation andengagement with participants after their surveys are submitted. It is critical that participantshave understood and interpreted the survey correctly. 34
  35. 35. HOW & WHAT WILL THE INDEX MEASURE:The Corporate Responsibility Index will measure responsible business practices throughevaluating 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 areasEach 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 scoreIn addition each management section of Community, Environment, Marketplace and Workplacewould be equally weighted (5.625%).Companies would be given credit for what they implement across their business and questionswithin each section will again be generally equally weighted.Once the validation process has been completed by market research company, the results willbe electronically generated by the survey databases.To ensure the ongoing sustainability of the Index, a nominal fee for participating companies tocover part of the validation cost will be charged at a later stage in the life of the index.Publishing The IndexResults of the index will have to be published in the leading publications for the index to gainacceptance by more and more companies.Participating companies will not be named until the results are published. It is at the company’sown discretion should they wish to publicize their involvement on their own websites or if theywish case studies of their corporate social responsibility practices to be reported in thecontacted newspapers. 35
  36. 36. BENEFITS FOR THE COMPANIES:By completing the Corporate Responsibility Index, the company will be using a proven businesstool that enables you to most effectively incorporate best business practice through yourstrategy and implementation processes across the whole organisation.Completing the Corporate Responsibility Index will drive overall performance through enhancedreputation, the retention and attraction of talented staff, lower costs through eco-efficiency andbuilding upon existing company profiles for investment purposes.There will be a confidential individual feedback report which will provide companies with theirposition- overall in the Index, in their sector, economic group and leading Indian businesses. It isa powerful internal management tool helping to engage board members and raise awareness ofthe complete range of corporate responsibility issues across the business whilst highlightingareas of strength and weakness.The Index will be an important external communications tool enabling companies to underwritethe public statements that they make on responsible business practice. It is an importantcommunications 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. Withenough goodwill and trust from the business community, the belief is that a foundation can beestablished which will eventually see companies voluntarily coming forward to be a part of thisindex.However, for this to happen, the need is of business is to embrace the given opportunity. That iswhy this is seen as being a collaborative process - in which the central agency will have to be asflexible as possible in responding to the day-to-day needs of participating companies. 36
  37. 37. 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. NatarajanSurveys: 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 BusinessWebsites: Centre for Social Markets http://www.csmworld.org CSR World http://www.csrworld.org Indian Chamber of Commerce Online http://www.indianchamber.org 37
  38. 38. Author’s ProfileProf. Dr. Uday Salunke Director - Welingkar Institute of Management is a mechanicalengineer 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 andother companies before joining Welingkar in 1995 as faculty for Production Management.Subsequently his inherent passion, commitment and dedication toward the institute led to hisappointment as Director in 2000. Dr. Salunkhe has been invited as visiting fellow at the HarvardBusiness School, USA and European University, Germany. He has also delivered seminars at theAsian Institute of Management, Manila and has been awarded "The Young Achievers Award-2003" in the field of Academics by the Indo American Society recently. 38