CSR- Indian Perspectives

2007

SUSBIZ India

CSR in India
CSR approaches and strategies are based on
the ethical beliefs of the founding fathers, business areas in which the companies operate, the socio-economic environment, opportunities emerging over long periods of their existence. visibility(Global) perception of customer oversight

Tied up with philanthropy and community development. Community influence and paternalism among traders-turnedentrepreneurs. Foundations within companies that follow the Gandhian ideology of giving back to society.
2007 SUSBIZ India 2

Companies & CSR

Three kinds of Indian companies when it comes to corporate responsibility:
big Indian multinational corporations that have proper corporate responsibility mechanisms in place; large national companies that appreciate the value of corporate responsibility but have no inherent structures to show for it; and the many small and medium-sized enterprises that are doing only piecemeal work at best.

2007

SUSBIZ India

What is CSR
Maximize companys overall impact on the society and stakeholders. More than a collection of discrete practices or occasional gestures, or initiatives motivated by marketing, public relations or other business benefits. approaches and attitudes differ largely due
to social and economic systems legal and regulatory frameworks, cultural practices, local societal and public needs and expectations.
In a developed country: governance, Business ethics, human rights and Environment
In a developing country( India): Focus on nation building Socio-economic development Rural development Employment Education Health care Community support

CSR:

2007

SUSBIZ India

Definition
The Prince of Wales International Business Leaders Forum defines CSR on basis of four issues:
corporate governance to include reputation, transparency, accountability, and anti corruption; safety and environment which comprises product/service safety, worker health and safety, local environment quality ; access/development that includes initiatives in education, healthHIV/AIDS, digital divide, enterprise development, and; Human Rights that includes labour standards, security and indigenous people.

2007

SUSBIZ India

CSR philosophies India

Model Ethical Statist Focus Voluntary commitment by companies to public welfare State ownership & legal requirements determine corporate responsibilities Corporate responsibilities limited to private owners (shareholders) Companies respond to the needs of stakeholders customers, employees, communities, etc. Champions M K Gandhi Jawaharlal Nehru

Liberal

Milton Friedman

Stakeholder

R Edward Freeman

2007

SUSBIZ India

CSR Paradigm in India

Sustainable business

Integrated into Business functions Goals, strategy Strategic partnerships Initiated by company

Corporate social responsibility

[102]/33%

Corporate community investment

Corporate responsibility [80]/26% Corporate citizenship [19]/6 % It doesn't matter, it's all the same thing [57]/18%

Community Affairs

Strategic giving Linked to business interests Passive donations To charities when requested

Philanthropy

Profit Focus
2007

Focus is on Shareholder profit SUSBIZ India 7

Front runners in India

Birlas & Tatas- Led by philosophies of nation building & trusteeship Hero Honda, Hindustan Unilever, ITC, Maruti Udyog etc- Fuse local business standards with the Partner/Parent companys thrust BHEL, ONGC, NTPC- Public sector-true to the reasons of being set up IT, IT ES, Pharma, Life science etc- emerging companies/sector- Spread the positive spill over of their growth and success.
2007 SUSBIZ India 8

Some examples
Issue Community development Corporate giving Health Gender equality Company Hindalco Indian Oil Corporation Larsen and Toubro NTPC Action Asian CSR Award for its Integrated Rural Poverty Alleviation Programme Dedicating 0.75% of net profit to community development initiatives One of first corporates to launch an HIV/AIDS programme One of the few organizations to have a policy for the grant of patrenity leave First company in India to be certified to the SA8000 social accountability standard for its Chirala facility Pioneering evaluation of human capital using an education index for its employees All BHEL units are certified to the ISO14 001 environmental management system Energy conservation measures are saving the company 1150 million rupees per annum Reduced flushing WCs is estimated to save 2 billion litres of water First Indian company to publish a sustainability report in line with Global Reporting Initiative guidelines

Labour standards

ITC

Human capital Environmental management Energy conservation Water conservation Disclosure

Infosys BHEL

Reliance Hindustan Sanitaryware Tata Iron and Steel

2007

SUSBIZ India

Examples
Boosting profits Gujarat Ambuja, one of the countrys leading cement manufacturers, reports that our efforts to achieve world standards in environment protection have had the happy outcome of substantially improving efficiency and profitability. Cutting costs Reliance Industries energy conservation measures have saved the company 1150 million rupees per annum. Increasing revenues HLLs Project Shakti creates income-generating opportunities for the under-privileged rural women, while giving the company an enhanced access to hitherto unexplored rural areas. Strengthening brand value In February 2004, Infosys was among seven international companies to be chosen in the first annual list of Top Brands with a Conscience. Enhancing reputation The Oil and Natural Gas Corporation has found that its community development programme has generated tremendous goodwill and earned the company the reputation of being a company that cares. Improving morale Tata Steel believes that helping the community also provides a new perspective to its employees, thereby strengthening employee morale.

2007

SUSBIZ India

10

The Drivers
Ethically aware consumer groups, NGOs. Moving beyond compliance. Right to Information Act. "last mile connectivity" to reach the benefits to the deserving people. Public- Private partnership.

2007

SUSBIZ India

11

2007

SUSBIZ India

12

2007

SUSBIZ India

13

2007

SUSBIZ India

14

Why CSR?
Because of visibility Feel good factor( retention of talent) Business partner requirements Voluntary Pressure from stakeholders Need to maintain good relationship with external entities Founders attitudes Pressure from investors, lenders and insurers Threat of regulatory action or emerging legislation Risk to company brand or reputation (and hence shareholder value) as a result of consumer pressure or NGO campaigns Desire to enhance or sustain competitiveness Barriers to competition

2007

SUSBIZ India

15

CSR Focus by Whom?

2007

SUSBIZ India

16

Expectation.
CSR begin at home- do the right thing towards internal stakeholders- esp employees. Comply with all legal requirements Look at
rigorously focusing on priorities, treating CSR as an investment and monitor ROI reporting performance in an open and transparent

real CSR leadership is not just putting ones own house in order, but advocating the right conditions to reward responsible practice.
2007 SUSBIZ India 17

Way forward
Indian companies need to stop looking at local communities through the prism of charity and see them as allies in the development process. CSR is critical in the context of enlightened self-interest for survival in the ever-growing fierce corporate competitive battle, for
protecting reputations, defending attacks, improving bottom line and building business competitive edge.

2007

SUSBIZ India

18

Barriers
Absence of clear linkage between CSR and financial success Low voluntary adoption of CSR- Leads to green washing Lack of mechanisms to measure, monitor evaluate and report impacts Two myths Smaller companies think it the responsibility of the bigger ones and It is mainly a philanthropic exercise High overheads of implementing and sustaining CSR efforts. No universally accepted frameworks.

2007

SUSBIZ India

19

The CSR business case

What is good for the community, the environment and the workforce is also good for the financial performance of the company Companies cannot be seen to exist in islands of prosperity in sea of poverty Go beyond compliance Hard commercial factor directly linked to profits and brand value. Manage risk( supply chain, business partners) Increasingly becoming a non-tariff trade barrier. Cost of not considering social, environmental issues could be crippling

2007

SUSBIZ India

20

Linkages
CSR dimension Activities Business Benefit Environmental improvements, eco-efficiency measures using less energy and materials, lower pollution costs and fines, reorganizing production processes, material flows and supplier relationships Cost savings

Effective Human resource management

Provision of training, health, and education benefits for workers; a clean and safe working environment; fair wages

Increased labour productivity Reduced costs

Poverty reduction

Building strong linkages with the local community and employment of locals

Business growth

Stake holder engagement

Engage in a dialogue with employees, suppliers , local community, NGO's, Politicians and other business partners

Risk reduction

2007

SUSBIZ India

21

Linkages
Capital stocks Internal objectives E.g.) External objectives E.g.

Economic

Profitability

Per Capita income growth

Human

Worker productivity

Employee well-being

Social

Reputation

Welfare

Environmental

Resource efficiency

Sustainability

2007

SUSBIZ India

22

CSR & Standards

Broadly relate to outcome i.e. Product and process Types 1. Quality (for example, appearance, cleanliness, taste, and facilities) 2. Safety (for example, pesticide or artificial hormone residue, microbial presence, and use of safety features in hotels) 3. Authenticity ( for example, guarantee of geographic origin or use of traditional process) 4. Goodness of the production process (for example, worker health and safety, environmental contamination, resource conservation, or ethical trade)
SUSBIZ India 23

2007

Some global standards on CSR

AccountAbility 1000 Business in the Community Corporate Responsibility Index Business in the Environment's Index Caux Principles for Business Coalition for Environmentally Responsible Economies - Principles Dow Jones Sustainability Group Index Ethical Trading Institute FTSE 4 Good Index Series Global Reporting Initiative Global Sullivan Principles Global e-Sustainability Initiative International Chamber of Commerce Guidelines London Benchmarking Group MHC International Principles for Global Corporate Responsibility Organisation for Economic Cooperation and Development Guidelines for Multinationals Social Accountability 8000 World Business Council for Sustainable Development

2007

SUSBIZ India

24

Comparison of standards
Origin Industry initiatives Sector coverage Shoes, Toys, Textiles, Retail Example Buyers COC's

Business associations

Multiple

WRAP, Kenya Flower Council code BGMEA code FTA, Organic labelling, fair trade ISO, SA 8000, GRI AA 1000 ETI, OECD Guidelines ILO Principles,m UN Global compact

Third party initiatives Independent/ Multi stakeholder

Multiple

All/Voluntary

Joing Govt-Business

Industry Specific

2007

SUSBIZ India

25

Salient point about standards

All standards/models focus
On ensuring basic human rights Protecting children, women and ensuring fair treatment to all stakeholders Some have requirements on disclosure and transparency Require stakeholder involvement Require adherence to local law at a minimum.
2007 SUSBIZ India 26

The Indian challenge

Three generations of challenges first generation: conflicts between companies and communities over the control of natural resources is widespread second generation: relating to hazards of industrial activity affecting Air, Water, Land and humans third generation: issues related to products and services,
Public expectation: In addition to providing good quality products at reasonable prices , companies should strive to make their operations environmentally sound, adhere to high labour standards, reduce human rights abuses and mitigate poverty.

2007

SUSBIZ India

27

Leader Speak
Corporate Social Responsibility is more than philanthropy and must not mean 'giving and receiving'. An effective CSR initiative must engage the less privileged on a partnership basis. "CSR means sustainable development of the community by being partners in their progress." The industry's focus should be about becoming efficient, competitive but also inclusive.
Mr Venu Srinivasan, Chairman - CII National Summit on CSR 2007, and Managing Director, Sundaram Clayton Limited said that New Delhi 14 June, 2007

2007

SUSBIZ India

28