CSR- Indian Perspectivessusbizindia.org/Admin/Public/Download.aspx?file=Files/Filer... · 2007, and Managing Director, Sundaram Clayton Limited said that New Delhi 14 June, 2007.

2007 SUSBIZ India 1

CSR- Indian Perspectives

2007 SUSBIZ India 2

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-turned-entrepreneurs.

• Foundations within companies that follow the Gandhian ideology of “giving back to society”.

2007 SUSBIZ India 3

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 4

What is CSR

• Maximize company’s 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.

• CSR: 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

2007 SUSBIZ India 5

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, health-HIV/AIDS, digital divide, enterprise development, and;

– Human Rights that includes labour standards, security and indigenous people.

2007 SUSBIZ India 6

CSR philosophies India

R Edward Freeman

Companies respond to theneeds of stakeholders – customers,

employees, communities, etc. Stakeholder

Milton Friedman

Corporate responsibilities limited to private owners (shareholders) Liberal

Jawaharlal Nehru State ownership & legal requirements

determine corporate responsibilities Statist

M K Gandhi Voluntary commitment bycompanies to public welfare Ethical

Champions Focus Model

2007 SUSBIZ India 7

Profit Focus

Philanthropy

Community Affairs

Corporate community

investment

Sustainable businessIntegrated into

Business functions Goals, strategy

Strategic partnerships Initiated by company

Strategic givingLinked to business

interests

Passive donations To charities when

requested

Focus is on Shareholder profit

CSR Paradigm in India

Corporate social

responsibility [102]/33%

Corporate responsibility [80]/26%

Corporate citizenship [19]/6 %

It doesn't matter,

it's all the same thing [57]/18%

2007 SUSBIZ India 8

Front runners in India

• Birlas & Tatas- Led by philosophies of nation building & trusteeship

• Hero Honda, Hindustan Unilever, ITC, MarutiUdyog etc- Fuse local business standards with the Partner/Parent company’s 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 9

Some examples

First Indian company to publish a sustainability

report in line with Global Reporting Initiative guidelines

Tata Iron and Steel Disclosure

Reduced flushing WCs is estimated to save

2 billion litres of water

Hindustan SanitarywareWater conservation

Energy conservation measures are saving

the company 1150 million rupees per annum

Reliance Energy conservation

All BHEL units are certified to the

ISO14 001 environmental management system

BHEL Environmental

management

Pioneering evaluation of human capital using

an education index for its employees

Infosys Human capital

First company in India to be certified to

the SA8000 social accountability standard for its Chirala facility

ITC Labour standards

One of the few organizations to have a

policy for the grant of patrenity leave

NTPC Gender equality

One of first corporates to launch an

HIV/AIDS programme

Larsen and ToubroHealth

Dedicating 0.75% of net profit to community

development initiatives

Indian Oil Corporation Corporate giving

Asian CSR Award for its Integrated Rural Poverty Alleviation

Programme

HindalcoCommunity development

Action Company Issue

2007 SUSBIZ India 10

Examples…

• Boosting profits Gujarat Ambuja, one of the country’s 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 company1150 million rupees per annum.

• Increasing revenues HLL’s Project Shakti creates income-generating opportunities for theunder-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 communitydevelopment programme has ‘generated tremendous goodwill and earned the company thereputation 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.


The Drivers

• Ethically aware consumer groups, NGO’s.

• Moving beyond compliance.

• Right to Information Act.

• "last mile connectivity" to reach the benefits to

the deserving people. Public- Private

partnership.





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


CSR Focus by Whom?


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 one’s own house in order, but advocating the right conditions to reward responsible practice.


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.


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 onesand

– It is mainly a philanthropic exercise

• High ‘overheads’ of implementing and sustaining CSR efforts.

• No universally accepted frameworks.


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


Linkages

Risk reductionEngage in a dialogue with employees, suppliers , local

community, NGO's, Politicians and other business partners

Stake holder engagement

Business growthBuilding strong linkages with the local

community and employment of locals

Poverty reduction

Increased labour

productivity

Reduced costs

Provision of training, health, and education benefits for

workers; a clean and safe working environment; fair wages

Effective Human resource

management

Cost savingseco-efficiency measures using less energy and materials, lower

pollution costs and fines, reorganizing production processes,

material flows and supplier relationships

Environmental improvements,

Business BenefitActivitiesCSR dimension


Linkages

Sustainability Resource efficiency Environmental

Welfare Reputation Social

Employee well-being Worker productivity Human

Per Capita income growth Profitability Economic

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


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)


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


Comparison of standards

Origin Sector coverage Example

Industry

initiatives

Shoes, Toys,

Textiles, Retail Buyers COC's

Business

associations Multiple

WRAP, Kenya

Flower Council code

BGMEA code

Third party initiatives Multiple

FTA, Organic

labelling, fair trade

Independent/

Multi stakeholder All/Voluntary

ISO, SA 8000, GRI

AA 1000

Joing Govt-Business Industry Specific

ETI, OECD

Guidelines

ILO Principles,m

UN

Global compact


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.


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.


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

CSR- Indian Perspectivessusbizindia.org/Admin/Public/Download.aspx?file=Files/Filer... · 2007, and Managing Director, Sundaram Clayton Limited said that New Delhi 14 June, 2007.

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