Report on the Karmayog CSR Ratings and Study 2008

7/27/2019 Report on the Karmayog CSR Ratings and Study 2008

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A REPORT

ON THE

Karmayog Corporate Social ResponsibilityRatings 2008

of the

1000 Largest Indian Companies

March 2009

In a democracy like India's, sustainable solutions to society's problems can only be found though thecollaboration and involvement of all stakeholders. Karmayog, established in 2004, is a uniqueorganization that connects citizens, civil society groups, corporates, academicians, media and

government through online and offline methodsVisit us on www.karmayog.org


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www.karmayog.org The Karmayog CSR Ratings of the 1000 largest Indian companies - 2008 2

Contents

1. Why a Rating on Corporate Social Responsibility?

2. Definition of CSR

3. Importance of CSR Ratings for Different Stakeholders

4. Methodology for the CSR Ratings and Study

5. Results of the Karmayog CSR Ratings of the 1000 largest Indian companies, 2008

6. Rating Criteria

7. Some observations from the Study and Ratings

8. Karmayogs Recommendations to companies

9. Industry Sector Analysis

10.CSR by Group Companies

11.Some Recent Trends in CSR in India

12.Some Developments in CSR in India since the first Karmayog CSR Ratings in 2007

13.Closing Statement

14.Karmayog CSR web-sections

15.About Karmayog


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Karmayog Corporate Social Responsibility Ratingsof the 1000 largest Indian companies - 2008

www.karmayog.org/csr2008

Why a Rating on Corporate Social Responsibility?

The problems and issues that confront society today are too large and complex to be solved by

government and NGOs alone. Sustainable solutions to societys problems can only be found through

the collaboration and involvement of all who are part of it.

Companies have tremendous strengths; they have extremely capable people, technology, access to

money, the ability of geographical reach, etc. Many companies worldwide and now even in India are

more powerful than governments and even countries, and thus corporates are important stakeholders in

society.

The Karmayog Corporate Social Responsibility Study and Ratings of Indian Companies was

undertaken to explore and understand the role that corporates are playing and can play in finding

meaningful solutions to the problems facing India today.

CSR Ratings are important to various stakeholders for different reasons:- government bodies can use

CSR Ratings to develop industry-wise CSR guidelines, industry associations can use them to setbenchmarks of CSR for companies to follow, NGOs get to know about the CSR undertaken by

companies, thus enabling partnerships with them, and companies themselves learn about and from the

CSR initiatives of other companies.

Usually corporates are invited to enter or nominate themselves for CSR awards, and hence only the

good companies are highlighted, whereas a rating enables a comparative study across all companies.Karmayog undertook a CSR study and rating to understand the CSR activities of all companies on anequal level, thus showing up companies doing no CSR, as well as showcasing companies doing good

work.

The Karmayog CSR Ratings also help to identify areas where corporates, government and civil society

organizations can work together.

This is the second CSR study and ratings undertaken by Karmayog, the first of which was done in 2007.

Definition of CSR

Every company harms the environment and people!

Corporate Social Responsibility is thus just about two aspects

1. The steps taken by the company to neutralise, minimise or offset thenegative effectscaused by itsprocesses and product-usage

2. The furtherpositive steps a company takes using its resources, core competence, skills, location andfunds for the benefit of people and environment.


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Corporate Social Responsibility helps to define the contribution of a company beyond economic value

and creating employment, and weighs this contribution against the damage done by the company

through its products and processes.

Corporate Social Responsibility is also a forward-action, i.e. it flows from a companys vision and

mission and is part of the companys everyday actions, rather than a retrospective action that isundertaken by a company at the end of its process.

Importance of CSR Ratings for different stakeholders

Corporates and their activities are connected to a large number of people, directly and indirectly. These

include employees, suppliers, consumers/customers, government, investors, citizens/community and theenvironment. Each of these has a role to play to make CSR effective and sustaining, and the CSR

Ratings helps to identify their individual and collaborative roles.

Some of these roles for different stakeholders are as listed below:

For Companies

To sensitize their directors and their employees about their responsibility towards society

To identify CSR activities they can and should undertake To understand the various international guidelines and norms for CSR and to effectively

implement these

To learn about and from the CSR initiatives of other companies

For Industry and trade associations

To get a snapshot of the state of CSR in India To set benchmarks of CSR for companies to follow

To prepare case studies and highlight best practices of CSR

To provide consultation on CSR

To work with Government and NGOs and international organizations to upgrade and improveCSR activities in India and to set milestones for companies

To recognize companies doing good CSR activities by instituting awards based on theseparameters

To understand the huge scale and magnitude of the benefits that are possible if an entire sectorspends at least the recommended minimum amount on CSR.

For Government bodies

To make industry wise guidelines and to introduce legislations that cause companies to workeffectively towards reducing environmental damage, and restoring damage done (in the areas of

raw material sourcing and usage, by product and waste disposal, product usage and end

disposal)

To make legislation that rewards CSR and penalizes damage to the environment

For NGOs and consultants

To know about the areas of CSR work undertaken by companies thus enabling partnershipswith them

To be able to identify companies which are not doing CSR or doing in a token manner, so as toapproach these companies to initiate meaningful projects


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To assist companies to formulate CSR objectives, implement CSR activities and monitor andevaluate their CSR activities

For Media

To stop eulogizing corporate leaders whose companies are damaging the environment andharming lives

To present a clear view of CSR that is separate from philanthropy, charity, marketing,advertising, or expanding business scope and to sensitize the public about this.

To highlight companies which are practicing good CSR, and to negate those companies whichare actually engaged in marketing or advertising their products or services under the guise of

CSR

To encourage and enable business publications to have a regular feature or column dedicated toCSR initiatives along with feedback from NGOs and other stakeholders

For researchers

To study CSR practices and results To influence the shaping of CSR policy and regulations

For students and colleges/ institutions

To become sensitized about the role and responsibility of companies and to understand theimpact and consequences of everyday processes and actions

To join a company that is working to benefit society and not one that is harming it

To develop a holistic view of life and living

For citizens, shareholders and investors

To understand that as consumers and stakeholders of companies , we can and need to influence

companies to change harmful policies and adopt CSR practices due to the huge impact andpower that companies have on people and the environment

To ensure that through our purchase choices we get desirable values for society to be reflectedin how companies do business.

Methodology for the CSR Ratings and Study

List of 1000 largest Indian companies is taken as per Sales figures from the BSE Sensex as inJune 2008

Information on the 1000 companies was collated from the companys website and AnnualReport of 2007-2008

Impact of the products and processes of the company is taken into account

CSR initiatives of the company for the current period is studied, including a comparison withpreviously listed CSR initiatives , as well as rating level assigned in the Karmayog CSR

Ratings, 2007.

Companies are rated from Level 0 to Level 5 (Level 5 being the highest)

Rating is based on Sufficient, Necessary and Negative Criteria for different levels (SeeKarmayogs detailed note on Criteria)

All companies were informed of the assigned rating and requested to respond with furtherinformation, if necessary

The Karmayog CSR Rating of any company is open to review whenever new information isprovided by the company


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Results of the Karmayog CSR Ratings of the 1000 largest Indian companies

Table showing the results of the Karmayog CSR Ratings of the 1000 largest Indian companies

Karmayog CSR Rating 2008 Number

of Companies

Percentage

of companies

Level 5 0 0%

Level 4 * 10 1%

Level 3 45 5%

Level 2 220 22%

Level 1 231 23%

Level 0 (Lowest) 494 49%

Total 1000 100%

* Companies with the highest rating of Level 4 are: ACC, Ballarpur Industries, HDFC, Infosys

Technologies, Jubilant Organosys, Kansai Nerolac Paints, Moser Baer, TCS, Tata Steel, and TitanIndustries.

Bar chart showing the results of the

Karmayog CSR Ratings of the 1000 largest Indian companies, 2008

Karmayog CSR Ratings

0%

10%

20%

30%

40%

50%

60%

5 4 3 2 1 0

Ratings from Level 0 to Level 5

%ofCompanies


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Rating Criteria

A) Minimum Necessary Criteria

Necessary parameters that make a company eligible for a particular rating level:

Necessary Criteria Explanation Rating

Level

If undertaking any CSR Activity Where any kind of social, developmental or

community work is doneLevel 1

If CSR is linked to reducing the

negative impacts of companys own

products or processes

CSR activities that aim to improve processes

and products of the company.Level 2

If CSR initiatives are for the localcommunity

CSR activities that are focused on those who areaffected directly by the company

Level 3

If CSR is embedded in the business

operations

CSR activities form a part of the daily business

activities of the company.Level 4

If innovative ideas and practices aredeveloped for CSR

CSR activities enable sustainable and replicablesolutions to problems faced by society.

Level 5

B) Sufficient Criteria for Minimum Rating

If the company is doing this, they automatically get this rating at least

Sufficient Criteria What this means Rating

Level

Company fulfilling the basic needs of

society

e.g. manufacture of food

The products and services of the company are

useful and benefits societyLevel 1

Unique CSR activity which would not

otherwise happen

e.g. Developing a mapping and

tracking software for adoption in India

The CSR activity being undertaken by the

company is not being done by government,

NGOs, etc.

Level 1

Company reducing negative impact of

otherse.g. A company that makes water

purification & waste recycling systems

The companys products or services provide

solutions to mitigate harm caused by actions ofcompanies, their products, etc.

Level 1

Company adopting the GRI

Framework for CSR reporting

The company is committed to measuring and

reporting its CSR initiatives as per a voluntary

globally accepted framework.

Level 2

Companys annual expenditure on

CSR = 0.2% of sales

The company is committed to a minimum

expenditure on CSR annually, and thus

considers CSR as an integral part of its business

Level 3


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C) Negative Criteria that usually determine the maximum possible Rating

Companies in this category will not normally get a higher rating than the one shown

Negative Criteria Reason Rating

LevelCompanies that make liquor, tobacco,

genetically modified crops

These products are not needed by society, and

cause harm to people and the environment. The

CSR to do is to stop making these products.

Level 0

Companies that violate

laws/rules/regulations

CSR is not limited just to how a company

spends its money, but also to how it makes that

money in the first place

Level 1

Companies engaged in high impact

processes

Processes that severely damage the environment

require extraordinary efforts by the company to

reduce and repair the damage, and requiregreater contributions to benefit society

Level 1


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Some observations from the Study and Ratings

1. 509 out of 1000 companies (51%) are doing CSR.

2. 21 of the 1000 (2%) companies publish a separate Sustainability Report.

3. 30 (3%) of the 1000 companies have reported the amount spent on CSR

4. 107 out of 1000 (11%) companies are doing CSR through their own trust or foundation

5. All PSUs undertake a basic minimum level of CSR based on mandatory regulations (e.g. relating to

employment, target groups of beneficiaries, etc.)

6. Many individual companies under a group report the same CSR activities across the group (See

Karmayogs detailed note on Group Companies)

7. Several companies repeat the exact same information every year for CSR with no fresh records of the

current years CSR, showing their low commitment to CSR.

10. Common areas in which CSR initiatives are undertaken include Education, Healthcare and Rural

development

11. Many companies spread their CSR funds thinly across many activities, thus reducing theeffectiveness and seriousness of their initiatives

12. The 1000 companies were grouped into 35 industry sectors and analysed. The Entertainment &

Media, Retail, Mining, Trading, and Construction industries all have low levels of CSR activities. The

Software, Banking and Paper industries are amongst those sectors with high levels of CSR.


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Karmayogs Recommendations to companies

The CSR study led to a set of recommendations from Karmayog to companies.

A) Mandatory Recommendations

There are 3 mandatory recommendations flowing from the premise that every company must do

CSR, and these are:

1. Minimum annual CSR expenditure

Every company must spend a minimum of 0.2% of its sales on CSR activities (i.e. Rs. 20 lakhs per Rs.

100 crores). The scale of operations of a company and its impact is connected with its turnover and not

with its profit. The larger the company the greater is the damage it is doing to the environment.

Conversely the greater is the companys ability to do good.

Table showing Rupee impact of 0.2% of sales for CSR expenditure

Size bySales

Company Salesin

Rs. Cr.

Net Profitin

Rs. Cr.

Minimum CSRRs. (cr.)

at 0.2% of Sales

1 Indian Oil Corp. 226000 7000 452

200 Indian Hotels 1800 370 3.6

400 Ahluwalia Contracts 880 51 1.8

600 Trent 500 30 1.0

800 Technocraft Industries 310 30 0.6

1000 Marathon NextGen. Realty 100 60 0.2

Total sales of 1000 companies: Rs. 25,00,000 crores

If recommended minimum CSR is spent @ 0.2% of sales, this = Rs. 5000 crores

2) CSR Reporting

A Corporate Sustainability section should be included in the Annual Report and preferably a separate

Corporate Sustainability Report (as per the Global Reporting Initiative framework) should be published

by the company.

CSR reporting should also include details of CSR expenditure by the company.

CSR is linked to the companys processes. It is recommended that the section on CSR reporting should

come after the EHS (Environment Health and Safety) section in the Annual Report.

3) Recommended Stepsfor CSR

a) Adoption of industry guidelines for improving processesThe first step is to identify and adopt methods to minimize the environmental damage caused by the

products and processes. A comprehensive set of guidelines, both general as well as sector-specific, have

been drawn up by the World Bank. These are known as the Environment, Health and Safety Guidelines(EHS) of the International Finance Corporation (IFC). The EHS Guidelines are technical reference

documents with general and industry-specific examples of good international industry practice.


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b) CSR linked to the skills of a companyCompanies must use their core competence, skills and strengths while undertaking CSR activities, asCSR is not an un-related activity

c) CSR linked to the location of a companyCompanies must first undertake CSR activities in the areas they are located in. (factories, plants,

offices, etc.) The greatest impact (in terms of land, pollution, livelihoods, etc.) is on the local

environment and community, and hence companies must focus on improving conditions in the

communities in which they operate.

B) Non Mandatory Recommendations

Karmayog has also made 9 non-mandatory recommendations on CSR to enable companies to make

their CSR programmes more meaningful and effective.

1. CSR philosophy to be definedCSR philosophy and focus to be developed from and based on the companys vision and mission

2. Ensure responsibility of suppliersEvery company should make efforts towards ensuring responsible behavior from their

suppliers/vendors who must follow all environmental, health and safety as well as human rights

guidelines and norms. It is recommended that reviews and audits of suppliers be conducted.

3. Create inclusive employmentCompanies to offer employment to those who find it difficult to get jobs, by reserving a smallpercentage of the workforce for such jobs, with a special emphasis on the local community

4. Link CSR initiatives to governments development plansIt is recommended that companies undertake CSR activities that are connected with and supplement the

governments social and development goals for India, which are outlined in documents such as the Five

Year Plan, and implemented through various schemes at the centre and state level. Companies must

partner with government in the implementation of such programmes and schemes.

5. Involve employees in CSRA company should involve their employees in its social responsibility efforts. This ensures

sustainability of CSR initiatives, as there is a commitment to CSR throughout the organisation. Further,

each employee acting in a socially responsible manner helps the company as a whole to do undertake

more effective CSR.

6. CSR activity to improve the industry sectorCompanies, through their CSR activities, should work towards raising standards and setting

benchmarks for their specific industry sectors, thus gradually leading to an overall more socially

responsible sector.

7. Expand Reach to benefit societyCompanies must extend their products & services to markets and areas that may not be as profitable to

the company, so as to extend solutions to the problems and issues in remote, under-serviced areas.While companies do expand their markets into new areas, they must do so more beyond areas that are

potential new markets. Extending business into new areas that need development may not give

immediate profits to a company, but this has long-term positive impacts on the area and its people.


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8. Support areas and issues that are neglectedIn a developing country such as India, there are some areas and issues that require sustained support ofa greater depth, beyond what government and society is able to provide, and companies must come

forward to take up these. E.g. Sports such as chess, protection of endangered species of wildlife,

heritage conservation, etc. are all issues that require corporate support.


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Industry Sector Analysis

The 1000 companies were grouped into 35 industry sectors and analysed

Consolidated Sector Wise CSR Ratings

S.No. Industry Sector

No. ofCos.

Sales inRs. crores Level 5 Level 4 Level 3 Level 2 Level 1 Level 0

1 Auto Ancillaries 48 45000 0 0 1 11 10 26

2 Automobiles 13 100000 0 0 4 4 0 5

3 Banking 40 260000 0 0 6 9 8 17

4 Cement 30 47000 0 1 0 11 11 7

5 Chemicals 63 45000 0 1 3 14 19 26

6 Computers 7 21000 0 1 0 0 2 4

7 Construction 57 65000 0 0 2 9 10 36

8 Diversified 13 24000 0 0 0 4 4 5

9 Electronics 18 35000 0 0 1 2 3 1210 Engineering 44 40000 0 0 3 10 9 22

11Entertainment &Media 15 8000 0 0 0 3 1 11

12 Fertilizers 19 41000 0 0 0 10 6 3

13 Financial Services 32 50000 0 1 1 2 6 22

14FMCG & ConsumerDurables 60 75000 0 0 4 15 14 27

15 Heavy Engineering 10 31000 0 0 1 1 6 2

16 Hotels 9 5300 0 0 0 3 2 4

17 Iron and Steel 93 180000 0 1 2 18 17 55

18 Jewelry 11 19000 0 0 0 0 4 7

19 Logistics 17 27000 0 0 1 6 5 5

20 Metals 14 51000 0 0 1 7 2 4

21 Mining 6 13000 0 0 0 3 2 1

22 Miscellaneous 42 45000 0 1 1 4 10 26

23 Oil and Gas 19 750000 0 0 2 5 8 4

24 Packaging 10 6300 0 0 0 0 3 7

25 Paper 13 7400 0 1 1 6 2 3

26Petroleum andPetrochemicals 7 6800 0 0 0 1 2 4

27 Pharmaceuticals 49 43000 0 1 1 16 17 14

28

Polymers and

Plastics 10 7000 0 0 1 0 5 429 Power 46 140000 0 0 2 11 8 25

30 Retail 5 8000 0 0 0 1 2 2

31 Software & ITES 40 88000 0 2 2 13 6 17

32 Sugar 25 15000 0 0 0 7 3 15

33 Telecommunication 20 64000 0 0 2 2 6 10

34 Textiles 77 57000 0 0 2 10 16 49

35 Trading 18 68000 0 0 1 2 2 13

Total 1000 2487800 0 10 45 220 231 494


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Industry Sectors that have high CSR: Banking, Software, Paper

Industry sectors with poor CSR: Retail, Entertainment & Media, Mining, Construction

Example of an industry sector with poor CSR: the Construction sector

57 of the 1000 companies are part of the construction industry

61% of the companies are doing no CSR work. 80% of the companies are below Level 2

2 companies which are at Level 3 are DLF and GMR Infrastructure

Total Sales of the 57 companies amounts to Rs.65000 crores.

If 0.2% of sales is spent on CSR (as per Karmayogs recommendation), then annual CSRexpenditure would amount to Rs.130 crores.

Table of the CSR Ratings of companies in the Construction sector

Karmayog CSR Rating 2008 Number of Companies Percentage

Level 5 0 0%

Level 4 0 0%Level 3 2 4%Level 2 10 18%

Level 1 10 18%

Level 0 35 61%Total 57 100%

Bar chart showing the CSR Ratings of companies in the Construction Sector

Construction Sector

0% 0%4%

18% 18%

61%

0%

10%

20%

30%

40%

50%

60%

70%

Level 5 Level 4 Level 3 Level 2 Level 1 Level 0

Rating Levels

%o

fcompanies

Example of an industry sector with good CSR: the Banking sector

40 out of 1000 companies are in the banking industry (this does not include financialinstitutions) 57% of these companies are doing CSR

60% of the companies are working in the area of Rural development


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There are 6 Level 3 companies: (Andhra Bank, Canara Bank, ICICI Bank, PNB, Union Bank ofIndia, Yes Bank)

Mandatory regulations on CSR for PSU banks makes this sector high performance

The total Sales of 40 companies is Rs.2,60,000 cr.

If 0.2% of sales is spent on CSR (as per Karmayogs recommendation), then annual CSRexpenditure would amount to Rs.520 crores

Table of the CSR Ratings of companies in the Banking sector


Level 5 0 0%Level 4 0 0%

Level 3 6 15%

Level 2 9 23%Level 1 8 20%

Level 0 17 43%Total 40 100%

Bar chart showing the CSR Ratings of companies in the Banking sctor

Banking Sector

0% 0%

15%

23%20%

43%

0%

10%

20%

30%

40%

50%

Level 5 Level 4 Level 3 Level 2 Level 1 Level 0

Rating Levels

%

ofCom

pa

nies


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Some Sector specific best CSR practices

No. Sector Expected CSR Example of a company doing this

1 Cement Quarry Rehabilitation ACC Ltd

2 Paper Farm Forestry Ballarpur Industries Ltd.

3 Finance Enabling access to affordable

housing

HDFC Ltd.

4 Software Software to improve public systems Infosys Technologies Ltd., TCS

Ltd.

5 Pharmaceutical Reducing environment pollution

through process improvement

Jubilant Organosys Ltd.

6 Paints Development of environmentally-friendly paints

Kansai Nerolac Paints Ltd.

7 Hardware Improvement in product design anduse to benefit society

Moser Baer Ltd.

8 Steel Mitigating impact on the natural and

human environment

Tata Steel Ltd.

9 Watches and

Jewellery

Employment of handicapped and

village artisans

Titan Industries Ltd.

Importance of the industry Sector-wise analysis of CSR of companies:

1. Snapshot of sector

It presents a picture of an entire industry, CSR initiatives undertaken by companies in that industry andexamples of companies doing good CSR

2. Potential CSR impactThe sector analysis shows the sales figures of the entire sector and the possible impact of spending

0.2% of sales (as recommended by Karmayog) on CSR by that sector

3. Sector-specific guidelinesThe sector analysis helps to frame norms and guidelines for different processes across the entire sector

as well as develop and encourage sector specific CSR activities.

4. Best practices for the sector

The sector analysis showcases best CSR practices by companies in a sector, thus enabling othercompanies to also take up such initiatives.

5. Comparison between sectorsThe sector analysis enables comparisons between different sectors, and shows up sectors with low and

high CSR initiatives.


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Industry sector-specific CSR initiatives

The CSR study helped to identify several sector-specific CSR initiatives that should be taken up by

companies of that industry sector, as these initiatives are directly connected to the processes and

products of that industry sector. As a society, we would expect any company working in these sectors to

be doing the following as an integral part of their CSR initiatives:

Table showing Expected CSR initiatives for different sectors

S.

No.

Industry Sector Example of expected CSR

1 Automobiles & Auto Ancillaries Reduction of auto emissions

2 Banking Support small entrepreneurs

3 Cement Quarry Rehabilitation

4 Chemicals Minimise air and water pollution

5 Construction Low cost housing6 Computers E-Waste management

7 Electronics Energy efficient products

8 Engineering Reduce material content and wastage

9 Entertainment and Media Raising awareness on social issues

10 Fertilizers Promote use of organic fertilizers

11 Financial Services Support small entrepreneurs

12 FMCG and Consumer Durables Reduce packaging

13 Heavy Engineering Mitigating impact on environment

14 Hotels Promote local tourism

15 Iron and Steel Environment restoration

16 Jewelery Promote local artisans and craftspeople

17 Logistics Fuel efficient vehicles18 Metal Environmental restoration

19 Mining Quarry rehabilitation

20 Oil and Gas Promote and develop alternate energy resources

21 Packaging Use of recyclable material

22 Paper Farm Forestry

23 Petroleum and Petrochemicals Environmental restoration

24 Pharmaceuticals Focus on prevention of diseases

25 Polymers and Plastics Environmental restoration

26 Power Use of renewable energy sources

27 Retail Reduce use of plastic and packaging

28 Software and ITES Green IT

29 Sugar Using by-products and waste to generate energy

30 Telecommunications Improving connectivity and services in rural areas

31 Textiles Use of environmentally friendly materials


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CSR by Group Companies

Observations:

1. No. of Groups in this studyOf the 1000 companies studied there are 30 groups with individual companies ranging from 2 to 24

2. Largest GroupsThe 5 largest groups (by sales) in this study are: Tata Group, Aditya Birla Group, Mahindra Group,

Reliance (ADAG), and Essar Group

3. Same CSR reportedMost of the companies under the group report the same CSR activities across the group

4. PhilanthropySome group companies contribute money to the group Foundation/Trust as a part of their CSR

5. CSR ExpenditureIndividual companies do not mention the amount spent by the company; instead the group expenditureis listed

6. Group FoundationThe common Foundation of the group undertakes all the CSR activities, as a result of which CSR is

often not connected to the processes & core competence of the individual companies

7. Benefits of CSR as a groupThere are several benefits of having a Group of companies doing CSR together:

- the group can develop tools for its individual companies to measure the impact of their CSR

activities- Individual companies can improve their CSR initiatives relative to each other, thus eventually

raising the CSR of the entire group

- Best practices can be shared and applied across all group companies (similar to all companiesin an industy sector)

Recommendation:

While there are synergies and various managerial reasons for companies to do CSR activities at a grouplevel, it is necessary for each company to undertake its own CSR activities (linked to its processes and

skills), while also contributing to the groups CSR work.

The Karmayog CSR Ratings are assigned for an individual company, based on its own processes,products, and work towards improvement of society; the CSR Ratings are not assigned to a Foundation,

Trust or Group, though these may be formed of the companies themselves.

An example of a Group that is doing CSR at an individual company level as well as a Group level: the

Tata Group

24 companies that are part of the Tata Group are included in this study of 1000 companies


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The Tata Group has a Code of Conduct for all individual companies that includes CSRinitiatives that have to be undertaken by the company in the community near its factories and

offices.

The Tata Group has developed tools such as Tata Index for Sustainable Human Developmentwhich is a model for measuring the social work that the group enterprises undertake

The CSR focus areas for companies of the Tata Group include education, health, environment,rural development, sports, arts and employee relations.

Table showing CSR ratings of the 24 companies of the Tata Group


Level 5 0 0

Level 4 3* 13%

Level 3 7 29%Level 2 10 42%

Level 1 3 13%

Level 0 1** 4%

Total 24 100%

* TCS, Tata Steel, Titan Industries

** Tata Elexsi

Some recent trends in Corporate Social Responsibility in India

1. Increase in expectations of stakeholdersVarious stakeholders have come to expect more from corporates, beyond just their profits

2. Governments role as a regulatory bodyThe government has recognised the role of corporates in the development of the country, and is taking

steps to define this role and has introduced some mandatory and non-mandatory recommendations tocorporates

3. Increasing awareness amongst consumers, management colleges and studentsThere is an increasing awareness and interest among consumers towards CSR.

More seminars, discussions & summer projects are being held by colleges to sensitise students as future

leaders, about CSR.

4. Suppliers ResponsibilityCompanies are encouraging suppliers to adopt socially responsible business practices.

5. Disclosure about social & environmental performanceStakeholders are demanding more information about a companys social & environmental performance.

21 of the companies in this study have published a Sustainability Report, as compared to 6 companies

last year.


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Some developments in CSR in India since the first Karmayog CSR Ratings in 2007

1. December 2007- RBI Notification to all Banks & Financial Institutions recommending thatNon Financial Reporting (NFR) be undertaken as a step towards Responsible Banking

2. June 2008 - Ministry of Corporate Affairs has stated that it would like to encourage allcompanies to disclose on their balance sheets the social work that they do

3. September 2008 -Government of Gujarat: mandates CSR expenditure - directs 6 PSUs to setaside 30% of their profit before tax to carry out welfare activities across Gujarat.

Draft industrial policy of Gujarat Govt. mandates CSR for industry associations and corporate

houses in the state

4. February 2009- Petroleum Ministry says that it will be mandatory for public sector oilcompanies to spend a minimum of 2% of their net profits on CSR activities

Closing Statement

While it is difficult to quantify the reasons for companies to take up Corporate Social Responsibility, it

is clear that all companies must be doing this, in order to help society as a whole to improve.

We, as consumers and stakeholders must accelerate and support those companies who have recognised

this and are taking steps to do business responsibly as well as contribute to benefit society.

When companies take up activities that help improve society, they are perceived as being better

companies in other areas as well, such as having better products and services, being a better place to

work in, and a better company to invest in. Today, companies that are doing nothing to give back to

society from which they have taken so much, are being looked at differently, despite the profits thatthey make. Further, those companies that have already included CSR as part of their business, will be

far ahead of the rest, when CSR expenditure becomes mandatory for all companies, as it soon will.

Enlightened businesses worldwide, small and large, have begun to realise that responsible practices

enhance profitability & ensure long-term survival. For those which disrespect the environment or living

beings, we, as responsible citizens, need to individually and collectively, reward or penalise them

through our voices and our wallets.

The Karmayog 2008 CSR Study and Ratings presents a comprehensive picture of the state of CSR in

India. It is hoped that this study will be an effective base for industry associations, government bodies,

researchers and academia, and NGOs to work together with corporates in improving society.


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Karmayog CSR sections

The Karmayog CSR Study and Ratings of Indian companies were started in 2007, and there are over

4000 pages of information on CSR on the Karmayog website:

A) Karmayog CSR Ratings of the 1000 largest Indian companies 2008:


1. Announcing the Karmayog CSR Ratings of India's Largest 1000 CompaniesPresentation on the Karmayog CSR Ratings of the largest 1000 Indian Companies-2008

Executive Summary of the Karmayog CSR Ratings, 2008 - (2 page note)

Report on the Karmayog CSR Ratings of India's 1000 Largest Companies (20 pages)

2. Karmayog CSR Rating 2008Karmayog CSR Rating 2008 of 1000 Biggest Indian Companies - Compiled Table

Karmayog CSR Rating Criteria

Table of Level 3, Level 4 and Level 5 Companies

Quotes from Level 3 and Level 4 rated Companies

3. Alphabetical Tables of CSR Rating of 1000 companies 2008

4. Details of CSR Activities of companiesIndividual CSR activities and profiles of the largest 1-500 companies -

Individual CSR activities and profiles of the largest 501-1000 companies -

Individual CSR activities and profiles of other companies -

5. Sector-wise analysis of CSR activities of companies

6. Sustainability Reports 2007-2008

B) Karmayog CSR Ratings of the largest 500 Indian companies 2007:


C) Corporate Social Responsibility: www.karmayog.org/csr

About Karmayog

Karmayog, established in 2004, is a unique organization that connects citizens, civil society groups,

corporates, academicians, media and government through online andofflinemethodsThe Karmayog website has 70,000+ pages of information in researched modules on over 350 civic and

social causes, a directory of civil society organizations in India (17,000) and an active discussion group

of 43,000 people who daily share their concerns, opinions, ideas, news, etc .www.karmayog.org/

For more information contact:

Vinay Somani Pooja Roy Tanya Mahajan

Karmayog

C/o Shri R.O.Somani Charitable Trust

Shreeniwas House, 2nd

Floor,H. Somani Marg, Fort, Mumbai 400 001

Tel.: 022 22940109 / 22013535

Email: [email protected]

Website: www.karmayog.org

Report on the Karmayog CSR Ratings and Study 2008

Documents