Study on Promoting Corporate Social Responsibility (CSR ... · Industries, Infosys, TCS, Wipro, ITC, Larsen and Tubro, Mahindra, Maruti Suzuki, Tata Motors, SIDBI, TCS, Wipro and

Study

on Promoting Corporate Social

Responsibility (CSR) in Indian Textile Industry by “Developing

a CSR Framework for Indian MSME Industries, based on Best

International CSR Practices”

India China Economic and Cultural Council New Delhi


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CONTENTS

EXECUTIVE SUMMARY

CHAPTER 1 : BACKGROUND ON CSR

CHAPTER 2 : OBJECTIVE, SCOPE AND METHOLOGY CHAPTER 3 : FEATURES OF THE SURVEYED TEXTILE

CLUSTERS

CHAPTER 4 : SURVEY FINDINGS- GRAPHS AND ANALYSIS CHAPTER 5 : PROPOSED CSR MODEL FOR IMPLEMENTATION

IN INDIAN TEXTILE SMEs

ANNEXURES

1. List of CSR Activities in Compliance with GRI Parameters 2. List of Companies Surveyed in China 3. List of Companies Surveyed in India


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EXECUTIVE SUMMARY

1. The Project on “Promoting Corporate Social Responsibility (CSR) in Indian Textile Industry by developing a CSR Framework for Indian MSME Industries, based on Best International CSR Practices” has been undertaken under the Advocacy Challenge Fund (ACF) MSME Financing Development Project (MSMEFDP), being implemented by Small Industries and Development Bank of India (SIDBI). The MSMEFDP is being undertaken in partnership with World Bank; DFID; KfW and GtZ, Germany. The objective of the project is to make the MSME sector competitive by addressing both the demand side and supply side issues pertaining to credit and non-credit needs of the MSMEs. The ACF under the project is a unique policy advocacy approach which facilitates the development and growth of a competitive and vibrant MSME sector by improved sect oral engagement in policy formulation and strengthening of representative organizations of MSME sector. The objectives of the Fund are:

Sectoral engagement of representative organisations in policy formulation

Active participation of private sector in policy advocacy

2. In order to enhance the responsible competitiveness of the MSME sector in India, the project on “Promoting Corporate Social Responsibility (CSR) in Indian Textile Industry by developing a CSR Framework for Indian MSME Industries, based on Best International CSR Practices“ has been initiated as an experiment to understand the CSR practices by Indian MSMEs in a particular industry cluster vis-à-vis those by Chinese manufacturers in a similar industry cluster in China and then suggest measures to enhance the CSR compliance level of Indian MSMEs in the said cluster to the level of the said Chinese cluster or to say euphemistically, twining the CSR practices in two different clusters of similar industry located in two different countries.

3. For the CSR twining purposes, the project has chosen Ludhiana textile cluster which is a leading textile/woolen knitwear manufacturing and exporting hub in India. For a counterpart similar cluster, the project has chosen the Nantong cluster and other textile clusters in the Jiangsu and Zhejiang provinces, which are also a leading textile manufacturing and exporting hub in China.

4. In order to understand and compare the CSR practices adopted by MSMEs in both the countries, the project has adopted internationally accepted GRI Reporting parameters as the criteria for inferences. It may be mentioned that the concept and philosophy of CSR has been advocated by ISO, UNIDO and World Bank. Recently ISO 26000 norms have been advocated to provide harmonized globally relevant guidance for private and public sector organizations of all types to encourage the implementation of best practice in social responsibility


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worldwide. However, the said ISO 26000 norms have not yet been published officially. Hence, the project was guided more by the GRI Reporting parameters.

5. Besides undertaking sample survey of a large number of MSMEs in both the clusters, the Project Team also held various consultations with relevant stakeholders, textile industries associations and chambers, such as the Knitwear Club and Apparel Exports Association of Ludhiana in India; and China Council for Promotion of International Trade (CCPIT), China National Textile and Apparel Council (CNTAC) and the Responsible Supply Chain Association (RSCA) in China.

6. A total of 104 textile SMEs were surveyed in China and 70 textile SMEs in India. The survey revealed that the Nantong textile cluster in China is more advanced in adapting and complying with CSR practices as compared to that of Ludhiana textile cluster. This is not to deny the fact that the manufacturers in Ludhiana are not aware of CSR philosophy and are not doing any CSR practices. On the contrary, MSMEs in Ludhiana do really understand the meaning and value of philanthropy or contribution for the welfare of their employees and society at large. But when it comes to comparison with international level, say, of the Chinese Nantong textile cluster, the CSR compliance level of Ludhiana cluster needs more ground to corner in future. As revealed by the survey, out of 96 CSR parameters of GRI, the Ludhiana textile cluster is found to comply with only 12 parameters, whereas the Nantong cluster in China complied with 27 performance indicators (including at least one from each of: economic, environment, human rights, labor, society, product responsibility.).

7. After conducting the detailed survey and based on views of various stakeholders, the salient observations are as follows:

CSR Baseline: The understanding of the concept of CSR is better among Chinese textile enterprises compared to enterprises in India. The Chinese textile enterprises are more educated in terms of what CSR is, why they should adopt CSR practices and what is CSR reporting. Many Indian textile enterprises face the challenge of lack of clear CSR guidelines and less understanding of CSR practices.

Export Push: The textile enterprises in China understand that for exporting to US, EU markets, they have to comply with international standards and adopt better labour welfare, environment and health practices. Foreign buyers are a major driver of CSR practices in China compared to India.

Policy Push: The Chinese Government is more proactive and has taken various initiatives to help Chinese textile enterprises improve their CSR practices and


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become more competitive globally. We can say that in China, there exists a Policy Push, which is helping the enterprises adopt CSR practices and improve their export potential. The China National Textile and Apparel Council

(CNTAC) has initiated an industry-wide and professional body, called the Responsible Supply Chain Association (RSCA), for the promotion of social responsibilities in Chinese textile industry. In India, no such sector specific body exists focusing entirely on promoting CSR in textile enterprises.

CSR Management System: The Chinese Government has developed an industry specific management system, called China Social Compliance for Textile & Apparel Industry- CSC9000T, for social compliance for China´s textile and apparel sector. The system is not only based upon the Chinese laws but also on relevant international conventions. The Indian Government has not developed any such sector specific system apart from the Voluntary CSR Guidelines issued by the Ministry of Corporate Affairs and applicable through the industry.

CSR Practices: Textile enterprises in China are more conscious towards protection of human rights and have also established policies for the same. They have also provided training to their workers on first aid, human rights, HIV/AIDS and drug abuse. Chinese textile enterprises also invest regularly in training their staff by sending them abroad in exhibitions, trade fairs etc.

CSR Reporting: It is not a widely adopted practice in India compared to China. Majority of the textile enterprises in China report their CSR practices either publicly or to the RSCA and CNTAC. They engage with their stakeholders

through annual reports, open-door policy and visit to plants/factory.

8. Based on the results of the surveys in China and India, and after doing a detailed study of the existing CSR Models in China and EU, we have prepared a CSR

Model for implementation in Indian textile SMEs to improve their CSR practices. The proposed CSR Model should help the enterprise in gaining a better understanding of their organization and at the same time determine the current state of the organization in relation to CSR. The enterprise should be able to use the tool to improve their CSR practices, enhance their export competitiveness and production efficiency. The CSR Model is discussed in detail in Chapter 5.


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CHAPTER 1: BACKGROUND ON CSR

CSR Definition and Need

The role of business in society has been debated in economic literature for a long time. By the term ‘Corporate Social Responsibility’ (CSR), what is generally understood is that business has an 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’s book on “Social Responsibilities of Businessman” published in 1953, which was the origin of the modern debate on the subject. Bowen reasoned that there would be general social and economic benefits that would accrue to society, if business recognized broader social goals in its decisions. Following the US – UK tradition, it can be defined as follows: “Corporate Social Responsibility is operating a business in a manner which meets or excels the ethical, legal, commercial and public expectations that a society has from business.” The World Business Council for Sustainable Development stresses, “CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as of the local community and society at large”. The European Union defines CSR as “… the concept that an enterprise is accountable for its impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large”. It may be noted that CSR activities of an institution is reported by the Global Reporting Initiative (GRI) which is a multi-stakeholder initiative, formed to develop globally applicable guidelines that can be used voluntarily by reporting organizations. The cornerstone of the GRI framework is the Sustainability Reporting Guidelines. The third version of the Guidelines – known as the G3 Guidelines - was published in 2006, and is a free public good. The Guidelines were designed to help companies report on the economic, environmental and social impact of their business operations. The guidelines acknowledge independent verification as a measure of providing assurance for reliability and completeness of sustainability reports. They also recognize the potential for verification to “enhance the quality of information within an organization and the underlying management systems and processes.” An annex to the guidelines outlines principles for verification and offers advice as to what may be expected from verifiers –

http://www.globalreporting.org/NewsEventsPress/ConferenceAndEvents/Conference2006/


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such as contents for inclusion in the verification report. The guidelines suggest that principles and standards for verification of social reports need to allow for more diverse approaches than are used in traditional financial auditing, while maintaining fundamental audit concepts necessary to provide assurance and credibility.

The Reporting Framework is made up of the Sustainability Reporting Guidelines, Sector supplements, Indicator Protocols and soon to come, National Annexes 1 . Together these are known as the Sustainability Reporting Framework. Sustainability reports based on the GRI framework can be used to benchmark organizational performance with respect to laws, norms, codes, performance standards and voluntary initiatives; demonstrate organizational commitment to sustainable development; and compare organizational performance over time. With over 7,000 listed companies, India has only a handful about 162 reporting on Sustainability strategy. These reports are mainly from Oil and Gas, IT, Steel, Minerals, Automotive, Pharma and other such 'Industrial Sectors'. Reliance Industries, Infosys, TCS, Wipro, ITC, Larsen and Tubro, Mahindra, Maruti Suzuki, Tata Motors, SIDBI, TCS, Wipro and Sesa Goa are some of the organisations that report on sustainability in India, with the first eight companies having recently been given the highest rating (A+) for GRI for their latest Sustainability Report.

ISO 26000:2010 by International Standards Organization

ISO 26000:2010 provides guidance to all types of organizations, regardless of their size or location, on:

concepts, terms and definitions related to social responsibility; the background, trends and characteristics of social responsibility; principles and practices relating to social responsibility; the core subjects and issues of social responsibility; integrating, implementing and promoting socially responsible behaviour

throughout the organization and, through its policies and practices, within its sphere of influence;

identifying and engaging with stakeholders; and communicating commitments, performance and other information related to

social responsibility.

1 Pilot National Annex for Brazil is under implementation, based on which National Annexes for other countries will be developed. 2 Based on GRI Reporting List available at globalreporting.com


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ISO 26000:2010 is intended to assist organizations in contributing to sustainable development. It is intended to encourage them to go beyond legal compliance, recognizing that compliance with law is a fundamental duty of any organization and an essential part of their social responsibility. It is intended to promote common understanding in the field of social responsibility, and to complement other instruments and initiatives for social responsibility, not to replace them.

ISO 26000:2010 is not a management system standard. ISO 26000:2010 is intended to provide organizations with guidance concerning social responsibility and can be used as part of public policy activities.

CSR Guidelines by Ministry of Corporate Affairs (Government of India) The guidelines have been formulated with the fundamental principle that each business entity should formulate a CSR policy to guide its strategic planning and provide a roadmap for its CSR initiatives, which should be an integral part of overall business policy and aligned with its business goals. The policy should be framed with the participation of various level executives and should be approved by the Board. The CSR policy should cover various core elements, including care for all stakeholders, ethical functioning, respect for worker’s rights and welfare, respect for human rights, respect for environment and activities for social and inclusive development. Guidelines have also been provided for proper implementation of CSR practices. The Guidelines are voluntary and are not intended for regulatory or contractual use.

The Need for CSR Over the past decades, a growing number of companies have recognized the business benefits of CSR policies and practices. Their experiences have been bolstered by a growing body of empirical studies, which demonstrate that CSR has a positive impact on business economic performance and it is not harmful to shareholder value. Companies have also been encouraged to adopt and / or expand CSR efforts as a result of pressures from customers, suppliers, employees, communities, investors, activist organization and other stakeholders. As a result CSR has grown dramatically in recent years with companies of all sizes and sectors developing innovative strategies. Corporates have experienced a range of bottom line benefits, which include-

1. Improved financial performance: A recent longitudinal Harvard University study has found that "stakeholder balanced" companies showed four times the growth rate and eight times employment growth when compared to companies that focused only on shareholders and profit maximization.


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2. Increase in Exports: Especially in context of Indian textile industry, many

enterprises, which have adopted good CSR practices, have reported increase in

exports and number of foreign buyers in international markets such as EU and US. Good quality of products provides a competitive advantage to the enterprises and leads to greater acceptability of the product across the value chain.

3. Enhanced brand image & reputation: A company considered socially responsible can benefit both by its enhanced reputation with the public, as well as its reputation within the business community, increasing a company's ability to attract capital and trading partners.

4. Increased sales and customer loyalty: A number of studies have suggested a large and growing market for the products and services of companies perceived to be socially responsible. While businesses must first satisfy customers' key buying criteria - such as price, quality, appearance, taste, availability, safety and convenience. Studies also show a growing desire to buy based on other value-based criteria, such as “sweatshop-free" and “child labour-free” clothing, products with smaller environmental impact, and absence of genetically modified materials or ingredients.

5. Increased ability to attract and retain employees: Companies perceived to have

strong CSR commitments often find it easier to recruit employees, particularly in tight labour markets. Retention levels may be higher too, resulting in a reduction in turnover and associated recruitment and training costs. Tight labour markets as well the trend toward multiple jobs for shorter periods of time are challenging companies to develop ways to generate a return on the consideration resources invested in recruiting, hiring, and training.

6. Reduced regulatory oversight: Companies that demonstrate that they are engaging in practices that satisfy and go beyond regulatory compliance requirements are being given less scrutiny and freer rein by both national and local government entities. In many cases, such companies are subject to fewer inspections and paperwork, and may be given preference or "fast-track" treatment when applying for operating permits, zoning variances or other forms of governmental permission.

7. Easier access to capital: The Social Investment Forum reports that, in the U.S. in 1999, there is more than $2 trillion in assets under management in portfolios that use screens linked to ethics, the environment, and corporate social responsibility. It is clear that companies addressing ethical, social, and environmental responsibilities have rapidly growing access to capital that might not otherwise have been available.


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Generally stated, CSR leads to a more beneficial situation in terms of cost saving through improved working conditions, better opportunities for international trade and attracting foreign clients and financiers, higher loyalty and productivity by workers and saved costs by energy efficiency and cleaner production.

CSR Stakeholders A stakeholder is any group or individual who can effect, or is affected by the activities and achievements of an organization. The stakeholders can be divided into the following six groups– a) Providers of funds/Investors b) Employees c) General public/Society d) Government e) Customers and f) Suppliers It is important to understand the role of various stakeholders in formulating CSR policies of an organization. This role has been examined in detail in later part of the report, in light of findings from the CSR survey.

Drivers of CSR

Many citizens, environmental organizations and leadership companies define corporate environmental responsibility as the duty to cover the environmental implications of the company’s operations, products and facilities; eliminate waste and emissions; maximize the efficiency and productivity of its resources; and minimize practices that might adversely affect the enjoyment of the country’s resources by future generations. In the emerging global economy, where the Internet, the news media and the information revolution shine light on business practices around the world, companies are more and more frequently judged on the basis of their environmental stewardship. Partners in business and consumers want to know what is inside a company. They want to do business with companies in which they can trust and believe. This transparency of business practices means that for many companies, corporate social responsibility, CSR, is no longer a luxury but a requirement.

Basically, the drivers of CSR are the mix of incentives and risks directed at companies to improve standards. These drivers are market-based, usually beginning when a firm anticipates or responds to a risk associated with the social, labor or environmental impact of a specific business practice.


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Economic Drivers Social Drivers Political/Regulatory Drivers

Pressure from foreign buyers, investors, customers.

Improved company image/reputation.

Improved risk management

Competitive advantage

Cost savings

Alignment with industry trends

Supply chain

Loan (Capital) linked drivers*

Pressure from NGO/CSOs

Pressure from local communities

Trustworthy and sustainable relationships with the community at large

To be a good corporate citizen

License to operate

Improved standing with government

Legal, regulatory drivers

Political pressure

* Many enterprises have to follow certain CSR guidelines because of pressure from lenders providing loan to the enterprises. In India, this practice has been observed in case of loans provided by SIDBI using World Bank Line of Credit.

Constraints Faced by Indian MSMEs

Before we discuss the benefits of adopting CSR practices for an enterprise, it is important to understand the various challenges faced by the Indian MSME sector. These challenges directly or indirectly affect each and every member of a cluster and also have an impact on CSR practices within the cluster. Some of these challenges include:

Child labor: Some unorganized units (manufactures, sub-contractors and service providers) employ child labor. Though exporters do not hire children directly, they are employed further down the supply chain in numerous unregistered units. Under this type of decentralized production, the system favors the employers who remain outside the reach of the law. Child labor is hired usually for the process of stitching, dyeing, embroidery and packing activities. Some of these activities do not require technical know-how unlike others and hence the existence of child labor is higher in these processes. According to some reports, exports from Indian textile industry have been denied in EU, US and other developed nations because of violation of human rights provisions and low quality of products.

Harmful Work Environment: The workers of the dyeing units are under a continuous threat from falling prey to various health disorders such as skin infections, T.B and asthma etc. They continue to work in these conditions without much help being rendered to them. Many exporters explain that the pressure from the global buyers on compliance issues is increasing rapidly. Amidst these, certain provisions had been made to ensure the safety of the


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workers. The personal protective equipments such as masks, gloves etc had been provided to the workers but were only used at the time of an audit or buyer visit. Workers felt that the use of these were a hindrance in their work due to which they preferred not to use masks and gloves.

Availability of skilled manpower: The non-availability of trained manpower, especially at the management level, poses a key risk. Further, as the apparel sector grows rapidly, there will be pressure on existing players s new entrants look for trained manpower at various levels.

Supply chain issues: Supply Chain Management (SCM) efficiencies are essential to apparel manufacturers to maintain and improve margins. SCM includes vendor management and logistics management. Vendor selection is an important outcome of the sourcing process and a key to most efficient sourcing. Logistics management aims to get the goods from the vendor to the store in the shortest possible time thereby avoiding unnecessary stocking of goods. In India, both vendor management and logistics management are still underdeveloped.

Entry of international brands: International brands are looking at India as a large opportunity. With possible easing of FDI norms in retail, one would expect a larger number of international brands to enter India to retail their products.

Upgradation of Industry as a whole: Upgradation of industry as a whole is necessary to provide better products to consumers at affordable prices.


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CHAPTER 2: OBJECTIVE, SCOPE AND METHODOLOGY

Objective

Considering the diverse issues and concerns of CSR practices in the MSME sector in India, it is necessary to study the actual CSR practices in Indian MSME Sector and compare them with international best practices. In fact, more important is to enhance the CSR compliance level of Indian MSMEs to the internationally accepted levels. Accordingly, the objectives of the study are:

To document and compare the compliance of CSR practices of the Ludhiana textile cluster in India with the Nantong textile cluster in China.

To suggest measures to enhance the CSR compliance level of Ludhiana textile cluster to that of Nantong textile cluster in China, which is reported to have a high level of CSR compliance. In other words, suggest measures to twin the CSR practices in 2 clusters through the process of CSR CLUSTER TWINING.

To develop a CSR Framework based on the survey findings and best international practices in China, for implementation in Indian MSMEs.

Scope

The project has undertaken to study the CSR practices in Ludhiana textile cluster and Nantong textile cluster in China. Ludhiana textile cluster has been chosen because of the following reasons:

Ludhiana in Punjab is famous for woolen hosiery and constitutes a sizable chunk of the cotton hosiery market also. About 90% of the nation's output of woolen/acrylic hosiery comes from this region.

The Ludhiana knitwear industry manufactures a vast range of products, which includes a range of products for winter wear as well as for summer wear, knitted bed sheet, skirts, tops, sportswear, night suits, etc.

Ludhiana products have high demand in both domestic as well as international markets with increasing exports to US, EU markets in recent years.

China’s Nantong textile cluster has been chosen because of the following reasons:

Nantong is a major city of China specializing in textile and garment industry, and is known globally as “Silicon Valley in textile”.

The CSR practices of SMEs in Nantong cluster are found in compliance with international standards and in accordance with requirements of EU, US importers.


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Nantong exports a large number of textile products to EU and US markets. Its export delivery value reached 40.34 billion Yuan in 2007 and 39.83 billion Yuan in 2008.

In Nantong, high emphasis is laid on usage of modern technology for producing best quality textile products. A large amounts of machinery have been put into application, including over 30 thousand computerized embroidery machine and Computer multi-needle quilting machine ,more than 200 Spewing Adhesive , Printing , dyeing and finishing production line.

Nantong has a relatively complete coordinated system on the division of production encompassing spinning, weaving, printing and dyeing, manufacturing, finishing, packaging, researching.

While a detailed analysis of the said 2 clusters in given in Chapter 3, suffice is to say that both the clusters have many similar features as given below:

Majority of the MSMEs in both Ludhiana and Nantong textile clusters are involved in cotton manufacturing, wool manufacturing and knitting.

Both textile clusters have a highly diversified base comprising of formal and informal firms, small fabricators and independent job-workers.

Products of both the textile clusters have high demand and compete in the international EU, US markets.


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CHAPTER 3: FEATURES OF THE SURVEYED TEXTILE CLUSTERS About Surveyed Textile Cluster in China

The Outline of Textile Industry in Nantong

The modern history of Nantong’s textile industry Nantong city, located in Jiangsu province, is a charming city which adjacent to river and sea. She has special connection with China’s civilian economy, making the cradle of national textile industry, known globally as “Silicon Valley in textile”. The scale, diversity and influence of Nantong’s textile industry:

Scale and influence

By 2008， the number of scale enterprise in textile and garment industry in Nantong had reached 2248, with the sale income of 135.2 billion and employees up to 287 thousand. Known as one of the major cities specializing in textile and garment industry, Nantong enjoys two comparatively advantages—cotton textile and garment, making up 4.06％ of domestic production in related industry. Recently Nantong maintained a rapid growth on export in textile industry, with export delivery value reaching 40.34 billion in 2007, and 39.83 billion in 2008. The scale of textile corporations is enlarging constantly. Among all the scale enterprises in Nantong, there are 6 textile groups, possessing total asset over 1 billion each. China’s leading textile enterprises in Nantong: XinYuan silk group, KaiSheng Home Textile corp, DaSheng group, JiangSu SanYou group affiliated to DaSheng group, DiAo group, LianFa group, Silk Group Co., Ltd etc. Thousands of business enterprises offering auxiliary service and tens of thousands of individual business form the unique manufactory and marketing group including corporations, peasant householder and productions, as well as the auxiliary and relatively complete coordinated system on the division of production encompassing Spinning, weaving, printing and dyeing, manufacturing, finishing, packaging, researching. A large amounts of machinery have been put into application, including over 10 thousand Water-jet Loom and air-jet loom, over 30 thousand computerized embroidery machine and Computer multi-needle quilting machine ,more than 200 Spewing Adhesive , Printing , dyeing and finishing production line including , and more than 3 thousand other equipment.

Categories

The textile industry in Nantong mainly includes: cotton manufacturing, wool manufacturing, knitting, bast fibre manufacturing, silk manufacturing, clothing,


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chemical fiber, yarn-dyed fabric, printing & dyeing, textile machinery and home textiles. The annual output of the main textile products is summed as following: yarn, 0.2836 million tons; grey cloth, 1.36 billion meters (cotton fabric, 0.915billion meters; blended fabric, 0.282 billion meters; pure chemical fiber cloth, 0.163 billion meters); dyeing cloth, 1.167 billion meters; wool (yarn), 6115.99 tons; hemp fabric, 0.9841 million meters; raw silk, 5584.16 tons; silk products, 59.4753 million meters; clothing output, 0.383 billion pieces (suites).

Industrial Scale

Sanxing town in Haimen is the featured town as the textile industry. Tongzhou district is the base district as China’s textile industry. Chuangang town is the famous featured town as China’s home textile embroidery. Libao town in Haian is authorized as the famous featured town on the knitting industry. Nantong is located in the Yangtze River Delta which is the fastest economic growing area in China. In Nantong, the resources of the textile materials are relatively abundant and the quality of labor force is relatively high. Nantong acted as our base for the surveys. Apart from Nantong, survey was also done in following major textile clusters around Nantong:

Haimen, Jiangsu (large textile hub where majority of SMEs have passed the identification of ISO19000 and some have been through the identification of ISO14000)

Taicang, Jiangsu (a major textile cluster with 1002 enterprises, and 54,000 employees)

Tongzhou, Jiangsu (top textile city and its products have a popular market in USA, France, Japan etc, more than 40 countries and regions)

Shaoxing, Zhejiang (Has 3800 textile enterprise, employing 140,000 people. Famous for dyeing, printing and light textile industry)

About Surveyed Textile Cluster in India: Ludhiana

Ludhiana is one of the two largest cities and largest industrial hub of Punjab known as the Manchester of India, having population of more than 15 lakhs. Ludhiana in Punjab is famous for woolen hosiery and constitutes a sizable chunk of the cotton hosiery market also. About 90% of the nation's output of woolen/acrylic hosiery comes from

this region. Ludhiana knitwear cluster has a highly diversified base with about 11, 000 formal and informal firms, and employs more than 200,000 workers. The knitwear industry has a range of firms employing 50 to 2500 workers depending upon size of firm, i.e. large, medium or small. Besides, there are about 9,000 or so small ``fabricators,'' or independent job-workers who own basic knitting and fabricating equipment and knit or process woolen garments for other larger manufacturers, but do


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not finish them. There are a large number of women home-based workers in this group who do embroidery and related tasks. The Ludhiana knitwear industry manufactures a vast range of products, which includes a range of products for winter wear like `sweaters, woollen socks, pullovers, cardigans, thermal wear, gloves, muffler, baret caps, shawls, jackets, jersey, and blankets, and for summer wear like T-shirts, cotton and blended socks, under garments, knitted bed sheet, skirts, tops, sportswear, night suits, etc.. The woolen products have a large range of raw material variety, i.e., Pure Marino, Botany, Lamb's wool, Shetland, Angora and Mohair range, in keeping with the latest demand trends from latest international fashion and color forecasts. These Ludhiana products have high demand in both domestic as well as international markets. The cluster units use different kinds of yarn for different markets. Main yarn range consists of cotton yarn, acrylic, pure and recycled wool, cashmelon and different blends. Designs for clothes for the domestic market are generally copied from the magazines, etc or samples provided by the buyers. Embroidery, patchwork, printing and beadwork are done with indigenous machinery and the quality of embroidery is not up to the standards acceptable in international markets. The share of domestic sale and exports is more or less 70:30. Main export markets – till early 1990s, it was former USSR and Middle East and now in recent years it has expanded to other markets in Europe and USA. Punjab exported ready-made garments and hosiery worth about Rs. 1312 crores in the year 2004, which went up to Rs. 1618 crores by March 2005.


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CHAPTER 4: SURVEY GRAPHS AND ANALYSIS

CSR BASELINE According to our survey of textile enterprises in and around Nantong, China, majority of the respondents follow CSR practices with adherence to established norms like environment and social norms and a business necessity. Hence, CSR forms a part of their business, not outside the business. For example, 53% enterprises also see it as a Guideline for environmental and social issues, 60% of the companies felt that, Social Responsibility in the SME industry implies building better goodwill that will enable them to strengthen contacts, while 45% of the surveyed enterprises consider CSR as an imperative requirement for exporting to buyers in the EU and US (Fig 1.1.1). A comparison with GRI Indicators reveals that the textile units in and around Nantong, China comply with 27 Performance Indicators (GRI LEVEL: A) (Annexure 1) In Ludhiana textile cluster, CSR compliance was found at lower level. In this cluster, CSR is primarily understood as taking care of their labour (71% respondents), while 56% of the enterprise consider CSR as a mean to building brand value of the enterprise (Fig 1.1.2). When compared with GRI Indicators, the Ludhiana textile units were found to be complying with only 12 Performance Indicators (GRI LEVEL: C). Major comparative findings on CSR compliance in these two textile clusters are given below:

Fig 1.1.1: CSR Baseline (China)


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Fig 1.1.2: CSR Baseline (India)

Challenges in Implementing CSR Practices Enterprises face many challenges in implementing CSR practices. So is the case with enterprises in the Chinese textile industry. These challenges directly or indirectly affect each and every member of a textile cluster and also have an impact on CSR practices within the cluster. According to the survey, 30% of the enterprises in China face challenges of limited financial resources and lack of employee participation, while implementing CSR practices. Around a fifth of the enterprises also face issues of lack of understanding of CSR activities and a conflict in coming to a consensus on implementing these CSR practices (Fig 1.2.1). Whereas in India, 44% of the enterprises face the challenge of non-availability of clear CSR guidelines, which is not the case with textile enterprises in China. The other major challenge faced by 39% of the Indian enterprises is less understanding of CSR practices. (Fig 1.2.2)


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Fig 1.2.1: Challenges in Implementing CSR Practices (China)

Fig 1.2.2: Challenges in Implementing CSR Practices (India)


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Drivers of CSR

Basically, the drivers of CSR are the mix of incentives and risks directed at companies to improve standards. These drivers are market-based, usually beginning when a firm anticipates or responds to a risk associated with the social, labor or environmental impact of a specific business practice.

55% of the companies surveyed in China say that the biggest drivers are Community and Employees within the company. Pressure from local communities and maintaining trustworthy and sustainable relationships with the community at large are important drivers. 41% also feel that the enterprise itself is reason enough to implement CSR. (Fig 1.3.1)

33% of the surveyed enterprises in China consider Foreign Buyers as the main driver of CSR activities while only 10% of the surveyed enterprises in India consider the same. 81% of the surveyed enterprises in India consider themselves as an important enough driver for CSR activities while 39% consider Employees as the main driver. (Fig 1.3.2)

Fig 1.3.1: Drivers of CSR (China

Fig 1.3.2: Drivers of CSR (India)


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INTERNAL CSR PRACTICES Internal CSR Practices of the Enterprises Inward looking CSR activities aim to strengthen the organization mainly for the benefit of its labor force and the working environment. Particularly in terms of labor welfare-

83% of the surveyed enterprises in China pay bonus to the employees compared to 46% of the surveyed enterprises in India. (Fig 1.4.1 and Fig 1.4.2)

61% of surveyed enterprises in China undertake performance review programmes as an important part of Internal CSR practices while only 26% of surveyed enterprises in India do so.

Job security is an integral part of internal CSR practices of 54% of surveyed enterprises in China compared to 30% in India.

Fig 1.4.1: Internal CSR Practices of Enterprises (China)


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Fig 1.4.2: Internal CSR Practices of Enterprises (India)

Healthcare CSR activities extend to employees’ children and next of kin. In terms of contribution to health care:

65% of the surveyed enterprises in China have provision of personal protective equipments like gloves, masks and mesh iron gloves for cutters compared to only 29% of surveyed enterprises in India.

In 59% of surveyed enterprises in China, every department has a second exit while in India only 31% of surveyed enterprises have a second exit.

Fig 1.5.1: Internal CSR Practices for Healthcare (China)


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Fig 1.5.2: Internal CSR Practices for Healthcare (India)

More and more enterprises have started considering corporate environmental

responsibility as their duty to cover the environmental implications of the company’s operations, products and facilities; eliminate waste and emissions; maximize the efficiency and productivity of its resources; and minimize practices that might adversely affect the enjoyment of the country’s resources by future generations.

According to the results of the 104 enterprises surveyed in China, 38% of the enterprises have undertaken activities to reduce environmental impacts of products and hazardous wastes compared to only 4% of surveyed enterprises in India. (Fig 1.6.1 and Fig 1.6.2)

27% of the enterprises (China) have also undertaken initiatives to reduce indirect energy consumption, compared to 16% of enterprises in India.

Fig 1.6.1: Internal CSR Activities for Environment- Cleaner production (China)


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Fig 1.6.2: Internal CSR Activities for Environment- Cleaner production (India)

Training and Development are very important drivers of any organization. Installation of Fire Extinguishers is an important CSR activity undertaken by most of the enterprises.

In China, 56 of the 68 surveyed enterprises (about 82%) installing fire extinguishers provide training to their workers on first aid and fire fighting. While 73% of the employees in the respondent units in China cluster have been given training in first aid and fire fighting, in case of Ludhiana textile cluster in India, only 46% of employees in the surveyed units have been imparted such training.

Of those surveyed, 44% of the enterprises in China have policies/guidelines for protection of Human Rights compared to only 7% in India.

Fig 1.7.1: Internal CSR Activities for Training and Development (China)


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Fig 1.7.2: Internal CSR Activities for Training and Development (India)

EXTERNAL CSR PRACTICES Outward looking CSR focuses on activities directed towards the benefit of the community at large in which the enterprise operates. Dominated by charity donations, which are strongly influenced by religious sentiment, the contributions take on various forms. Entrepreneurs’ are the key drivers and thus want to express their larger responsibility towards the community where “everyone knows each other, and we, the more fortunate cannot deny the help”. In terms of charity donations, about 60% of the surveyed enterprises provide financial help to their worker’s family in an event of death (Fig 1.8.1). Out of the 23 small enterprises surveyed, only 50% provide this kind of help to their worker’s family.

In India, 90% of the surveyed enterprises donate to religious bodies, 69% of the enterprises provide financial help to workers family in case of dealth and 4% of the enterprises organise community kitchen. (Fig 1.8.2)

Fig 1.8.1: External CSR Activities for Charity Donations (China)


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Fig 1.8.1: External CSR Activities for Charity Donations (India)

In terms of health care related external CSR activities, out of the 104 enterprises surveyed in China 70% lend support to the worker’s in case their family members are ill compared to 50% of surveyed enterprises in India. 40% of the enterprises in China donate to hospitals for treating poor and old people compared to 49% in India. (Fig 1.9.1 and Fig 1.9.2).

Fig 1.9.1: External CSR Activities in terms of Healthcare (China)


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Fig 1.9.2: External CSR Activities in terms of Healthcare (India)

While environment and community welfare are limited to a few clusters, the contributions often constitute a large chunk of the external CSR budget of SMEs. Mainitaining cleanliness of the factory surroundings and taking appropriate measures of disposal of garbage are the most important external CSR activities undertaken by over 72% of the surveyed enterprises in China and over 57% in India, as per the survey results. (Fig 1.10.1 and Fig 1.10.2). In China, 36% of survryed enterprises have undertaken initaitive for chemical waste treatments compared to only 3% in India.

Fig 1.10.1: External CSR activities for Environment (China)


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Fig 1.10.2: External CSR activities for Environment (India)

Contributions towards education include funds flow to skills development institutions or for construction of schools and cultural centers. Frequently enterprise leader establish NGOs to run schools and training institutions, which not only benefit the sector but also the community. According to the survey, 54% of the surveyed Chinese enterprises provide aid in terms of scholarship or monetary help to poor students compared to 17% in India. About 42% of the Chinese enterprises also donate to schools, training centers and sport facilities compared to 27% in India. (Fig 1.11.1 and Fig 1.11.2)

Fig 1.10.1: External CSR Activities in Education (China)


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Fig 1.10.2: External CSR Activities in Education (India)

INDIVIDUAL CSR Impact of Financial Crisis The global financial crisis had a severe impact on textile industry as there was a decrease in demand from markets in EU and US. However, despite the downturn 82% of the surveyed Chinese enterprises and 94% of the surveyed Indian enterprises continued undertaking CSR activities. Of the 23 small sized enterprises surveyed in China, 21 of them undertook CSR activities and 80% of the medium sized enterprises also continued with the same. Health related activities have continued to be undertaken by 55% of the total surveyed Chinese enterprises, despite difficulty in financial situation faced by the enterprise (Fig 1.13.1). Education related activities have also been continued by 32% of the Chinese enterprises in these times. Charities and recreational events have been cut down in these situations. In India, 91% of the surveyed enterprises continued their charity welfare, health and environment related activities. (Fig 1.13.2)


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Fig 1.13.1: Activities continued, despite the financial crisis (China)

Fig 1.13.2: Activities continued, despite the financial crisis (India)

Motivation for Internal and External CSR

CSR leads to a more beneficial situation in terms of cost saving through improved working conditions, better opportunities for international trade and attracting foreign clients and financiers, higher loyalty and productivity by workers and saved costs by energy efficiency and cleaner production.

Around 52% of the surveyed Chinese enterprises compared to 29% of surveyed Indian enterprises feel, that the strongest motivators of undertaking any type of internal and external CSR are that it leads to an increase in production efficiency or capacity. (Fig 1.14.1 and Fig 1.14.2)


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49% of the enterprises consider security of future orders as the major motivator in undertaking CSR activities, compared to only 4% of surveyed in Indian enterprises.

41% of surveyed enterprises in China consider that undertaking any form of CSR practices attracts more investments in the future, compared to only 14% of surveyed enterprises in India.

Fig 1.14.1: Motivation for Internal and External CSR (China)

Fig 1.14.2: Motivation for Internal and External CSR (India)


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COLLECTIVE CSR CSR activities conducted jointly with either cluster enterprises or support organization are considered as collective. Examples of collective CSR practices are the same as those of external CSR practices, when done jointly with other enterprises or support organizations.

According to the survey results in China, 80% of the 104 enterprises surveyed, provide their employees with good working conditions as an important part of Labor Welfare. Another important activity that has been taken care of by almost 65% of the enterprises is fair pay practices like minimum wages and statutory benefits (Fig 1.15.1).

Fig 1.15.1: Collective CSR Activities for Labour Welfare. (China)

Fig 1.15.2: Collective CSR Activities for Labour Welfare. (India)


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In terms of healthcare, 92% of the surveyed Chinese enterprises provide training to their employees on drug abuse, family planning, HIV and AIDS; compared to only 7% of the enterprises in India. (Fig 1.16.1 and Fig 1.16.2)

Fig 1.16.1: Collective CSR Activities for Healthcare. (China)

Fig 1.16.2: Collective CSR Activities for Healthcare. (India)

In terms of environment, 76% of the surveyed Chinese enterprises have undertaken collective activities for disposal of garbage (Fig 1.17.1). 41% of the Chinese enterprises have established a proper system for handling hazardous materials compared to 14% of Indian enterprises. (Fig 1.17.2)


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Fig 1.17.1: Collective CSR Activities for Environment. (China)

Fig 1.17.2: Collective CSR Activities for Environment. (India)

In terms of training and development, 39% of surveyed Chinese enterprises provide training to staff by sending them abroad in exhibitions and trade fairs while in India, none of the surveyed enterprise undertake this initiative. 72% of Chinese enterprises provide training to staff on technical issue coampred to only 13% of Indian enterprises. (Fig 1.18.1 and Fig 1.18.2)


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Fig 1.18.1: Collective CSR Activities for Training and Development. (China)

Fig 1.18.2: Collective CSR Activities for Training and Development. (India) In terms of pereference, according to the survey, 73% of the surveyed Chinese enterprises and 34% of the surveyed Indian enterprises prefer Collective CSR over Individual CSR. All enterprises have stated various reasons for doing so. Some feel it is easier to do this as their individual ability is limited and it consumes less time. Some believe that Collective CSR is the necessary foundation when people live in the community and say that “Solidarity means Strength.” In China, 75% of the medium sized enterprises prefer collective CSR and 65% of the small sized enterprises feel the same.


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Impact of CSR Activities Undertaking internal or external CSR activities have led to an increase in enterprise cooperation for 56% of the surveyed enterprises in China and only 9% of surveyed enterprises in India. Profit margins have increased for 44% of the Chinese enterprises compared to only 20% of Indian enterprises (Fig 1.20.1 and Fig 1.20.2). Other important positive affects have been an increase in sales, company brand value and exports. Good quality of products provides a competitive advantage to the enterprises and leads to greater acceptability of the product across the value chain.

Fig 1.20.1: Impact of CSR Activities (individual or collective) on the cluster (China)

Fig 1.20.2: Impact of CSR Activities (individual or collective) on the cluster (India)


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CSR REPORTING An increasing number of companies are reporting publicly on their social, environmental and ethical performance, both as a communication to stakeholders, and as a management tool. In China, 62% of the surveyed enterprises communicate to the public their CSR activities, while in India, none of the surveyed enterprises communicate their CSR activities to public (Fig 1.21).

Fig 1.21: CSR Reporting in China

GUIDELINES FOR CSR REPORTING

70% of the surveyed Chinese enterprises use the guidelines specified under CSC9000T system by Responsible Supply Chain Association (CNTAC-RSCA) to communicate CSR activities. In terms of frequency of reporting, 17% of the surveyed enterprises have an annual period of reporting. CSC9000T China Social Compliance for Textile & Apparel Industry - Principles and Guidelines were released in 2005 and since then has received a positive response from the industry and organizations both at home and abroad. CSC9000T places an emphasis on operating business under the law and applying systematic management. Businesses are expected to respect the rules of law and strengthen CSR practice by means of establishing and perfecting internal management system that controls key CSR elements. In this sense, CSC9000T sets its bottom line at observing Chinese rules and regulations concerning these elements, which is determined by the development status quo of Chinese textile and apparel industry. CSC9000T consists of 10 elements, including management system, employment contract, child labor, forced or compulsory labor, working hours, wages and welfare, discrimination, trade union and collective bargaining, harassment and abuse, health and safety.


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Apparently, CSC9000T covers all the key CSR issues within the Chinese textile and apparel industry that international brand owners and retailers are most concerned about and these issues are also specified in their codes of conduct. Meanwhile, it also contains other elements determined by the practical conditions of the Chinese textile and apparel industry.

STAKEHOLDERS In China, the main stakeholder groups of the survryed enterprises are their customers, suppliers and employees whereas in India, the main stakeholder groups are suppliers and employees (Fig 1.22.1 and Fig 1.22.2).

Fig 1.22.1: Stakeholder Groups (China)

Fig 1.22.2: Stakeholder Groups (India)


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Methods for Stakeholder Communication 62% of surveyed enterprises in China communicate with their stakeholders through an open door policy compared to only 21% in India (Fig 1.23). Visits to plants and factories are an important mode of communication both in India and China. Other widely used methods in China are annual reports and in India are annual general meetings and review meetings.

Fig 1.23.1: Methods for Stakeholder Communication (China)

Fig 1.23.2: Methods for Stakeholder Communication (India)


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CHAPTER 5: PROPOSED CSR MODEL FOR IMPLEMENTATION IN INDIAN TEXTILE SMEs Based on the results of the surveys in China and India, and after doing a detailed study of the existing CSR Models in China and EU, we have prepared a CSR Model for implementation in Indian textile SMEs to improve their CSR practices. The proposed CSR Model should help the enterprise in gaining a better understanding of their organization and at the same time determine the current state of the organization in relation to CSR. The enterprise should be able to use the tool to improve their CSR practices, enhance their export competitiveness and production efficiency. The proposed CSR Model is explained below.

CSR Model for Indian Textile SMEs


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The Model, as depicted in the above flowchart, includes the following steps: 1. A CSR Committee should be formed, which will be responsible for identifying the

organizational goals, impacts and develop the CSR policy. The committee should be multidisciplinary and composed of top management staff of the organization and representatives from various verticals/departments of the organization, which includes procurement, manufacturing, sales and distribution, human resources, finance and administration.

2. Before making the CSR policy of the organization, the CSR Committee should be fully aware of the situation of the organization in terms of its core competencies, main competitors, drivers and motivation towards CSR and innovation and barriers that have prevented the adoption of related practices. For accomplishing this task, the committee should use the SELF ASSESMENT TOOL, which will help the committee gain a better understanding of their organization and at the same time determine the current state of the organization in relation to CSR. The committee should use the tool and also take inputs from the various external and internal stakeholders of the organization. The different stakeholders could be investors, suppliers, buyers, employees, and also regulators.

3. Based on the inputs received using the tool and with reference from the GRI and ISO 26000 CSR Guidelines, the CSR Committee should develop the CSR POLICY of the organization. The policy should outline why the organization wants to adopt CSR practices, what it expects to be the end result of this process and also define certain indicators to monitor, measure the performance. CSR should be integrated into the organization’s corporate philosophy and culture and the organization may choose to set aside a percentage of the profits for CSR initiatives.

4. The next task for the committee is to form various departmental task teams, which would be responsible for defining and implementing various internal and external

CSR activities to be undertaken to achieve the CSR goals defined in the above step. Activities could be defined in the following areas: - Internal CSR: Labour welfare, healthcare, environment- cleaner production and

training and development. - External CSR: Charities-welfare, healthcare in the community, education

initiatives, social environment.

5. Now is the time for the Task Teams to implement the CSR activities worked out in Steps 3 and 4 above. Each Task Team should be responsible for implementing CSR activities in their particular department, and milestones and deadlines should be established. Business procedures and management systems may have to be changed, if necessary, to achieve the desired CSR goals.


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6. A Review should be conducted every six months to ascertain the progress made towards the achieving the CSR goals of the organization as defined in Step 3 and identify the gaps/short comings, if any. If there are shortcomings and the goals are not fulfilled, the entire process from steps 2 to 5 should be repeated.

7. CSR Reporting: After successful implementation, comes time to produce the Business Responsibility Report of the entity. The Report acts as a medium for the company to report publicly on their social, environmental and ethical performance, both as a communication to stakeholders, and as a management tool. The entity may use the GRI Guidelines, which set out the principles and indicators to measure and report their economic, environmental, and social performance. Recently, the Ministry of Corporate Affairs (MCA) has suggested a draft framework which can be used by businesses to report on their performance areas of employee welfare, environment, human rights, stakeholder engagement, policy advocacy, inclusive growth and customer value.

SELF ASSESSMENT TOOL

Section A – The purpose of this section is to help the CSR Team gain a better understanding of their organization. The Team will be able to identify the unspoken goals of the organization through recognizing customer requirements and core organizational competencies, and understanding the market and the long term objectives of the organization. 1. Name of Enterprise 2. Name of Respondent 3. Respondent’s Position: 4. Main Product(s)

_ _ _

5. Main markets

- Local - Regional - Export:

- Number of countries you export to: - Name the major countries of export:


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6. What are your company’s core competencies? - Quality - Product Innovation - Process Innovation - Price - Brand - Customer Service - Flexibility - Any other:

7. What are the requirements of your buyers, especially foreign buyers? - - - - 8. What are the goals of your company?

- To become a global player - Produce low cost, good quality products - Develop innovative products - Simplify customer service - Any other:

9. What is your main motivation to CSR?

- Security of future orders - Values and Religious sensitivities - Gain production efficiencies - Pressure from buyers - Pressure from authorities/regulators - Clean environment - Follow the steps of other competitor - Financial gain/reduction in costs - Others, explain

10. What do you understand by Social Responsibility?

- Monitoring system imposed by our clients - Guideline for environmental and social issues - Requirement for exporting to buyers in EU, US - Better goodwill and trust among buyers and suppliers - Building brand value - Taking care of labour - Accreditation/Certification systems


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- Involving in community welfare - Requirement for working with global brands

11. What are the reasons for absence of CSR activities?

Internal - Lack of knowledge and awareness - Lack of time - Lack of funds - Lack of skilled manpower

External - Risk involved - Pressure from competitors - No need due to lack of demand

12. What are the various stakeholder groups for your enterprise?

- Suppliers - International buyers - Society - Employees - Shareholders - Customers - Regulators - Any other, please specify:

Section B – The purpose of this section is to help the CSR Team determine the current state of the organization in areas of employee welfare, environment, human rights, stakeholder engagement, policy advocacy, inclusive growth and customer value. The questionnaire will enable the Team to assess the current gaps, observe the existing relationship with various stakeholders and identify the understanding of the organization of CSR concepts. Labour Welfare 1. Do you have a performance review program for your employees?

- Yes - No - In part - Don’t know


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2. Do you have training and skill development programs for your employees, in terms of?

Activity YES NO Don’t Know

Training to staff by sending abroad in fairs, exhibitions etc.

Training to staff on technical issues.

Training on drug abuse, family planning, HIV & AIDS.

Training to workers on first aid, fire fighting.

Training on aspects of human rights (child labour etc.)

3. Do you involve your employees in the product development process/in making important decisions?

- Yes - No - In part - Don’t know 4. Does your enterprise have suitable arrangements for health, safety and welfare that provide sufficient protection for your employees?


Ambulance, medical room in the facility

Adequate number of First aid boxes

Adequate number of Fire extinguishers

Provision of personal protective equipments like gloves, masks and mesh iron gloves for cutters

Every department has second exit

Provision of adequate lighting in the facility

Medical help especially in case of an accident

5. Is there transparency in appointment letters, contracts?


6. Are employees provided with monetary help for wedding, education or any special need, as when required?

- Yes - No - Sometimes - Don’t know 7. Are employees provided with bonus, gifts on festivals, special occasions?

- Yes - No - Sometimes - Don’t know 8. Do you organise any recreational events, tourism etc. for your employees?

- Yes - No - Don’t know


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Why is Labour Welfare Important? The long-term success of an enterprise often depends on the knowledge, skills, talent, innovative creativity and – particularly – the motivation of its employees. As the enterprise grows, it needs people that you can rely on and delegate to, so that you can strengthen the business. Although complying with legislation covering employment, workplace health and safety issues can ensure that you provide for your workers’ basic needs, visible commitment to the improvement of their job satisfaction, career development and personal welfare will demonstrate that you really value them as individuals – and that you value their contribution to your business. Involving your employees will allow you to get more from them in terms of ideas, commitment and loyalty, enhancing your effectiveness as an entrepreneur. Employees are the frontline troops of most businesses and may often see problems –and solutions – before you do. By ensuring that they understand your company’s values and way of working, and by allowing them to contribute their ideas, they will help you better manage change as your enterprise evolves. Here are some tips to help you build good ‘internal partnerships’ with your employees:

ensure that there is trust between managers and employees;

consult with your employees on business matters (where useful) and seek their cooperation on matters of importance to the company; and

consider how individual employees’ career development and skill-training can benefit your business over the long term.

Effective internal partnerships also create relationships that improve your business’ flexibility, responsiveness and ability to share knowledge between workers. A motivated staff often leads to a stable, contented workforce – and helps to build a good reputation for the enterprise. Environment- Cleaner production 9. Have you taken initiatives to reduce your enterprise’s environmental impact in terms of:


Waste minimization, disposal and recycling

Reducing indirect energy consumption

Pollution prevention (e.g. emission of air and water, noise)

Provide energy efficient or renewable energy based products


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Reducing greenhouse emissions

Mitigate environmental impacts of products and hazardous wastes

Sustainable transport options

Cleaning of factory surroundings

10. Have you obtained NOC-Fire from the fire department?

- Yes - No - Don’t know 11. Does your enterprise provide clear and accurate environmental information on its products and activities to customers, suppliers, local community etc.?


12. Do you think your enterprise will gain (save money) if it takes steps to reduce its environmental impact (e.g. by recycling, reducing energy consumption, preventing pollution)?

- Yes - No - In part - Don’t know Why are good environment policies needed for the organisation? Environmental degradation is both a global and a local problem of increasing concern throughout society – and therefore also among your customers, especially those from the US and EU markets. It has become imperative for to address issues such as global warming, biodiversity conservation and climate change in a comprehensive and systematic manner. Further, good environmental performance often makes financial sense. Energy efficiency, pollution prevention, waste minimisation and recycling can all result in significant cost-reductions for the business, as well as other benefits such as ensuring compliance with environmental regulations, improving your relationship with the local community, motivating your employees and making your customers more loyal. All of these benefits clearly contribute to the long-term sustainability and success of your enterprise. All companies – regardless of size or sector – can have positive and negative impacts on the environment. Negative impacts arise through the direct or indirect consumption of energy and resources, the generation of waste and pollutants and the destruction of natural habitats. Businesses need to understand and be accountable for direct and indirect environmental impacts of their operations, products and services and strive to make them more beneficial. Although the potential to reduce negative environmental impacts may be limited in smaller enterprises, every enterprise can help by reducing energy consumption, by


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minimising waste and by recycling materials. Even modest improvements can make a profound difference when aggregated with the efforts of other businesses. Human Rights 13. Do you have policies/guidelines for protection of human rights?

- Yes - No - Don’t know 14. Is there a process (mechanism for addressing grievances) to ensure adequate steps are taken against all forms of discrimination on basis of caste, religion or gender, both in the workplace and at the time of recruitment?

- Yes - No - Partially - Don’t know 15. Is equal pay provided to employees at same level, with same skills?

- Yes - No - Don’t know

Why is it necessary to have policies for human rights? Human rights are the codification and agreement of what it means to treat others with dignity and respect. In recent times, it has become necessary for businesses to integrate respect for human rights in management systems, in particular through assessing and managing human rights impacts of operations, and ensuring all individuals impacted by the business have access to grievance mechanisms. Respect for human rights help businesses to manage risks, seize business opportunities and compete in a responsible fashion. It also enhances you’re the reputation and brand value of your business among the key stakeholders, including shareholders, employees, customers and others. Community Welfare 14. Does your enterprise provide support to local community activities and projects, in terms of:


Donation to religious bodies/temples

Help for marriage in community

Community Kitchen

Health camp for employees, their family members and community


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Donations to hospital

Donation to schools, training centers, sport facilities etc.

Scholarships to needy students

Any other

15. Are your employees encouraged to participate in local community activities (e.g. providing employee time and expertise, or other practical help)?

- Yes - No - Sometimes - Don’t know Why good community welfare policies are needed for the enterprise? There is a clear connection between a healthy and profitable business and the wellbeing of the community around it. Most small businesses are an integral part of their community and have an active involvement with local aspirations and activities. Such enterprises enjoy benefits such as:

valuable networking and links with other local enterprises;

increased customer recognition and esteem;

enhanced company reputation and brand value; and

improved staff recruitment and retention. But being a good neighbour is not just about having respect for others in your immediate vicinity. Community support can include anything that benefits the community, such as sponsorship or the provision of time and expertise. It might cover participation in local sporting, educational or cultural initiatives. Helping to tackle social issues such as crime-prevention or long-term unemployment in your local area may also help the long-term financial success of your business. Being positively engaged in your local community can also help you identify new markets, customers or business opportunities, build contacts with local authorities and opinion-leaders, and facilitate new partnerships with other businesses on community projects. Try to choose activities that are aligned with your enterprise’s business objectives (e.g. activities that interest potential customers or address your company’s training and employment needs), are relevant to your local community, engage your employees and are within your capacity to provide. Stakeholder Engagement 16. What is the importance of the following stakeholders to your enterprise?

S. No.

Stakeholder Not Important

Low Important

Medium Importance

High Importance

1. Suppliers


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2. International buyers

3. Society

4. Employees

5. Shareholders

6. Customers

7. Regulators

8. Any other

17. Do you engage with your stakeholders? If yes, what are your various approaches?

- Annual Report - Annual General Meetings - Representation in Board - Open-door policy - Training programs and workshops - Review meetings - Visit to factory, plants - Any other, please specify:

Why is it necessary to engage with the stakeholders? Stakeholder engagement is the process by which a firm's stakeholders engage in dialog to improve a firm's decision-making and accountability toward CSR. Stakeholder engagement works to take into account the concerns and objectives of a firm's stakeholders in its decisions. The stakeholders of an organization include suppliers, customers, employees, shareholders, lenders, community, regulators etc. Stakeholder engagement provides opportunities to further align business practices with societal needs and expectations, helping to drive long-term sustainability and shareholder value. It helps in taking inputs from all the groups that will be affected by the company’s decision. The enterprise should engage in an open, two-way dialogue with its stakeholders seeking understanding and solutions to issues of mutual concern.


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ANNEXURE 1

The table below gives a list of the CSR activities being undertaken by the surveyed textile clusters in China and India, in accordance with the GRI Indicators.

GRI Indicator Protocol Set

GRI Indicator Protocol Specific CSR Activities under the Indicator

Compliance in China

Compliance in India

Governance, Commitments

and Engagements

4.5: Linkage between compensation for members of the highest governance body, senior managers, and executives, and the organization’s performance

√

4.8: Statements of mission or values, codes of conduct, and principles.

√ √

4.9: Procedures of the highest governance body for overseeing opportunities and risks.

√

4.12: Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses.

√

4.13: Memberships in Associations √ √ 4.14: Type of Stakeholder Groups Suppliers √ √

International Buyers √ √ Society Employees √ √ Shareholders √ Customers √ √ Regulators (Government)

4.16: Various Methods of Stakeholder Engagements

Annual Report √ Annual General Meetings √ Representation in Board Open-door policy √ Review Meetings √ Visit to factory, plants √ √

4.17: Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.


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Compliance in China

Compliance in India

Economic EC1: Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

Donations to religious bodies (temples)

√

Financial help to worker's family in event of death (employee compensation)

√ √

Bonus (employee benefits)

√ √

Overtime (employee benefits)

√ √

Community kitchen √ Donation to organisations working for poor and old people

√ √

Financial help for marriages in community

Scholarships or monetary help to poor students

√ √

Donation to schools, training centers, sport facilities etc.

√ √

Donations to hospital for treating poor and old people

√ √

EC4: Significant financial assistance received from government.

√

EC5: Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.

Fair play like minimum wages and statutory benefits

√

Environment EN6: Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives.

Activities undertaken to make energy efficient or renewable energy based products

√

EN7: Initiatives to reduce indirect energy consumption and reductions achieved.

Activities to reduce indirect energy consumption

√ √

EN18: Initiatives to reduce greenhouse gas emissions and reductions achieved.

Activities aimed at reducing greenhouse emissions

√

EN22: Total weight of waste by type and disposal method.

Waste disposal facilities √ √


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Compliance in China

Compliance in India

EN24: Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Waste treatment plants

Proper system of handling hazardous materials and effluent treat plant

√ √

EN26: Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Activities taken to reduce environmental impacts of products

√

Labour Practices and Decent Work

LA1: Data on Total workforce √ √

LA2: Total number and rate of employee turnover by age group, gender, and region.

√ √

LA8: Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

Ambulance, medical room in the facility

√ √

Adequate number of First aid boxes

√ √

Adequate number of Fire extinguishers.

√ √

Provision of personal protective equipments like gloves, masks and mesh iron gloves for cutters.

√ √

Every department has second exit

√ √

Medical help specially in case of an accident

√ √

Maternity (pregnancy) assistance

√

Help workers in case their family members are ill

√ √

MSDS (Material safety data sheets) of chemicals posted

Training to workers on first aid, fire fighting.

√ √

Training on drug abuse, family planning, HIV &

√


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Compliance in China

Compliance in India

AIDS.

LA11: Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

Training to staff by sending abroad in exhibitions, conference, trade fairs etc.

√

Training to staff on technical issues.

√

LA12: Percentage of employees receiving regular performance and career development reviews.

Performance review program for staff

√ √

LA14: Ratio of basic salary of men to women by employee category.

Equal pay is provided to employees at same level, with no gender bias

√ √

Human Rights HR3: Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Policies for protection of human rights

√

Training on aspects of human rights (child labour etc.)

√

Social Performance

SO5: Public policy positions and participation in public policy development and lobbying.

√ √

SO7: Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes.

√

(None)

SO8: Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations.

√

(No Fines)

Product Responsibility

PR3: Type of product and service information required by procedures and percentage of significant products and services subject to such information requirements.

√

PR5: Practices related to customer satisfaction.

√

Number of Performance Indicators Complied in China: 27 (GRI LEVEL: A) Number of Performance Indicators Complied in China: 12 (GRI LEVEL: C)


56

ANNEXURE 2: LIST OF COMPANIES SURVEYED IN CHINA

Serial No. Company Name Location

1 Shinih Fiber Products(Suzhou) Co., Ltd Jiangsu

2 Shanghai Tianqiang Textile Co ., Ltd Shanghai

3 Changshu Jinboer Wool Textile Co., Ltd. Jiangsu

4 Wujiang Xue Er Mei Textile Co., Ltd Jiangsu

5 Wujiang Shengze Xuchun Textile Factory Jiangsu

6 Jiangsu Golden Autumn Elastic Fabrics Co.,Ltd Nantong

7 Shaoxing Shuang Jin Textile Co., Ltd Zhejiang

8 Haining Zhengda Warp Knitting Co.,Ltd. Zhejiang

9 Zhenjiang Lingda Industry Co.,Ltd. Zhejiang

10 Hangzhou Jingheng Industrial Co Ltd Hangzhou

11 Nantong Jianghuai Lnterlining Co., Ltd. Nantong

12 Nantong Dongtai Yarn Dyed Co., Ltd. Nantong

13 Lingxian Tongle Woollen Co., Ltd Shandong

14 Shanghai Tian En Textile Co ., Ltd Nantong

15 Shaoxing County Zhenxuan Textile Co., Ltd. Zhejiang

16 Shaoxing Jianlan Knitting Co., Ltd. Zhejiang

17 Nantong Haoxuan Textile Co., Ltd. Nantong

18 Gao Yang Zhenhua Co.,Ltd. Nantong

19 Shanghai Jihong Cashmere Textile Co., Ltd. Shanghai

20 Hangzhou Feitian Woolen & Down Textile Products., Ltd. Zhejiang

21 Shanghai Weiren Textile Co., Ltd. Shanghai

22 Shaoxing Nuanfeng Textile Co., Ltd. Zhejiang

23 Nantong. Detex@Gmail. Com Nantong

24 Changzhou Creat Textile Printing & Dyeing Co., Ltd. Jiangsu

25 Shaoxing Yuanda Textile Co., Ltd. Zhejiang

26 New Shisu Textile Co.,Ltd Shaoxing

27 Jiaxing Huateng Woollen Fabrics Co.,Ltd Zhejiang

28 Yangzhou Dongtai Wool Co., Ltd Jiangsu

29 Shaoxing Huayan Digital Technology Co.,Ltd. Zhejiang

30 Shaoxing Heng Da Import And Export Co., Ltd Zhejiang

31 Jiaxing Mitsuboshi Dress Adornment Materials Co.,Ltd Zhejiang

32 Yongsheng Printing And Dyeing Co.,Ltd Jiangsu

33 Wujiang Jiamei Textile Co.,Ltd Jiangsu

34 Wujiang Yixiang Textile Co.,Ltd Jiangsu

35 Ideal Button Co.,Ltd Zhejiang


57


36 Fooan Thread Co.,Ltd Nantong

37 Changshushi Jia Qi Zhenzhi Co.,Ltd. Jiangsu

38 Zhenghua Woolen Textile Co.， Ltd. Heibei

39 Fujian Change Xinghui Textile Co.,Ltd Fujian

40 Fujian Changle Xinghui Textileco.,Ltd Fujian

41 Zhejiang Furun Dyeing&Printing Co.,Ltd. Shanghai

42 Jiu Guan(Guangzhou)Textiles Trade Co.,Ltd Guangzhou

43 Beijing Jisun High-Tech Co.,Ltd. Beijing

44 Wuxi Shuangmao Chuangyi Wool Spinging Weaving &Dyeing Co.,Ltd Nantong

45 Wuxipacific Group Company Co.,Ltd Nantong

46 North Way Thading Zhejiang

47 Zhangjiagang Free Trade Zone Haifeng Textile Co.,Ltd Jiangsu

48 Huazhong Yangzhou Yangzhou

49 Dongda Textile Co.,Ltd Nantong

50 Shaoxing Jingbang Textile Co.,Ltd. Zhejiang

51 Hangzhou Xiaoyue Dyeing And Weaving Group Co., Ltd. Zhejiang

52 Hangzhou Xiaohong Textile Co. Ltd. Hangzhou

53 Siyun Textile Co. Ltd. Zhejiang

54 Shaoxing Lvye Textile Co., Ltd. Zhejiang

55 Zhejiang Ruifeng Import And Export Co., Ltd. Zhejiang

56 Weihai Dishang Huaqi Woolen Fabric Co., Ltd. Shandong

57 Cixi Sunrise Sealing Material Co., Ltd. Zhejiang

58 Novel Dyeing & Printing Limited Nantong

59 Shaoxing Bayson Garments Co., Ltd. Zhejiang

60 Changzhou Yesheng Woolens And Flannel Co., Ltd. Jiangsu

61 Dongguan City South Nekon Machinery Co., Ltd. Nantong

62 Hebei Msjc Textile Co., Ltd. Hebei

63 Shanghai Xiaoguo Blade Co., Ltd. Shanghai

64 Huzhou Fengshun Textile Co., Ltd. Zhejiang

65 Evergreen Silk Manufactory Co., Ltd. Nantong

66 Shaoxing Tongchuang Textile Co., Ltd. Zhejiang

67 Hangzhou Fuen Textile Co., Ltd. Zhejiang

68 Changzhou Xinhongtu Weaving Dyeing & Printing Co., Ltd. Jiangsu

69 Jilin Hengsheng Woolen Textile Co., Ltd. Jilin China

70 Shenzhen Bada Textile Co., Ltd. Shenzhen


58


71 Shaoxing Yixing Textile Co., Ltd. Zhejiang

72 Shaoxing Runda Textile Co., Ltd. Zhejiang

73 Shaoxing Rongli Textile Co., Ltd. Zhejiang

74 Tiantai Blue Sky Environmental Protective Co., Ltd. Zhejiang

75 Suzhou Yasi Printing And Dyeing Co.,Ltd Suzhou City

76 Suzhou Silk Weixing Printing & Dyeing Co.,Ltd. Suzhou City

77 Fujian Yongfeng Knitting Textile Co.,Ltd. Fujian Province

78 Shanghai Caiyuan Textile Import And Export Co.,Ltd. Shanghai

79 Yangzhou Jingdi Textile Co., Ltd. Yangzhou City

80 Changzhou Maotiao Co.,Ltd Changzhou City

81 Zhejiang Lingda Industry Co.,Ltd Zhejiang

82 Pinghu Hot Melt Adhesive Web & Film Co.,Ltd Pinghu City

83 Huzhou Jnd Printing And Dyeing Co.,Ltd Huzhou

84 Shanghai Hywell Fibre Industry Co.,Ltd. Shanghai

85 Zhejiang Huili Dyeing& Finishing Co., Ltd. Zhejiang

86 Jiangyin Joy Textile Co.,Ltd. Jiangyin

87 Shaoxing Xingjia Textile Industry Co.,Ltd Zhejiang

88 Wujiang Xujiang Textile Co., Ltd. Wujiang

89 Hangzhou Jingtong Textile Co., Ltd Zhejiang

90 Haiyan Caiyi Technology Products Co., Ltd. Zhejiang

91 Shanghai Dg Instrument Co., Ltd. Shanghai

92 Wujiang Zhongfu Craft Printing Co., Ltd. Jiangsu

93 Wuxin Xinda Silk Factory Wujiang

94 Yitong Textile Co., Ltd. Zhejiang

95 The-Silkland Weaving Limited Huzhou Zhejiang

96 Changzhou Shunchang Textile Co., Ltd. Jiangsu

97 Shaoxing Diya Textile Co., Ltd. Zhejiang

98 Anhui Yilun Ramieco., Ltd. Anhui

99 Shanghai Meta-Tex Metallic Yarn Co., Ltd. Shanghai

100 Hangzhou Mengda Industry Co., Ltd. Zhejiang

101 Wuxi Fourth Textile Co., Ltd. Nantong

102 Wujiang Lixin Textile Co., Ltd. Jiangsu

103 Suzhou Dr. Dragon Fiber Finishing Co., Ltd. Zhejiang

104 Nantong Jumenglai Textile Co., Ltd Nantong, Jiangsu


59

ANNEXURE 3: LIST OF COMPANIES SURVEYED IN INDIA

S. No. Name of Company Location

1 Oriental Knitfabs Pvt. Ltd. Ludhiana

2 Sriyansh Knitters Ludhiana

3 Pee Jay Import Exports Ludhiana

4 Jay Kay Wears Pvt. Ltd. Ludhiana

5 Youngman Textiles Ltd. Ludhiana

6 Woolways India Ltd. Ludhiana

7 Jawandsons Ludhiana

8 Uday Udyog Ludhiana

9 S.G.S. International Ludhiana

10 Supreme Tex Mart Ltd. Ludhiana

11 Venus Texspin Limited Ludhiana

12 Lakra Industries Ltd. Ludhiana

13 Jay Kay Hosiery Mills Pvt. Ltd. Ludhiana

14 Cotton & Blends Inc. Ludhiana

15 Paras Ram Textiles Pvt. Ltd. Ludhiana

16 Vallabh Knitwears Ludhiana

17 Surya Synthetics Ludhiana

18 Triveni Silk Mills Ludhiana

19 Luxmi Spinning Mills Pvt. Ltd. Ludhiana

20 Uday Kraft Ludhiana

21 JHG Knit Fab Ludhiana

22 Shree Ganesh Acro Yarn Ludhiana

23 Lakshmi Spinners Ludhiana

24 Dolphin International Ludhiana

25 Star Suitings India Ludhiana

26 Oster Knit (P) Ltd. Ludhiana

27 Arora Knit Fab Pvt. Ltd. Ludhiana

28 Arora Industries Ludhiana

29 Ankita Impex Ludhiana

30 Shree Manibhadra Overseas Ludhiana

31 Jain Udhay International Pvt. Ltd. Ludhiana

32 Dove Creation Ludhiana

33 Almighty Creations Ludhiana

34 R.B. Knit Exports Ludhiana

35 Veetrag Hosiery Ludhiana


60

S. No. Name of Company Location

36 Himker Knits Pvt Ltd Ludhiana

37 Pankaj Hosiery Ludhiana

38 Sun Hill Knitwears Ludhiana

39 Sun Flower Hosiery Ludhiana

40 Harman Wool Syndicate Ludhiana

41 New Maharaja Hosiery Mills Ludhiana

42 Taiga Kniwear Pvt Ltd Ludhiana

43 Maini Hosiery Workers Ludhiana

44 VH Hosiery & Textile Mills Ludhiana

45 JK Narang Hosiery Ludhiana

46 Bajaj Knits Ludhiana

47 Miniking Ludhiana

48 BBS Hosiery Ludhiana

49 BBS Exports Ludhiana

50 S.A. Textiles Ludhiana

51 Anil Apparel Ludhiana

52 Pilot Hosiery Ludhiana

53 S.R. Woolen Mills Ludhiana

54 Chandan Knitwear Ludhiana

55 Zaima Fashions Ludhiana

56 Long Life Hosiery Ludhiana

57 A.A. Creations Ludhiana

58 Rama Krishna Knitters Pvt Ltd Ludhiana

59 Pushkar Knit Ludhiana

60 Deetex Knitwears Ludhiana

61 Jaytee Ludhiana

62 Chaman Lal & Bros Ludhiana

63 Virsa Knits Ludhiana

64 NP Bhanot Hosiery Ludhiana

65 Repaly Fashions Ludhiana

66 Rose Marie Knitwear Pvt Ltd Ludhiana

67 Advaith International Ludhiana

68 Oslo Knitwears Ludhiana

69 Montu Shallu Knitwears Ludhiana

70 AR Knitwears Ludhiana

Study on Promoting Corporate Social Responsibility (CSR ... · Industries, Infosys, TCS, Wipro, ITC, Larsen and Tubro, Mahindra, Maruti Suzuki, Tata Motors, SIDBI, TCS, Wipro and

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