CSR in India

Birendra RaturiCBI Trainer

Venue: 8-9 June 2011FICCI New Delhi India

Program CSR training India

Social Responsibility

Societies are not destroyed by the activities of rascals but by the inactivity of good people. What a paradox! If they can tolerate destruction by being inactive, how can they be good? The question is, are they discharging their social responsibility?

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Great Leaders said

“We do not claim to be more unselfish, more generous or more philanthropic than others, but we think we started on sound and straightforward business principles considering the interests of the shareholders, our own and health and welfare of our employees…the sure foundation of prosperity”. ---Jamshedji Nusserwanji Tata

The price of greatness is responsibility. --Winston Churchill

For evil to flourish, good people have to do nothing and evil shall flourish. --Edmund Burke

and thusEvery individual and organization has social responsibility without which society starts dying

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CSR in India- BackgroundToday's buzzword, Corporate Social Responsibility or CSR has been part of the Tata Group ever since the days of Jamshetji Tata. Right From 1892

•Workers' welfare requirements of the country•Granting scholarships for further studies abroad in 1892 •Supporting Gandhiji's campaign for racial equality in South Africa •First science centre, hospital and atomic research centre •providing relief and rehabilitation to natural disaster affected places

Tata initiated various labour welfare laws, like the establishment of Welfare Department was introduced in 1917 and enforced by law in 1948 or Maternity Benefit was introduced in 1928 and enforced by law in 1946.

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CSR progression in India

•Evolved through the concept of ‘giving’ – an integral part ofIndian culture

PhilanthropyReligious donations

•Modern connotationGandhian concept of Trusteeship

Bombay Plan (1944-45) – First initiative by leading business houses (Tata, Bajaj, Birla group through FICCI)

Individual initiatives by individual corporate

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The Evolution of CSR

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from profit focus a company exists only for short term share holder profit

to philanthropy passive donations to charities when requested

to community affairs strategic giving linked to business interests (includes cause- related marketing)

to corporate community investment strategic partnershipsinitiated by company

to Sustainable Businessintegrated into business functions, goals, strategy

What is CSR (macro-level)

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Strategic alignment towards CSR, community involvement, stakeholder dialogue, multi-sector partnerships, social investment, institution building, CSR-oriented advocacy.

Social and environmental auditing and reporting, voluntary standards, codes of conduct, multi-sector partnerships, stakeholder dialogue, eco-efficiency measures.

Legislation, inspection, criminal and civil prosecution, foreign direct liability (for overseas subsidiaries), industry standards.

CSR in India: Drivers

• National and international laws• Globalization brought new players to Indian markets• Growing middle class• Entry of new money (payment systems) made previously

inaccessible products accessible• Brands support by attracting advertising• Part of the population remains poor• Education is not for everyone a reality• Welfare GAP between urban and rural areas

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CSR - INTERNAL v/s EXTERNALInternal (carried out within the organisation) viz.

Energy and water conservationEmployee welfare – training, healthcareAffirmative action – employment of backward sectionsCorporate governance

External (within vicinity or for society at large), viz.Community developmentCapacity buildingEnvironmental protectionHealthcareCreating awareness - education, health, social issuesE-initiatives – Online Information, éducation, etc.

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Developments in CSR in IndiaFrom philanthropy to CSR to Inclusive business. Carroll’s CSR pyramid

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CSR Initiatives in India

Ministry of Corporate Affairs published the “Corporate Social Responsibility Voluntary guidelines 2009”Guidelines on Corporate Social Responsibility for Central Public Sector Enterprises (March 2010)National Foundation of Corporate Citizenship www.nfcgindia.org Governance (NFCG) in partnership with Confederation of Indian Industry (CII), Institute of Company Secretaries of India (ICSI) and Institute of Chartered Accountants of India (ICAI)

www.csrindia.info – a portal for information on CSR

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Federal government policies and legislation

Specific issue policies and legislation, e.g.:

– Tax reduction in respect of donations to certain funds, charitable institutions, etc. (80D)http://www.incometaxindia.gov.in/acts/income%20tax%20act/80g.asp

– Child Labour Law (1996) http://www.indianchild.com/child_labour_law_in_india.htm

– Environmental Protection Act (1986) and many sub-regulations http://envfor.nic.in/legis/env/env1.html http://sjvn.nic.in/projects/environmental-regulations.pdf

– Right to Information Act (2005) http://righttoinformation.gov.in/rti-act.pdf

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CSR initiatives

Confederation of Indian Industry (CII)

•CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a proactive role in India’s development process•National Committee on Corporate Social Responsibility & Community Development (constituted 2001)•CSR Activities

– Social Development Agenda– Develops CSR guidelines– Promotes the sharing of CSR experiences and best practices

www.cii.in

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CSR initiatives

Bombay Chamber of Commerce & Industry

•Bombay Chamber of Commerce & Industry provides a platform for those members who are looking for suitable projects and activities to fulfill their responsibilities.•Provides information regarding a few projects run by NGOs which may be considered for support either individually or jointly with other members.•Handbook on CSR

www.bombaychamber.com

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CSR initiatives

Global Compact Network India

•Formed in 2003, National Contact Point of Global Compact (GC)•GC: Guiding principles for businesses towards respecting values of Human Rights, Labour Rights, Environment Protection and Anti-corruption and working towards achievement of UN Millennium Development Goals.

http://globalcompactasiapacific.org/india/www.globabcompact.org

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CSR initiatives

Close cooperation with OECD (as a non-member country)

•India is on the Governing Board of the OECD’s Development Centre and it also participates as an observer in some OECD Committees and various working groups.•The OECD Development Centre:Innovative solutions to global challenges of development, poverty alleviation and inequality•India also supports the OECD regionally-focused activities in Asia, hosting regional forums and workshops on issues including investment, taxation, financial education, private pensions, and development.

www.oecd.org

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Key issues in export markets

What are expectations of international buyers?

• Strong supply chain responsibility (from raw material to final consumer)

• Environmental responsibility (India’s biodiversity heritage)

• Transparency (CSR reporting)

• Safe and healthy working conditions

• Human rights (child labour, forced labour, working hours)

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Why is CSR important for SMEs in India?

• To Manage risks by integrating environmental and social performance with business strategy

• To strengthen your license to operate in the local community due to a strong relationship with stakeholders and regulatory authorities

• To access international markets• To improve access to funds and investors• To reduce costs:

savings of inputs,increase in productivityImprovement of supply chain and customer relations

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Why is CSR important for SMEs in India?

• To motivate your employees• To recruit high quality employees• To strengthen relations with other stakeholders in the supply

chain• To ensure natural resources do not run out• To prevent pollution, health hazards• To create awareness (e.g. consumers)• To build a sustainable future (society and business)

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Current status and perceptions of CSR in India

Status• Economic reforms and rise have not yet lead to substantial

changes in CSR approach• India adopted some aspects of global mainstream CSR,

but mainly follows its own CSR agenda

Perceptions• CSR still has connotation of philanthropy• Strong feeling of ‘giving something back to society’

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Current status and perceptions of CSR in India

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More traditional sectors•Philanthropy embedded in India’s culture and enhances employee motivation•Focus on environmently-friendly products, rather than focus on waste reduction, footprints, emissions•Training on the job: to overcome India’s poor education system and poor educational levels of the poor

‘New’ sectors (e.g. IT)•‘Going green’: focus on integrated environmental management•More relaxed and open culture: first name identification, direct e-mails, performance driven packages

Current status and perceptions of CSR in India

• 50% of Indian companies consider CSR as part of sustainable business rather than philanthropy

• An imbalance between internal and external CSR dimensions: the vast majority of Indian companies include external dimensions, only 20% include internal dimensions like working conditions and environmental practices

• However, the vast majority of multinational companies consider CSR part of sustainable businessIncluding a better balance between internal and external CSR dimensions

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Current status and perceptions of CSR in IndiaSMEs

• SMEs lack structured approach and proper stakeholder dialogue to communicate their action and results on planned CR activities

• Overall, SME’s tend to focus more on internal issues like labor issues, employee & family welfare, emissions reduction etc.

• Fear of bureaucracy, time & cost are the main barriers to further engagement, but barriers tend to be built on perception rather than reality.

• In present scenario there is a need for them to engage in whole umbrella of CR activities involving diverse stakeholder groups primarily Society, NGO’s, Government and Shareholders.

(source: Partners in Change)

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A Survey among 82 Indian companies on CSR

Corporate initiatives with regard to CSR

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Source entire research: http://timesfoundation.indiatimes.com/articlelist/articleshow/4592300.cms

Challenges for CSR initiatives in India

Challenges from the research:

• Lack of community participation in CSR activities• Need to build local capacities• Issues of transparency• Non-availability of well-organised non-governmental

organisations• Visibility factor• Narrow perception towards CSR initiatives• Non-availability of clear CSR guidelines• Lack of consensus on implementing CSR issues

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SWOT Analysis CSR in India

Strengths Weaknesses

• Allready some PSU and Large Private Organisation doing some good CSR work

• National Guidelines /Framework on CSR

• Philanthropy – a giving approach

• No training and knowledge on CSR

• No clear framework for SMEs and MSMEs to work on SR

• Large Gap of Rich and Poor

Opportunities Threats

• Potential of inclusive business concepts

• Growing demands for CSR in export markets

• Growing importance of bio-diversity

• May become a trade barrier• Increasingly aware society within

and overseas

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Overview of Samples in Moradabad

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Moradabad Cluster Internal and External CSR – Business Case

Internal -Labour welfare Health care- Fair and timely payment to workers- Provision of monetary aids when in need- Provision of Festival bonus- Monetary help for weddings- Interest free advances- Satisfactory work bonus- Providing free refreshments (tea and snacks usually twice a day)

For some exportersonly:- All provisions of factories law are abided e.g.: standing orders, appointment letters, minimumwage payment- All policies are displayed- Provision of provident fund forcore employees

- Provide medical help when needed in the form of monetary support and referral to hospitals- No work overload:- Use of protective mask (althoughminimal)For some exportersonly:- A dedicated hospital by the industryassociation,- In house dispensary,- First aid boxes,- Maternity benefits.- Provision of medical claim for employees and their families- Provision of basicsafety measures

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Moradabad Cluster Internal CSR – Business Case

Environment Training and Development

For exporters only:- Training in hazardous chemicals,- Fool proof system for air and waterpollutants control,- Fire drills - Recycling of all Products

- Participated in a training by an ILOproject to improve work efficiency

Exporters only- Staff orientation Program

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Moradabad Cluster External CSR – Business Case

Health Education

- Charity to hospitals OPDsand dispensaries- Organize health camps andHIV/AIDs education- Medical aid to poor

- Aid in setting up and running of‘Madarsas’ (primary schools based onMuslim teachings)- Contribution to NGO run schools- Engaging with NGOs to sponsorchild education- Felicitation of retired schoolTeachers

Charities

- Zakaat and Fitra- Donating blankets in winters- Free water service in summers,- Monetary help to poor for marriages- Donation to mosques for construction activities etc- Donating to Masjid for external community work

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Some Indian Companies Auto Ancillaries: Sundaram Clayton Ltd.Automobiles: Ashok Leyland Ltd.Banking: Union Bank Ltd.Cement: ACC Ltd.Chemicals: Kansai Nerolac Paints Ltd.Computers: Moser BaerConstruction: GMR Infrastructure Ltd.Electronics: Siemens Ltd.HeavyEngineering: Larsen and Toubro Ltd.Financial Services: HDFC Ltd.FMCG and Consumer Durables: Dabur India Ltd.Engineering: Praj IndustriesIron and Steel: Tata Steel Ltd.

Logistics: Transport Corporation of India Ltd.Metal: Tinplate Co. of India Ltd.Oil and Gas: Bharat Petroleum (BPCL)Paper: Ballarpur Industries LtdPharmaceuticals: Jubilant Organasys Ltd.Polymers and Plastics: Jain Irrigation Systems Ltd.Power: Suzlon Energy Ltd.Software and ITES: Infosys Technologies Ltd.Telecommunications: GTL Ltd.Textiles: Arvind Ltd.Trading: 3M India Ltd.Miscellaneous: Titan Industries Ltd

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