raghu iyer csr in india

8/6/2019 Raghu Iyer Csr in India

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2007 SUSBIZ India 1

CSR- Indian Perspectives


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2007 SUSBIZ India 2

CSR in India CSR approaches and strategies are based on

the ethical beliefs of the founding fathers, business areas in which the companies operate, the socio-economic environment, opportunities emerging over long periods of their existence. visibility(Global)

perception of customer oversight

Tied up with philanthropy and community development.

Community influence and paternalism among traders-turned-entrepreneurs.

Foundations within companies that follow the Gandhian ideology ofgiving back to society.


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2007 SUSBIZ India 3

Companies & CSR

Three kinds of Indian companies when it comes to corporate

responsibility:

big Indian multinational corporations that have proper corporate

responsibility mechanisms in place;

large national companies that appreciate the value of corporate

responsibility but have no inherent structures to show for it; and

the many small and medium-sized enterprises that are doing only

piecemeal work at best.


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2007 SUSBIZ India 4

What is CSR Maximize companys overall impact on the society and stakeholders. More than a collection of discrete practices or occasional gestures, or

initiatives motivated by marketing, public relations or other businessbenefits. approaches and attitudes differ largely due

to social and economic systems

legal and regulatory frameworks, cultural practices,

local societal and public needs and expectations.

CSR: In a developed country:governance,Business ethics,

human rights and Environment

In a developing country( India):Focus on nation building

Socio-economic developmentRural development

EmploymentEducationHealth care

Community support


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2007 SUSBIZ India 5

Definition The Prince of Wales International Business Leaders

Forum defines CSR on basis of four issues: corporate governance to include reputation, transparency,

accountability, and anti corruption;

safety and environment which comprises product/service safety,

worker health and safety, local environment quality ; access/development that includes initiatives in education, health-

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

Human Rights that includes labour standards, security and

indigenous people.


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2007 SUSBIZ India 6

CSR philosophies India

R Edward Freeman

Companies respond to theneeds of stakeholders customers,

employees, communities, etc.Stakeholder

Milton Friedman

Corporate responsibilitieslimited to private owners

(shareholders)Liberal

Jawaharlal NehruState ownership & legal requirements

determine corporate responsibilitiesStatist

M K GandhiVoluntary commitment bycompanies to public welfareEthical

ChampionsFocusModel


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2007 SUSBIZ India 7

Profit Focus

Philanthropy

Community Affairs

Corporate community

investment

Sustainable businessIntegrated into

Business functions

Goals, strategy

Strategic partnershipsInitiated by company

Strategic givingLinked to business

interests

Passive donationsTo charities when

requested

Focus is onShareholder profit

CSR Paradigm in India

Corporate social

responsibility [102]/33%

Corporate responsibility [80]/26%

Corporate citizenship [19]/6 %

It doesn't matter,

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


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2007 SUSBIZ India 8

Front runners in India Birlas & Tatas- Led by philosophies of nation

building & trusteeship Hero Honda, Hindustan Unilever, ITC, Maruti

Udyog etc- Fuse local business standards with

the Partner/Parent companys thrust BHEL, ONGC, NTPC- Public sector-true to thereasons of being set up

IT, IT ES, Pharma, Life science etc- emergingcompanies/sector- Spread the positive spill overof their growth and success.


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2007 SUSBIZ India 9

Some examples

First Indian company to publish a sustainabilityreport in line with Global Reporting Initiative guidelines

Tata Iron and SteelDisclosure

Reduced flushing WCs is estimated to save2 billion litres of water

Hindustan SanitarywareWater conservation

Energy conservation measures are savingthe company 1150 million rupees per annum

RelianceEnergy conservation

All BHEL units are certified to theISO14 001 environmental management system

BHELEnvironmentalmanagement

Pioneering evaluation of human capital usingan education index for its employees

InfosysHuman capital

First company in India to be certified tothe SA8000 social accountability standard for its Chirala facility

ITCLabour standards

One of the few organizations to have apolicy for the grant of patrenity leave

NTPCGender equality

One of first corporates to launch anHIV/AIDS programme

Larsen and ToubroHealth

Dedicating 0.75% of net profit to communitydevelopment initiatives

Indian Oil CorporationCorporate giving

Asian CSR Award for its Integrated Rural Poverty AlleviationProgramme

HindalcoCommunity development

ActionCompanyIssue


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2007 SUSBIZ India 10

Examples Boosting profitsGujarat Ambuja, one of the countrys leading cement manufacturers, reports that

our efforts to achieve world standards in environment protection have had the happy outcome ofsubstantially improving efficiency and profitability.

Cutting costsReliance Industries energy conservation measures have saved the company1150 million rupees per annum.

Increasing revenuesHLLs Project Shakti creates income-generating opportunities for theunder-privileged rural women, while giving the company an enhanced access to hithertounexplored rural areas.

Strengthening brand valueIn February 2004, Infosys was among seven international companiesto be chosen in the first annual list of Top Brands with a Conscience.

Enhancing reputationThe Oil and Natural Gas Corporation has found that its communitydevelopment programme has generated tremendous goodwill and earned the company thereputation of being a company that cares.

Improving moraleTata Steel believes that helping the community also provides a new perspectiveto its employees, thereby strengthening employee morale.


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The Drivers Ethically aware consumer groups, NGOs.

Moving beyond compliance. Right to Information Act.

"last mile connectivity" to reach the benefits to

the deserving people. Public- Privatepartnership.


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Why CSR? Because of visibility Feel good factor( retention of talent)

Business partner requirements Voluntary Pressure from stakeholders Need to maintain good relationship with external entities

Founders attitudes Pressure from investors, lenders and insurers Threat of regulatory action or emerging legislation Risk to company brand or reputation (and hence shareholder value)

as a result of consumer pressure or NGO campaigns

Desire to enhance or sustain competitiveness Barriers to competition


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CSR Focus by Whom?


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Expectation. CSR begin at home- do the right thing towards

internal stakeholders- esp employees. Comply with all legal requirements

Look at

rigorously focusing on priorities, treating CSR as an investment and monitor ROI

reporting performance in an open and transparent

real CSR leadership is not just putting ones ownhouse in order, but advocating the rightconditions to reward responsible practice.


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Way forward Indian companies need to stop looking at local

communities through the prism of charity and see themas allies in the development process.

CSR is critical in the context of enlightened self-interestfor survival in the ever-growing fierce corporate

competitive battle, for protecting reputations,

defending attacks,

improving bottom line and

building business competitive edge.


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Barriers Absence of clear linkage between CSR and financial success

Low voluntary adoption of CSR- Leads to green washing

Lack of mechanisms to measure, monitor evaluate and reportimpacts

Two myths

Smaller companies think it the responsibility of the bigger onesand

It is mainly a philanthropic exercise

High overheads of implementing and sustaining CSR efforts.

No universally accepted frameworks.


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The CSR business case What is good for the community, the environment and the workforce

is also good for the financial performance of the company

Companies cannot be seen to exist in islands of prosperity in sea ofpoverty

Go beyond compliance

Hard commercial factor directly linked to profits and brand value.

Manage risk( supply chain, business partners)

Increasingly becoming a non-tariff trade barrier.

Cost of not considering social, environmental issues could be

crippling


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Linkages

Risk reductionEngage in a dialogue with employees, suppliers , localcommunity, NGO's, Politicians and other business partners

Stake holder engagement

Business growthBuilding strong linkages with the localcommunity and employment of locals

Poverty reduction

Increased labourproductivity

Reduced costs

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

Effective Human resourcemanagement

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

pollution costs and fines, reorganizing production processes,material flows and supplier relationships

Environmental improvements,

Business BenefitActivitiesCSR dimension


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Linkages

SustainabilityResource efficiencyEnvironmental

WelfareReputationSocial

Employee well-beingWorker productivityHuman

Per Capita income growthProfitabilityEconomic

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


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CSR & Standards Broadly relate to outcome i.e. Product and process Types

1. Quality (for example, appearance, cleanliness,taste, and facilities)

2. Safety (for example, pesticide or artificialhormone residue, microbial presence, and use

of safety features in hotels)3. Authenticity ( for example, guarantee of

geographic origin or use of traditional process)4. Goodness of the production process (for

example, worker health and safety,environmental contamination, resourceconservation, or ethical trade)


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Some global standards on CSR AccountAbility 1000 Business in the Community Corporate Responsibility Index Business in the Environment's Index

Caux Principles for Business Coalition for Environmentally Responsible Economies - Principles Dow Jones Sustainability Group Index Ethical Trading Institute FTSE 4 Good Index Series Global Reporting Initiative

Global Sullivan Principles Global e-Sustainability Initiative International Chamber of Commerce Guidelines London Benchmarking Group MHC International Principles for Global Corporate Responsibility Organisation for Economic Cooperation and Development Guidelines for Multinationals Social Accountability 8000 World Business Council for Sustainable Development


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Comparison of standardsOrigin Sector coverage Example

Industry

initiatives

Shoes, Toys,

Textiles, Retail Buyers COC's

Business

associations Multiple

WRAP, Kenya

Flower Council code

BGMEA code

Third party initiatives MultipleFTA, Organiclabelling, fair trade

Independent/

Multi stakeholder All/Voluntary

ISO, SA 8000, GRI

AA 1000

Joing Govt-Business Industry Specific

ETI, OECD

GuidelinesILO Principles,m

UN

Global compact


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Salient point about standards All standards/models focus

On ensuring basic human rights

Protecting children, women and ensuring fairtreatment to all stakeholders

Some have requirements on disclosure and

transparency

Require stakeholder involvement

Require adherence to local law at a minimum.


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The Indian challenge Three generations of challenges

first generation: conflicts between companies

and communities over the control of natural resources iswidespread

second generation: relating to hazards of industrial activityaffecting Air, Water, Land and humans

third generation: issues related to products and services,

Public expectation: In addition to providing good quality products atreasonable prices , companies should strive to make their operations

environmentally sound, adhere to high labour standards, reduce humanrights abuses and mitigate poverty.


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Leader Speak Corporate Social Responsibility is more than

philanthropy and must not mean 'giving and receiving'.An effective CSR initiative must engage the lessprivileged on a partnership basis. "CSR meanssustainable development of the community by being

partners in their progress." The industry's focus shouldbe about becoming efficient, competitive but alsoinclusive.

Mr Venu Srinivasan, Chairman - CII National Summit on CSR

2007, and Managing Director, Sundaram Clayton Limited saidthat New Delhi 14 June, 2007

raghu iyer csr in india

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