0 évaluation0% ont trouvé ce document utile (0 vote)
145 vues50 pages
Corporate Social Responsibility (csr) is becoming increasingly important activity to businesses nationally and internationally. The various practices followed by the corporate in different parts of the world differ significantly. In the developed nations, the basic needs of the population do not need so much support as in the under-developed nations.
Corporate Social Responsibility (csr) is becoming increasingly important activity to businesses nationally and internationally. The various practices followed by the corporate in different parts of the world differ significantly. In the developed nations, the basic needs of the population do not need so much support as in the under-developed nations.
Corporate Social Responsibility (csr) is becoming increasingly important activity to businesses nationally and internationally. The various practices followed by the corporate in different parts of the world differ significantly. In the developed nations, the basic needs of the population do not need so much support as in the under-developed nations.
INTRODUCTION Corporate Social Responsibility (CSR) is becoming an increasingly important activity to businesses nationally and internationally. As globalisation accelerates and large corporations serve as global providers, these corporations have progressively recognised the benefits of providing CSR programs in their various locations.
CSR activities are now being undertaken throughout the globe. A popular explanation of the term CSR is the continuing commitment by businesses 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. Over the last few decades, an increasing number of companies worldwide started promoting their business through Corporate Social Responsibility strategies because the customers, the public and the investors expect them to act sustainable as well as responsible.
In some cases, CSR is a result of a variety of social, environmental and economic pressures while some other cases many large corporations, it is primarily a strategy to divert attention away from the negative social and environmental impacts of their lives. It enables the company to leverage its products, employee strength, networks and profits and up to some extent to create a sustainable change for marginalized communities. Despite certain criticisms on the CSR activities, more and more companies in the world are inclined towards corporate social responsibility.
The CSR Executives have the task of reconciling the various programs, quantifying their benefits, or at least sketching a logical connection to the business, and securing the support of business line counterparts. CSR can not only refer to the compliance of human right standards, labor and social security arrangements, but also to the fight against climate change, sustainable management of natural resources and consumer protection.
The various practices followed by the corporate in different parts of the world differ significantly. In the Developed nations, the basic needs of the population do not need so much support as in the under-developed nations. The demographies, literacy rate, poverty ratio and GDP of the country have significant role in determining the directions of CSR initiatives of an organization.
The social responsibility, as a corporate governance philosophy, should be an outcome of business strategy, social responsibility has three major dimensions, viz 1. The quality of a companys engagement in dealing with its employees, shareholders, other stakeholders and society at large, 2. Systems thinking leading towards going beyond the pursuit of pure profits is a corporations engagement with society and 3. Managing a broader portfolio of assets including social investments in areas like education, health, community development and conservation of environments.
Importance of CSR
A company has to keep a balance between short-term profitability and long-run social development, which involves going beyond meeting the minimum regulatory standards of pollution control or energy conservation, however, in a rapidly changing todays business environment and consequent to the market-friendly economic reforms. The dominance of the Government has been reduced considerably. It has affected the social sector services, which used to be provided by the government at zero or subsidized costs. In turn, the pressure to provide such services have been shifted to the companies as the society expects companies to carry some of the social responsibilities of government.
On the one hand, the social needs and expectations for responsible corporate citizenship have been substantially growing as a consequence of market-friendly reforms. On the other hand, the corporates are caught by the forces of global fierce competition, threatening their survival resulting in continuous pressure to find adequate profitability by any means. In todays corporate world, no company can afford to ignore and abstain itself from discharging its social obligations emanating from the trust and faith that society at large and stakeholders in particular, have reposed on it.
Fortunately, the new organisations, which are growing at a faster pace in the era of economic reforms, have started reaching out in the areas of education, creation of human capability and upliftment of the society. It has definitely reflected a new image of self, a new evaluation of responsibilities and a new realization of the fact that social commitment need not necessarily go against creating profitability in the long run.
The corporate social responsibility (CSR) is essentially a concept whereby companies integrate social and environmental concerns in their business operations and in the interaction with their stakeholders on a voluntary basis. Through voluntary commitment to CSR, companies send a positive signal of their behavior to their various stakeholders, viz., shareholders, employees, investors, creditors, suppliers, customers, regulators, government and the society at large. In doing so, they make an investment towards future and increase their profitability.
In fact, corporate governance and corporate responsibility towards society are inextricably interlinked, intertwined and inseparable from each other. If a corporate house is expected to provide good governance to its stakeholders and society at large, it is because it enjoys so much facilities from the society, in terms of developed infrastructure, trained workforce, peaceful environment, law and order etc. that it is only appropriate that the company gives back to the society at least something in return in the form of good governance.
Therefore, it is a well-conceived fact that good corporate governance itself is part and parcel of corporate responsibility towards society. There are many factors that have compelled the corporates to recognize and attach tremendous importance to CSR in discharging their day to day activities. Some these are
1. New concerns and expectations from various stakeholders in the context of large-scale industrial change due to globalization. 2. Increased influence of social criteria on the investment decisions of individuals and institutions both as consumers and as investors 3. Increased concern about the damage to the environment caused by economic activities. 4. Transparency of business activities brought about by the modern information and communication technologies. 5. In the present era of intense competition, it is Imperative for the corporate to generate and sustain goodwill among their stakeholders and the community at large. Therefore, active participation in various social welfare projects is surely going to improve the corporates visibility and place them on a pedestal of high public esteem. 6. The business firms should understand the fact that economic goals and social responsibility objectives need not be contradictory to each other rather both can co-exist and both can be achieved simultaneously. Inclusive growth, as a national policy, is based on the need to diagnose and reduce injustice to marginalized and neglected social strata. Corporate social responsibility, as an inextricable ingredient of good corporate governance, is aimed at using the corporate power to achieve economic progress together with social justice.
CSR in Law Social justice is a fundamental Directive Principle of national governance enshrined in the Constitution of India. Discharge of corporate responsibility by an enlightened corporate is supposed to ensure contribution to reduction of social injustice. This, as a matter of course, requires diagnosis of social injustice before corporate policies can be framed alluding to corporates social responsibility and its discharge.
Corporate Social Responsibility (CSR) should be viewed as a way of conducting business, which enables the creation and distribution of wealth for the betterment of its stakeholders, through the implementation and integration of ethical systems and sustainable management practices. CSR is the process by which managers of an organization think about and evolve their relationships with stakeholders for the common good, and demonstrate their commitment in this regard by adoption of appropriate business processes and strategies.
CSR does not emanate directly from external demands but instead from organizationally embedded processes. These processes prompt the organization to view its relationships with stakeholders in a different perspective, which in turn influences its engagement with them.
Concept of CSR The corporate social responsibility (CSR) is essentially a concept whereby companies integrate social and environmental concerns in their business operations and in the interaction with their stakeholders on a voluntary basis. Through voluntary commitment to CSR, companies send a positive singal of their behavior to their various stakeholders, viz., shareholders, employees, investors, creditors, suppliers, customers, regulators, government and the society at large.
The term is often used interchangeably for other terms such as Corporate Citizenship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a framework for measuring an organisations performance against economic, social and environmental parameters. Corporate social responsibility is represented by the contributions undertaken by companies to society through its core business activities, its social investment and philanthropy programmes and its engagement in public policy. In recent years CSR has become a fundamental business practice and has gained much attention from chief executives, chairmen, boards of directors and executive management teams of larger international companies.
They understand that a strong CSR program is an essential element in achieving good business practices and effective leadership. Companies have determined that their impact on the economic, social and environmental landscape directly affects their relationships with stakeholders, in particular investors, employees, customers, business partners, governments and communities. A company has to keep a balance between short-term profitability and long-run social development, which involves going beyond meeting the minimum regulatory standards of pollution control or energy conservation, however, in a rapidly changing todays business environment and consequent to the market-friendly economic reforms.
The dominance of the Government has been reduced considerably. It has affected the social sector services, which used to be provided by the government at zero or subsidized costs. In turn, the pressure to provide such services have been shifted to the companies as the society expects companies to carry some of the social responsibilities of government. On the one hand, the social needs and expectations for responsible corporate citizenship have been substantially growing as a consequence of market-friendly reforms. On the other hand, the corporates are caught by the forces of global fierce competition, threatening their survival resulting in continuous pressure to find adequate profitability by any means.
In todays corporate world, no company can afford to ignore and abstain itself from discharging its social obligations emanating from the trust and faith that society at large and stakeholders in particular, have reposed on it. Fortunately, the new organisations, which are growing at a faster pace in the era of economic reforms, have started reaching out in the areas of education, creation of human capability and upliftment of the society. It has definitely reflected a new image of self, a new evaluation of responsibilities and a new realization of the fact that social commitment need not necessarily go against creating profitability in the long run.
EVOLUTION OF THE CSR CONCEPT The definition of CSR has evolved over the decades, generally becoming more precise as to the types of activities and practices that might be subsumed under the concept. Early definitions were often general and ambiguous. Over the decades, definitions of CSR have reflected concerns such as:
Seriously considering the impact of company actions on others; The obligation of managers to protect and improve the welfare of society; Meeting economic and legal responsibilities and extending beyond these obligations.
A more comprehensive definition of CSR is that it encompasses the economic, legal, ethical, and discretionary or philanthropic expectations that society has of organisations at a given point in time. This definition specifies four different, but interrelated, categories of responsibilities that business has towards society. This characterisation also attempts to place the traditional economic and legal expectations of business in context by combining them with more socially oriented concerns such as ethics and philanthropy. A brief elaboration of this definition is useful.
First, and foremost, business has a responsibility which is economic in nature or kind. Before anything else, the business institution is the basic economic unit in society. As such it has a responsibility to produce goods and services that society wants and to sell them at a profit. All other business roles are predicated on this fundamental assumption. The economic element of the definition suggests that society requires business to produce goods and services and sell them at a profit. This is how the capitalistic economic system is designed and functions.
Firms that do not generate economic sustainability go out of business and become irrelevant. Just as society expects business to make a profit (as an incentive and reward) for its efficiency and effectiveness, society expects and requires business to obey the law. The law, in its most rudimentary form, depicts the basic rules of the game by which business is expected to function. Society expects business to fulfil its economic mission within the framework of legal requirements set forth by the societys legal system. Law may be thought of as codified ethics. Thus, the legal responsibility is the second part of this CSR definition.
The next two responsibilities attempt to specify the nature or character of the obligations that extend beyond obedience to the law. The ethical responsibility represents the kinds of behaviours and ethical norms that society expects business to follow. These ethical responsibilities extend to actions, decisions and practices which are beyond what is required by the law. Though they seem to be always expanding, they nevertheless exist as expectations over and beyond legal requirements. Finally, there are discretionary or philanthropic responsibilities. These represent voluntary roles, initiatives, and practices that business assumes but for which society does not provide as clear an expectation as in the ethical responsibility.
ENVIRONMENTAL ISSUES AND CORPORATE GOVERNANCE It is a well-known fact that the present environmental problems are serious. In recent years, the environmental degradation due to different types of pollution occurring in air, water, soil and the biosphere have grown to an alarming level. Much of the blame has been laid at the doorstep of industry. The big companies have been targeted as the main culprits and enemies of the environment. The problems like global warming, depletion of ozone layer, increased instances of health problems etc. have arisen due to rapid industrialization without any consideration for environment protection. Industry can no longer survive with the damaging image of being responsible for environmental damage.
Therefore, companies have to re-examine and refurbish their activities right from the nature of products they produce, technology they employ, raw materials they use and the way they market their products. The environment protection and pollution prevention have been recognized as the essentials for good corporate governance practices. In fact, many international committees on corporate governance have required the companies to publish a detailed report on the measures taken by them in preventing pollution and environment protection in their annual reports. As recommended by these committees, many well governed companies have developed their environmental policy and disclosed the same in the annual report. In the near future, companies that refuse to go green will definitely perish in an environmentally conscious society.
Therefore, corporate leaders should essentially learn to promote resource preservation by reducing waste and maximizing resources while improving profitability. The time is ripe for all companies to take a fresh look into environmental issues. The attempts to improve environmental performance should be considered as an opportunity to innovate and not as a burden. Environmental audits can provide an in-depth review of the company processes and progress in realizing long-term strategic goals.
DEFINITIONS OF CSR IN THE GLOBAL CONTEXT While there may be no single universally accepted definition of CSR, each definition that currently exists underpins the impact that businesses have on society at large and the societal expectations of them. Although the roots of CSR lie in philanthropic activities (such as donations, charity, relief work, etc.) of corporations, globally, the concept of CSR has evolved and now encompasses all related concepts such as triple bottom line, corporate citizenship, philanthropy, strategic philanthropy, shared value, corporate sustainability and business responsibility.
This is evident in some of the definitions presented below:
a) The EC defines CSR as the responsibility of enterprises for their impacts on society. To completely meet their social responsibility, enterprises should have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders
b) The WBCSD defines CSR as the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.
c) According to the UNIDO, Corporate social responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company achieves a balance of economic, environmental and social imperatives (Triple-Bottom-Line Approach), while at the same time addressing the expectations of shareholders and stakeholders.
In this sense it is important to draw a distinction between CSR, which can be a strategic business management concept, and charity, sponsorships or philanthropy. Even though the latter can also make a valuable contribution to poverty reduction, will directly enhance the reputation of a company and strengthen its brand, the concept of CSR clearly goes beyond that.
From the above definitions, it is clear that: The CSR approach is holistic and integrated with the core business strategy for addressing social and environmental impacts of businesses. CSR needs to address the well-being of all stakeholders and not just the companys shareholders. Philanthropic activities are only a part of CSR, which otherwise constitutes a much larger set of activities entailing strategic business benefits.
Global principles and guidelines for CSR A comprehensive guidance for companies pertaining to CSR is available in the form of several globally recognised guidelines, frameworks, principles and tools, some of which are discussed below.
It must be noted that most of these guidelines relate to the larger concept of sustainability or business responsibility, in keeping with the fact that these concepts are closely aligned globally with the notion of CSR.
UNGC UNGC is worlds largest corporate citizenship initiative with the objective to mainstream the adoption of sustainable and socially responsible policies by businesses around the world.
The 10 principles of the UN Global Compact have been derived from various UN conventions such as the Universal Declaration of Human Rights, ILOs Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on environment and development, and the UN Convention Against Corruption. These principles cover four broad areas:
1. Human rights (support and respect the protection of international human rights and ensure that business is not complicit with human rights abuses) 2. Labour rights (uphold the freedom of association and effective recognition of the right to collective bargaining, elimination of all forms of forced and compulsory labour, effective abolition of child labour and elimination of description in respect of employment and occupation) 3. Environment (support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility and encourage the development of environmental friendly technology) 4. Governance (work against corruption in all forms, including bribery and extortion).
The UN Guiding Principles on Business and Human Rights The UN guiding principles provide assistance to states and businesses to fulfil their existing obligations towards respecting and protecting human rights and fundamental freedoms and comply with the existing laws.
These principles act as global standards for addressing the risk of human rights violation related to business activity. In circumstances when these laws are breached or the guidance is not adhered to, suitable remedies have also been recommended.
The primary focus is on the protection of human rights by both, the state and the business enterprises, and the principles broadly outline the manner in which the framework can be implemented.
UN GLOBAL COMPACT PRINCIPLES The Ten Principles
The UN Global Compacts ten principles in the areas of human rights, labour, the environment and anti-corruption, related with corporate social responsibility enjoy universal consensus and are derived from:
t and Development
The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption:
Human rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: Make sure that they are not complicit in human rights abuses.
Labour standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour, and Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technology.
Anti-corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
The goals (MDGs) are: 1. Eradicate Extreme Hunger and Poverty 2. Achieve Universal Primary Education 3. Promote Gender Equality and Empower Women 4. Reduce Child Mortality 5. Improve Maternal Health 6. Combat HIV/AIDS, Malaria and other diseases 7. Ensure Environmental Sustainability 8. Develop a Global Partnership for Development
All above said have to be taken by corporates into thier consideration while framing their corporate policies.
ILOs tripartite declaration of principles on multinational enterprises and social policy This is another voluntary declaration whose adoption by governments, employers and multinational organisations is encouraged, with the intention of further ensuring labour and social standards.
This is particularly for organisations that operate across multiple countries. Focus is on core labour standards such as (i) freedom of association and the right to collective bargaining (prohibition of discrimination, bonded and forced labour) (ii) industrial relations (no trade union restrictions, regular discussions between management and labour, and the provision of a forum to lodge complaints in case of labour standard violation) (iii) employment opportunities (creation of job security, improved living and working conditions and ensuring that wages are on par with those of other enterprises in the same country).
OECD Guidelines: Multinational enterprises A OECD Guidelines for multinational enterprises elaborate on the principles and standards for responsible business conduct for multinational corporations.
B These guidelines were recently updated in 2011. They cover areas such as employment, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition and taxation.
C They contain defined standards for socially and environmentally responsible corporate behaviour, and also pro- vide procedures for resolving disputes between corporations and communities or individuals adversely impacted by business activities.
D The OECD Guidelines for Multinational Enterprises are non-binding recommendations covering all major areas of business ethics addressed by governments to multinational enterprises operating in or from adhering countries.
E The Guidelines were adopted on 21 June 1976 by OECD member states. The last update of the OECD Guidelines was adopted in May 2011. The new text introduces provisions on human rights, workers and wages, and climate change.
F It establishes that enterprises should avoid causing or contributing to adverse impacts through their own activities or through business relationships, and it recommends that companies exercise due diligence to ensure they live up to their responsibilities.
Content The OECD Guidelines provide voluntary principles and standards for responsible business conduct in the following areas: - Information disclosure - Human Rights - Employment - Combating bribery, bribe solicitation, and extortion - Consumer interests - Science and technology - Competition and - Taxation
Core issues include: - Respect for labour standards - Contribution to sustainable development - Respect for human rights - Environment protection - Combating Bribery and corruption - Whistle-blower protection - Supply chain responsibility
Social Accountability International (SAI) SA 8000 Standard
A This is one of the worlds first auditable social certification standard. It is based on ILO, UN and national law conventions, and adopts a management system approach in order to ensure that companies that adopt this approach also comply with it.
B This standard ensures the protection of basic human rights of workers. The nine basic elements of this standard in- clude (i) child labour (ii) forced and compulsory labour (iii) health and safety (iv) freedom of association and the right to collective bargaining (v) discrimination (vi) disciplinary practices (vii) working hours (viii) remuneration (ix) management systems.
C According to SAAS, there are 695 facilities in India that have been accredited with this standard. Out of these, Aditya Birla Chemicals (India) Limited, Bhilai Steel Plant Steel Authority of India Limited, Birla tyres, Dr Reddys Laboratories Limited and Reliance Infrastructure Limited figure prominently in the list of certified facilities within India
Responsible Business Enterprise: A Corporations around the world are responsibly struggling with a new role, which is to meet the needs of the present generation without compromising the ability of the next generations to meet their own needs.
B Organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to apply sustainability principles to the ways in which they conduct their business.
C Sustainability refers to an organizations activities, typically considered voluntary, that demonstrate the inclusion of social and environmental concerns in business operations and in interactions with stakeholders (van Marrewijk & Verre, 2003).
D It is no longer acceptable for a corporation to experience economic prosperity in isolation from those agents impacted by its actions. A firm must now focus its attention on both increasing its bottom line and being a good corporate citizen.
E Keeping abreast of global trends and remaining committed to financial obligations to deliver both private and public benefits have forced organizations to reshape their frameworks, rules, and business models.
The key drivers for CSR: Enlightened self-interest - Creating a synergy of ethics, a cohesive society and a sustainable global economy where markets, labour and communities are able to function well together.
Social investment - contributing to physical infrastructure and social capital is increasingly seen as a necessary part of doing business.
Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable and be prepared to report publicly on their performance in social and environmental arenas
Increased public expectations of business - globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment.
World Economic Forum & CSR A The World Economic Forum has recognised the importance of corporate social responsibility by establishing the Global Corporate Citizenship Initiative.
B The Initiative hopes to increase businesses' engagement in and support for corporate social responsibility as a business strategy with long-term benefits both for the companies themselves as well as society in general.
C At the Forum's Annual Meeting 2002, the Initiative launched a joint CEO statement, Global Corporate Citizenship: The Leadership Challenges for CEOs and Boards.
D This joint statement recommends a framework for action that business executives can use to develop a strategy for managing their company's impact on society and its relationships with stakeholders.
This statement was endorsed by the CEOs of over 40 multinational companies, including the CEOs of Accenture, Deloitte Touche Tohmatsu, Deutsche Bank, Rio Tinto, Siemens, Renault, McDonalds, Infosys Technologies, Coca- Cola, DHL and PricewaterhouseCoopers.
CSR and Accountability
A Accountability is one of the processes whereby a leader, company, or organization seeks to ensure integrity. In a global stakeholder society, accountability is among the key challenges of organizations.
B Responsible leaders are concerned with reconciling and aligning the demands, needs, interests, and values of employees, customers, suppliers, communities, shareholders, nongovernmental organizations (NGOs), the environment, and society at large.
C A companys track record in terms of CSR accounting will be effective when appropriate CSR measures are included in its internal as well as its supply-chain activities. Furthermore, the literature reflects a growing need for dissemination of good practice in CSR accountability and a need for more pressure to be exerted on NGOs to prove themselves as ethical, transparent, and accountable as those they seek to influence (Frame, 2005).
D A relevant point raised in some literature has to do with the effectiveness of strategies undertaken by communities to demand corporate accountability (Garvy & Newell, 2005).
E This literature argues that the success of community-based strategies for corporate accountability is conditional upon the right combination of state, civil, societal, and corporate factors.Frynas (2005) makes the point that accountability is more than making false promises.
F In the oil, gas, and mining sectors, despite the promise of CSR and the spending of over US $500 million in 2001 alone on a long list of community development programs and other CSR initiatives, the effectiveness of the initiatives has been increasingly questioned.
G Frynas points out that there is mounting evidence of a gap between the stated intentions of business leaders and their actual behavior and impact in the real world of financial funding.
H CSR requires accountability by all leaders, individuals, organizations, stakeholders, customers, and community members, and yet accountability is complex. The factors which influence the effectiveness of corporate ac- countability are multiple and tightly interconnected.
This interconnectedness and its relationship to accountability are represented in the work of Dolan (2004), which uses the example of his own company to illustrate the idea of considering a business as an interconnected web of relationships, with the consequences of every action the company takes having an impact on both the world and the companys long-term business.
PARTNERING WITH STAKEHOLDERS
CSR is strictly embedded with a multitude of business actors. With the call for sustainability and the new role of business in society (Blowfield & Googins, 2006), and with increased expectations and new rules and tactics (Burke, 2005), leadership is bound to come into contactand conflictwith key stakeholders in the arena of responsible business, global versus regional and local needs, and different national cultures.
The concept of stakeholder engagement and communication with stakeholders looks like a catch-22 of leadership practices for CSR (Morsing, Schultz, & Nielsen, 2008). Although companies strive to engage in CSR together with their stakeholders, they are simultaneously struggling to understand the true relationship behind this marriageand first of all, who their stakeholders are. In both the business and academic literature, the shareholders are now renamed as one of many key stakeholders, and they are seen as competing for influence with employees, customers, consumers, suppliers, competitors, trade unions, the environment, the local communities, and the society at large, to name a few and the most recurrent ones.
Two basic relationship models may help to explain how leaders can best interact with multiple and diverse stakeholders. The inside-out approach suggests that leaders can manage their CSR activities and achieve favorable reputations with their stakeholders by building CSR activities across Business boundaries and in a framework where the decision-making point resides inside the organization and where communication with stakeholders is a means to deliver information already developed and perhaps even implemented. CSR reporting for stakeholders can be one such practice and has sometimes been used as a tool in the marketing communicators toolbox (Sweeney & Coughlan, 2008). The literature also shows this can backfire, feeding skepticism toward CSR and its terminology from trade unions as well as from the activist opposition (Burke, 2005; David, Bloom, & Hillman, 2007).
An alternative approach is based on substantial attention and engagement with the stakeholders to reach CSR goals (Morsing et al., 2008). Communication is not just a device for alignment; the decision-making process is negotiated and concepts or key actions developed. The stakeholders in this model are actors, together with the company, in achieving sustainable development. This differentiation is similar to that seen in other literature that focuses on the difference between stakeholder identitythe extent to which the corporations and their stakeholders interests are linkedand stakeholder managementthe incorporation of stakeholders interests into operational decision making (Black & Hartel, 2003; Boutilier, 2007; Shropshire & Hillman, 2007).
Despite the debate, real stakeholder engagement ultimately leads to a combination of organizational and social learning, which is a basis for long-term change based on trust, but which is not always clearly quantifiable or predictable in the short term (Roome & Wijen, 2006; Van Kleef & Roome, 2001). Whatever the approach to stakeholders, well-intentioned efforts sometimes produce disappointing results, or conflicting stakeholder demands cause problems (Boutilier, 2007). Nevertheless, leadership efforts to deal rationally with stakeholders, with uncertainty, and with constraints lead to greater potential for sustainability in terms of culture, structure, and output. Corporations need to engage with stakeholders to develop valuable CSR-related actions.
Stakeholders that face challenges and threats are more likely to partner with corporations on CSR-related issues and corporations and stakeholders are more likely to succeed when a long-term vision is embraced. The literature shows that corporate leadership should have a holistic approach to engage with stakeholders and that the vital link between business and stakeholder management is leadership (Chow Hoi Hee, 2007).
Organizational Challenges and Limitations on implementation of CSR
Companies face challenges and limitations as they implement CSR. These usually relate either to 1) political issues 2) organizational-level concerns and are often embedded in culture. The complexity of operating in a global society places new demands on organizations and their leadership. As the roles and responsibilities of government are being redefined and the boundaries between business and government become less clear, the literature shows that business leaders are facing a daunting array of challenges such as,
A The business image B The legal background C The job-market situation D The corruption and the correlates of economic stagnation and social decline E The socialist associations
In the new age of CSR, the needs of the stakeholders, consumers, employees, national as well as international regulators, watchdogs, NGOs, and activist groups have to be satisfied (Hatcher, 2002). Lewicka-Stralecka (2006) identifies the opportunities and limitations of CSR in the so-called countries of transformation, or Central and Eastern European countries:
The CSR rhetoricincluding the blurred boundaries of CSR, the under-development of the civic society, the economic reality, the ethical standards, and the attempts at self-regulation of business considers the biggest challenge in the field of CSR implementation to be the development of leaders for a sustainable global society, asking what kind of leader is needed for building a sustainable global society and how we can best develop individuals with these leadership capabilities. According to this author, the task and challenge will be to develop leaders for a sustainable global society by encouraging imagination and the accomplishment of a positive change.
According to Howell and Avolio (1992), responsible leadership is the art of building and sustaining relationships with all relevant stakeholders, and it requires socialized, not personalized, leaders. Here, the challenge is to develop leaders who can relate in different ways, who are able to align different values into a common vision, who can listen to and care for others and ultimately serve them. Meeting these challenges requires the joint efforts of a global society and responsible leadership committed to diversity, ethics, and values.
According to the emergent literature, there is a growing awareness that business needs to manage its relationship with the wider society. Corporate leaders are responsible for their corporations impact on society and the natural environment beyond legal compliance and the liability of individuals. To the novice, this annotated bibliography offers a short but nevertheless deep introduction to the field. More experienced leaders can gain new perspectives on how to grow in their approach to sustainability and how to develop innovative business models in accord with the triple bottom line.
CSR is becoming a leading principle of top management and of entrepreneurs. The number of observations in research in this field clearly delineated models, leadership competencies, accountability, and structure of partnerships as well as organizational challenges and limitations and ethics. Organizations can reexamine their pattern of behaviors in the TBL framework and begin their journey toward a sustainable approach that is integrated into their business strategy.
CORPORATE CULTURE Culture is the way of life, especially the general customs and beliefs, of a particular group of people at a particular time. According to Institute of Corporate Culture Affairs (ICCA), Corporate culture can be defined as an organizations unique body of knowledge that is nurtured over a long period of time resulting in commonly held assumptions, values, norms, paradigms and world views.
These shape the behaviour and thinking of the people within the organization and thus form the organisations core identity characterising the organisations way of doing business with qualities distinct from others. In the organisational behaviour literature, corporate culture has been defined by E. H. Schein, a leading theorist on organizational behaviour, as a pattern of shared basic assumptions that a group learns in dealing with its problems of external adaptation and internal integration.
Organisations communicate the spirit of their corporate culture in several visible and invisible manifestations which may include formal and informal management structures, statements of values and aspirations, rewards and recognition systems, staffing and selection procedures, training and development activities, company ceremonies and rituals as well as stories and physical symbols.
More recently, CSR, branding and corporate culture have become entwined as a way of increasing the identification of employees with a companys values, mission and practices. This has become increasingly important as employers now rate the corporate culture and image of a company as a key determinant in attracting, motivating and retaining key staff.
CORPORATE ENVIRONMENTAL MANAGEMENT Eco-efficiency, Environmental auditing, Environmental management systems (EMS) Corporate environmental management (CEM) is an umbrella term that encompasses policies, tools, systems and strategies that can be put in place to enhance the environmental performance of a company.
It is closely associated with the concept of eco-efficiency that argues that a company can simultaneously improve both its environmental performance and its economic competitiveness by adopting CEM practices. This has come to be known as a win win situation. It is now widely recognised that businesses, through environmentally sound management practices, have a major role to play in contributing to mitigating environmental problems at a local, national and global level. Many CEM practices can save companies money.
Measures to reduce energy, minimise waste and reduce water consumption, for example, will directly reduce costs and add to profitability. But companies are increasingly becoming aware that even where CEM becomes more expensive, it can still help a companys competitiveness by differentiating a company from its competitors and enhancing image, brands and reputation.
However, companies are also increasingly being influenced by a variety of external pressures and a companys stakeholders often expect environmentally responsible behaviour. Increasingly therefore CEM is becoming part of a companys so-called social licence to operate.Given the internal and external demands to improve the environmental performance of a company, those companies that achieve high standards of environmental performance will benefit in a number of ways.
In order to realise this competitive advantage, companies must seek to develop policies, management systems, strategies and assessment and communications tools which will improve their environmental performance and address the environmental demands placed upon them by their stakeholders. By incorporating the increasingly important environmental dimension into the decision-making processes of the firm, managers can seek to reduce costs and exploit the opportunities offered by increased public environmental concern within a dynamic marketplace.
Industry, particularly in the developed world, must increasingly take into account the costs of the effect of its operations on the environment, rather than regarding the planet as a free resource. In the past, few companies counted the costs of the pollution which they discharged into the atmosphere, and the debate has now turned to legislation aimed at forcing companies to comply with certain standards and taxing firms which pollute.
CORPORATE RESPONSIBILITY INDEX Business in the Communitys (BITC) Corporate Responsibility Index (CR Index) is one of the UKs leading benchmarks of responsible business, helping companies to integrate and improve responsible practice across their operations. It provides a systematic approach to managing, measuring and reporting their impact on society and on the environment. The survey covers practice in four key areas: marketplace, workplace, community and environment.
Originating in BITCs Business in the Environment Index, it is the result of a major collaborative effort by BITC member companies to articulate a comprehensive measurement tool. From completing the survey to receiving their feedback reports, CR participants undertake a process of internal gap analysis and action planning for continuous improvement. In addition to detaining impact performance in the four key areas, the Index can also be used as an indicator of management quality, clearly of interest to the investment community.
CORPORATE SOCIAL ENTREPRENEUR A corporate social entrepreneur is a person who innovatively employs market forces, including new business ventures, to address or solve social or environmental problems. A social entrepreneur may be independent or an employee of a business firm. Social entrepreneurs may be motivated by personal values, a desire to profit from a previously unidentified market opportunity, a desire to leverage business practices to solve social problems, or some combination of these. Independent social entrepreneurs can operate in a variety of ways.
They may build traditional businesses in a socially responsible manner; create or develop new products, services, or market segments suggested by social issues; innovate in processes or technologies that are less harmful; or identify business opportunities to profit while addressing a serious social problem. An example of independent social entrepreneurship is the work of Maria Teresa Leal, founder of Coopa-Roca sewing cooperative in the slums of Rio de Janeiro.
Within large organisations, social entrepreneurs are likely to be the champions for socially responsible practices and for profitmaking ventures derived from or suggested by social problems. They may develop skills at recognising and capitalising on corporate social opportunity. An example of corporate social entrepreneurship is the spearheading of aluminium recycling by Reynolds Aluminium Co. in the early 1970s, based on both environmental concerns and a desire to stabilise raw materials sources. A more recent example from the US is the work of Ray Anderson at Interface, Inc., where process and product innovations are aimed at reducing the companys ecological footprint to zero.
CORPORATE SOCIAL INVESTMENT AND SOCIAL OPPORTUNITY
A corporate social opportunity is a potentially profitable market oriented venture that derives from or is suggested by a companys social responsibilities or by social or environmental problems. As the definition implies, corporate social opportunity exists at the interface between business processes and market forces, on the one hand, and social or environmental issues and problems, on the other. The concept does not assume that government is the necessary arbiter of societal problems; nor does it assume that government has no role to play.
Instead, the idea of corporate social opportunity is that members of any social institution including business can legitimately work to solve complex, intransigent issues such as poverty, disease, illiteracy, species extinction, pollution, and more. Cairos privately held chain of daycare centres, The Baby Academy, is an outgrowth of its founders identifying a corporate social opportunity to provide quality daycare for special needs children. The very successful micro-lending organisation, Grameen Bank of Bangladesh, resulted from its founders belief that the very poor would repay the small loans needed to improve their economic situations.
Ciudad Saludable, an enterprise that employs the poor to recycle wastes that Peruvian cities cannot handle, was born of a double need for employment opportunities and waste management.
Taking advantage of corporate social opportunities generally requires innovative perception and high tolerance for risk. The potential rewards include typical business goals such as profits, new markets, and process improvements, as well as social goals such as the alleviation of human suffering and improvements to the quality of human life.
CORPORATE SOCIAL PERFORMANCE (CSP) Corporate social performance (CSP) is defined as a business organisations configuration of principles of social responsibility, processes of social responsiveness, and observable outcomes as they relate to the firms human, stakeholder, and societal relationships.
The CSP concept recognises that business is a powerful social institution with responsibilities to use that power wisely on behalf of societies, stakeholders, and peoples. Every business firm exists and operates within a dense social network, and CSP provides a way of assessing every firms inputs, processes, and outcomes with respect to that network. It does not focus narrowly on maximizing shareholder wealth, but instead emphasises self-regulation.
Business cases for corporate social responsibility After weighing the pros and cons of CSR, most businesses today embrace the idea. For last few years, the business case for CSR has been unfolding. Before buying in to the idea of CSR, many business executives have insisted that the business case for it be further developed. The business case embraces arguments or rationales as to why businesspeople believe these concepts bring distinct benefits or advantages to companies specifically, and the business community generally. Even the astute business strategy expert, Michael Porter, who for a long time has extolled the virtues of competitive advantage, has embraced the belief that corporate and social initiatives are intertwined.
Porter has argued that companies today ought to invest in CSR as part of their business strategy to become more competitive. Of course, prior to Porter, many CSR academics had been presenting this same argument. Simon Zadek, a European, has presented four different business rationales for being a civil (socially responsible) corporation. These reasons form a composite justification for business adopting a CSR strategy. First, is the defensive approach. This approach to CSR is designed to alleviate pain. That is, companies should pursue CSR to avoid the pressures that create costs for them. Second, is the cost benefit approach. This traditional approach holds that firms will undertake those activities that yield a greater benefit than cost.
Third, is the strategic approach. In this rationale, firms will recognise the changing environment and engage in CSR as part of a deliberate corporate strategy. Finally, the innovation and learning approach is proposed. Here, an active engagement with CSR provides new opportunities to understand the marketplace and enhance organisational learning, which leads to competitive advantage. Most of these rationales have been around for years, but Zadek has presented them as an excellent, composite set of business reasons for pursuing CSR.
Putting forth the business case for CSR requires a careful and comprehensive elucidation of the reasons why companies increasingly understand that CSR is in their best interests to pursue. Two particular studies have contributed towards building this case. A study by Price water house Coopers, presented in their 2002 Sustainability Survey Report, identifies the following top 10 reasons why companies are deciding to be more socially responsible:
Enhanced reputation Competitive advantage Cost savings Industry trends CEO/board commitment Customer demand SRI demand Top-line growth Shareholder demand Access to capital
Second, a survey conducted by The Aspen Institute, in their Business and Society Program, queried MBA student attitudes regarding the question of how companies will benefit from fulfilling their social responsibilities. Their responses, in sequence of importance, included:
A better public image/reputation Greater customer loyalty A more satisfied/productive workforce Fewer regulatory or legal problems Long-term viability in the marketplace A stronger/healthier community Increased revenues Lower cost of capital Easier access to foreign markets
Between these two lists, a comprehensive case for business interest in CSR/CSP is documented. It can be seen how CSR/CSP not only benefits society and stakeholders, but how it provides specific, business-related benefits for business as well.
Examples of CSR in practice There are many ways in which companies may manifest their CSR in their communities and abroad. Most of these initiatives would fall in the category of discretionary, or philanthropic activities, but some border on improving some ethical situation for the stakeholders with whom they come into contact. Common types of CSR initiatives include corporate contributions, or philanthropy, employee volunteerism, community relations, becoming an outstanding employer for specific employee groups (such as women, older workers, or minorities), making environmental improvements that exceed what is required by law, designing and using codes of conduct, and so on.
Among the 100 Best Corporate Citizens selected in 2006 by Business Ethics magazine, a number of illuminating examples of CSR in practice are provided. Green Mountain Coffee Roasters of Waterbury, Vermont, was recognised for its meticulous attention to CSR including its pioneering work in the fair trade movement, which pays coffee growers stable, fair prices.
Another example of CSR in practice is the Chick-fil-A restaurant chain based in Atlanta, Georgia. Founder and CEO Truett Cathy has earned an outstanding reputation as a business executive deeply concerned with his employees and communities. Through the WinShape Center Foundation, funded by Chick-fil-A, the company operates foster homes for more than 120 children, sponsors a summer camp, and has hosted more than 21 000 children since 1985. Chick- fil-A has also sponsored major charity golf tournaments.
In the immediate after math of Hurricane Katrina in 2005, judged to be the worst and most expensive ever in terms of destruction, hundreds of companies made significant contributions to the victims and cities of New Orleans, Biloxi, Gulfport and the entire Gulf Coast of the US. These CSR efforts have been noted as one of the important ways by which business can help people and communities in need. As seen in the examples presented, there are a multitude of ways that companies have manifested their corporate social responsibilities with respect to communities, employees, consumers, competitors, and the natural environment.
CSR in the future What is the future for corporate social responsibility? The most optimistic perspective seems dominant and it is depicted well by Steven D. Lydenberg in his book Corporations and the Public Interest: Guiding the Invisible Hand. Lydenberg sees CSR as a major secular development, driven by a long-term reevaluation of the role of corporations in society. Lydenberg says this re-evaluation is more evident in Europe, where the stakeholder responsibility notion is more readily assumed, but that US business people are more sceptical of this assumption. He goes on to argue, however, that the European influence will be very hard to resist over the long run.
By contrast with the optimistic perspective, David Vogel is genuinely sceptical of CSR and he develops this argument in his book The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, in which he critiques CSRs influence and success. Vogel is very much of the mind that CSR will not be successful until mainstream companies begin reporting some aspect of CSR as being critical to the companys past or future performance. In other words, CSR is successful only to the extent that it adds to the bottom line and can be specifically delineated as having made such an impact.
In reacting to Vogels scepticism, it must be observed that this convergence of financial and social objectives characterises the trajectory that CSR has taken in the past two decades. It is evident by CSR practices and trends, that social responsibility has both a social component as well as a business component. In todays world of intense global competition, it is clear that CSR can be sustainable only so long as it continues to add value to corporate bottom lines.
It must be observed, moreover, that it is that conglomerate of stakeholders known as society, or the public, not just business executives alone, that plays an increasing role in what constitutes business success and for that reason, CSR has an upbeat future in the global business arena. The pressures of global competition will continue to intensify, however, and this will dictate that the business case for CSR will always be at the centre of discussions.
CORPORATE VOLUNTEERING & CORRUPTION Business ethics, Corporate governance, UN Global Compact, Transparency International, UN Declaration against Corruption and Bribery in International Commercial Transactions Corruption can be defined as the misuse of entrusted power for private gain, which is also the definition used by Transparency International (TI).
Corruption occurs where people collude to improperly benefit themselves or others with whom they are associated, by misusing the authority and trust which they have been given. Individuals can act corruptly on their own without involving another party, but TIs definition is confined to where there are two parties to the act of corruption, namely the person who offers or provides the inducement and the party influenced by or acting on it.
Though this is a simple definition it encompasses a complex topic with many forms of corruption which include: Fraud Bribery Conflict of interest Defalcation Embezzlement Nepotism and favouritism Trading in influence Collusive bidding Extortion Illegal information brokering Insider trading
Money laundering, although not corruption in itself, is an associated activity to corruption as proceeds from corrupt activity often need to be laundered to gain a veneer of legitimacy. The terms grand and petty corruption are often used to distinguish between corruption involving large amounts, and corruption involving small payments. A classic example of grand corruption is private sector bribery of public officials for large contracts.
Correspondingly, petty corruption describes small payments, commonly known as facilitation payments, paid to secure or expedite services to which the briber is legally entitled, such as installing a telephone; or to avoid being subject to illegitimate harassment, for instance by the police. Grand and petty corruption are part of a continuum of corruption, and so tolerating or ignoring petty corruption confuses the boundaries and provides an adverse signal, thereby feeding widespread corruption.
The relevance to CSR is that corruption is widespread and damages societies, economies, enterprises and the lives of people. Enterprises can make a contribution to countering corruption through CSR. The word corruption comes from the Latin corruptus, meaning to destroy, and this characterises the severity of change and damage that can be caused by a corrupt act.
The trust given to the individual is destroyed, and the effects can be highly damaging. Corrupt behaviour can damage the rule of law, democratic rights and human rights. It can act as a tax on the poor, be the cause of environmental damage such as deforestation, provide funds for terrorism, facilitate smuggling, counterfeiting, money laundering and numerous other criminal activities. For enterprises it presents a risk to reputation, business success and sustainability and may also lead to civil and criminal sanctions.
Countering corruption is carried out through a range of approaches including:
Legislation the USA was first to introduce national legislation in 1976 with the Foreign Corrupt Practices Act. A number of international conventions have been introduced in recent years to require states to implement national legislation.
These conventions include the OECD Convention on Countering Bribery of Foreign Public Officials in International Transactions, and the United Nations Convention against Corruption.
Building national integrity systems this involves strengthening the key institutions which between them uphold integrity in a country, such as the executive, judiciary or the media.
Encouraging good governance and anti-corruption measures through international aid and development.
Enterprises adopting no-corruption polices and implementing codes of conduct and systems enterprises can also demand anti-corruption performance from key business partners such as suppliers.
Sectoral initiatives such as the Extractive Industries Transparency Initiative and the Wolfsberg Principles.
Civil society advocacy and action by organisations such as Transparency International, the global coalition against corruption,
Media investigating and exposing corruption.
Socially responsible investment anti-corruption criteria being included in SRI indices such as has been done with the FTSE4Good Index.
International instruments setting standards and providing implementation tools, such as the UN Global Compact and its 10 th Principle against Corruption, and the Business Principles for Countering Bribery.
Increased transparency transparent procurement and tendering processes, freedom of information legislation, use of information technology to make available information to citizens or parties to a contract tender, use of the TI Integrity Pact.
Enhanced reporting and credibility greater clarity and range of public reporting from all forms of organisation, and the use of independent verification.
Greater expression of expectations and action by societies collectively and through individual action.
Most forms of corruption are illegal in countries around the world and therefore it could be assumed that the scope is limited for CSR which is beyond compliance. In fact, while laws tend to proscribe or sanction, they are often insufficiently enforced and even if so, do not usually provide for the depth and range of activity needed to implement anti-corruption policies. The CSR opportunity for enterprises is to build a culture of no-corruption in their organisations and encourage this in their business partners and in the communities in which they operate.
Most large enterprises have in place codes of conduct but fewer have comprehensive implementation systems such as providing leadership, communication, training, HR policies and procedures, internal controls and sanctions. Fewer enterprises carry out activities that contribute to strengthening the anti-corruption structures in the societies in which they operate such as supporting or encouraging local business associations and NGOs. Corruption while behind so many of the major societal issues such as poverty, deforestation, earthquake damage, deaths from counterfeit drugs does not yet receive the same attention on the CSR agenda as environment, human rights, community needs or medical causes. CSR provides a framework within which enterprises can enhance their management of preventing corruption, have greater chance of competing on a level playing field for contracts, build greater trust among stakeholders and make a significant contribution to people in countries most vulnerable to corruption.
CSR IN INDIAN SCENARIO Corporate Social Responsibility
India is a country of myriad contradictions. On the one hand, it has grown to be one of the largest economies in the world, and an increasingly important player in the emerging global order, on the other hand, it is still home to the largest number of people living in absolute poverty (even if the proportion of poor people has decreased) and the largest number of undernourished children. What emerges is a picture of uneven distribution of the benefits of growth which many believe, is the root cause of social unrest. Companies too have been the target of those perturbed by this uneven development and as a result, their contributions to society are under severe scrutiny. With increasing awareness of this gap between the haves and the have-nots, this scrutiny will only increase over time and societal expectations will be on the rise. Many companies have been quick to sense this development, and have responded proactively while others have done so only when pushed.
Governments as well as regulators have responded to this unrest and the National Voluntary Guidelines for Social, Environmental and Economic Responsibilities of Business or the NVGs (accompanied by the Business Responsibility Reports mandated by the SEBI for the top 100 companies) and the CSR clause within the Companies Act, 2013 are two such instances of the steps taken. According to Indian Institute of Corporate Affairs, a minimum of 6,000 Indian companies will be required to undertake CSR projects in order to comply with the provisions of the Companies Act, 2013 with many companies undertaking these initiatives for the first time. Further, some estimates indicate that CSR commitments from companies can amount to as much as Rs. 20,000 crores. This combination of regulatory as well as societal pressure has meant that companies have to pursue their CSR activities more professionally.
That attempts to bring together good practices of companies and grant-making foundations so as to assist companies pursue their CSR activities effectively, while remaining aligned with the requirements of the Companies Act, 2013. The 21st century is characterized by unprecedented challenges and opportunities, arising from globalization, the desire for inclusive development and the imperatives of climate change. Indian business, which is today viewed globally as a responsible component of the ascendancy of India, is poised now to take on a leadership role in the challenges of our times. It is recognized the world over that integrating social, environmental and ethical responsibilities into the governance of businesses ensures their long term success, competitiveness and sustainability.
This approach also reaffirms the view that businesses are an integral part of society, and have a critical and active role to play in the sustenance and improvement of healthy ecosystems, in fostering social inclusiveness and equity, and in upholding the essentials of ethical practices and good governance. This also makes business sense as companies with effective CSR, have image of socially responsible companies, achieve sustainable growth in their operations in the long run and their products and services are preferred by the customers. Indian entrepreneurs and business enterprises have a long tradition of working within the values that have defined our nation's character for millennia. India's ancient wisdom, which is still relevant today, inspires people to work for the larger objective of the well-being of all stakeholders.
These sound and all-encompassing values are even more relevant in current times, as organizations grapple with the challenges of modern-day enterprise, the aspirations of stakeholders and of citizens eager to be active participants in economic growth and development. The idea of CSR first came up in 1953 when it became an academic topic in HR Bowens Social Responsibilities of the Business. Since then, there has been continuous debate on the concept and its implementation. Although the idea has been around for more than half a century, there is still no clear consensus over its definition.
One of the most contemporary definitions is from the World Bank Group, stating, Corporate social responsibility is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local community and society at large, to improve their lives in ways that are good for business and for development.The CSR in India has traditionally been seen as a philanthropic activity. And in keeping with the Indian tradition, it was an activity that was performed but not deliberated. As a result, there is limited documentation on specific activities related to this concept. However, what was clearly evident that much of this had a national character encapsulated within it, whether it was endowing institutions to actively participating in Indias freedom movement, and embedded in the idea of trusteeship.
As some observers have pointed out, the practice of CSR in India still remains within the philanthropic space, but has moved from institutional building (educational, research and cultural) to community development through various projects. Also, with global influences and with communities becoming more active and demanding, there appears to be a discernible trend, that while CSR remains largely restricted to community development, it is getting more strategic in nature (that is, getting linked with business) than philanthropic, and a large number of companies are reporting the activities they are undertaking in this space in their official websites, annual reports, sustainability reports and even publishing CSR reports.
The Companies Act, 2013 has introduced the idea of CSR to the forefront and through its disclose-or-explain mandate, is promoting greater transparency and disclosure. Schedule VII of the Act, which lists out the CSR activities, suggests communities to be the focal point. On the other hand, by discussing a companys relationship to its stakeholders and integrating CSR into its core operations, the draft rules suggest that CSR needs to go beyond communities and beyond the concept of philanthropy. It will be interesting to observe the ways in which this will translate into action at the ground level, and how the understanding of CSR is set to undergo a change.
CORPORATE SOCIAL RESPONSIBILITY VOLUNTARY GUIDELINES 2009
Voluntary compliance is one of possible ways of practicing corporate social responsibility. It is seen as an alternative to the state-imposed regulations on company's behavior. Proponents of voluntary compliance argue that it is in company's own interest to behave socially responsibly and that in pursuit of good public image, company will withdraw from doing actions, which could damage its perception by public. Thus there is no need for state regulations.
On the other hand, opponents deem that companies may claim to voluntary adhere to self-imposed regulations but in practice they often follow profit maximizing behavior often violating stakeholders' interests. However, such behavior may be problematic not only morally or ethically but also legally: corporate codes of conduct may give rise to legal obligations pursuant to national laws of European Union member states implementing the Unfair Commercial Practices Directive or pursuant to consumer protection laws in other jurisdictions, including (subject to the effect of the Federal and State constitutions) the States of the United States of America.
In the United States, voluntary compliance may also refer to an argument made by tax protesters, who suggest that payment of income tax is voluntary, and not legally enforceable. However, this argument is rejected by the Internal Revenue Service, and has not been accepted by the U.S. courts. In order to assist the businesses to adopt responsible governance practices, the Ministry of Corporate Affairs has prepared a set of voluntary guidelines which indicate some of the core elements that businesses need to focus on while conducting their affairs.
These guidelines have been prepared after taking into account the governance challenges faced in our country as well as the expectations of the society. The valuable suggestions received from trade and industry chambers, experts and other stakeholders along with the internationally prevalent and practiced guidelines, norms and standards in the area of Corporate Social Responsibility have also been taken into account while drafting these guidelines . Fundamental Principle: 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.
Core Elements: The CSR Policy should normally cover following core elements:
1. Care for all Stakeholders: The companies should respect the interests of, and be responsive towards all stakeholders, including shareholders, employees, customers, suppliers, project affected people, society at large etc. and create value for all of them. They should develop mechanism to actively engage with all stakeholders, inform them of inherent risks and mitigate them where they occur.
2. Ethical functioning: Their governance systems should be underpinned by Ethics, Transparency and Accountability. They should not engage in business practices that are abusive, unfair, corrupt or anti-competitive.
3. Respect for Workers' Rights and Welfare: Companies should provide a workplace environment that is safe, hygienic and humane and which upholds the dignity of employees. They should provide all employees with access to training and development of necessary skills for career advancement, on an equal and non-discriminatory basis.
They should uphold the freedom of association and the effective recognition of the right to collective bargaining of labour, have an effective grievance redressal system, should not employ child or forced labour and provide and maintain equality of opportunities without any discrimination on any grounds in recruitment and during employment.
4. Respect for Human Rights: Companies should respect human rights for all and avoid complicity with human rights abuses by them or by third party.
5. Respect for Environment: Companies should take measures to check and prevent pollution; recycle, manage and reduce waste, should manage natural resources in a sustainable manner and ensure optimal use of resources like land and water, should proactively respond to the challenges of climate change by adopting cleaner production methods, promoting efficient use of energy and environment friendly technologies.
6. Activities for Social and Inclusive Development: Depending upon their core competency and business interest, companies should undertake activities for economic and social development of communities and geographical areas, particularly in the vicinity of their operations.
These could include: education, skill building for livelihood of people, health, cultural and social welfare etc., particularly targeting at disadvantaged sections of society.
Implementation Guidance: 1. The CSR policy of the business entity should provide for an implementation strategy which should include identification of projects/activities, setting measurable physical targets with timeframe, organizational mechanism and responsibilities, time schedules and monitoring.
Companies may partner with local authorities, business associations and civil society/non-government organizations. They may influence the supply chain for CSR initiative and motivate employees for voluntary effort for social development.
They may evolve a system of need assessment and impact assessment while undertaking CSR activities in a particular area. Independent evaluation may also be undertaken for selected projects/activities from time to time.
2. Companies should allocate specific amount in their budgets for CSR activities. This amount may be related to profits after tax, cost of planned CSR activities or any other suitable parameter.
3. To share experiences and network with other organizations the company should engage with well- established and recognized programmes/platforms which encourage responsible business practices and CSR activities. This would help companies to improve on their CSR strategies and effectively project the image of being socially responsible.
4. The companies should disseminate information on CSR policy, activities and progress in a structured manner to all their stakeholders and the public at large through their website, annual reports, and other communication media.
Provision for CSR in Companies Bill 2012
Till date it is very difficult exercise to analyze the spending of CSR by various firms and private companies and such information is not maintained at government level, even -5- among the top 100 firms by revenue, there are many who dont report their CSR spends or even declare the social causes they support, that is because they are not required to do so by law and no provisions for CSR exists in the Companies Act, 1956 so currently the Ministry does not maintain such details. But all that will change when the new Companies Bill, 2012 (which has already been passed by the Lok Sabha) becomes a law.
The Companies Bill, 2012 incorporates a provision of CSR under Clause 135 which states that every company having net worth Rs. 500 crore or more, or a turnover of Rs. 1000 crore or more or a net profit of rupees five crore or more during any financial year, shall constitute a CSR Committee of the Board consisting of three or more Directors, including at least one Independent Director, to recommend activities for discharging corporate social responsibilities in such a manner that the company would spend at least 2 per cent of its average net profits of the previous three years on specified CSR activities.
It is proposed to have detailed rules after passing of Companies Bill 2012 by Rajya Sabha to give effect to this provision. According to Schedule-VII of Companies Bill, 2012 the following activities can be included by companies in their CSR Policies:-
(i) eradicating extreme hunger and poverty; (ii) promotion of education; (iii) promoting gender equality and empowering women; (iv) reducing child mortality and improving maternal health; (v) combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases; (vi) ensuring environmental sustainability; (vii) employment enhancing vocational skills; (viii) social business projects; (ix) contribution to the Prime Ministers National Relief Fund or any other fund set by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Caste, the Scheduled Tribes, other backward classes, minorities and women; (x) such other matters as may be prescribed8.
The Companies Bill, 2012, Clause 135 also provides for constitution of a CSR Committee of the Board that The CSR Committee is required to;
(a) formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time. (d) The format for disclosure of CSR policy and the activities therein as part of Boards report will be prescribed in the rules once the Bill is enacted.
The data pack compiled by CSR identity.com together with Forbes India is revealing to some extent how much each company will have to fork out on CSR when they will bound by law and their actual spending for the financial year 2012.
The Companies Act, 2013
A In India, the concept of CSR is governed by clause 135 of the Companies Act, 2013, which was passed by both Houses of the Parliament, and had received the assent of the President of India on 29 August 2013.
B The CSR provisions within the Act is applicable to companies with an annual turnover of 1,000 crore INR and more, or a net worth of 500 crore INR and more, or a net profit of five crore INR and more.
C The new rules, which will be applicable from the fiscal year 2014-15 onwards, also require companies to set-up a CSR committee consisting of their board members, including at least one independent director.
D The Act encourages companies to spend at least 2% of their average net profit in the previous three years on CSR activities. The ministrys draft rules, that have been put up for public comment, define net profit as the profit before tax as per the books of accounts, excluding profits arising from branches outside India.
E The Act lists out a set of activities eligible under CSR. Companies may implement these activities taking into account the local conditions after seeking board approval. The indicative activities which can be undertaken by a company under CSR have been specified under Schedule VII of the Act.
The draft rules (as of September 2013) provide a number of clarifications. Some of its highlights are as follows:
Surplus arising out of CSR activities will have to be reinvested into CSR initiatives, and this will be over and above the 2% figure,
The company can implement its CSR activities through the following methods:
A Directly on its own, Through its own non-profit foundation set- up so as to facilitate this initiative, Through independently registered non-profit organisations that have a record of at least three years in similar such related activities, Collaborating or pooling their resources with other companies Only CSR activities undertaken in India will be taken into consideration, Activities meant exclusively for employees and their families will not qualify.
B A format for the board report on CSR has been provided which includes amongst others, activity-wise , reasons for spends under 2% of the average net profits of the previous three years and a responsibility statement that the CSR policy, implementation and monitoring process is in compliance with the CSR objectives, in letter and in spirit. This has to be signed by either the CEO, or the MD or a director of the company
Governance Clause 135 of the Act lays down the guidelines to be followed by companies while developing their CSR programme. The CSR committee will be responsible for preparing a detailed plan on CSR activities, including the expenditure, the type of activities, roles and responsibilities of various stakeholders and a monitoring mechanism for such activities. The CSR committee can also ensure that all the kinds of income accrued to the company by way of CSR activities should be credited back to the community or CSR corpus.
A set of such enabling processes, their inter-relationships and the sequence in which they need to be developed have been identified below:
Reporting The new Act requires that the board of the company shall, after taking into account the recommendations made by the CSR committee, approve the CSR policy for the company and disclose its contents in their report and also publish the details on the companys official website, if any, in such manner as may be prescribed. If the company fails to spend the prescribed amount, the board, in its report, shall specify the reasons.
Business responsibility reporting on CSR The other reporting requirement mandated by the government of India, including CSR is by the SEBI which issued a circular on 13 August 2012 mandating the top 100 listed companies to report their ESG initiatives.
These are to be reported in the form of a BRR as a part of the annual report. SEBI has provided a template for filing the BRR. Business responsibility reporting is in line with the NVG published by the Ministry of Corporate Affairs in July 2011.
Provisions have also been made in the listing agreement to incorporate the submission of BRR by the relevant companies. The listing agreement also provides the format of the BRR. The BRR requires companies to report their performance on the nine NVG principles. Other listed companies have also been encouraged by SEBI to voluntarily disclose information on their ESG performance in the BRR format.
Companies Act, 2013, Clause 135: CSR committee requirements A CSR committee of the board should be constituted. It should consist of at least three directors out of whom at least one is an independent director. This composition will be disclosed in the boards report as per sub-section (3) of section 134.
The CSR committee shall: formulate and recommend a CSR policy to the board, indicating the activities as specified in Schedule VII of the Act
a. To Recommend the amount of expenditure to be incurred on the activities indicated in the policy
b. To Monitor the CSR policy regularly
While developing these processes, no standard set of recommendations exist for all companies. However, an overview of the required details, the activities required to be completed for each of these processes along with some additional guidance on critical issues has been provided below:
A CSR strategy refers to what the company expects to achieve in the next three to five years and incorporates the vision, mission and goals on a broader level. It also entails how it plans to achieve these in terms of organisation and approach.
B CSR policy refers to what the company expects to achieve over the next year. This is aligned with the requirements of the Companies Act, 2013. Programme refers to a sector or an issue that the company proposes to address through its CSR. This can, for instance, be education of the girl child or agriculture development.
C Programmes will be clearly outlined in the companys CSR strategy. Programme goals will be achieved through a series of individual projects and, a project refers to a set of interventions, typically in a specific geography and addressing a specific stakeholder group, with a definite set of goals, beginning and end and a budget attached to it. Each project in turn will consist of a number of activities. All of which contribute towards the project goals.
CSR: Planning and strategising The first step towards formalising CSR projects in a corporate structure is the constitution of a CSR committee as per the specifications in the Companies Act, 2013, clause 135.
Background A Clause 135 of the Companies Act, 2013 requires a CSR committee to be constituted by the board of directors. They will be responsible for preparing a detailed plan of the CSR activities including, decisions regarding the expenditure, the type of activities to be undertaken, roles and responsibilities of the concerned individuals and a monitoring and reporting mechanism.
B The CSR committee will also be required to ensure that all the income accrued to the company by way of CSR activities is credited back to the CSR corpus. This is an excellent starting point for any company new to CSR.
C In case a company already practices CSR, this committee should be set up at the earliest so that it can guide the alignment of the companys activities with the requirements of the Act. For effective implementation, the CSR committee must also oversee the systematic development of a set of processes and guidelines for CSR to deliver its proposed value to the company, including:
D one-time processes such as developing the CSR strategy and operationalising the institutional mechanism repetitive processes such as the annual CSR policy, due diligence of the implementation partner, project development, project approval, contracting, budgeting and payments, monitoring, impact measurement and reporting and communication
GUIDELINES ON CSR FOR PUBLIC ENTERPRISES IN INDIA
The Department of Public Enterprises had issued Guidelines on Corporate Social Responsibility (CSR) for CPSEs in April, 2010 which have been issued formally to the Ministries/Departments for compliance in the Central Public Sector Enterprises (CPSEs) under their administrative control. Following are the salient features of guidelines on CSR & Sustainability:
(i) Corporate Social Responsibility and Sustainability is a companys commitment to its stakeholders to conduct business in an economically, socially and environmentally sustainable manner that is transparent and ethical.
(ii) In the revised guidelines, CSR and Sustainability agenda is perceived to be equally applicable to external and internal stakeholders, including the employees of a company, and a companys corporate social responsibility is expected to cover even its routine business operations and activities. CPSEs are expected to formulate their policies with a balanced emphasis on all aspects of CSR and Sustainability equally with regard to their internal operations, activities and processes, as well as in their response to externalities.
(iii) In the revised guidelines CSR and Sustainable Development have been clubbed together in one set of guidelines for CSR and Sustainability because of close linkage between the two concepts.
(iv) Public Sector enterprises are required to have a CSR and Sustainability policy approved by their respective Boards of Directors. The CSR and Sustainability activities undertaken by them under such a policy should also have the approval/ratification of their Boards. Within the ambit of these guidelines, it is the discretion of the Board of Directors of CPSEs to decide on the CSR and Sustainability activities to be undertaken.
(v) The financial component/budgetary spend on CSR and Sustainability will be based on the profitability of the company and shall be determined by the Profit After Tax (PAT) on the company in the previous year.
PAT of CPSES in the Previous year Range of the Budgetary allocation for CSR and Sustainability activities (as % of PAT in previous year)
(i) Less than Rs. 100 crore (ii) Rs. 100 crore to Rs. 500 crore (iii) Rs. 500 crore and above
3%-5% 2%-3% 1%-2%
All CPSEs shall strive to maximize their spending on CSR and Sustainability activities and move towards the higher end of their slabs of budget allocation.
(vi) Loss making companies are not mandated to earmark specific funding for CSR and Sustainability activities. However, they must pursue CSR and Sustainability policies by integrating them with their business plans, strategies and processes, which do not involve any financial expenditure. They may also collaborate with the profit making CPSEs and assist them in ingenious ways without financial support in CSR and Sustainability activities.
(vii) Mandatory compliance with legal requirement/rules/regulations/laws in letter and in spirit will be covered under CSR and Sustainability activity. However, expenditure on such activities would not be covered by CSRs financial component and would be considered as mainstream business spend.
(viii) The unutilized budget for CSR activities planned for a year will not lapse and will, instead, be carried forward to the next year. However, the CPSEs will have to disclose the reasons for not fully utilising the budget allocated for CSR and Sustainability activities planned for each year.
The unspent amount will have to be spend within the next two financial years, failing which, it would be transferred to a Sustainability Fund to be created separately for CSR and Sustainability activities.
(ix) From amongst these beneficiaries of CSR and Sustainability spend (financial component) of a company, the stakeholders directly impacted by its operations and activities can rightfully stake a claim for attention before others.
Such stakeholders are generally located in the periphery of commercial operations of a company. The corporate social responsibility of a company towards these stakeholders extends beyond its legal obligation to compensate for, and ameliorate the impact of its commercial activities. For this reason, CPSEs must accord priority to these stakeholders and undertake CSR and Sustainability projects in the periphery of its commercial operations on priority.
(x) CPSEs are expected to take initiative to promote welfare of employees and labour by addressing their concerns of safety, security, professional enrichment and healthy working conditions, whether mandated or otherwise. However, expenditure on mandated activities cannot qualify for CSRs financial components.
(xi) Although CPSEs may select their CSR and Sustainability projects from a vast range of available options, priority should be accorded to activities pertaining to
(i) inclusive growth of society, with special attention to the development of weaker sections of society and the backward districts of the country, and
(ii) environment sustainability. CSR and Sustainability initiatives should focus on capacity building, skill development and infrastructural development for the benefit of the marginalised and under privileged sections of the local communities and also in the backward regions so that avenues are created for their employment and income generation, and they also experience empowerment and inclusion in the economic mainstream.
(iii) Weaker sections would include SC, ST, OBC, minorities, women and children, BPL families, old and aged, physically challenged, etc.
(xii) It is mandatory for CPSEs to take up at least one major project for development of a backward district as identified by the Planning Commission for its Backward Region Grand Fund (BRGF) Scheme, and one major project for environment sustainability. For Maharatna CPSEs, it is mandatory to take up one more major project in either of the two categories.
(xiii) A Board level committee headed by either the Chairman and / or Managing Director, on an Independent Director would assist the Board of Directors to formulate CSR and Sustainability policies and oversee the implementation of CSR and Sustainability projects/activities by the CPSE.
(xiv) There is emphasis on internalizing the philosophy and spirit of CSR and Sustainability within the organizational culture and ethos. The philosophy and spirit of corporate social responsibility and sustainability should get embedded in the core values of all the CPSEs, be imbibed by the employees at all levels and it should permeate into all the activities, processes, operations and transactions of the enterprise.
Corporate enterprises professing to behave responsibly are expected to produce goods and services that are safe and healthy for the consumers and the environment, with reduced cost to the company in the long run.
(xv) 5 per cent of the annual budget for CSR and Sustainability activities has to be earmarked for Emergency needs, which would include relief work undertaken during natural calamities/disasters, and contributions towards Prime Ministers / Chief Ministers Relief Funds.
(xvi) Ethical conduct of business lies at the core of responsible business. To promote organizational integrity it is essential that premium is placed on individual probity of employees; transparency in all activities, dealing and transactions is encouraged; unethical, corrupt and anti-competition practices are discouraged temptation of quick returns and marginal gains in business through questionable means is resisted; and, position and situations that give rise to possible conflict of interest are avoided.
(xvii) Sustainability reporting and disclosure of all CSR and Sustainability activities undertaken by a CPSE is mandatory. By reporting transparently and with accountability, public sector companies can gain and reinforce the thrust of the stakeholders.
This, in turn, would provide a powerful stimulus to their CSR and Sustainability policies and agenda, and motivate them to pursue them with greater vigour. As per the above guidelines on CSR issued by the Department of Public Enterprises (DPE) in April, 2010, all profit making Central Public Sector Enterprises (CPSEs), including Maharatna CPSEs are required to select CSR activities which are aligned with their Business strategy and to undertake them in a project mode.
CPSEs are mandated to spend their funds on CSR projects selected by them with the approval of their respective Boards. All profit making CPSEs are to allocate budget mandatorily through a Board Resolution as percentage of net profit (previous year) in the following manner:
Loss making CPSEs are not mandated to earmark specific funding for CSR activities. CSR Budget is fixed for each financial year and this fund does not lapse. It is transferred to a CSR funds in which it accumulates. Implementation of CSR activities of CPSEs is monitored by the administrative Ministries/Departments of concerned CPSEs. States/UT/PSU-wise information of CSR work undertaken by the CPSEs, including Maharatna CPSEs and the number of persons benefited there from, is not maintained centrally in the Department of Public Enterprises.
Information furnished by Maharatna and Navratna CPSEs on total funds allocated for CSR and the funds utilized for the year 2010-11 and 2011-12 is given in the Annexure-II. CPSEs are free to take up CSR Projects for upliftment of weaker sections and backward districts. The exact provisions of the Companies Bill, 2012 were debated, as noted, herein above, in Rajya Sabha. It was then became the Companies Act 2013. Its detailed rules gave effect to the provisions of voluntary guidelines issued in 2009 to Corporate Sector (Private Companies). On that, the Companies are now bound to implement Corporate Social Responsibilities.
In case of public sectors, revised guidelines on CSR and sustainability are being implemented from 1 April 2013, as a commitment of the CPSEs to their stakeholders to conduct business in an economically, socially and environmentally sustainable manner.A robust and thriving development sector is central to Indias quest for equitable, inclusive and sustainable growth. Indias development sector has evolved substantially over the last few decades and is now witnessing unprecedented interest and investments across the value chain.
With the passage of the Companies Act, 2013 the mandate for corporate social responsibility (CSR) has been formally introduced to the dashboard of the Boards of Indian companies. The industry has responded positively to the reform measure undertaken by the government with a wide interest across the public and private sector, Indian and multinational companies. The practice of CSR is not new to companies in India. However, what this Act does is bring more companies into the fold. Also, it is likely that the total CSR spends will increase. What is clear to many companies is that if this increased spending is to achieve results on the ground which is the intent of the Act then it needs to be done strategically, systematically and thoughtfully.
The CII, being the leading industry body, through this handbook, envisages equipping companies for this shift of structured engagement with communities. This aims both at companies that are veteran CSR practitioners as well as those that are just entering the fray. It suggests steps to develop a CSR strategy and Policy and identifies the key building blocks for initiating and developing the CSR programs.
It walks the CSR practitioner through some of the key choices that may be required to be made while pursuing CSR objectives and develop an organization that is socially sensitive and responsible. Building a society which provides equal access to opportunities negates disparities and, is a collective responsibility. This Act presents a unique opportunity to stand up to the challenge. It is a call for action. And this handbook is a significant step in that direction.
The constitutional structure of the country was laid with an objective of one man equals one vote, equals one value. However the socio-economic realities of the country still have a long way to go to match this vision of independent India where today there are many first among equals. The country presently is under intense debate of developmental growth versus welfare based development.
Our political realities and our economic senses are at cross-roads. How do we strike a balance between the two? The choices we make today are going to influence our generations to come. Every single major policy initiative in this country has been driven with a perspective that an overwhelming concern for the disadvantaged and marginalised, a multidimensional view of poverty and human deprivation, the focus on our fundamental rights and the need to expand opportunities while ensuring its equal distribution are fundamental for achieving strong human development.
But disparity, inequality and the growing divide in our societies define our existence today. The inclusion of the CSR mandate under the Companies Act, 2013 is an attempt to supplement the governments efforts of equitably delivering the benefits of growth and to engage the Corporate World with the countrys development agenda. Philanthropy and CSR is not a novel concept for Indian companies, however a few organisations are likely to struggle. The role of civil society in fuelling this change is bound to be extremely important. With the new corporate resources in their tool bag much will depend on their ability to innovate and adapt.
TOP PSUs spending on CSR in India
Maharatna CPSEs S. No. Name of the CPSE Year Total funds allocated for CSR (Rs. Crores) Funds utilized for CSR (Rs.In Crores )
1.
Coal India Limited 2010-11 2011-12 262.28 553.33 152.33 77.33
2.
Indian Oil Corporation Limited 2010-11 2011-12 131.11 95360 128.41 82.73
3.
National Thermal Power Corporation Limited 2010-11 2011-12 72.37 45.52 72.21 49.43
4.
Oil and Natural Gas Corporation Limited 2010-11 2011-12 335.352 378.48 219.03 121.08
5.
Steel Authority of India Limited 2010-11 2011-12 94.00 64.00 68.95 61.25
Navratna CPSEs Name of CPSE Year Total funds allocated for CSR Funds utilized for CSR (Rs. Crore ) (Rs. Crore)
GAIL (India) Limited 2010-11 2011-12 69.54 (including carry forward amount of financial year 2009-10) 82.77 63.91 54.43
5.
Hindustan Aeronautics Limited 2010-11 2011-12 (No specific allocation of money for CSR, as CSR Policy was notified formally during November 2010) 5.00 1.79 5.81
Shipping Corporation of India Limited 2010-11 2011-12 3.77 5.67 5.84 including the balance carry forwarded from the previous year 5.84
BENEFITS OF A ROBUST CSR PROGRAMME As the business environment gets increasingly complex and stakeholders become vocal about their expectations, good CSR practices can only bring in greater benefits, some of which are as follows:
Communities provide the licence to operate: Apart from internal drivers such as values and ethos, some of the key stakeholders that influence corporate behaviour include governments (through laws and regulations), investors and customers.
In India, a fourth and increasingly important stakeholder is the community, and many companies have started realising that the licence to operate is no longer given by governments alone, but communities that are impacted by a companys business operations. Thus, a robust CSR programme that meets the aspirations of these communities not only provides them with the licence to operate, but also to maintain the licence, thereby precluding the trust deficit.
1. Attracting and retaining employees: Several human resource studies have linked a companys ability to attract, retain and motivate employees with their CSR commitments. Interventions that encourage and enable employees to participate are shown to increase employee morale and a sense of belonging to the company.
2. Communities as suppliers: There are certain innovative CSR initiatives emerging, wherein companies have invested in enhancing community livelihood by incorporating them into their supply chain. This has benefitted communities and increased their income levels, while providing these companies with an additional and secure supply chain.
3. Enhancing corporate reputation: The traditional benefit of generating goodwill, creating a positive image and branding benefits continue to exist for companies that operate effective CSR programmes. This allows companies to position themselves as responsible corporate citizens.
DESIGNING A VOLUNTEERING PROGRAMME As part of their corporate social responsibility efforts, companies encourage their employees to volunteer for a cause (usually pre-selected by corporate human resources or foundations) during work hours under formalised employee volunteering programmes (EVPs). These EVPs involve substantial opportunity cost for employers and therefore must be carefully planned and executed.
Who is a corporate volunteer? A corporate volunteer is an employee who actively takes on a task, responsibility, or project on his or her own accord without needing to be assigned or told to do so as part of his or her daily job duties. Corporate volunteering is generally considered an altruistic activity and is intended to promote larger social or environmental good or improve the quality of life of a target beneficiary or a community.
Most often, there are no financial gains for the work or service provided by such volunteers. However, sometimes this volunteering involves incentives such as personality or profile development, skill development, socialisation, and fun. In certain areas of volunteering work such as health services, education or emergency rescue volunteers receive training before they can contribute.
COMMUNITY ENGAGEMENT
A community can be defined as a homogenous group of individuals bound together geographically, politically, culturally or by certain values, principles or shared characteristics. For the purposes of this discussion, we define community as the collection of stakeholders who reside in the local vicinity of company operations and who rely on or are impacted by its shared resources. Community engagement is defined as a process in which the needs, priorities and values of various individuals (not directly associated with or dependent on a given company) and that of other external organisations in a community are incorporated into corporate decision-making and management activities.
CASE STUDIES The case studies below demonstrate how diverse company activities can be for businesses of all sizes.
SAP Here for Life is a not-for-profit public benevolent organisation focusing on education, awareness and research aimed at the prevention of youth suicide. The organization provides resources, education and school based life skills programs to help prevent suicide amongst young people. Through its charity sponsorship program SAP Australia supports Here for Life with monetary contributions, volunteering and staff involvement in the agency's programs
Sun Microsystems In 1998, Sun became Musica Viva's first and only principal sponsor. By associating itself with a leader in the IT industry, Musica Viva gains networking opportunities within the corporate sector, resulting in further sponsorship openings.
It gains access to Sun's staff and customer base to increase awareness of Musica Viva's activities and performances, enabling it to achieve its own aims of taking the beauty of music into the lives of ordinary Australians and forging meaningful links between the arts and the corporate world.
The exchange of expertise helps both partners. Sun provides its technological know-how and assists with market reach for Musica Viva, which in turn provides opportunities to give something back to Australia's cultural life through supporting and engaging with music in various ways.
IBM IBM - Japans e-elder initiative is a national program using training materials and other support from IBM Japan which will hire and train seniors as instructors for other seniors in an effort to help elder citizens (expected to make up one-fifth of Japans population by 2008) more fully participate in a Web-based society.
HP In Singapore, HP staff raised nearly $295,000 for charity in 2003 and received a SHARE Gold Award from the Community Chest of Singapore for employee participation exceeding 50%. One event was Gladiathon, a fundraiser in support of the President's Challenge 2003.
Leading by example was the Managing Director from HP Asia Pacific, who wore a gladiator costume and competed with other IT industry leaders in the battle for charity. HP was the largest corporate donor of this event, raising a total of $121,000.
Microsoft Microsoft works closely with international organizations such as the World Food Programme, Save the Children, and Mercy Corps to provide technology-based development assistance through the HEART (Humanitarian Empowerment and Response through Technology) program. More and more, global organizations rely on technology to improve the effectiveness of their humanitarian efforts around the world.
NOTABLE SOCIAL WORKS BY SOME COMPANIES IN INDIA
Ashok Leyland It Operates a Fun-Bus in Chennai and New Delhi. This bus, equipped with a hydraulic lift, takes differently abled children and those from orphanages and corporation primary schools on a days picnic. The company also runs AIDS awareness and prevention programmes in its Hosur factories for about 3.5 lakh drivers.
Axis Bank The Axis Bank Foundation runs Balwadis which are learning places for children living in large urban slum clusters. It also conducts skill development programmes (PREMA and Yuva Parivartan) in motor driving, welding, mobile repairing, tailoring etc, for the youth in backward districts.
Bharat Petroleum Corporation Its rain water harvesting project Boond, in association with the Oil Industries Development Board, selects draught- stricken villages to turn them from water-scarce to water-positive. Some of BPCLs other social programmes include adoption of villages, prevention and care for HIV/AIDS and rural health care.
Hindalco Industries Its CSR activities are concentrated in 692 villages and 12 urban slums, where it reaches out to about 26 lakh people. It has constructed check dams, ponds and bore wells to provide safe drinking water.
In education, it awards scholarships to students from the rural schools it support. Its other interests include womens empowerment and health care, in which it treats patients in hospitals, runs medical camps and operates rural mobile medical van services.
Indian Oil Corporation It runs the Indian Oil Foundation (IOF), a non-profit trust, which works for the preservation and promotion of the countrys heritage. IOCL also offers 150 sports scholarships every year to promising youngsters. Some of its other initiatives lie in the domains of clean drinking water, education, hospitals and health care.
CSR POLICIES OF CORPORATES IN INDIA
Corporate Social Responsibility (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. CSR is not a new concept in India. From the Vedic ages we have seen a reflection of business responsibility towards society. In the very beginning of Vedic preaching we read about "Sah Navavtuh Ma Vidvishavhe", which means, "May we together shield each other and may we not be envious towards each other".
Business in ancient India was seen as a legitimate, integral part of society. The core function of business was to create wealth for society through manufacturing, selling, distributing their offerings. It was based on an economic structure that believed in the philosophy of "Sarva loka hitam" which means the well-being of all stakeholders". Indias largest and internationally best-known companies - TATAs and BIRLAs endorsed the principle of business being a TRUSTEE OF SOCIETYS WEALTH espoused by Mahatma Gandhiji and have led the way in making corporate social responsibility an intrinsic part of their business plans.
These companies have been deeply involved with social development initiatives such as building of institutions for education and learning, hospitals, etc in the communities surrounding their facilities or in areas where these facilities are not available.J.R.D. Tata, who was instrumental in inducing social change through his numerous efforts remarked, While profit motive no doubt provides main spark for any economic activity, any enterprise which is not motivated by consideration of urgent services to the community becomes outmoded soon and cannot fulfill its real role in modern society.
As said by Peter Drucker The 21st century will be the century of the social sector organization. The more economy, money, and information become global, the more community will matter. A business has a lot of responsibility to the community around its location and to the society at large.
These responsibilities include:
1. Taking appropriate steps to prevent environmental pollution and to preserve the ecological balance. 2. Rehabilitating the population displaced by the operation of the business. 3. Contributing the overall development of the locality. 4. Taking steps to conserve scarce resources. 5. Contributing to research and development. 6. Development of backward areas. 7. Promotion of ancillary and small-scale industries. 8. Making possible contribution in furthering social causes like the promotion of education and population control.
Our Honble Prime Minister Dr. Manmohan Singh, has also reiterated the importance of corporate social responsibility for business - These are good times for Indian business. But with greater opportunity comes greater responsibility. You must pay due attention to improved corporate governance. You must be sensitive to the urgent need to protect our environment and to prevent degradation of our land, water, and air resources.
You must ensure that the interests of your shareholders and stakeholders are best served. Even as you demand a more hospitable environment for business, you must become more socially responsible. Corporations both in the public and private sectors, have joined hands to become good corporate citizens by contributing a part of their profits towards
1. generating employment 2. women empowerment 3. supporting the disadvantaged people 4. establishing schools / providing scholarships for higher studies 5. providing healthcare services in rural areas, either directly or indirectly
Public Sector Company MMTCS CSR
With approval of the Board, MMTC adopted CSR as a policy initiative in Sept. 2006 effective from 2007-08 with the following objectives:
1. To initiate voluntary measures to address economic, social and environmental concerns of stakeholders; 2. To make CSR a key business process for sustainable development; 3. To be a good Corporate Citizen. MMTC is strongly aware that companies are also members of the society and that a company cannot remain sustainable unless it co-exists with society as a good corporate citizen and meets the expectations of society through its business activities.
DPE issued guidelines on CSR in April, 2010 for CPSEs and MMTC accordingly reoriented its CSR policy to conform to DPE guidelines.DPE has also issued guidelines on Sustainable Development in September, 2011 and MMTC is currently in the process of adopting the same and drafting an SD Policy of its own.MMTC follows a three pronged approach for carrying out CSR activities which encompass its role as a promoter, a partner and a facilitator towards adding value to the triple bottom line.
A committee comprising Director (Personnel), Director (Finance) and Chief General Manager (Personnel)/General Manager (Personnel) forms the apex body in charge of laying down guidelines for allocation of budgets and approving of CSR areas/projects; and another committee comprising 2 Directors (Marketing), Chief General Manager (Finance) & Chief General Manager (Personnel)/General Manager (Personnel) forms the apex body in charge of laying down guidelines for allocation of budgets and approving of SD areas/projects to be supported by MMTC.
Our engagement areas in CSR include infrastructural development, environmental care and concern and relief and restoration during time of natural calamities.
Since MMTCs primary focus under infrastructure development is education and healthcare and capacity building & ensuring environmental sustainability, we take pride in mentioning that our efforts address the Millennium Development Goals (MDGs) of the 17 United Nations even if on a small scale.
MMTC SD Sustainable Development (SD) is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.Concerns about sustainable development suggest that meeting the needs of the future depends on how well we balance social, economic, and environmental objectives or needs when making decisions today. DPE also issued guidelines on Sustainable Development and MMTC is in the process of adopting the same with the objective to:
1. exhibit sensitivity towards environmental responsibilities and conduct our activities accordingly 2. become water positive using rain water harvesting technique 3. manage waste responsibly- Reduce, Reuse & Recycle 4. efficiently utilize energy resources 5. make efforts for preservation of ecological balance & heritage 6. sensitize human resource of MMTC towards environmental needs
A Committee comprising 2 Directors (Marketing) & CGM (Finance) as Members and CGM (P)/GM (P) as Member Secretary, shall be responsible for Implementation of SD. The Committee shall be the Apex Policy making Body to lay down guidelines for allocation of budget under various head of SD. Personnel Division at Corporate Office may assist the Apex Committee. The CGM (P)/ GM (P) at Corporate Office and the GM at Regional office and his associate finance will be responsible for implementation of SD programme as decided by the apex committee. MMTC is committed towards environmental upkeep through promoting large scale plantation in and around the mining areas.
MMTC has taken up plantation of more than 5500 saplings in the vicinity of MMTC Regional offices in Bellary (Karnataka), Barbil (Orissa) and NINL Plant promoted by MMTC in Jajpur District, Orissa. Tree plantation drives are also undertaken in and around Companys residential complexes at various locations. We have diversified into the area like Wind power energy generation, which is a clean and environment friendly source of energy. The Company has set up a wind mill in Karnataka state, which is the first in the series. Along with that we have encouraged use of environment friendly techniques in plants or facilities promoted by us , one of the examples being an Iron and Steel plant which uses environment friendly techniques like:-
1. Steam and power generation based on full utilization of by product- blast furnace gas and coke oven. No external fuel is used. 2. Dust extraction and dust suppression units are installed at dust generation points. The collected dust is recycled in Sinter plant. 3. Complete recycle of solid waste generated. 4. The liquid slag produced (a by-product) in blast furnace is granulated and sold to cement companies. 5. Zero emission of solid, liquid and gaseous wastes.
MMTC has also taken up construction of two check dams in Orissa during the current year in Jajpur district in association with State Govt. of Orissa. The check dams are being constructed at Kumbhirgaria village in Danagadi Block and Khapar Nallah near Ghasiber in Danagadi Block.
MMTC - CSR & SD INITIATIVES IN 2011-12 During the year 2011-12 budget approved by the Board for undertaking CSR activities was Rs. 3crores (3% of Net Profits of year 2010-11) & for undertaking SD activities was Rs. 45 lakhs (0.5 % of Net Profits of year 2010-11).
The focus areas of CSR 2011-12 were: 1. Infrastructure development 2. Primary Healthcare 3. Education 4. Skill development trainings 5. Response to natural calamities 6. Promotion of Socio-cultural activities
Whereas the focus areas of SD 2011-12 were: a. Waste management b. Water management
Moving ahead into the new financial year we plan to maintain and consolidate our position in the society with an increased emphasis on socially and environmentally responsible practices both at MMTC and the communities in which they operate. They strive to strengthen their CSR approach by undertaking following actions:
The MMTC aims to create a CSR & SD action plan which will involve identification of specific project for implementation over a time horizon in conformity to the following aspects highlighted in the DPE guidelines
1. CSR & SD activities to be focused at locations around areas of operation 2. More focus at economic, environment and social issues resulting from our operations 3. Identifying specific problems to be addressed in the locations/community groups using baseline studies 4. Designing specific projects which typically comprise of a core intervention besides a few ad-hoc grant based actions. We aim to create partner selection guidelines for identifying key partners/implementation agencies for carrying out our CSR & SD activities
RELIANCE POWERS CSR POLICIES Reliance Power in its continuous efforts to positively impact the society, especially the areas around its sites and offices, has formulated policies for social development that are based on the following guiding principles: Adopt an approach that aims at achieving a greater balance between social development and economic development. Adopt new measures to accelerate and ensure the basic needs of all people. Work towards elimination of all barriers for the social inclusion of disadvantaged groups- such as the poor and the disabled Give unfailing attention to children for in their hands lies the country's future. It is for their sake that health, education and environment get topmost priority in our programmes and investments.
In areas around its power plant sites in Sasan, Rosa, Krishnapatnam, Butibori, Chitrangi and others, Reliance Power has been actively involved in various social and environmental organizations to address the issue of sustainable development and social uplift. The Company in discharge of its responsibility as a corporate citizen actively contributes to community welfare measures and takes up several social initiatives every year. Reliance Power Ltd. has been closely working with institutions and social organizations and supporting their programmes for social development, adult literacy, adoption of village, tree plantation schemes etc.
Health Health and safety are of universal concern across the spectrum of communities. As a company, we are not only committed to compliance with legal norms but it is our endeavour to voluntarily go beyond that and provide quality healthcare facilities in the regions around our site. We are committed to providing all possible support to create awareness on various health related issues impacting the local people. We believe in a multidimensional approach that considers the needs of the area leading to an effective plan to address all issues in consultation with the local administration, community workers and NGOs working in the area.
At its various project sites, Reliance Power sites runs medical facility center, physiotherapy center, and mobile medical vans that dispenses free medicines and provide free health check-ups. Also periodically we come up with health camps like general health check up camps, gynecology camps, eye check up camps and corrective surgery camps for disabled children.
Education Education is a basic tool to bring development to an area and its people. We aim to create an awareness pool of human resource both within and across our area of operations. Reliance power is committed to bridging the digital divide between the haves and have nots in educational infrastructure and facilities. Exposure to technology along with a sustainable education model could be strengthened through partnership with government and quasi- government agencies.
Reliance Power is involved in a surfeit of activities that have changed the lives of the people residing at the sites or the PAFs (Project Affected Families).Education is the main thrust of these activities. Major contributions made in the area include building of a DAV school at the site for the children of the PAFs and the children of the villages around the sites, free school bus facility for the students, stipend to every child who attends school (a boy child gets Rs. 250 per month while a girl child gets a stipend of Rs. 300 per month), free uniforms, study tours for children, teaching aids to the teachers, training of teachers, as well as night schools for uneducated adults etc.
Employment Community is an integral part of the business environment and the basic commitment lies towards augmenting the overall economic and social development of local communities by discharging our social responsibilities in a sustainable manner. Reliance Power invests significantly in skill upgradtion of people around the sites.
The trained manpower available for construction will ensure quality and accident free working. CIDC, a Government of India initiative has been engaged and has trained about 300 project affected youths as electricians, welders, carpenters and masons and bar benders in batches of 40 each. To further encourage them we paid them, a monthly stipend of Rs.1000 per month. In addition efforts are on to enroll the oustees in short term courses at the ITI operating in the region. Apart from these, training is also provided are:
Computer coaching centre English speaking classes Personality development classes Physiotherapy training center Training by NAC (National Academy of Construction) and use them for future requirement of the construction.
For the women folk of the villages, in an effort to empower them the company trains them in soft skills like tailoring and poultry farming etc. Reliance Power provides assistance to women keen on starting their own businesses.
The Human Touch beyond policy imperatives. Although the main thrust of Reliance Powers CSR lies in providing quality education, health care and livelihood, they dont restrict themselves to it. In order to better lives around our areas of interest and business, they strive to provide basic amenities like electrification in the villages, augmentation and development of roads connecting the village to the main roads, old age support for senior citizens of the project affect families, development of the grazing lands for the cattle of the villagers, afforestation and veterinary camps for domestic cattle. Moral and financial support is extended during social occasions like marriages, community prayers, funerals and other such occasions.
POLARIS SOFTWARE CSR POLICIES CORPORATE SOCIAL RESPONSIBILITY (CSR) In Polaris, Corporate Social Responsibility (CSR) or Corporate Citizenship is taken very seriously. It is not just an involvement in charitable or philanthropic activities due to business responsibility, but our organization's conscious decision to support social, economic and ethical responsibilities. The CSR practice is embedded in the organisation's culture and is part of our way to develop the society where we live and owe our growth.
Ullas Trust Ullas Trust was started in 1997 by Polaris employees with an aim to integrate Polaris with a larger community and enable them to enjoy the bliss of working with young minds in the country.The primary motive of Ullas is to recognize academic excellence in students from the economically challenged sections of our society and encourage the Can do spirit towards chasing their dreams and aspirations.
Very early in its evolution, Ullas decided to focus its energies on students during the most vulnerable stage in their journey adolescence. This would translate into students from Class (Grade) 9th to 12th. Ullas' regularly conducts integrated and holistic programs to encourage young students. Briefly, these programs are as follows.
Annual Workshop The Chairman and CEO of Polaris, along with Polaris employees anchor a large scale annual workshop for over 2000 students. This workshop focuses on three main objectives: Recognize Young achievers in a public platform and award merit scholarships. 1. 2. Seed the thought of looking beyond their immediate environment and encourage them to dream big and articulate their dreams with conviction in a specially created Diary of Dreams. Provide an opportunity to interact with eminent personalities and role models.
SUMMIT Program This is a unique self-enrichment program. It comprises of a personality development module and a technology skill development module. All classes are anchored by Polaris employees (and their families) during the weekends for students from class 9 to 12, thus giving the employees a special opportunity to mentor these students.
The Summit program is graded as Level 1 to Level 4, with Level 1 beginning for Class 9th and finishing with Level 4 for Class 12th. Through the SUMMIT programs, Ullas gets a fantastic opportunity to make positive interventions in the journey of the student and actively support their Can do attitude towards achieving their aspirations.
Higher Education Program Ullas also supports Higher Education aspiration of deserving students through Merit Scholarships and Mentoring Programs. After the 12th standard, aspirants apply for the Higher Education Scholarships and go through a formal interview by panels of Polaris employees, where they build a case of why they should be awarded the scholarships.
This again gives them a head-start in facing interviews. The Higher Education Scholarships continue till the student graduates and their mentoring programs encompass Presentation techniques, Preparing for interviews, awareness of corporate etiquette and unleashing their potential as well as the power of team work demonstrated throughout-bound programs.
Touch the Soil This is a unique program that spreads the Power of Dreams to Municipal, Corporation or Government school students in rural and semi-urban districts. Employees form teams and engage with students in 9th and 12th grades and conduct specially designed interactive workshops. Each student is encouraged to dream big and dream with conviction.
The programs mentioned above are based on six guiding principles:
1. 1 A young mind learns through his/her observations and by expanding his view. One can broaden his/her vision in this manner. 2. 3. 2 A young mind gets inspired by experiencing role models. Its only when one observes benchmarks of success can one even think about it. 4. 5. 3 A young mind gets energized and further encouraged by recognition in a larger group. 6. 7. 4 Between the ages of 13 and 16, the maximum change in ones thought process occurs and any positive influence gets amplified. 8. 9. 5 To bring anything to reality one needs to visualize it. When one pens his or her dreams on paper ones own personal commitment to the dreams increases and the chances of achieving the dream increases. 10. 11. 6 During the journey towards achieving dreams, if ones thoughts are supported and discussed with a mentor, friend and guide, it inspires and accelerates momentum towards ones goals.
NIIT TECHNOLOGIESS CSR POLICY
Corporate Social Responsibility NIIT Technologies is committed to giving back to the society, utilizing IT as an instrument for social development and progress.
Taking Learning Stations to the Playground
Established in 2001, Hole-in-the-Wall Education Ltd., (HiWEL) breaks the traditional confines of a school. HiWEL uses a unique collaborative learning approach encouraging children to explore, learn and enjoy. This path-breaking learning methodology was created by Dr. Sugata Mitra, Chief Scientist of NIIT.
With the formation of HiWEL in 2001, a national research program was started, in which Learning Stations were set up in 23 locations across rural India. This on-going project continues to create a tremendous impact among generations of young learners. In 2004, Hole-in-the-Wall reached Cambodia through the Ministry of External Affairs, Government of India.
A New Lease of Life for a School in North Bihar NIIT Technologies connects with real India by upgrading a school in North Bihar, India. The company helped bring improved learning facilities to children in remote villages with no infrastructure, facilities and opportunities. This provides a significant boost to girls education.
Tireless Support for Social Causes The company recently joined hands with CHILDLINE, New Delhi to celebrate the NGOs 12th anniversary with 500+ under privileged children.
Careers NIIT Technologies recognizes creativity and treats each employee as a key resource. We provide an environment where employees can be productive, think out of the box and deliver value to customers.
The company fosters a performance- driven culture, and provides opportunities to work with thought and business leaders, who guide out employees through their career journey. Our global footprint will expose our people to supportive work environments in different geographies, among different people and within different cultural milieus.
TCS CSR POLICIES Corporate Social Responsibility At TCS, sustainability is seen as a state of being in balance between Corporate Economic Responsibility (CER) and Corporate Social Responsibility (CSR). Approach Initiatives Key Facts and Figures
The guiding principle of TCS Corporate Social Responsibility programs is Impact through empowerment, where empowerment is a process of strengthening the future today, so that risks are minimized, value created and certainty is experienced. We strive to ensure that the communities engaged through our CSR initiatives also experience certainty in their lives.
The core areas for TCS CSR programs are education, health and environment. The choice of education as a theme flows from TCS being in the knowledge domain. Similarly, attention to the cause of health acknowledges that health is a vital precondition for promoting social good. Concern for the environment is in line with our belief that this global cause demands our attention to ensure a sustainable and productive planet. These themes are established centrally for adoption or adaptation across all geographies.
TCS' Approach TCS has chosen the following channels to drive its CSR initiatives: Developing innovative solutions to address large-scale societal problems by utilizing our IT core competence. Volunteering for projects that address the felt need of communities in which TCS operates, while aligning with the core themes of TCS CSR. Participating in community development program championed by our clients. Partnering with select non-government and civil society organizations and other government bodies. Supporting large-scale causes such as disaster relief or any other cause as determined by the Corporate CSR Council.
Key facts and Figures In the year 2011-12 year TCS associates volunteered 58,362 hours on CSR initiatives and through these initiatives reached out to 57,90,604 beneficiaries.
TCS Summit 2013 attendees participate in Build a Bike for local charity The attendees of the TCS Summit 2013 participated in Build a Bike for local charity. They raced to construct the ultimate human-powered, no-gasoline-needed rocketa child-sized bicycle, for the local Boys & Girls Club in Hilton Head. activities involved volunteering their time to help those in need.
CORPORATE SOCIAL RESPONSIBILITY (CSR) OF SBI
Corporate Social Responsibility: 1. The Bank keeps aside 1% of its net profit for corporate social responsibility and the endeavor is to have full achievement of the same. 2. The Bank CSR policy involves donation under the following major categories:
i) National donations to Prime Ministers and Chief Ministers Relief Funds for natural and other calamities, ii) Contribution to organizations having exemption under 80G of the Income Tax Act largely for equipment and vehicles, iii) Distribution of fans and water purifiers to neighbor-hood schools. During the year we are happy that the target of donating 1% of the net profits to CSR, which has eluded the Bank earlier, was not only fully achieved but was surpassed.
Table for CSR Expenditure Rs. In Crore
3. Other Flagship programmes: Looking to the deep inconvenience and discomfort students faced in hot summer in classrooms without the fans, the Bank donated 1,40,000 fans to 14,000 schools. The methodology was that every branch of the Bank adopted a school in its neighbor-hood attended by students from modest background and installed 10 fans and one water purifier.
This strategy gave wide reach to the activity and every single region of the country having SBI branch had schools in the vicinity benefitting from donation of fans and a water purifier.
Table for Donation of fans and water purifiers
Donation of water purifier to Jai Kisan School, Manjhatali Gumla, Jharkhand
The Bank prefers to support largely with community assets as the benefits of those are shared by all.These steps have created tremendous goodwill in the community and many of our branch managers have been invited to preside over the annual functions of neighbor-hood schools. The Bank considers this to be a constructive bond between the Bank and the community. The Bank is happy to make the lives of our young citizens comfortable and healthier.
To help in delivering quality healthcare and transportation of patients and doctors which is a challenge especially in non- metro areas, Bank has donated 313 ambulances and medical vans. To help children especially the physically handicapped children, Bank has distributed 51 school buses/vans. Some of the notable beneficiaries of Banks support have been the following institutions like Aravind Eye Hospital, Chennai, Tata Medical Centre, Kolkata, N. Swain Memorial Trust, Hyderabad, Sankara Nethralaya, Chennai, St. Xaviers College, Mumbai etc.
The Bank has also supported several initiatives in installing solar lamps in many places largely in the rural areas not having dependable electricity supply. Apart from its exemplary work done in financial inclusion, the Bank has spent a total amount of INR 123.27 crores on CSR activities in FY 2012-13. The details of the activities and projects undertaken have been covered above in Section B as well as in Corporate Social Responsibility section of the Annual Report. The Bank undertakes numerous community development initiatives across the length and breadth of India supporting education, healthcare, livelihood etc.
The Bank has won the following awards for its CSR activities. Golden Peacock Award for Corporate Social Responsibility. Asias Best CSR Practice Award-2012 Asian CSR leadership Award -2012. IPE Best CSR Award -2012. Most Caring Company Award 2012.
The focus areas of the Banks CSR activities are listed hereunder: Supporting education. Supporting healthcare. Assistance to poor & underprivileged. Environment protection. Entrepreneur development programme. Help in National calamities.
AWARDS FOR CSR
Corporate Governance & Sustainability Vision Awards 2013 held in New Delhi, in February 2013 Sustainability and Corporate Governance is the need of the hour in the corporate sector. In the long run every other organization will fade out if they do not exercise sustainable practices and governance timely in the right manner. This is more significant and applicable in a country like India, which is on a growth path towards becoming a world leader. Organisations needs to emphasise on real wealth creation by adopting to business approach that creates long- term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.
With this backdrop, Indian Chamber of Commerce in association with the Department of Public Enterprises, Government of India had organized the India Corporate Governance & Sustainability Vision Summit during February, 2013 at New Delhi.The Corporate Governance & Sustainability Vision Awards acknowledge and reward companies that have taken positive steps to manage and measure their economic, environmental and social impacts and performances and have integrated sustainability into their core business models.
In turn these awards provide a platform to highlight leading examples of sustainable practices and performance to inspire and motivate others to adopt similar policies and practices and transparently communicate on their performance. The Awards were given away in the following categories as mentioned below.
Sustainability Performance Award: This award recognizes a company that has excelled in its overall environmental, economic and social performance.
Sustainability Reporting Award: This award recognizes a company that has demonstrated excellence in transparently reporting on its sustainability policies, practices and performance in line with internationally agreed reporting principles.
Water Stewardship Award: This award recognizes a company that has demonstrated commitment to manage the impacts on local communities and resources through water consumption as well as through implementing relevant policies, practices and monitoring and measuring its performance.
Considering the current importance of water for industry, we suggest an award category for industries that have shown significant efforts and achievements in water conservation and use.
Corporate Governance Award: This award recognizes a company that has demonstrated commitment to corporate governance through implementing relevant policies, practices and monitoring, measuring and publicly disclosing its performance.
Ernst and Young (P) Ltd has joined hands with ICC as the Knowledge Partner of this initiative.
2010 awards ORGANIZATION THAT OFFERS THE BEST RETURN TO INVESTORS 1.CAIRN India Ltd. 2. Dabur India Ltd. 3. Jain Irrigation Systems Ltd. 4. Lupin Ltd.
ORGANIZATION THAT OFFERS THE BEST RETURN TO CONSUMERS 1. Blue Dart Express Ltd. 2. Broadridge Financial Solutions (India) Pvt. Ltd. 3. Jain Irrigation Systems Ltd. 4. VA TECH WABAG Ltd.
BEST CORPORATE SOCIAL RESPONSIBILITY PRACTICE 1. Blue Dart Express Ltd. 2. Mahindra & Mahindra Ltd. 3. Max India Foundation 4. Polaris Software Lab Ltd. 5. Punjab National Bank 6. Steria India Ltd. 7. Tata Steel Ltd. 8. Sesa Goa Ltd. Alternate Livelihood Project ( ALOP) ( Runners up ) 9. IBM India Pvt. Ltd. ( Runners up ) 10. YES BANK Ltd. ( Runners up )
Awards For 2009 Organization that offers the Best Return to Investors 1. Cadila Healthcare Ltd. 2. The Shipping Corporation of India Ltd.
Organization that offers the Best Return to Channel Partner / Ancillary Developments 1. Nandan Biomatrix Ltd.
Best Corporate Social Responsibility Practice 1. Larsen & Toubro Ltd. 2. Ambuja Cements Ltd. 3. Punjab National Bank 4. Steria India Ltd. 5. Coca-Cola India Pvt. Ltd. 6. Infosys Technologies Ltd. 7. Parivarthan, JK Tyre & Industries Ltd. 8. Agro Tech Foods Ltd. (Certificate of Merit)
Awards For 2008 Organization that offers the Best Return to I nvestors 1. Hindustan Aeronautics Ltd.
Best Social and Corporate Governance Practice Winners 2008 1. Bharti Foundation 2. Canara Bank
1. Godfrey Phillips India Ltd. 2. Hindustan Unilever Ltd. 3. ITC Ltd. 4. Pepsico India Holdings Pvt. Ltd. (Waste to health) 5. Polaris Software Lab 6. Steria India Ltd. 7. Zydus Sristhi
CORPORATE GOVERNANCE AWARD
The Corporate Governance Awards are offered, herein India, at national level, to the best corporates, following the best corporate governances principles by the The Institute of Company Secretaries of India (ICSI). By going through the detail of the procedures to be followed for the receipt of the award, one can thoroughly understand what corporate governance is and what are expected from the corporates, by the regulatory bodies. The ICSI has been constituted under an Act of Parliament i.e., the Company Secretaries Act, 1980 to develop and regulate the profession of Company Secretaries. The ICSI functions under the jurisdiction of Ministry of Corporate Affairs, Government of India.
The affairs of the Institute are managed by the Council of the Institute consisting of fifteen elected members and five nominees of the Central Government. The ICSI has on its rolls nearly 35,000 members including around 5,000 members holding Certificate of Practice and nearly 4,00,000 students pursuing the Company Secretary ship Course.
ICSI have established a Centre for Corporate Governance, Research & Training (CCGRT) at Navi Mumbai to promote the high quality research & training on corporate governance. The Institute has been taking various measures to promote and facilitate good governance in the corporate sector. These measures include recognition and awarding companies and persons for their enduring contribution to governance.
It has been bestowing National Awards for excellence in corporate governance for the last 12 years. The awardees for ICSI National Awards for Excellence in Corporate Governance are selected through a very rigorous comprehensive evaluation process undertaken by an eminent jury. The Jury to adjudge the awardees for the ICSI National Awards for Excellence in Corporate Governance used to consist of various eminent and highly placed people such as Chief Justice, Chairmen of financial institutions, Chairman and secretary of ICSI, Chairman, CEOs, MDs of stock exchanges and other bigger corporates.
AWARDS CATEGORIES The ICSI National Awards for Excellence in Corporate Governance is bestowed on two best governed companies and a Certificate of Recognition is given to other top five companies. In addition, the ICSI Lifetime Achievement Award for Translating Excellence in Corporate Governance into Reality is bestowed on an eminent personality.
The following categories of awards are bestowed under the ICSI National Awards for Excellence in Corporate Governance.
A. Two Best Governed Companies B. Award to Company Secretaries of the respective Awardee Companies C. ICSI Life Time Achievement Award for Translating Excellence in Corporate Governance into Reality D. Certificate of Recognition to other Top 5 Companies. Eligibility
The eligibility criteria, for participation, in the ICSI National Awards for Excellence in Corporate Governance, are as under: (a) Listed entities in India which send their nomination for the Award. (b) Unlisted companies in India which send their nomination for the Award.
The factors considered in selecting personalities for conferment of ICSI Life Time Achievement Award for Translating Excellence in Corporate Governance into Reality are as under: (a) Performance of Group/Company he/she has led; (b) Social Welfare; (c) Public Policy; (d) Corporate Governance; (e) Negative Contribution, if any.
EVALUATION PROCESS
Firstly, Evaluation of Responses to First Questionnaire
Secondly, Evaluation of Responses to Second Questionnaire
Thirdly, Responses from Independent Directors
Fourthly, Media Reports & Information collected from websites
Fifthly, Regulatory response on the Credentials of the company
Finally selection by Jury
The Questionnaires and evaluation methodologies are developed through an open, transparent and consultative process. The draft Questionnaires are first developed by a technical team of academic officers of ICSI taking into account the regulatory requirements, the prevailing global best practices, excellence in governance performance and futuristic orientation in governance matters and the same placed on the website of the Institute for public comments and suggestions.
The questionnaires are also sent to SEBI, OECD, Asian Development Bank, World Bank, Industry Associations, IIMs, National Law School of India University, Indian Law Institute for their comments and suggestions. The Expert Group finalizes the Questionnaire taking into consideration the suggestions received.
The First Questionnaire is sent to all companies listed on National Stock Exchange of India Limited and the Bombay Stock Exchange Limited. The questionnaires are also placed on the website of the Institute.
Companies are short listed based on the evaluation of First Questionnaire, which aims to assess the rule based governance in the company. The Second Questionnaire is then sent to all the short listed companies. It focuses on principle-based governance.
At the 3rd stage of evaluation, a maximum of 10% marks be deducted from the overall scores of first and second questionnaires, based on the responses of the independent directors and the regulatory authorities.
The Top 15 companies be selected on the basis of the total marks (out of 100) earned by the shortlisted companies. The evaluation of these companies is placed before the Jury (as first equals) for the final decision. The details of all participant companies also be made available for the final decision of the Jury.
The ICSI National Awards for Excellence in Corporate Governance is bestowed on the basis of the decision of the Jury relying on the information provided by the companies in response to the Questionnaires, the information available about the company in public domain and as gathered from various accessible sources including feedback provided by regulatory bodies and analysis made by the ICSI of the information so gathered.
The authenticity and veracity of the information provided by the companies and as contained in the Annual Report and other documents of the company are taken in good Faith by the ICSI.
The following documents of the company are relied upon for evaluating the participating companies for the Awards:
Annual General Meeting;
nies to the Questionnaires designed by the Institute;
h and analysis;
CORPORATE GOVERNANCE RATINGS
It is becoming more common for investors to consider governance issues when making investment decisions. In response to this interest, several organizations now rate the corporate governance practices of public companies, either as a stand-alone offering or as part of a credit rating. This memo provides a summary of the governance ratings provided by Institutional Shareholder Services (ISS), The Corporate Library, and Governance Metrics International. It also summarizes the governance issues considered by several credit ratings agencies: Moodys Investor Services, Standard and Poors and Fitch Ratings, CRISIL, ICRA.
The current focus on corporate governance has led many to seek more information on the quality of governance practices at specific companies. It is becoming more common for investors to consider governance issues when making investment decisions. In response to this interest, several organizations are offering corporate governance ratings which evaluate governance practices of public companies.
This memo provides a summary of the governance ratings provided by Institutional Shareholder Services, The Corporate Library and Governance Metrics International. For each ratings organization, we describe and summarize the company and governance-related products, the major governance issues addressed by the ratings, as well as the specific areas analyzed which relate to executive and director compensation and board structure and practices. Several credit ratings agencies have added governance issues to their ratings methodology.
The governance issues most important to creditors are often different from those which most affect stockholders. The credit rating agencies have explored this issue and developed approaches for evaluating governance with a focus on the issues that most affect creditors. The governance issues analyzed by Moodys Investor Services, Standard and Poors and Fitch Ratings, ICRA, CRISIL are summarized in this memo. This memo was compiled based mainly on information currently posted on the websites of the organizations discussed. Some additional information was gathered from conference presentations and other materials made publicly available by the organizations.
Corporate Governance Ratings Organizations The corporate governance ratings organizations have all begun offering rating services during the past five years. The audience for these services is varied, and the market is still developing. Potential users of the ratings services include institutional investors, fund managers, smaller investors, executive search firms, accounting firms, compensation and governance consultancy firms, insurers offering directors and officers liability insurance, rated companies and academics.
INSTITUTIONAL SHAREHOLDER SERVICES CORPORATE GOVERNANCE QUOTIENT (ISS CGQ) In June 2002, Institutional Shareholder Services (ISS) launched a corporate governance rating system, which is included with the proxy analysis service they provide for their institutional investor clients. ISS is a leading provider of proxy voting and corporate governance services to institutional investors.
ISS provides its subscribers with voting recommendations on each ballot item for which shareholder approval is sought (including the adoption of incentive plans and the election of directors). Presumably, subscribing investors use the CGQ as a part of their investment and voting decisions. ISSs corporate governance rating system compares companies corporate governance practices with a market index, as well as with one of Standard & Poors 23 industry groupings.
Governance Topics Assessed ISS assesses the corporate governance practices of covered companies, focusing on the following eight core topics: Board Structure and Composition Audit Issues Charter and Bylaw Provisions Laws of the State of Incorporation Executive and Director Compensation Qualitative Factors Director and Officer Stock Ownership Director Education
GOVERNANCE METRICS INTERNATIONAL (GMI) Company and Ratings Products Governance Metrics International (GMI) is an independent corporate governance rating agency which was found in 2000. The evaluation of governance practices is the only service the company provides. GMIs clients include institutional investors, including mutual funds, money management firms and pension funds, as well as corporations, law and accounting firms, insurance underwriters, regulators and others. The rating system used by GMI is the result of extensive research and testing and includes a scoring algorithm which has a patent pending.
Currently, the GMI universe includes ratings for 2,100 companies from all over the world. There were plans to increase the universe of rated companies during 2004. GMI clients can purchase subscriptions based on geographic or market sector categories. Smaller investors and analysts can also purchase subscriptions for a customized portfolio of at least 40 companies across geography and industry groups.
STANDARD & POORS CORPORATE GOVERNANCE SCORES (CGS) Company and Ratings Products Standard & Poors is a global provider of credit ratings and other services designed to help individuals and institutions around the world make better-informed financial decisions.
Standard and Poors (or S&P) has developed widely-recognized financial market indices, such as the S&P 500. S&P formed a Governance Services unit in 1998 and launched a corporate governance scoring service in 2000. The Governance Services unit provides confidential corporate governance evaluations, customized research and corporate governance screens in addition to the public corporate governance scores (CGS).
A CGS is developed by S&P governance analysts upon the request of the company which is to be reviewed. The scores are not intended to be used as a credit rating or equity analysis. By itself, it [the CGS] should not be intended to serve as financial advice, nor as a recommendation for a specific course of action. Its simple purpose is to provide an objective benchmarking of a companys corporate governance standards in a global context. In this regard, governance scoring can be viewed as a positive complement to traditional equity and credit analysis.
However, credit ratings analysts at S&P often consider governance issues while assessing a companys management quality, accounting and financial controls. The CGS is reported on a scale of 1 to 10, with 10 being the best possible score. Specifically, the CGS reflects the effectiveness of the interaction among a companys management, board, shareholders and other stakeholders. This focuses on the internal governance structure and process at an individual company.
S&Ps governance service also conducts a Country Governance Review which considers the effectiveness of the legal, regulatory information and market infrastructure. This focuses on how external forces at a macro level can influence the quality of a companys corporate governance. The details of the Country Governance Review are beyond the scope of this memo (see the S&P website for more information).
Governance Topics Assessed The S&P methodology for assessing governance includes approximately 80 factors which fall under the following four components:
1. Ownership structure and external influences Transparency of ownership Concentration and influence of ownership and external stakeholders
2. Shareholder rights and stakeholder relations Shareholder meeting and voting procedures Ownership rights and takeover defenses Stakeholder relations
3. Transparency, disclosure and audit Content of public disclosure Timing of, and access to, public disclosure The audit process
4. Board structure and effectiveness Board structure and independence Role and effectiveness of the board Senior executive and director compensation
FITCH RATINGS
Company and Ratings Products Fitch Ratings is a global credit rating agency. Fitch Ratings is owned by Fimalac, which also owns Core Ratings, a European rating agency providing independent investment analysis of corporate responsibility risks. In April 2004, Fitch Ratings published a special report entitled Evaluating Corporate Governance: The Bondholders Perspective which announced their approach to incorporating corporate governance into their overall credit rating process.
Fitch has always taken aspects of corporate governance into account but in this report, they outline a more systematic framework for reviewing governance practices that affect credit quality. Fitch uses the analyses of corporate governance practices in a general way when determining credit ratings.
They describe the effect on their credit ratings in the following way: 1 Exceptionally weak or deficient governance practices can contribute to a negative rating action, possibly including a downgrade.
2Exceptionally strong governance practices could warrant a special mention or other positive recognition in the credit analysis but will not drive a positive rating action generally.
Fitch employs the following approach to conduct a review of a companys corporate governance: 1. Leveraging data and information on the quality of governance practices across companies.
2. Performing contextual reviews of the qualitative factors and nuances around a companys approach to corporate governance.
GMI Ratings GMI Ratings is an independent provider of research and ratings on environmental, social, governance and accounting-related risks affecting the performance of public companies. The firms ESG ratings for nearly 5,500 companies worldwide incorporate 120 ESG KeyMetrics to help investors assess the sustainable investment value of corporations. The firm also provides Accounting and Governance Ratings (AGR) for approximately 18,000 public companies worldwide.
AGR metrics reflect the accuracy and reliability of a companys financial reporting. Clients of GMI Ratings include leading institutional investors, banks, insurers, auditors, regulators and corporations seeking to incorporate accounting and ESG factors into risk assessment and decisionmaking. A signatory to the Principles for Responsible Investment (PRI), GMI Ratings was formed in 2010 through the merger of Governance Metrics International, The Corporate Library and Audit Integrity. In the 2012 Independent Research in Responsible Investment (IRRI) Survey conducted by Thomson Reuters Extel and SRI-CONNECT.com, GMI Ratings was named The Best Independent Corporate Governance Research Provider
This is alist of countries by average overall rating in corporate governance
(GMI Ratings (formerly, Governance Metrics International) Country Rankings as of September 27, 2010)
Rank Country Companies Average Overall Rating 1 United Kingdom 394 7.60 2 Canada 132 7.36 3 Ireland 19 7.21 4 United States 1,761 7.16 5 New Zealand 10 6.70 6 Australia 194 6.65 7 Netherlands 30 6.45 8 Finland 28 6.38 9 South Africa 43 6.09 10 Sweden 40 5.88 11 Switzerland 51 5.86 12 Germany 79 5.80 13 Austria 22 5.77 14 Italy 52 5.25 15 Poland 14 5.11 16 Norway 26 4.90 17 Singapore 52 4.82 18 Denmark 24 4.79 19 France 100 4.70 20 India 56 4.54 21 Belgium 24 4.35 22 Greece 24 4.25 23 Malaysia 28 4.21 24 Thailand 15 4.20 25 Portugal 11 4.14 26 Hong Kong 72 4.06 27 Spain 43 3.97 28 South Korea 88 3.93 29 Brazil 67 3.91 30 Russia 25 3.90 31 Taiwan 78 3.84 32 Israel 17 3.79 33 Turkey 17 3.62 34 China 91 3.37 35 Japan 392 3.30 36 Indonesia 21 3.14 37 Mexico 21 2.43 38 Chile 15 2.13
Certificate of recognition for excellent corporate governance practices in India
The Corporate Governance Awards are offered, herein India, at national level, to the best corporates, following the best corporate governances principles by the The Institute of Company Secretaries of India (ICSI). By going through the detail of the procedures to be followed for the receipt of the award, one can thoroughly understand what corporate governance is and what are expected from the corporates, by the regulatory bodies.
The Institute of Company Secretaries of India initiated the award in the year 2001 with an aim to promote the cause of Corporate Governance in the country. The ICSI in pursuance of its goals of catalyzing a pervasive consciousness of the need for good governance in the Indian corporate sector instituted the ICSI National Award for Excellence in Corporate Governance in the year 2001. The underlying guideline for the Corporate Governance Award is to identify the corporate, which best follow the corporate governance norms in letter and spirit that will create and establish an atmosphere of good citizenry.
ICSI National Awards for Excellence in Corporate Governance - 2012
Chairman of the Awards Jury of the ICSI (Institute of Company Secretaries of India) and former Chief Justice of India Shri Justice M. N. Venkatachaliah here today presented the ICSI National Awards for Excellence in Corporate Governance -2012 to two Best Governed Companies: 1. InIndian Oil Corporation Limited; and HCL Technologies Limited.
The Awards were presented during the ongoing2 nd CSIA International Corporate Governance Conference. The Company Secretaries of the awardee companies, ShriRajuRanganathan, Company Secretary, Indian Oil Corporation Limited ; and Shri Manish Anand, Company Secretary, HCL Technologies Limited were also honoured for their contribution in adhering to good corporate governance practices.
ICSI Life Time Achievement Award for the year 2012 was presented to Shri Deepak S. Parekh, Chairman, Housing Development Finance Corporation Ltd. for translating excellence in Corporate Governance into reality.
Certificates of Recognition were presented to the Top Five Companies. These are ( in Alphabetical order): 1. CMC Limited 2. Engineers India Limited 3. ONGC Limited 4. Persistent Systems Ltd. 5. Powergrid Corporation of India Limited
Both IOC and HCL Tech were adjudged as the best governed companies for 2012. The ICSI has also conferred a Life Time Achievement Award to Deepak Parekh, Chairman of Housing Development Finance Corporation, for translating excellence in corporate governance into reality. Five companies were also presented with certificate of recognition. These are CMC, Engineers India, ONGC, Persistent Systems and Power Grid Corporation.
AWARD FOR THE YEAR 2009 This ICSI award was received for the year 2009 by NTPC. The NTPC Limited was awarded "ICSI National Award for Excellence in Corporate Governance 2009". NTPC has been selected for the award after a detailed three-stage evaluation process by a jury of eighteen imminent personalities inter alia, comprising Shri R.C. Lahoti, former Chief Justice of India, Shri Naresh Chandra, former Cabinet Secretary, Shri S. Ramadorai, Vice Chairman TCS, Shri Y.C. Deveshwar, Chairman ITC and Shri V.K. Singlu, former Comptroller & Auditor General of India. Shri A.K. Rastogi, Company Secretary, NTPC has also been awarded in recognition of his role in strengthening the Corporate Governance of the Company on the occasion.
OTHER CORPORATE GOVERNANCE AWARDS
1. Good Corporate Citizen Award to NTPC The Award is given to the corporate for its outstanding achievement in the area of CSR and Corporate Governance. Corporate Social Responsibility is deeply ingrained in its culture. The company should be the one, committed to achieving high standards of corporate governance and developing mutual trust with the communities around its power stations.Indias largest power company NTPC received this Good Corporate Citizen Award- 2011 by PHD Chamber of Commerce. The winners of the award are selected by eminent jury under the Chairmanship of Honble Justice Shri J.S Verma.
2. Golden Peacock Global Award for Excellence in Corporate Governance Golden Peacock Global Awards have been instituted by World Council for Corporate Governance. This award was received by NTPC on 9th October, 2009 from Dr. Ola Ullsten, former Prime Minister of Sweden at London, U.K. NTPC Ltd. bagged the Golden Peacock Global Award for Excellence in Corporate Governance for the year 2009. The award was conferred at a special award function at the 10th International Conference on Corporate Governance organized by World Council for Corporate Governance. For the year 2013, New India Assurance Co. Ltd. has bagged this award, at a ceremony held in London.
ICRAs Corporate Governance Rating (CGR) is meant to indicate the relative level to which an organisation accepts and follows the codes and guidelines of corporate governance practices. The corporate governance practices prevalent in a company reflect the distribution of rights and responsibilities among different participants in the organisation such as the Board, management, shareholders and other financial stakeholders, and the rules and procedures laid down and followed for making decisions on corporate affairs.
he emphasis of ICRAs CGR is on a corporates business practices and quality of disclosure standards that address the requirements of the regulators and are fair and transparent for its financial stakeholders.The emphasis of ICRAs Stakeholder Value and Governance (SVG) Rating, on the other hand, is on value creation and value management for all stakeholders of a company, besides the companys corporate governance practices. An SVG Rating considers a companys actual performance and the accrual of the benefits of such performance among all its stakeholders, apart from the quality of the companys corporate governance practices.
It is the combined assessment of stakeholder value creation and management and the quality of corporate governance practices that determines the SVG Rating. ICRAs CGR and SVG Ratings may help the Rated corporate entity in raising funds; listing on the stock exchange; dealing with third parties like creditors; providing comfort to regulators; improving image/credibility; improving valuation; and bettering corporate governance practices through benchmarking.
In these turbulent times, it is often debated in corporate circles that what is legal may not necessarily be the most proper or transparent corporate decision. Companies which merely comply with legal or regulatory requirements are not necessarily addressing ideally the concerns of their various stakeholders. By stakeholders, I do not mean only those, holding stocks in the company.
In the broadest sense, stakeholders would include shareholders, suppliers, creditors, employees and customers of the company. Each one of these sections has expectations from a corporate entity, and companies will need to be responsive to these. SEBI has, of late, been pushing the need for corporates to get themselves rated on CG parameters, something which most now believe would benefit not only stakeholders, but also the companies themselves.
CAREs Corporate Governance Rating CAREs Corporate Governance Rating (CGR) is an opinion on relative standing of an entity with regard to adoption of corporate governance practices. It provides information to stakeholders about the level of corporate governance practices of the entity. It enables corporate entities to obtain an independent and credible assessment of the quality and extent of their corporate governance. The rating process would also determine the relative standing of the entity vis--vis the best practices followed in the domestic as well as international arena. Companies can also use these ratings as reference and set benchmarks for further improvements.
Investors and other stakeholders get benefited as they are able to differentiate companies based on degree of corporate governance. In fact, there is a greater need for CG ratings today than ever before. And consequently, all the top rating agencies in the country are now working overtime on their own CG rating initiatives. Fitch Ratings India, whose parent recently acquired CoreRatings which focuses on governance and responsibility, is, for instance, working on assimilating the work done by CoreRatings, and examining the best way of introducing the product in India. Ratings major Crisil has two mandates on hand and its first rating was expected to be released by January 2003.
Corporate governance rating (CGR) - rating symbols and definition
Symbols Definition CARE In CARE's opinion, the company has adopted corporate governance practices which would provide its CGR 1 stakeholders highest comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGR 2 In CARE's opinion, the company has adopted corporate governance practices which would provide its stakeholders high level of comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGR 3 In CARE's opinion, the company has adopted corporate governance practices which would provide its stakeholders adequate level of comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGR 4 In CARE's opinion, the company has adopted corporate governance practices which would provide its stakeholders moderate level of comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGR 5 In CARE's opinion, the company has adopted corporate governance practices which would provide its stakeholders inadequate level of comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGR 6 In CARE's opinion, the company has adopted corporate governance practices which would provide its stakeholders poor level of comfort on the degree of corporate governance. CARE's CGR rating is however not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE assigns '+' or '-' signs to be shown after the assigned rating (wherever necessary) to indicate the relative position within the band covered by the rating symbol.
Corporate Governance & Value Creation (CGV) Rating - Rating Symbols and Definition
Symbols Rating Definition CARE CGV 1 The entity is placed in the highest category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGV 2 The entity is placed in the high category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGV 3 The entity is placed in the adequate category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGV 4 The entity is placed in the moderate category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGV 5 The entity is placed in the inadequate category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE CGV 6 The entity is placed in the poor category in terms of its ability to optimise value creation for all its stakeholders in conjunction with Corporate Governance practices. CARE's CGV rating is not a certificate on statutory compliance and is not a recommendation to buy or sell securities issued by the entity. CARE assigns '+' or '-' signs to be shown after the assigned rating (wherever necessary) to indicate the relative position within the band covered by the rating symbol