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1
India’s Competitiveness Edge - A Study of the Role of
Corporate Social Responsibility
ABSTRACT
The theme of corporate social action assumes pivotal significance in the world wide debate on
sustainable development. Modern corporation exert considerable influence on the economy,
polity & society of the nation. The world over increasingly, there is an evidence of extraordinary
economic power exercised by mega corporations, their impact being more severe in the case of
developing countries. As more of the developing countries in the world opted for a democratic
framework, the issues of economic & social governance became very important; these subsume
issues like human rights, labour standards, health care and poverty among others. Secondly the
competitiveness index in India is very low due to the existing social problems & there is a need
for companies to join in to raise the competitiveness level of the country.
The paper firstly examines the trends in the area of CSR over the years from cheque
philanthropy to community projects to corporate governance. Continues by providing an insight
in the space of CSR in India and highlights the research done on the initiatives undertaken by
different companies in this regard. It also includes a detailed study of the current CSR policies &
initiatives of one of India’s pioneering companies in this field, Tata Steel.
The paper concludes with a few thoughts on what is the future & the need of the hour i.e.
a tripartite action on part of government, public enterprises and the corporate sector to face the
challenges put forth by the changing economy.
Lastly the focus is on the proposal of building a CSR Index for India which will help
improve corporate responsibility by providing a systematic process that compares companies’
management processes and performance with those of others in their sector. It would provide a
benchmark for companies who are committed to managing, measuring and reporting their
impact on society. It will also help companies who want to venture into a certain area of CSR to
know how much work has been done there and what has been their experience.
Research Assistance: Altaf Patel and Ramit Munshaw are Welingkar students pursuing
PGDBM (Year 2005 – 07)
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CORPORATE SOCIAL RESPONSIBILITY:
The role of business in society has been debated in economic literature for a long time. By the
term ‘Corporate Social Responsibility’ (CSR), what is generally understood is that business has
an obligation to society that extends beyond its narrow obligation to its owners or shareholders.
This idea has been discussed throughout the twentieth century, but it was Howard R. Bowen’s
book on “Social Responsibilities of Businessman” published in 1953, which was the origin of the
modern debate on the subject. Bowen reasoned that there would be general social and
economic benefits that would accrue to society, if business recognized broader social goals in
its decisions.
Corporate Social Responsibility is nothing but what an organization does to positively influence
the society in which it exists. It could take the form of community relationship, volunteer
assistance programmes, healthcare initiatives, special education / training programmes and
scholarships, preservation of cultural heritage and beautification of cities. The philosophy is,
basically to give back to the society, what it (business) has taken from it, in the course of its
quest for creation of wealth. Social responsibility becomes an integral part of the wealth creation
process - which if managed properly should enhance the competitiveness of business and
maximize the value of wealth creation to society.
The World Business Council for Sustainable Development in its publication "Making Good
Business Sense" by Lord Holme and Richard Watts used the following definition.
"Corporate Social Responsibility 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."
Another definition is "CSR is about capacity building for sustainable livelihoods. It respects
cultural differences and finds the business opportunities in building the skills of employees, the
community and the government."
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CORPORATE SOCIAL RESPONSIBILITY – A BROADER PERSPECTIVE
Since 1990, a number of developments such as increasing democratization of governments,
creation of newer social and economic institutions, rapid growth of volunteerism in the form of
non-profit organizations, increasing consumer awareness, focus on the need for reducing
poverty, dealing with the human rights issues, among others have reinforced the need to
articulate policies and actions to incorporate responsiveness.
CSR is concerned with treating the stakeholders of the firm ethically or in a socially responsible
manner. The aim of social responsibility is to create higher standards of living, while preserving
the profitability of the corporation. (Michael Hopkins 1998)
Simon Zadek (2001) describes the development of CSR broadly in terms of three
generations:
The 1st generation of CSR showed that companies can be responsible in ways that do not
detract from commercial success. The most prominent changes include adoption of strategic
approach to philanthropy, expansion of the geographic focus of corporate, and evolving of
measurement tools.
The 2nd generation is focusing on CSR as an integral part of long term business strategy
The 3rd generation of CSR is expected to make a significant contribution to address issues
such as poverty, exclusion and environmental degradation. This will involve both
partnerships with civil society and changes in public policy.
Today we find that as more and more industries are setting up their factories, they are
encroaching on the land which belonged to the community residing there, and therefore through
their activities they end up affecting the existing lifestyles of the community members.
For maintaining cordial relations between the members of the community and the organization it
is essential for the organization to depict a fair behavior and must give back to the community
through various community related initiatives. This strategic move is of mutual benefit and is
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critical for the success of the organization as it can gain a competitive advantage as it is seen as
an organization which is concerned for the people and all its stakeholders.
To illustrate the convergence between the community and the corporation the use of the
‘The London Group Benchmarking Model’ is valuable. The LBG seeks to develop and
expand the reporting of company activities in the community so that they are more
transparent and can be judged by the impact they achieve.
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‘The London Group Benchmarking Model’
The Philanthropic component: This is typically what all companies, including Indian
companies do. The distinctiveness of this component is that it satisfies the lowest level need
of the organization i.e. it provides a reputation of being a ‘caring company’. Here companies
not only make donations of money or kind but also employee volunteering.
The Social Investment component: Here the company looks at a more systematic and
strategic activities with its community involvement with a view of attaining business benefits in
the medium term. Such activities are typically aimed at communities, but at times both
employees as well as their families can be the beneficiaries.
The Commercial Initiatives: Here while addressing social issues the company is also
focusing on the commercial benefits it can derive from the activity undertaken. Typical
examples include Cause-related marketing or event sponsorship.
Triple-bottom-line’. The company studies the impact of its activities on the society and planet
i.e. societal and environmental returns, apart from the financial returns.
The relative sizes of the components are meant to reflect the impact of that activity on the
community. Hence here we see that ‘business ethics’ impacts the society more than the
‘philanthropic’ activities.
This model is very useful as it is a good representation of the strategic community involvement,
the business links with the community and the stakes emerging from the accountability, ethical
and management perspectives.
In India we have not yet witnessed significant development in these fields but steps are being
taken towards addressing the rights of communities across the business landscape.
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CORPORATE SOCIAL RESPONSIBILITY - TODAY
CSR can affect a variety of stockholders, including customers, employees & their families,
investors, local communities, environmental groups, government, suppliers & competitors.
Accordingly, CSR involves a wide range of practices in the area human rights, employee
relations, diversity, consumer protection, environmental protection, fiscal responsibility &
accountability, market practices & philanthropy.
Indian MNC’s like the, ITC, Ranbaxy & DuPont India, have endeavored to create a better social
order. What is significant with these companies is that they initiated the process of CSR from
their doorstep by providing a better & healthy work atmosphere to their employees.
Part of the wealth created should be made available for the benefit of the nation.
In creation of wealth, care must be taken to not only protect the environment but also enhance
it so that this world, which we have borrowed from our children, is left in better shape for them.
Leadership in business is living by these ideals and leading by example.
In today’s world, the only constant is change. Leaders must anticipate change, drive it, make
acceptable to all stake holders, and turn threats into opportunities through their vision & their
actions.
People argue that there must be legal provisions for CSR, just like the concept of corporate
governance in structuring the board of a company. It is seen that the company name
independent directors in their board of directors as a statutory requirement. The very notion &
goal of protecting shareholders’ interest is defeated as in many companies independent
directors are “friends” of promoters and act as rubber stamps. The point of submission here is
not to formalize CSR in a legal boundary. Let it come from within the company, let it evolve as a
company’s philosophy, something attached to the company’s brand…and let society be the
judge of its sincerity of purpose and honesty of action.
A survey by the Capital Care of the London business community points out “Over three quarters
of the business here agree that organizations should do more than the law requires on
environmental concerns & over half think that they should do so on social objectives.”
Of course, all companies must conform to the basic legal requirements pertaining to CSR, such
as environmental norms, labour welfare requirements, and advertising laws. But they must
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55strive beyond the legal requirements. Here I would like to cite the example of DuPont’s India
Safety Standards where all employees have a prescribed code of conduct – something beyond
the legal requirement.
There must be a set of ethical & moral values to guide all business processes at the workplace
as well as the market place. In the words of Kofi Annan, U.N. Secretary General: “We have to
choose between a global market driven only by calculations of short term profit, and one which
has a human face……Between a selfish free-for-all in which we ignore the fate of the losers,
and a future in which the strong and successful accept their responsibilities, showing global
vision & leadership”.
Gandhi’s philosophy of trusteeship is similar to the CSR of the modern business world; the
Gandhian notion of trusteeship has been followed by the Tatas and Birlas ever since their
inception.
Jamshedji Tata with his vision to create the Indian Iron & Steel Industry transformed an
unknown village ‘Sakchi’, later named as ‘Jamshedpur’ into a model town of planning &
community care.
The National Dairy Development Board (NDDB) has transformed huge areas in Indian
villages by empowering producers & creating a manufacturing outlet for their produce. Dr.
Kurien’s AMUL-led Operation Flood was the forerunner of this initiative, which has spread to
many states & similar operations.
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The Tata’s under the chairmanship of S.P.Kotwal conducted a social audit, the aim of which
was to find out areas where Tata was not able to discharge its responsibility towards society.
The reason for all this hectic society is not far to seek. CSR adds value to the social
environment, the work environment, and ultimately to the company. According to a report, nine
of the top ten Forbes 500 firms have something in common besides success: CSR
programmes. Corporate philosophy is undergoing a change, from “Profit making” to
“value creation”- something far more enduring.
‘Operation Muskan’, this Smile Train project was flagged off in October by Tata Steel Rural
Development society (TSRDS) - Tata Steel’s NGO community service arm. The TSRDS
realized the urgent need for this form of reconstructive surgery at various health camps. At one
week long camp in Ghatshils, doctors treated 108 cleft palate cases; in Deoghar, 149 people
requested for the surgery.
While India Inc. still calculates the plusses & minuses of good corporate conduct, corporate
social responsibility for the Tatas & Birlas is an old tradition. The Tata Group invested more than
150 crore on the social sector in 2002, the A.V. Birla Group Rs. 57 crore, Reliance Rs. 30 crore,
& Infosys Rs. 5 crore. Tata Steel set aside as much as 12-14% of its profit after tax (PAT for
2003-04 is Rs. 1746.22 crore) for welfare activities.
The Infosys Foundation supports disadvantaged people directly or through organizations. The
foundation prefers to work through smaller organizations & donates in kind father than in cash.
For instance, recently gave books in Kannada worth Rs. 10,000 to a village library, so that it
could help strengthen the local language.
The middle class founders of the mega-successful Infosys believe that wealth must be equitably
distributed “Unless you create wealth by legal means, you cannot distribute it. And without the
two, you don’t have progress” says N. R. Narayanmurthy of this celebrated & brilliantly
successful IT company. “Putting public good ahead of private good in every decision you
make, will in fact, result in reaching the private good.”
To distribute its substantial wealth & formalize its social support initiatives Narayanmurthy & his
wife Sudha set up the Infosys Foundation in March 1997 which receives 1% of the
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company’s after tax profit. All financial assistance to the needy is given in the form of rule-
based distribution of money.
In the field of education, the foundation has instituted 26 scholarships for Ph.D scholars in 13
prestigious institutions. It has also anchored the ‘train & trainee program’ in which computer
science students form engineering colleges are exposed to the latest IT trends. The foundation
has also played an important role in setting up science centers & libraries and to date, 1001
libraries have been inaugurated with assistance from this foundation.
The Infosys Foundation is committed to giving 30% of its funds to old people, the
destitute & the handicapped, 15% for rural development, 30% for education of poor but
talented children, 15% for cultural activities & 10% for health care, both in village and in
cities.
Dr. Irani propounded five basic tenets of CSR at the 27th annual meet of the US-India business
council meeting: “The aim of the industry should not be to make money. The aim should be to
serve customers & other stake holders and the result would surely be more money. And
pursuing excellence would enable it to create even more wealth”. Companies are increasingly
required to apply corporate social responsibility by balancing the economic, social &
environmental dimensions of their operation whilst building shareholder value. Corporate
Governance is about promoting corporate fairness, transparency & accountability.
Companies used to see this area of corporate social philanthropy as the last thing on their
agenda ten years ago, but now they agree that social & economic issues are intertwined.
Corporate philanthropy - or corporate social responsibility – is becoming an ever more important
field for business. Today’s companies ought to invest in corporate social responsibility as a part
of their business strategy to become competitive. Corporate success depends on the local
environment: an appropriate infrastructure, the right types & quality of education to future &
current employees, cooperation with local suppliers, quality of institutions, local legislation & so
on. In this corporate competitive context, the company’s social initiatives can have great impact
no only for the company but also for the local community.
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CSR BUDGETS OF SOME OF THE TOP COMPANIES IN INDIA
Sr. Name of the company Total Funds Deployed on
No. CSR Last Year (2004-05)
1. ABB Ltd. Rs. 0.9 crores
2. Amway India Enterprises Rs. 0.45 crores
3. British Gas Rs. 1 crore
4. Hindustan Lever Ltd Rs. 24.6 crores
5. Infosys Technologies Ltd. Rs.18 crores (1.5% of PAT)
6. Jankidas Bajaj Gramvikas Sanstha (Bajaj) Rs. 0.45 crores
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TATA STEEL – THE PIONEERS IN CORPORATE SOCIAL RESPONSIBILITY
Organizational Profile
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CSR Affiliations
Tata Steel is a signatory or member of:
United Nations Global Compact
Global Reporting Initiative
CII-UNDP
Global Business Coalition for HIV/AIDS
CII SDCA National Committee
STOP TB India Business Alliance
SA 8000
THE Mining Geological & Metallurgical Institute of India
CSR Policies
Founder & Group Chairman first articulated Tata Steel’s explicit CSR policy in 1904. It was later
formalized as various policies from 1980 onwards. It is monitored & enforced through the Tata
Business Excellence Model.
Tata Steel has an entire organizational structure to enforce/monitor the policy. Formal
departments & divisions (Environment & safety, Public Health, Medical Services, Social
services, & family initiatives, community development & social welfare, ethics, HR & IR) are
responsible for CSR reports to the managing director through deputy managing director
corporate services & deputy managing director steel. Deputy managing director corporate
services is also a Tata Steel Board member.
The company claims to have lined compensation of the board members & senior
management to sustainability performance:
1. Anti-corruption or bribery
Tata Steel covers concerns of bribery through the Tata Code Of Conduct (COC), which has
specific clauses on Gifts & Donation & Conflict of Interest. Moreover, it has an explicit Gift
Policy, which is step towards abating rivalry. The Tata COC was implemented in 1998-1999,
Gift Policy on 1st January 2005. The company has an ethics structure, with ethics counselor
(Ombudsperson) and departmental ethics coordinators for enforcing & monitoring
complaints of COC. The Ethics Counselor has been implemented since 1997-1998.
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2. Antidiscrimination or rivalry
While recruiting also its press advertisements always specify, “We are an equal opportunity
employer. Women candidates are encouraged to apply.” The company appoints fresh
professionals from reputed campuses that have an all India selection pattern. This ensures
diversity amongst its employees.
3. Grievance Redressal
For any complaint, the employees can approach the ethics counselor. There is an individual
grievance handling procedure, which handles any deviation from the standardized rule. An
IT based grievance handling procedure called “Samadhan” is also in place.
Issues relating to any biases & unfairness can reported to the ethics counselor who reports
to the managing director. A “whistle blower committee” ensures to maintain confidentiality of
the employees making complaints in this regard. A service rule & standing order laid down
the procedure and policies of the company by which all employees are guided. Any
deviation from this is dealt by the management. Grievance handling procedure is in place
since 1920s.
4. Transparency or disclosure
Tata Steel provides access to company’s policies through its website.
5. Corporate Governance
Tata Steel complies with the requirements under clause 49 of the listing agreements entered
into the stock exchanges of India. It also discloses compensation required by the Board
members/Senior management.
6. Environmental Management
Tata Steel’s environmental policy has been implemented since 1994 and
monitored/enforced through environment management system which also provides for a
known complaints procedure.
7. Human Rights
Tata Steel does not have an exclusive human rights policy, however the social
accountability policy is keeping with the principle of SA 8000. Standard includes
commitment to conventions such as Universal Declaration of Human Rights, Rights of Child
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& ILO. This has been implemented since December 2003, monitored/enforced through the
SA8000 MR System, with a known complaints procedure.
1. Employee Benefits
Tata Steel seeks to create a world class development environment through processes such
as performance management, talent review, recruitment through skills assessment,
succession planning & leadership development etc. Training & development plans are in
place across the organization for worker & officer cadres. The ISO 9000, ISO14001, and
OHSAS 18001 certification have clauses taking care of employee welfare.
2. Gender
The HR Policy is committed to equal employment opportunity. About 3.5% of the senior
management executives are women. There are no women executives in board level. As per
statutory norms all women employees are provided the facility of maternity leave & crèche.
The facility provided are more than what has specified in the act.
3. Employee Union
Tata Steel allows for the unionization of the employees. There are in all ten unions across all
locations with which the management interacts. Interaction takes place through joint
departmental council & joint consultative of management having equal representation from
both management & union.
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6. Suppliers Screening
The company does not screen its suppliers on suitability parameters. However it has started
capturing details against some parameters for each supplier.
1. Social/Community/Charitable contributions
Tata Steel’s top 5 community development projects in terms of priority:
2. Infrastructure Development
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3. CSR Socio-Economic Impact
Social Audits survey is conducted once in every ten years by eminent panel of independent
judges. Report on the survey conducted last year is awaited.
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RESEARCH UNDERTAKEN - INITIATIVES TAKEN BY OTHER CORPORATE:
America Micro Micro Self Help AIG has a joint venture TATA
Intnl Group Finance Insurance Groups Group for its insurance business in
India. TATA AIG sells micro
insurance to the rural poor by
leveraging existing distribution
networks. It uses SHGs (Self Help
Groups) and community enterprises
as low-cost delivery and servicing
channels which also help in creating
livelihood for the poor.
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Company Domain Project (s) Partner (s) Special Features
19
Company Domain Project (s) Partner (s) Special Features
Cadence NGO CRY, Sai Supports Child Relief & You (CRY)
Design Partnership Kripa, and its various projects across
Systems Tapovan geographical locations. Supports
two NGOs in its neighbourhood Sai
Kripa & Tapovan.
20
Company Domain Project (s) Partner (s) Special Features
21
Company Domain Project (s) Partner (s) Special Features
22
Company Domain Project (s) Partner (s) Special Features
23
Company Domain Project (s) Partner (s) Special Features
IOCL Culture Heritage Sites ASI and Created a non-profit trust name The
NCF Indian Oil Foundation (IOF). The
objective of their initiatives is to
protect, preserve and promote
India’s national heritage and culture
and built a corpus of Rs. 25crores
and an annual recurring contribution
of Rs. 10crores.
Jet Airways Fund Raising ‘Magic Box’ Save the Runs an in-flight collection
Children programme, the ‘Magic Box’ in
association with the NGO Save the
Children India. The initiative
contributed above Rs. 25million till
end April 2002. This fund has been
used in the development activities
at Kargil in Kashmir, improvement
of education & health care facilities
in quake affected Osmanabad
district in Maharashtra, and in the
fight against trafficking of women &
child prostitution in the Indian sub
continent.
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Company Domain Project (s) Partner (s) Special Features
25
Company Domain Project (s) Partner (s) Special Features
26
Company Domain Project (s) Partner (s) Special Features
Pizza Under- Food for Good A part of the profits of every pizza
Corner privileged sold at pizza corner goes to a fund
India Children called ‘Food for Good’ which is
meant to benefit lesser privileged
children. Beneficiaries of the
programme include 20 street
children in Bangalore who receive
term deposits by the company.
These term deposits will fund the
higher education of these children
who will then complete 10th grade &
age 18.
Polaris Education Education- Akanksha, Setup the Ulhas trust to help &
Software Financial Pratham support the education of
Lab Support Movement economically backward children
through scholarships of Rs. 1500
which takes care of their annual
educational expenses. Career
counseling and training sessions
also happen throughout the year to
mentor the progress of these
children. About 1500 students were
awarded in 2003.
Tata Education Support & Central & Set up the Audit literacy programme
Consultancy Improvement State (ALP) to help the Indian
Services of Adult Government Government eradicate illiteracy.
Literacy The ELP uses the Computer Based
Programme Functional Literacy (CBFL) model,
an innovative teaching method
designed by TCS, where the
instructor uses multimedia software
to teach the adults to read. Adult
illiterates can learn to read after 40
hours of instruction of over 8 to 10
weeks.
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Company Domain Project (s) Partner (s) Special Features
Yes Bank Sustainable Project USAID With support from USAID, Yes
finance financing Bank has increased financing of
small & medium enterprises for
energy efficiency. The aim is to
commercialize renewable energy,
energy efficiency & water
technologies related products &
services. The U.S. guarantee
covers upto 50% new principal loss
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in case of default. This lowers the
risk for YES Bank to invest in small
& medium scale enterprises.
Just to give a broad idea of the areas in which Indian companies are practicing their CSR
activities, a small graph has been made showing the areas of concentration & the
number of companies (from the above stated) who are working for it.
35
30
25
20
Number of Companies
15
10
5
0
LC CV EW RD EM H &E NGO CG W & C R HIV/AIDS PIC
EW Employee Welfare
RD Rural Development
EM Environment Management
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THE FUTURE:
The theme of corporate social action assumes pivotal significance in the world wide debate on
sustainable development. Modern corporation exert considerable influence on the economy,
polity & society of the nation. The world over increasingly, there is an evidence of extraordinary
economic power exercised by mega corporations, their impact being more severe in the case of
developing countries. As more of the developing countries in the world opted for a democratic
framework, the issues of economic & social governance became very important; these subsume
issues like human rights, labour standards, health care and poverty among others. There is
sufficient evidence to show that in many countries of the developing world governments have
not been able to provide investible resources for the social sector development, and further
where the government has been able to do so, they have not been able to create requisite
institutional framework for the implementation, monitoring and evaluation of such endeavours. It
is therefore recognized that developing countries need to create alternatives for social sector
development, and of the suggested routes for doing so is to develop viable & strategic public-
private partnership.
It is also increasingly acknowledged by the academics & the public policy makers that the
beginning of withdrawal by the state in many developing countries signifies the potential onset
of an era full of opportunities for developing public-private partnership. It is also because neither
the public nor the private sector alone can counter effectively the challenge of social sector
development. The government on its own cannot get involved any further in several sectors
simultaneously as it did in the last four decades in many countries. One of the biggest
challenges for governments in the developing countries like India is to create and nurture a
durable framework of institutions who will translate public policies into deliverables. India needs
a strong institutional framework for meeting the multiple objectives of economic growth and
development. The second requirement is the commitment of the top management of the public
enterprises and the corporate sector to move away from a mere philanthropy to corporate social
action. In the public enterprises, corporate social responsibility is practiced largely as per the
mandate of the controlling ministry and is based significantly on the basis of commercial
considerations such as displacement and rehabilitation of communities due to large scale site
development of newer projects. In the corporate sector also one of the primary drivers for the
introduction of corporate social responsibility is commercial such market access to rural
hinterland. However, what is needed is some commonality and continuity of themes for
sustainable development.
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There is a need for training and development of a large pool of voluntary sector personnel and
co-operatives so that they can get substantively involved; non-governmental organizations in
many cases have played an important role in initiating several innovative programmes and
activities in the social sector; however, a lot more is required to have them further involved in as
professional a manner as possible.
It is therefore, suggested that all the agencies and institutions including the multilateral
institutions assisting social sector development in India world re-look at the cumulative
experience of promoting corporate social action in as transparent and accountable manner as
possible. The public enterprises need to do more than the mandated corporate social
responsibility programmes and the corporate sector should aim at involving the multiple
stakeholders. The larger issues and long run ramifications of public policy on corporate social
action for stakeholders and society need to be integrated into a coherent plan of action in the
future. There has been a lot of debate on the impact of the 73rd and 74th amendments to the
Constitution of India; one of the disturbing aspects of the debate is the uneven and tardy
progress in respect of several schemes of public welfare due largely to such issues as
corruption and deficiencies in institutional infrastructure. Therefore, there is an urgent need for a
tripartite action on part of government, public enterprises and the corporate sector. There is
fortunately no dearth of talented opinion makers and social activists but they need to be
harnessed and put in place to create a suitable platform such that the movement for
internalizing and institutionalizing corporate social responsibility becomes a durable one.
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THE CORPORATE SOCIAL RESPONSIBILITY INDEX FOR INDIA:
At this point of time there is no authoritative, voluntary, CSR (corporate social responsibility)
initiative that is business-led and engages with companies from all sectors, publicly ranking their
CSR activity, whilst consolidating information demands made on companies. Thus what is
required is a Corporate Social Responsibility Index which would help meet this need in India.
The Index will help improve corporate responsibility by providing a systematic process that
compares companies’ management processes and performance with those of others in their
sector. It would provide a benchmark for companies who are committed to managing,
measuring and reporting their impact on society. The Index would be based on a framework of
four components shown in the following model:
Performance
Corporate Integration &
Management
Strategy Impact
The Corporate Strategy section looks at how the nature of a business’ activities influence its
company values, how these tie into strategy and how they are addressed through risk
management, development of policies and responsibilities held at a senior level in the company.
The Integration section looks at how companies organize, manage and integrate corporate
responsibility throughout the operations. Is it part and parcel of the company culture? Is it
integrated into the strategic decision-making processes of the company and linked through into
internal governance and risk management systems?
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The integration is assessed through the Management section where the processes for
managing different stakeholder relationships are reviewed. This section looks at what the key
issues are for the business in the Community, Environment, Marketplace and Workplace, the
objectives and targets set to manage these issues and how it communicates, implements and
monitors its policies, objectives and targets.
Community relates to the interface between business and society that can be both positively
and negatively affected by a project, product or investment on a local or global level.
The Environment comprises the world’s ecosystems and natural resources and is affected
directly and indirectly by a company’s operation, products and services. Being responsible
means safeguarding both the systems and resources for future generations.
Responsibility in the Workplace is the creation of a working environment where personal and
employment rights are upheld.
The Performance and Impact section looks at companies’ performance across a range of social
and environmental impact areas.
The Corporate Responsibility Index would be a strategic management tool to enhance the
capacity of businesses to develop, measure and communicate best practice in the field of
corporate social responsibility. It would do this through benchmarking corporate social
responsibility strategy and implementation process.
The Index would be created by the support of leading businesses in the country as well as
leading NGO’S who would be committed to continually improve their positive impact on society.
Every year more & more successful companies would be invited to participate in the Corporate
Responsibility Index by completing an online survey accessible via individual and secure
usernames and passwords.
Even though the Corporate Responsibility Index will be a self-assessment exercise a central
agency will have to monitor the whole process. This central agency will not be involved directly
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in the task of rating companies, but will act as the 'trustee' overseeing the integrity of the
process.
The Corporate Responsibility Index survey will be made available to companies once they have
registered to participate in the Index. The survey would be a web based electronic tool and
would also be password protected for each individual company.
Comprehensive guidance notes would also be provided with the survey in the form of separate
documents. These would provide definitions, and help notes to support the understanding of
why a particular aspect is important and how this may be applied within a business. Together
with the survey this would also provide a roadmap for integrating corporate responsibility within
the business.
A market research company like ORG-Marg would be required here to take up the responsibility
for the collection, analysis and aggregation of participant responses as well as add expertise to
the validation process; it will examine all responses for completeness and consistency. In
addition it will also be needed to meet with selected participants to check their understanding
and interpretation of the questions and seek further substantiation when necessary.
The robustness of the survey would be demonstrated by the ongoing consultation and
engagement with participants after their surveys are submitted. It is critical that participants
have understood and interpreted the survey correctly.
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HOW & WHAT WILL THE INDEX MEASURE:
The Corporate Responsibility Index will measure responsible business practices through
evaluating four main areas:
The corporate responsibility strategy of the business
Each Of The Four Components Of The Index Model Would Be Weighted As Follows:
Companies would be given credit for what they implement across their business and questions
within each section will again be generally equally weighted.
Once the validation process has been completed by market research company, the results will
be electronically generated by the survey databases.
To ensure the ongoing sustainability of the Index, a nominal fee for participating companies to
cover part of the validation cost will be charged at a later stage in the life of the index.
Participating companies will not be named until the results are published. It is at the company’s
own discretion should they wish to publicize their involvement on their own websites or if they
wish case studies of their corporate social responsibility practices to be reported in the
contacted newspapers.
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BENEFITS FOR THE COMPANIES:
By completing the Corporate Responsibility Index, the company will be using a proven business
tool that enables you to most effectively incorporate best business practice through your
strategy and implementation processes across the whole organisation.
Completing the Corporate Responsibility Index will drive overall performance through enhanced
reputation, the retention and attraction of talented staff, lower costs through eco-efficiency and
building upon existing company profiles for investment purposes.
There will be a confidential individual feedback report which will provide companies with their
position- overall in the Index, in their sector, economic group and leading Indian businesses. It is
a powerful internal management tool helping to engage board members and raise awareness of
the complete range of corporate responsibility issues across the business whilst highlighting
areas of strength and weakness.
The Index will be an important external communications tool enabling companies to underwrite
the public statements that they make on responsible business practice. It is an important
communications tool during a time when stakeholders are becoming increasingly skeptical.
However, for this to happen, the need is of business is to embrace the given opportunity. That is
why this is seen as being a collaborative process - in which the central agency will have to be as
flexible as possible in responding to the day-to-day needs of participating companies.
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REFERENCES:
The London Group Benchmarking Model – Partners in Change Strategy Paper 2001-0; Pg42
Stakeholder Engagement: The Concept and Practice – Ravi Puranik & Viraf Mehta
CSR Debate in India: From Philanthropy to Public – Private – People Partnerships, Jagdish
Gulati
The Role of Social and Societal Responsibility as a Core Value of the University and
Corporate Sectors – R. Natarajan
Surveys:
ACNielson 2005 Corporate Image Monitor results
http://www.acnielson.co.in/news.asp?newsID=144
The state of CSR, Partners in Change (PiC), Indian Market Research Bureau (IMRB) 2003
Centre for Social Markets (CSM). Corporate Social Responsibility – Perceptions of Indian
Business
Websites:
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Author’s Profile
He has 12 years of experience in the corporate world including Mahindra & Mahindra, ISPL and
other companies before joining Welingkar in 1995 as faculty for Production Management.
Subsequently his inherent passion, commitment and dedication toward the institute led to his
appointment as Director in 2000. Dr. Salunkhe has been invited as visiting fellow at the Harvard
Business School, USA and European University, Germany. He has also delivered seminars at the
Asian Institute of Management, Manila and has been awarded "The Young Achievers Award-
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