CB BureauIn this CauseBecause series, we look at industry-wise CSR work done by major companies in India. Here, it’s the turn of fashion and lifestyle retail brands. In India this sector was estimated at Rs 221,000 crore last year – it is expected to grow at 12 per cent CAGR over the next 5 years to reach Rs 394,000 crore. These gargantuan numbers may not seem incongruous when you notice the large crowds thronging malls and street shops every weekend. However, it disguises the huge losses suffered by some of the most famous fashion retail names in the country. Clearly, sales don’t always equal to fat profits. But what does that mean for their CSR activities?
We take a look.
Aditya Birla Retail
Aditya Birla Fashion and Retail Limited (ABFRL) was formed by the merger of Aditya Birla Group’s (ABG) Madura Fashion & Lifestyle and Pantaloons Fashion and Retail in May 2015. While the latter is a well-known name, not many are aware (unless you participate in Brand Equity quizzes) that the former includes brands such as Louis Philippe, Allen Solly and Peter England, amongst others.
ABG is, of course, prominently active in the CSR space with its main focus on girl-child education and health issues. ABFRL’s priorities are no different. It also works on sustainable livelihood, infrastructure development and social-change advocacy programmes. The modus operandi before embarking on any project is to consult with the local communities, including village panchayats and other stakeholders. At ABG, every manufacturing unit has a CSR cell.
While information on ABFRL’s CSR activities may not be as detailed as that for the Group, one can still glean the basics from the annual report disclosures. On education, support has been given to schools through distribution of notebooks, computers and other teaching aids. Special coaching for students as well as support to girl students are facilitated through NGOs like Pratham and Swami Vivekananda Youth Movement. Similar partnerships have been undertaken with Rock-Fund and SV Education Trust. In 2015″16, the beneficiaries were an estimated 18,515 students across 36 villages.
On healthcare, through its multiple partners, the company conducted health camps, pulse polio programmes and cancer awareness sessions which helped over 1 lakh people in 64 villages. Other initiatives include 350 toilets built under the Nirmal Ghar Swacchata Abhiyan scheme and 670 youth coached at skills training centres through its Mission Sankalp partner organisations. In total, Rs 203.81 lakh was spent on CSR in 2015″16, with education taking the lion’s share of the amount. Monitoring is done through a set of key performance indicators, although it’s not clear what those are.
ABFRL’s sustainability initiatives are aligned with the Group’s ReEarth programme, established on the principle of ‘responsible stewardship’. The goal is to align with international standards set by organisations like the Organisation for Economic Cooperation and Development (OECD) and the Global Reporting Initiative (GRI). Its nine sustainability missions include water, waste, energy, green building, carbon footprinting, CSR, sustainable products, packaging, and health and safety. The company has carefully measured its water, waste, energy and GHG emissions to set the baseline figures. In 2015″16, energy reductions were achieved through measures like LED installation and operational efficiency. On other parameters, the outcomes are yet to be known. On the sourcing and products side, the company adheres to a non- hazardous chemicals policy in its apparels and has developed products with environmental and resource optimisations such as zero-detergent shirts and use of eco-resins. It has also reduced approximately 130 tonnes of packaging and has started using reusable plastic crates. The company uses the IT software ENABLON to manage its sustainability programme.
Nahar Group
The company name may not be well known (one of its brands, Monte Carlo, is though) but it is easily one of the biggest in this industry with subsidiaries in textiles, yarns, fabrics, knitwear and polyfilms. As per the stated policy, medical relief and research, sustainability, education and social upliftment activities form the core of its CSR projects. At the Group level, the CSR programmes taken up are the Mohan Dai Oswal Cancer Treatment & Research Foundation, which is a premier specialised hospital where patients are given a 25 per cent concessional rate.
Each Group company follows the same CSR policy and implements its CSR work through Oswal Foundation, a charitable organisation formed in 2006. Two of the main projects taken up are promoting education by adopting government schools in Ludhiana and SAS Nagar in Punjab, and maintaining the quality of soil and water on Sidhwan Canal in Ludhiana for environmental sustainability. Nahar Spinning Mills contributed Rs 120.4 lakh to the Foundation in FY 2015, while for Nahar Industries Enterprises Ltd it was Rs 17.53 lakh. Information for the other group companies is not available (except Nahar Poly Films, which was in loss in 2015″16 and hence did not have to spend on CSR).
In terms of sustainability initiatives, only limited information is available. The stated long-term vision is to ‘generate power by using non-conventional and renewable energy sources’. The company has set up such power plants in Punjab, Tamil Nadu, Karnataka and Rajasthan. These plants are approved by the United Nations and carbon emission credits have been granted.
Arvind Lifestyle Brands Ltd
Arvind Lifestyle is a $1 billion textile and apparel major with brands such as GAP, Ed Hardy and Gant forming a part of the family. Its formal CSR policy, set up in 2014, was valid till 2016″17 (the current status of this policy is not known) and encompassed just about every CSR area out there, be it education, vocational skills, health, environmental initiatives, agricultural initiatives, water and sanitation, or art and cultural initiatives.
The company’s CSR work is implemented through its two CSR arms, Strategic Help Alliance for Relief to Distressed Areas (SHARDA) Trust and Narottam Lalbhai Rural Development Fund (NLRDF). The former works with the urban poor specifically on improving access to basic physical infrastructure and primary healthcare. It also partners with local governments on education by improving school infrastructure and monitoring teachers’ and students’ performances. Through Gyanda, each year over 900 students (1300 in 2015″16) from 5 municipal schools benefit at its three learning centres. Vocational training, such as the one for computer applications, is provided to young people. The company also works with Ahmedabad Municipal Corporation (in Sanjay Nagar) to upgrade slums through provision of clean drinking water and sanitation facilities. On health, the plan is to set up three primary health centres in various parts of Ahmedabad during 2016″17.
NLRDF, on the other hand, works in rural areas, collaborating with the government in delivering of basic services. Currently it is operational in 16 districts of Gujarat, reaching out to a population of about 25,000. The interventions are similar to that of SHARDA Trust – covering vocational and entrepreneurship training and infrastructure upgradation in schools. Additionally, it has provided improved seeds to 66 families in Tandalia village and promoted the use of biogas. From 2007″11, NLRDF has trained 9,600 widows in 16 Gujarat districts on entrepreneurship and implemented a programme to promote maternal and infant health in 136 villages in Sabarkantha district, Gujarat. Arvind Lifestyle is also a part of the Better Cotton Initiative (BCI), a Swiss association working to reduce environmental and social impacts of cotton growing. In 2015″16, Arvind Foundation was set up to act as an umbrella organisation for CSR activities, the details of which are yet to be disclosed. The amount spent on CSR in 2015″16 was Rs 7.48 crore of the required 7.84 crore (an additional Rs 0.36 crore was spent on administrative overheads).
Provogue
Provogue’s stated CSR objectives span the following areas: poverty and malnutrition, healthcare including rehabilitative healthcare, education and vocational skills, and rural and slum area development. However, with the company deep in losses, no expenditure on CSR has yet been possible.
Raymond
While there isn’t much clarity on the company’s CSR focus areas, these are claimed to cover rural development, eradicating of hunger, poverty and malnutrition, healthcare, vocational skills, education, environmental sustainability and everything else under the sun. For 2015″16, the Group has proposed to take up activities relating to rural development including livestock development, community irrigation and water conservation. The Raymond Embryo Research Centre conducts research in embryo transfer in cattle, while the JK Trust Gram Yojana’s (JKTGVY) mission is to improve the quality of life in India’s rural areas through a ‘cattle breed improvement programme’. The Trust is currently operating a network of 3,860 Integrated Livestock Development (ILD) Centres in 110 districts across 8 states in the country.
Another initiative is the Raymond Rehabilitation Centre for the welfare of underprivileged children. Established in 2006 at Thane, it provides free vocational training workshops to young people over 16 years. In 2012, Raymond launched a training centre in Patna to impart tailoring skills to underprivileged youth. The initial target was to train over 10,000 students but there’s no information if this has been achieved or revised. The Raymond Group also runs two schools but there is no clarity whether these are not-for-profit schools or have special concessions for underprivileged children (aside from the RTE rules).
In FY 2015 the company spent Rs 57 lakh on CSR – this was two per cent of its net profit.
FabIndia
Surprisingly for a company whose model is based on linking rural producers to urban markets, there is little clarity on what FabIndia’s CSR projects are. Its CSR policy states promotion of education and vocational skills, social welfare, women empowerment, healthcare, environment conservation and rural development as the core focus areas. Its implementing partner is Bhadrajun Artisans Trust, which manages the Fabindia School established in 1992 in the village of Bali, Rajasthan. With nearly 45 per cent of the students being girls, the school claims to provide high-quality education to the rural children from poor backgrounds. The Trust also supports other NGOs. FabIndia’s other partner is the well-known Centre for Science and Environment (CSE). Aside from this, the rest of its CSR is a black box.
Shoppers’ Stop
The famous Shoppers’ Stop brand happens to include other famous names such as Crossword, Homestop and a host of Estee Lauder products including Mac, Clinique and Bobbi Brown. The company’s green initiatives are based on the 3Rs principle – that is, reduce-reuse-recycle. Accordingly, the company has introduced eco-friendly products, recycled e-waste and clothes, and promoted water conservation in its many stores. It has also installed solar power at its Andheri store in Mumbai. The company claims that overall there has been a decrease in energy consumption resulting in cost savings of Rs 4.69 crore over 5 years.
On CSR activities, while the policy document link failed to work, the 2015 annual report states that the highest amount was spent on skill development for the youth in four cities, while livelihood creation for disabled young people came second in terms of monetary expenditure. For the former programme, the company partnered with Unnati; for the latter it supported Pankh, an initiative by Trust for Retailers & Retail Associates of India (TRRAIN). Another Rs 10 lakh was spent on relief for the Chennai floods. In FY 2015, the prescribed CSR amount was Rs 1.28 crore, out of which Rs 0.74 crore was spent. The remaining amount could not be spent due to its partner NGO not being able to provide the required merchandise on time.
Future Group
With the acquisition of Bharti Retail in 2015, Future Group, which consists of household names such as Big Bazaar, Food Bazaar, Home Town and eZone, has become one of the biggest players in the Indian retail industry. The company considers CSR, inclusive growth and sustainability central to its business across the entire value chain. For inclusive growth, it claims to focus on employability, innovation and entrepreneurship, while CSR is driven through ‘community-driven development’. Sustainability rests on optimising energy consumption whilst promoting eco-friendly products and creating awareness on environmental issues.
Overall, the company’s CSR policy document reads more like the circular issued by the government on the 2013 Act. Yet, with no profits made in the past three years (a familiar story in Indian retail), it was not required to spend any money on CSR. In 2015, Future Group set up the Sone Ki Chidiya Foundation Trust to consolidate and manage all CSR activities taken up by the Group entities. Additional information on the Trust’s undertakings is not available though.
Reliance Retail
The company, which has brands such as Reliance Trends and Reliance Footprint, has also tied up with a slew of global brands – Diesel, Gas, BCBG MaxAzria, Marks & Spencer, Steve Madden, etc. However, there is no CSR activity directly attributable to the retail arm of RIL. So, while there are initiatives taken up by RIL, there is no transparency on what Reliance Retail as a standalone company is doing for its stakeholders, society and the environment.
Zara
For popular international brands like Zara, while there is no specific information provided on its work in India, Inditex (the parent company), being a member of the Ethical Trading Initiative 2007, has worked in Tamil Nadu to eradicate abusive employment practices. The company has also participated in the financing of agricultural projects such as Better Cotton Initiative to promote the production of sustainable raw materials and donated €2.3 million to Doctors Without Borders’ (Médecins Sans Frontières, MSF) project to combat Kala Azar in India which has helped more than 13,000 people. Another noteworthy project is the MSF initiative started in 2009 to combat child malnutrition in the district of Darbhanga in Bihar. More than 19,000 children have received treatment with more than 90 per cent success. Inditex has supported this project since 2011, with a contribution of €2.8 million till 2015. It’s a pity that these initiatives are not publicised in India”one has to go to the main Inditex website to find such snippets of information.
CB view
While the 2013 CSR Act is applicable to foreign companies in India, there’s little or no data to indicate if the provisions of the same are being followed. Information is hard to come by and basic data is missing. For many international retail brands, partnering with an Indian company is the easy way out, considering the logistics and complexities of operating in this country. However, that leads to further ambiguity in their CSR duties. Are they required to abide by it? If yes, are they even doing it and who’s going to hold them accountable? As of now, there seems to be no answer.
For Indian retail, the biggest brands are suffering heavy losses, which puts them outside the ambit of the 2013 Act. It is, then, of little surprise that consolidation has been the major activity in the retail space in the last few years. Even among the ones that are doing relatively better, CSR is highly conspicuous by its absence.
For Indian retail, the biggest brands are suffering heavy losses, which puts them outside the ambit of the 2013 Act. It is, then, of little surprise that consolidation has been the major activity in the retail space in the last few years. Even among the ones that are doing relatively better, CSR is highly conspicuous by its absence. Perhaps lifestyle brands exist in a parallel universe wherein they owe nothing to no one? Unsurprisingly, there have been no responses to the questions sent out by the CB team to these companies (we are referring to the few that actually have a semblance of a CSR team or are kind enough to provide contact details on their websites).
Considering that apparel manufacturing has a huge environmental impact at every stage of its journey, companies would do well to take note of that (and also that more and more of their customers may be taking note of the same) and do their fair share to minimise the negative fallouts. Supply chain is another problem area – the terrible conditions under which garment workers operate (especially in poor countries) and the measly wages given are well documented. The companies covered in this article have little to say about their culpability in these violations and the steps taken to ensure fair and just trading and manufacturing practices. One wonders if it will take a tragedy of the same proportion as that of the Rana Plaza disaster for meaningful change to occur. One hopes not.