CB Bureau
around corporate social responsibility (CSR), business ethics, cause
initiatives, sustainability, conservation, green… in 2010?
The optimistic mind says: ‘The business world and the policymakers
are going through an ‘awakening’ phase and 2010 saw them taking several
significant steps towards betterment of the human race and the planet…’
The pessimistic or the cynical one says: ‘The large-scale
propaganda is on. Lobbyists of big business empires are building a market for alternative
energy sources, biodegradable and ‘green’ products, products related to public
health, and conservation-minded technology. The selling minds are cashing in on
the conscious and concerned minds…’
Not rooting for any one view – neither optimistic nor
pessimistic or cynical – CauseBecause revisits and highlights the significant
developments of 2010 that will set the stage for progress in the responsibility
and sustainability domain in the New Year.
The policymakers’ side
The environment ministry showed its teeth.
Environment conservationists across the country found a
powerful flagbearer in the person of Jairam Ramesh, minister of environment and
forests. Ramesh seems to have been as much in the news as the prime minister. The
environment minister has been pulling up corporate and other commercial
establishments for flouting environment norms. From large mining giants like
Vedanta and Posco to automobile manufacturers, to real estate developers and to
government bodies developing airports or special economic zones, no one was
spared. They were all reminded of the stringent environment rules they had to
abide by, and it was clear that to so abide was a vital part of their ‘social
responsibility’.
Here are several CauseBecause stories that summarize
Ramesh’s actions in 2010:
SUV owners should not avail of
subsidized diesel: Ramesh
Environment should be a
mainstream issue in political agenda: Ramesh
Environment ministry defers
green signal to thermal power, steel and sponge iron projects
Posco violated environmental
laws; uncertainty clouds biggest FDI project
Development will happen, but
not at the cost of environment and nature: Ramesh
Finally, $100 billion to deal
with global warming in developing countries
From the corporate affairs minister’s office
While environment minister was pulling the ‘responsibility’ reins
and was trying to make businesses abide by the existing laws, the corporate
affairs minister Salman Khurshid was busy making several new regulations that
would make it almost compulsory for businesses to be socially responsible. The
news that has been making rounds is that it will be compulsory for every
business house to spend at least two per cent of their annual profits towards
CSR.
Moreover, they will have to submit a detailed report clarifying how the
two per cent has been spent.
These stories throw light on the corporate affairs
minister’s role in CSR in 2010:
Corporate affairs minister
calls for ‘ethical, responsible and sustainable’ businesses
Environment sustainability
reporting to be compulsory; accounting standards being made
CSR funds: Parliamentary panel
wants 50% to go for afforestation
CSR is a way of doing
business; will be considered in Companies Bill 2009
CSR provision in the new
Companies Bill will only be ‘guiding’, not compulsory
The companies’ side
A CauseBecause survey done in August (CSR a buzzword;
socially responsible brands popular among Delhiites) showed that
consumers in the National Capital Region prefer to be loyal to companies that
embrace CSR principles.
Looking at the global preferences, similar findings came
from Burson Marsteller’s 2010 Corporate Social Responsibility Perceptions
Survey, Cone 2010 Shared Responsibility Study, GfK’s Green Gauge Global report,
and most recently, the 2010 Edelman goodpurpose study. The percentages and the
brand preferences differ across these studies, but the core message – consumers
prefer ‘responsible’ brands – remain the same.
A recent National Geographic survey, which studied 17,000
consumers in 17 countries, stated that Indians are the most ecofriendly
consumers in the world. India topped the Consumer Greendex, where consumers
were asked about energy use and conservation, transportation choices, food
sources, the relative use of green products versus traditional products,
attitudes towards the environment and sustainability, and knowledge of
environmental issues.
Hence, Indian companies are now expected to pardon a bit of
their shareholder responsibilities and focus more on their societal, social and
environmental obligations – the wealth maximization goal cannot be achieved by
ignoring these responsibilities. It can also be stated otherwise – fulfilling
societal or social obligation can indirectly help in wealth generation. Nearly
all leading companies in India are somehow engaged in one or the other
corporate social responsibility programme. The major focus areas include
education, health, livelihood creation, skill development, and empowerment of weaker
sections of the society.
In 2010, notable efforts have come forth from Tata Group,
Infosys, Bharti Enterprises, ITC Welcomgroup, Reliance Industries, Wipro, Indian
Oil Corporation and ONGC, among others.
According to a study undertaken by an industry body in June
2009, which studied the CSR activities of 300 corporate houses, corporate India
has spread its CSR activities across 20 states and union territories, with
Maharashtra gaining the most from them. About 36 per cent of the CSR activities
are concentrated in Maharashtra, followed by about 12 per cent in Gujarat, 10
per cent in Delhi, and 9 per cent in Tamil Nadu.
The companies have, on an aggregate, identified 26 different
themes for their CSR initiatives including community education, environment,
health and rural development.
A report by The
Economic Times revealed that donations by listed companies grew by eight per
cent during the last fiscal. The study of disclosures made by companies showed
that 760 companies donated US$170 million in FY09, up from US$156 million in
the year-ago period. As many as 108 companies donated over US$216,199, up 20
per cent over the previous year.
Listed below are a handful of initiatives that will give a
fair indication of the CSR commitment of various organizations in the country:
- Reliance Industries and
two Tata Group firms – Tata Motors and Tata Steel – are the country’s most
admired companies for their corporate social responsibility initiatives in
the field of education, environment conservation and public health,
according to a Nielsen survey.
- Under its Corporate
Service Corps (CSC) programme, IBM joined hands with the Tribal Development
Department of Gujarat for a development project aimed at upliftment of
tribals in the Sasan area of Gir forest.
- Towards curbing of carbon
footprints at office, 2010 witnessed various initiatives including
application of renewable energy technologies, moving to paperless
operations, and recognition of environmental standards. Financial organizations”where
paper usage is comparatively higher than other sectors”including HSBC India,
Max New York Life and Standard Chartered Bank continued with the year-before’s
resolution of asking their customers to shift to e-statements and e-receipts.Telecom operators including
Airtel, Aircel, Vodafone and Idea, too, pushed their efforts to shift as many
customers to e-bill and save paper.
- State-owned navratna company
Coal India Ltd (CIL) will invest US$67.5 million in 2010-11 on social and
environmental causes.
- Public sector aluminium company
NALCO has contributed US$3.23 million for development work in Orissa’s
Koraput district as part of its CSR.
- Mangalore Refinery and
Petrochemicals Limited (MRPL) spent Rs 12.70 crore on various CSR
activities during 2009-10. This is a quantum jump in the amount allocated
for CSR, considering that MRPL in 2008-09 spent Rs 3.69 crore on such
activities.
- NASSCOM Foundation, the
social development arm of NASSCOM, in partnership with Microsoft announced
ConnectIT Workshops for NGOs and government officials in Karnataka. The
workshops will start in the months of January and February 2011, and aim to
utilize information technology for everyday development work.
- As part of its CSR, pharmaceutical
major GlaxoSmithKline (GSK) dedicated its new Albendazole manufacturing
unit in its existing Nashik facility to the World Health Organization’s (WHO)
global programme to eliminate lymphatic filariasis (LF).
- National Thermal Power
Corporation (NTPC) announced that it will set up a medical college and an
engineering college in Orissa as part of its CSR activities.
- In recognition of its
commitment to energy conservation and efficiency, Jindal Steel and Power
Limited’s (JSPL) Raigarh (Chhattisgarh)-based plant has been conferred
with the National Energy Conservation Award (NECA) 2010.
- PVR Nest, the CSR arm of
PVR Ltd, was ‘highly commended’ under the Best Green Educational Project category
(promoting sustainable development issues) at the Global Green Award 2010
in London.
- New Delhi Municipal
Council (NMDC) was felicitated and conferred with Pragya Puraskar for its
outstanding initiatives towards CSR activities for socio-economic and
cultural upliftment of weaker sections in the society.
- Tata Power, Mahindra and
Mahindra, IBM India and Hindalco Industries became recipients of the Golden
Peacock Global Awards for corporate social responsibility, at Lisbon in
Portugal.
Let’s also take a look at three multinational companies that
made news”some good, some bad”for their responsible initiatives in 2010:
- BP: Causing the largest oil misfortune in the United States’
history brought down BP’s much-hyped Beyond Petroleum campaign. The
company was charged for using cost-cutting measures that caused numerous
deaths and severe environmental damage. Fingers were pointed at the core
values and meaning of the company’s CSR policies. A section of the media labelled
the company as a bad example of CSR – one that ignored basic human and
environment safety norms but went on to do other symbolic activities in the
name of CSR. However, another section largely debunked condemnation of the company’s
CSR and said it should not be connected to a ‘natural’ disaster.
- Wall Street: The crash of Wall Street two years ago is
probably the biggest consumer betrayal in recent history. The ripple
effect shook the world economy and brought down countless industries. Two
years later, the investigations continue to reveal the murky business
practices followed by the company. Various experts suggest that had the Wall
Street banks worked to encourage a responsible corporate culture, this
collapse could have been avoided.
- Toyota: When General Motors almost collapsed, Toyota was
expected to make rapid gains but several basic safety calls held it back. The
company’s calls to take back already sold cars either for repairs or
replacements got mixed reactions from the CSR experts – while a section
called them ‘under compulsion’ activities camouflaged under CSR, others
commended the company’s efforts.
Philanthropists of
India
Azim Premji, who transformed a family-owned cooking oil firm
into the software giant Wipro, announced earlier this month that he was giving
US$2 billion to fund rural education.
The 100 wealthiest Indians have a net worth equal to 25 per
cent of India’s GDP, and Premji’s donation , by far the largest ever made by an
individual in India, was seen as a challenge to others in the ultra-rich club.
The 2010 list of Forbes Asia’s ’48 Heroes of Philanthropy’
contained four Indians, and all were women. The list included biotech major
Biocon’s CEO Kiran Mazumdar Shaw; Anu Aga of Thermax; Kiran Nadar , collector
of contemporary Indian arts and wife of HCL Technologies co-founder Shiv Nadar;
and Rohini Nilekani, wife of IT major Infosys’ co-founder Nandan Nilekani.
Nilekani, who supports many NGO activities, featured in the
list for the second consecutive year. She has donated $40 million over the
years to support causes such as education, microfinance, healthcare and
environment.