Karmayog

CorporateSocialResponsibility Ratings2007 ofthelargest500IndianCompanies www.karmayog.org csr

Summary of Presentation
Easy everyday examples of social responsibility What is Corporate Social Responsibility? Results of the Karmayog CSR Rating Ho e assigned the CSR Rating

!nferences from the CSR rating exercise "ur Recommendations for companies !mportance of the CSR Ratings for different sta#eholders

Easy everyday examples of Social Responsibility

Easy everyday examples of social responsibility..

No. $ Type of Organisation Private Schools & olleges Examples of socially responsible activities ! "etting #lumni to institute scholarships & pri$es % "ffering space for training & classes & sports' etc( % )dopting a local garden % Encourage volunteering for topical causes ! Suggesting solutions for local problems to govt & media % +aintaining nearby public spaces' including footpaths % "ffering space in society ,garage' etc(- for use for training & classes( etc( and as a material collection centre ! #'areness posters of symptoms of different diseases % Collecting / donating old medicines to charitable hospitals % "ffering discounted medicines for poor patients ! reating a Patients( )nformation entre & *ibrary % Encouraging citi1ens to help accident victims by ta#ing care of legal aspects of accidents & emergency cases % 2isplaying 34atients and 2octors 5ill of Rights / Responsibilities6

%ousing Societies

Shops e.g.& hemists Private %ospitals

Easy everyday examples of social responsibility

No. 7 Type of Organisation +ovie Theatre , +ultiplex , +alls Examples of socially responsible activities % Screening of 89"s films % Special sho s for underprivileged groups % "ffering table space for 89"s % )dopting a nearby garden & open space and maintaining it % Chec#ing and offering tips to vehicle users % Ensuring 4;C certificates % 4romoting accident a areness' pedestrian safety % 2onate excess food responsibly to 89"s & citi1ens( % Compost organic aste % >elecast&print profiles and achievements of 89"s & citi1ens % >elecast&print social service messages along ith advertisements % 2edicated section on social / developmental issues' and for citi1ens? dialogue & feedbac#

Petrol Pumps

< =

%otels and -estaurants +edia .T/0 print0 radio1

2hat is orporate Social -esponsibility3

2hat is orporate Social -esponsibility3

>he Karmayog CSR study led to some very clear / simple insights' that@

4Every company harms the environment56 .!"stasanindi#id"aldoes1

Corporate Social Responsibility is thus only about t o aspects@ $- -educing the Negative Effects& Steps ta#en by a company to neutralise' minimise or offset the harmful effects caused by its processes and product%usage *- )ncreasing the Positive ontributions& Aurther steps ta#en using its resources' core competence' s#ills' location and funds for the benefit of people and the environment

-esults of the 7armayog S- -ating 899:

-esults of the 7armayog S- -ating of the largest <99 )ndian companies

7armayog S-ating
*evel < .highest1 = @ 8 ? 9 .lo'est1 Total

No. of ompanies

; of ompanies

9 => =? ?@: AB 88B .no S-1 <99

9; ?; A; 8A; ?A; =C; ?99;

> %DE 0 )nfosys0 Tata Steel0 Titan )ndustries

Fasis of assignment of the S- ratings

*evel = Only = companies out of <99 in this study have been assigned a level = rating since they do the follo'ing Eounding principles )nternalised SGsing core competence Srecommendations Setting standards ommitment to improvement )nnovative SStrategies 4hilosophy of improving society through business CSR is central to the business process and is planned and ta#en for ard' rather than done alongside or in reverse steps CSR activities are lin#ed to the company?s uniBue resources >he company has adopted all or most of the $$ recommendations on CSR made in the Karmayog CSR study' >he company raises the standards in its sector >he company is transparent about its business processes' monitors / reports these' including setting improvement targets >he company uses innovative ideas and strategy for its CSR activities similar to its business practices

Fasis of assignment of the S- ratings

*evel @ =9 companies out of <99 in this study have been assigned a *evel @ rating since they do the follo'ing& S- philosophy defined S- alongside business S- for local community +easuring SSrecommendations Gp'ard Slearning curve >he company has a defined CSR philosophy and focused areas of or#' that may or may not be related to their business processes( CSR is in the process of being internalised into the operations of the company' and is at present being done alongside other operations CSR activities are connected ith physical areas of operation of the company' but may not be using the core competence CSR activities are listed and documented' though there may not be actual figures of amount spent by the company on CSR >he company has adopted some of the recommendations regarding CSR made in the Karmayog CSR study !t is expected that many Cevel . companies ill become Cevel 0 companies in due course(

Fasis of assignment of the S- ratings

*evel 8 ?@A companies out of <99 in this study have been assigned a *evel 8 rating Fusiness Process and product life cycle 2egree of environmental damage caused during sourcing' manufacturing or delivery of the product or service is considered Companies engaged in the follo ing extensively damage the environment@ chemicals ,fertili1ers' paints' plastics-' mining' aviation' thermal po er generation' cement manufacture Hence their CSR rating is limited to * even if they are doing extensive or# under CSR( *evel ? AB companies out of <99 in this study have been assigned a *evel ? rating Environmental impact Every Company must be or#ing to ards reducing environmental degradation' to get a Karmayog CSR rating of even Cevel $

Fasis of assignment of the S- ratings

*evel 9 **D companies out of 7EE in this study have been assigned a Cevel E rating Companies doing no CSR Companies producing cigarettes&tobacco products / liBuor

Other criteria considered for assignment of the S- rating S- #mount )mount spent by a company on CSR relative to its sales

Expanding marHets to rural areas Employee volunteerism

Considered as expansion of the business and not part of CSR

4articipation of employees in unrelated volunteering is not considered to be part of the company?s CSR activities(

)nferences from the 7armayog S- rating exercise

)nferences from the 7armayog S- rating exercise

?1 No S>he results of the CSR Rating exercise are extremely disappointing since almost half of >he companies are not doing any CSR 81 ToHen "estures +any are only ma#ing to#en gestures to ards CSR in tangential ays such as donations to charitable trusts' 89"s' sponsorship of events' etc( @1 S- Effectiveness +ost spread their CSR funds thinly across many activities' thus reducing the effectiveness and seriousnes =1 S- ommitment +ost seem reluctant to do CSR activities unless mandated by la <1 S- as P+ost use CSR as a mar#eting tool C1 S- Philosophy Fery fe have a clearly defined CSR philosophy( +ost implement CSR in an ad% hoc manner' unconnected ith their business process( :1 S- Transparency Fery fe companies openly state the damage caused by their processes and the steps being ta#en to reduce this damage A1 S- -eporting "nly : companies publish a Corporate Sustainability Report to measure and assess the impact of their business on the environment B1 S- Spend Firtually no company states ho much it spends on CSR

)ndustry SectorI'ise analysis of the S- activities of the largest <99 )ndian companies

S- in 8A )ndustry Sectors
#n industry analysis of 8A sectors has also been done for the <99 companies (Number of companies in each sector is in brackets)
)utomobiles ,$.)uto%components ,**5an#s ,0*Cement ,$:Chemicals ,*<Construction / allied activities ,$.Aertili1ers ,$*Ainancial Services ,$$A+C9 / Consumer 2urables ,*E9as 4rocessing ,79lass / Ceramic ,0Heavy Engineering ,$DHotels ,0!ron / Steel ,*7+etals ,$*+ining ,<"il ,$<4aper ,:4etroleum / 4etrochemicals ,74harmaceuticals ,.*4olymers / 4lastic 4roducts ,$04o er ,$:Shipping / Cogistics ,DSoft are / !>ES ,$<Sugar ,$*>extiles ,*=>rading ,$$>yres ,<-

)mportance of the Sector!'ise analysis

Snapshot of sector !t presents a picture of an entire industry' their common processes and products' their CSR initiatives' including examples of companies doing good CSR

Potential S- impact !t presents figures of the sales of the entire sector' the net profit' and possible impact ith the recommended CSR expenditure Sector!specific guidelines Fest practices for the sector ;niform norms get created for processes and CSR activities for different sectors' / also a level playing field 5enchmar#ing of best practices internal to / externally by the companies

Sector Example ! The Paper )ndustry

7armayog S- -ating of *argest <99 )ndian ompanies ! Extract of Paper Sector
ompany .alphabetical1 )ndhra 4radesh 4aper +ills 5allarpur !ndustries H K 4aper Rama 8e sprint / 4apers >amil 8adu 8e sprint / 4apers West Coast 4aper +ills Total Sales -s. r. 07E $=EE :7E .EE <EE .7E 4250 Net Profit -s. r. *7 $7E $7 *E .7 .E 275 +in S-s. r G E(D .(: $(. E(: $(0 E(< 8.5 7armayog S-ating *&7 *&7 *&7 $&7 $&7 $&7

No $ * . 0 7 :

S- #ctivities education' healthcare community' environment education' health community development environment environment S-

> Note & 7armayog recommends that ompanies spend a minimum of 9.8 ; of sales on activities annually

ompulsory S-&! our = -ecommendations

ompulsory S-&! Our = -ecommendations

?1 #doption of industry guidelines for processes > o types of international guidelines already exist@ ommon guidelines on Environment' Health and Safety ,EHS- applicable to most industries )ndustry!specific guidelines lin#ed to the processes of that sector( e(g(sector%specific guidelines that include technical reference documents for different sectors such as forestry' manufacturing' po er' etc( Every company must include a Corporate Sustainability section in its )nnual Report ,Iust as >echnology ;p%gradation Report is included- and preferably publish a separate Corporate Sustainability Report ,as per the 9lobal Reporting !nitiative frame or#- also

81 Sustainability -eporting in the #nnual -eport

@1 Protection and Every company must be engaged in CSR activities that restoration of the minimise its "W8 harm to the environment environment

ompulsory S-&! Our = -ecommendations

=1 +inimum annual S- expenditure
Every company must spend a minimum of E(*J of its sales on CSR activities ,i(e( Rs( *E Ca#hs per Rs( $EE Crores-

Table sho'ing -upee impact of 9.8; of sales for S- expenditure Si$e by Sales
$st $EEth *EEth .EEth Rico )uto !ndustries Ctd( 0EEth 7EEth C(9( 5ala#rishna / 5ros( Wartsila !ndia Ctd :EE 0EE *7E .7 $7 *7 ?.8 9.A 9.<

ompany

Sales in -s. .cr.1

Net Profit -s. .cr.1

+inimum S-s. .cr.1 at 9.8; of Sales

8A9.9 <.9 8.9

!ndian "il Corporation FiIaya 5an# 8agarIuna Construction Co(

$0E'EEE *'7EE $'EEE

7'EEE .7E 7E

Total sales of <99 companies& -s. ?=0990999 crores )f recommended minimum S- is spent J 9.8; of sales0 this K -s. @999 crores

/oluntary S-&! Our : -ecommendations

/oluntary S-&! Our : -ecommendations

?1 Define S- philosophy >he CSR philosophy and obIectives should be clearly stated ,starting ith areas that directly concern the company?s o n business processes81 Eocused S) fe CSR activities should be identified and or#ed upon for a sustained period <1 Gse core competence Core competence should be utilised to benefit its sta#eholders and society C1 Extend Fusiness Scope ) company should stretch its business reach to under%served groups and populations even at reduced profit or marginal losses :1 Develop S- implementation systems ) CSR committee should be set up including an external 2irector' an 89" and local sta#eholders for selecting' monitoring and evaluating CSR activities

@1 reate )nclusive Employment !nclusive employment opportunities' such as for the physically%challenged' should be created =1 Spur ommunity Development 4roIects to help its local communities and environment should be the starting point

Some developments in S- after our study

-eserve FanH of )ndia& outlines guidelines for financial sector Dec. 899:@ R5! 8otification to all 5an#s / Ainancial !nstitutions recommending that 8on Ainancial Reporting ,8AR- be underta#en as a step to ards KResponsible 5an#ing?( +inistry of orporate #ffairs& recommends reporting of SLune 899A& >he +C) has stated that it ould li#e to encourage all companies to 3disclose on their balance sheets the social or# that they do6( "overnment of "uMarat& mandates S- expenditure Sept. 899A@ % 9uIarat 9ovt( directs : 4SEs to set aside .EJ of their profit before tax to carry out elfare activities across 9uIarat( % 2raft industrial policy of 9uIarat 9ovt( mandates CSR for industry associations and corporate houses in the state( Companies to be allocated developmental activities in sectors li#e health' education / environment in respective talu#as' villages or districts(

)mportance of the S- -atings for different staHeholders

Every staHeholder has a role to play to maHe S- effective and sustainable

N"Os ompanies )ndustry & trade associations "ovt. bodies

+edia

iti$ens0 )nvestors0 shareholders

-esearchers0 students

$iagramshowing#ario"sstakeholdersofCSR

)mportance of the S- -atings for

Foard of Directors
>o implement international CSR guidelines and norms >o sensitise employees about the value of CSR >o identify possible CSR activities >o learn from others? CSR initiatives

)ndustry & Trade #ssociations

>o understand the huge scale and magnitude of the benefits that are possible if an entire sector spends even E(*J of turnover on CSR >o get a snapshot of the state of CSR / set benchmar#s for companies >o prepare case studies' highlight best practices / give a ards >o provide consultation on CSR >o or# ith 9overnment' 89"s and international organisations to upgrade and improve CSR activities

)mportance of the S- -atings for

"overnment bodies
>o develop industry% ise guidelines for CSR >o introduce la s that ould re ard companies that are or#ing to ards reducing environmental damage and la s that ould penalise companies that continue to do harm( ,e(g( the polluter%pays principle >o enable companies to partner ith government in implementing social elfare and developmental schemes ,e(g( adoption of !>!s-

N"Os
>o #no about the areas of CSR or# underta#en by companies' thus enabling partnerships ith them >o be able to identify companies hich are not doing CSR or doing so in a to#en manner' so as to approach these companies to initiate meaningful proIects >o assist companies to formulate CSR obIectives' implement CSR activities' and monitor and evaluate their CSR activities

)mportance of the S- -atings for

+edia
>o stop eulogising leaders hose companies / products are damaging the environment / harming lives >o highlight companies practising good CSR' and to negate those companies hich are actually engaged in mar#eting of their products under the guise of CSR >o present a clear vie of CSR that is separate from philanthropy' charity / expanding business scope' and to sensitise the public about this >o encourage publications to have a regular feature on CSR initiatives

iti$ens0 )nvestors0 Shareholders

>o understand that as consumers and sta#eholders of companies' e can and must influence companies to change harmful polices and adopt proper CSR practices( ,due to the huge impact and po er that companies have on people and the environment >o ensure that our purchase choices align companies to do business in a ay that reflect our desirable values for society(

)mportance of the S- -atings for

Students
>o be sensitised about the role and responsibility of companies >o understand the impact and conseBuences of everyday processes and actions >o develop a holistic vie of life and living Fefore Moining a company@ to Ioin a company that is or#ing to benefit society and not one that is harming it 2ithin any company@ to improve the functioning of the company to ma#e it a business that contributes to society Feyond the business@ use the core competence and resources of the company to improve society

losing Statement
Enlightened businesses orld ide' small and large' have begun to realise that responsible practices enhance profitability / ensure long%term survival( Companies not doing CSR ill not survive L it?s only a Buestion of hen( Aor those companies hich disrespect the environment or living beings' e' as responsible citi1ens' need to individually and collectively' re ard or penalise them through our voices and our allets

..

Lubilant Organosys0 a pharmaceutical company0 'hile acHno'ledging losing Statement the harm caused in manufacturing its chemicals0 actively 'orHs to minimise the damage. )t is one of the only C )ndian companies that published a orporate Sustainability -eport last year.

%&herearestakeholderswhocan#oicetheirconcerns todaywhileweengagethem.&hereisanothercategory ofstakeholderslikeflora'fa"naandphysical en#ironment'whose#oiceswecannothear'b"twho areaffectedbyanthropogenic(i.e.ca"sedbyh"mans) impactsofglobalpop"lation.&hef"t"regenerationis anotherimportantgro"pofstakeholdersthatdoesnot e*isttodayb"twillbeimpactedbyo"racti#ities++,

Lubilant Organosys *imited0

Karmayog

CorporateSocialResponsibility Ratings2007 ofthelargest500IndianCompanies www.karmayog.org csr