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CORPORATE SOCIAL RESPONSIBILITY RATING
OF TOP INDIAN COMPANIES
GUIDED BY: PROF. SUPRITI MISHRA
PGDM: 2010-2012 GROUP: 3 AKASH KU ROUT (01) TAPAN KU SAH00 (05)
HIMADRI BARAH (21) SURAJ PATTNAIK (24)
media and government through online methods. Introduction 2. Why a Rating on Corporate Social Responsibility? 3. Definition of CSR 4. civil society groups. corporates. sustainable solutions to society's problems can only be found though the collaboration and involvement of all stakeholders is a unique organization that connects citizens. Importance of CSR Ratings for Different Stakeholders 5.In a democracy like India's. Contents 1. academicians. Methodology for the CSR Ratings and Study .
and thus corporate are important stakeholders in society. Some Recent Trends in CSR in India 13.6. they have extremely capable people. access to money. Many companies worldwide and now even in India are more powerful than governments and even countries. Results of the CSR Ratings of the 50 largest Indian companies. Rating Criteria 8. Annexure 2: Table of Level 3 rated companies Introduction The problems and issues that confront society today are too large and complex to be solved by government and NGOs alone. Some observations from the Study and Ratings 9. Annexure 1: Table of Level 4 rated companies 15. Sustainable solutions to society’s problems can only be found through the collaboration and involvement of all who are part of it. . Recommendations to companies 10. Industry Sector Analysis 11. technology. CSR by Group Companies 12. etc. the ability of geographical reach. Closing Statement 14. Companies have tremendous strengths. 2008 7. The Corporate Social Responsibility Study and Ratings of Indian Companies was undertaken to explore and understand the role that corporate are playing and can play in finding meaningful solutions to the problems facing India today. Our objective of the research was online content analysis of India’s fifty largest company by collecting data from their website and rate them according to their CSR activities.
These include employees. thus enabling partnerships with them. Some of these roles for different stakeholders are as listed below: For Companies • To sensitize their directors and their employees about their responsibility towards society • To identify CSR activities they can and should undertake . directly and indirectly. Definition of CSR “Every company harms the environment and people!” Corporate Social Responsibility is thus just about two aspects 1. Usually corporate are invited to enter or nominate themselves for CSR awards. location and funds for the benefit of people and environment. and hence only the good companies are highlighted. Corporate Social Responsibility helps to define the contribution of a company beyond economic value and creating employment. and the CSR Ratings helps to identify their individual and collaborative roles. Corporate Social Responsibility is also a forward-action. NGOs get to know about the CSR undertaken by companies. and companies themselves learn about and from the CSR initiatives of other companies.Why a Rating on Corporate Social Responsibility? CSR Ratings are important to various stakeholders for different reasons: . rather than a retrospective action that is undertaken by a company at the end of its process. whereas a rating enables a comparative study across all companies. industry associations can use them to set benchmarks of CSR for companies to follow. We undertook a CSR study and rating to understand the CSR activities of all companies on an equal level. minimize or offset the negative effects caused by its processes and product-usage 2. government. citizens/community and the environment. core competence. and weighs this contribution against the damage done by the company through its products and processes. The steps taken by the company to neutralize.government bodies can use CSR Ratings to develop industry-wise CSR guidelines. consumers/customers. The further positive steps a company takes using its resources.e. skills. Importance of CSR Ratings for different stakeholders Corporate and their activities are connected to a large number of people. i. as well as showcasing companies doing good work. it flows from a company’s vision and mission and is part of the company’s everyday actions. investors. suppliers. Each of these has a role to play to make CSR effective and sustaining. thus showing up companies doing minimum some kind of CSR activity.
and to negate those companies which are actually engaged in marketing or advertising their products or services under the guise of CSR • To encourage and enable business publications to have a regular feature or column dedicated to CSR initiatives along with feedback from NGOs and other stakeholders For researchers • To study CSR practices and results • To influence the shaping of CSR policy and regulations For students and colleges/ institutions • To become sensitized about the role and responsibility of companies and to understand the impact and consequences of everyday processes and actions • To join a company that is working to benefit society and not one that is harming it • To develop a holistic view of life and living For citizens. charity. marketing.• • To understand the various international guidelines and norms for CSR and to effectively implement these To learn about and from the CSR initiatives of other companies For Industry and trade associations • To get a snapshot of the state of CSR in India • To set benchmarks of CSR for companies to follow • To prepare case studies and highlight best practices of CSR • To provide consultation on CSR • To work with Government and NGOs and international organizations to upgrade and improve CSR activities in India and to set milestones for companies • To recognize companies doing good CSR activities by instituting awards based on these parameters • To understand the huge scale and magnitude of the benefits that are possible if an entire sector spends at least the recommended minimum amount on CSR. product usage and end disposal) • To make legislation that rewards CSR and penalizes damage to the environment For NGOs and consultants • To know about the areas of CSR work undertaken by companies thus enabling partnerships with them • To be able to identify companies which are not doing CSR or doing in a token manner. by product and waste disposal. implement CSR activities and monitor and evaluate their CSR activities For Media • To stop eulogizing corporate leaders whose companies are damaging the environment and harming lives • To present a clear view of CSR that is separate from philanthropy. so as to approach these companies to initiate meaningful projects • To assist companies to formulate CSR objectives. For Government bodies • To make industry wise guidelines and to introduce legislations that cause companies to work effectively towards reducing environmental damage. or expanding business scope and to sensitize the public about this. • To highlight companies which are practicing good CSR. advertising. shareholders and investors . and restoring damage done (in the areas of raw material sourcing and usage.
Results of the CSR Ratings of the 50 Indian companies Table showing the results of the CSR Ratings of the 50 Indian companies Karmayog CSR Rating 2008 Level 5 Level 4 * Level 3 Level 2 Level 1 Level 0 (Lowest) Total Number of Companies 0 10 33 5 2 0 50 Percentage of companies 0% 20% 66% 10% 4% 0% 100% * Companies with the highest rating of Level 4 are: ACC. Infosys Technologies. Bar chart showing the results of the CSR Ratings of the 50 Indian companies . Kansai Nerolac Paints. Necessary and Negative Criteria for different levels.• • To understand that as consumers and stakeholders of companies . HDFC. Methodology for the CSR Ratings and Study • • • • • List of 50 largest Indian companies is taken as per Sales figures from the BSE Sensex as in June 2008 Information on the 50 companies was collated from the company’s website and Annual Report of 2007-2008 Impact of the products and processes of the company is taken into account Companies are rated from Level 0 to Level 5 (Level 5 being the highest) Rating is based on Sufficient. Nalco. Tata Steel. Ballarpur Industries. Union Bank and Yes Bank. we can and need to influence companies to change harmful policies and adopt CSR practices due to the huge impact and power that companies have on people and the environment To ensure that through our purchase choices we get desirable values for society to be reflected in how companies do business. Jubilant Organosys. Jain Irrigation Systems Ltd.
automobiles. forestry based products manufacture. Zero Rated Products: Companies which make the following are given a Zero CSR rating: . (Apart from the mandatory regulations and laws in place) 6. then a zero . 3. Hence. Harmful processes: Companies which engage in the following processes extensively damage the environment. tyres manufacture. Impacts of usage: The implications of the usage of the product / services is considered while assigning the rating of a Company.mining. Hence a CSR rating of not more than 2 can be given to them. then the CSR rating = 0. Least harmful process: The process followed in the making of that product or delivery of that service is considered while assigning the rating of a Company. plastics) 8. Need of Society: If the product / service offered is not needed by society.Iron and steel manufacture 9. If a Company does not spend this minimum amount. To get a CSR rating of even 1. waste generation.cement manufacture. even if they are doing extensive work under CSR.aviation. just as every individual does.) 7. a Company must be engaged in environmental work that rejuvenates and restores the damage done.Paper. Minimum CSR Spend: A company must spend an amount equivalent to at least 0. Such an amount provides an idea of the magnitude of CSR that can be done by a Company. The process followed should be one that does the least harm. and to rejuvenate the source / place from where it uses resources or operates. environmental degradation. which make the following extensively damage the environment.Rating Criteria 1.thermal power generation. every Company must be working to reduce environmental degradation. Must – do CSR: Every Company degrades the environment. Hence a CSR rating of not more than 2 can be given. Products and Services: The subjective rating (0-5) is based on the Company’s main products / services. etc.liquor companies 4.cigarettes and tobacco based products . 5. (Pollution. 2. auto parts. (Chemicals such as fertilizers.2 % of its sales for CSR activities. Harmful products: Companies. paints. even if they are doing extensive work under CSR.
30 (3%) of the 1000 companies have reported the amount spent on CSR. 11. Within such a setup. The 1000 companies were grouped into 35 industry sectors and analyzed. 107 out of 1000 (11%) companies are doing CSR through their own trust or foundation 5. 21 of the 1000 (2%) companies publish a separate Sustainability Report. Several companies repeat the exact same information every year for CSR with no fresh records of the current year’s CSR. Insurance and Finance sectors tend to get rated higher because of the nature of their work. target groups of beneficiaries. Retail. and Construction industries all have low .or low CSR rating would be give. showing their low commitment to CSR. Accordingly. Employee participation and volunteerism: This factor has not been a deciding factor in the CSR rating as it is more important for the Company as a whole to have a defined CSR philosophy which it practices. 509 out of 1000 companies (51%) are doing CSR. b = CSR activities in the immediate physical vicinity of the Company’s operations and c = CSR activities involving the larger community and society as a whole. which is often not voluntary and is usually also temporary. and will hence be contributing towards the CSR objectives of the Company. as often what is termed as “social banking” is just a simple extension of the customer base and business. etc. 10. All PSU’s undertake a basic minimum level of CSR based on mandatory regulations (e. Mining. Many companies spread their CSR funds thinly across many activities. This is a far more effective. 2. and long-lasting method of practicing CSR as compared to employee payroll giving and volunteerism. 7. “b”. relating to employment. 3. However. Social Banking and Social Responsibility: Banking. The Entertainment & Media. each employee will be a more sensitized participant.g. a company would be assigned either “a”. and is also part of the priority sector lending that is mandatory. Healthcare and Rural development 11. Many individual companies under a group report the same CSR activities across the group. Common areas in which CSR initiatives are undertaken include Education. thus reducing the effectiveness and seriousness of their initiatives 12. or “c” where a = CSR activities involving employees only. Some observations from the Study and Ratings 1. 12. 10. 4. Trading.) 6. Reach of CSR Activities: A second rating has also been carried out simultaneously to determine the extent of impact that a Company’s CSR activities has. engaging in micro-finance and rural banking does not automatically mean good CSR practice.
6 0. It is recommended that the section on CSR reporting should come after the EHS (Environment Health and Safety) section in the Annual Report. Cr.) at 0.2% of sales for CSR expenditure Size by Sales 1 200 400 600 800 1000 Company Indian Oil Corp. Realty Sales in Rs. this = Rs. CSR is linked to the company’s processes. The Software.8 1. CSR reporting should also include details of CSR expenditure by the company. .2 Total sales of 1000 companies: Rs.2% of Sales 452 3. A) Mandatory Recommendations There are 3 mandatory recommendations flowing from the premise that ‘every company must do CSR’. 25. (cr. Cr.6 1.2% of sales.levels of CSR activities. Minimum annual CSR expenditure Every company must spend a minimum of 2% of its profit on CSR activities. 7000 370 51 30 30 60 Minimum CSR Rs.00. 226000 1800 880 500 310 100 Net Profit in Rs. The larger the company the greater is the damage it is doing to the environment. Indian Hotels Ahluwalia Contracts Trent Technocraft Industries Marathon NextGen. Banking and Paper industries are amongst those sectors with high levels of CSR. 5000 crores 2) CSR Reporting A Corporate Sustainability section should be included in the Annual Report and preferably a separate Corporate Sustainability Report (as per the Global Reporting Initiative framework) should be published by the company. Recommendations to companies The CSR study led to a set of recommendations to companies. Table showing Rupee impact of 0. and these are: 1.000 crores If recommended minimum CSR is spent @ 0.0 0. The scale of operations of a company and its impact is connected with its turnover and not with its profit. Conversely the greater is the company’s ability to do social activity.
1. with a special emphasis on the local community 4. Further. Health and Safety Guidelines (EHS) of the International Finance Corporation (IFC). livelihoods. 6. B) Non Mandatory Recommendations We have made 9 non-mandatory recommendations on CSR to enable companies to make their CSR programmes more meaningful and effective. 3.) is on the local environment and community. plants. which are outlined in documents such as the Five Year Plan. 5. skills and strengths while undertaking CSR activities. Companies must partner with government in the implementation of such programmes and schemes. Involve employees in CSR A company should involve their employees in its social responsibility efforts. and hence companies must focus on improving conditions in the communities in which they operate. CSR activity to improve the industry sector . The EHS Guidelines are technical reference documents with general and industryspecific examples of good international industry practice. offices. Create inclusive employment Companies to offer employment to those who find it difficult to get jobs. Ensure responsibility of suppliers Every company should make efforts towards ensuring responsible behavior from their suppliers/vendors who must follow all environmental. pollution. both general as well as sector-specific.) The greatest impact (in terms of land. as CSR is not an un-related activity c) CSR linked to the location of a company Companies must first undertake CSR activities in the areas they are located in. etc. have been drawn up by the World Bank.3) Recommended Steps for CSR a) Adoption of industry guidelines for improving processes The first step is to identify and adopt methods to minimize the environmental damage caused by the products and processes. health and safety as well as human rights guidelines and norms. CSR philosophy to be defined CSR philosophy and focus to be developed from and based on the company’s vision and mission 2. etc. This ensures sustainability of CSR initiatives. These are known as the Environment. It is recommended that reviews and audits of suppliers be conducted. and implemented through various schemes at the centre and state level. by reserving a small percentage of the workforce for such jobs. (factories. Link CSR initiatives to government’s development plans It is recommended that companies undertake CSR activities that are connected with and supplement the governments social and development goals for India. as there is a commitment to CSR throughout the organisation. each employee acting in a socially responsible manner helps the company as a whole to do undertake more effective CSR. b) CSR linked to the skills of a company Companies must use their core competence. A comprehensive set of guidelines.
so as to extend solutions to the problems and issues in remote. . through their CSR activities. and companies must come forward to take up these. thus gradually leading to an overall more socially responsible sector. they must do so more beyond areas that are potential new markets.g. Sports such as chess. Extending business into new areas that need development may not give immediate profits to a company. beyond what government and society is able to provide. While companies do expand their markets into new areas.Companies. Support areas and issues that are neglected In a developing country such as India. but this has long-term positive impacts on the area and its people. there are some areas and issues that require sustained support of a greater depth. etc. 7. Expand Reach to benefit society Companies must extend their products & services to markets and areas that may not be as profitable to the company. E. protection of endangered species of wildlife. are all issues that require corporate support. should work towards raising standards and setting benchmarks for their specific industry sectors. 8. heritage conservation. under-serviced areas.
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