Corporate Social Responsibility in India and Abroad

By

Isah Musa Ahmad

(II- Seminar PhD)

Chairman:
Dr. V.R. Kiresur
2-2
SEQUENCE OF FOLLOWS
• Historical update
• Objectives
• CSR in India
• Experience around
the globe
• Challenges
• Arguments
• Summing up
 “Economic growth without
social progress lets the great
majority of people remain in
poverty, while a priviledged few
reap the benefits of rising
abundance” ……
 Introduction
Historical updates Definitions

 Pre II World War  Business ethics

 Social movement 1960  Corporate citizenship

 Academicians  Stakeholder engagement

 Media coverage 2001  Social ethics

 NGO propaganda  Sustainability

 Business motives 2004  CSR

2-51
 CSR in the 20 th Century!
th
CSR in the 20 Century!

Why the need of CSR?

• Social problems
• England 1945
• Reduce Govt. over burden &
• America 1946 dependence
• China 1977 • Environmental concerns
• India 1810 • Externalities
• Politics
• Nigeria 1985
• South Africa 1992
• Australia 1972 Source: Corporate monitor, 2010
Dimensions of Social problem

Economical Political

Cultural Religious

7/16
 Cntd…
Poor
education

lack of
access Poor
to basic sanitation
services

No access
poverty
to clean Unemplo
drinking yment
water

a lack of
Food
Insecurity
adequate
resources
 CSR In India

 One Country, many

Worlds

 Most cultural
pluralistic, diversified
yet harmonious and
socially integral

 World Largest
democratic entity

 Second most favorable “ Man becomes great exactly in the degree

foreign investment in which he works for the welfare of his
destination fellow Men”
Mahatma Gandhi
 CSR India: Fact finder

Vedic period

Socio-cultural & Religious norm

Richest traditional in the world

Sarva loka hitam

 CSR India: Update
 First country to mandate CSR legislation.

 The new law will replace the nearly 60-year-old

Companies act.

 Effective 1st April, 2014.

 Total 14,000 companies.

 2% be spent or remit to Prime minister`s relief fund.

 Total CSR expenditure – 15,000 Crore.

 Comply or explain.
Source: Ministry of Corporate affairs, GOI, 2014
 Phases of CSR in India
1st 2nd
 Featured 1850`s  1914 – 1960.
 Oldest form of CSR  Dominated by struggle for
 Dominated by culture, religion, independence.
family tradition, &  Influenced by Ghandhi`s
industrialization. theory of trusteeship
 Charity & philanthropy still  Aim to consolidate and
characterized CSR practices amplify social development
today.

3rd 4th
 Traditional philanthropy
 1960 – 1980 (Cold War)
was abandoned
 India positioned btw capitalism
 CSR was integrated into
& Communism
coherent & sustainable
 Public sector is prime mover of
business strategy
development

Source: Mohaptra, 2010

 Indian CSR Core Values

Community
Consumers involvement
&
Environment
development

Human
right
Fair
operating Organizational
practices governance

Source: Ajit Sign, 2013

 Clause 135, Companies Act, 2013

Net worth > 500 Crore

Turn over > 1000 Crore Enacted 29,
Net profit > 5 Crore August, 2013

Board role CSR Committee

1. Approve the CSR Policy

1. Formulate & recommend to
board the CSR Policy.
2. Ensure activities are done
2. Recommend expenditure to
3. Recommend the be spent
expenditure to be spent
3. Monitor the policy from
4. ensure that stipulated 2%
spent. time to time
5. If fails to spend such
amount shall, in its report Hon.
specify the reasons. President
 Implications of Companies Act, 2013
Draft rule
Grey areas
• net profit before tax as per books
• Reporting on annual basis from • Should voluntary
FY 2014-15 contribution by corporates
• CSR activities conducted as be made compulsory??
projects or programs
• CSR programs through NGO`s • debate as to impose
• CSR activities must be penalty
undertaken within India
• activities exclusively for the benefit • None profitable company
of employees of company or their
family members
• Non inclusiveness
• Companies shall report, in the
prescribed format, details of CSR
initiatives in the Directors’ Report • directors for the
and in the company’s website. constitution of the CSR
committee
India CSR activities as per
Schedule VII
Gender & Women Eradicating hunger &
empowerment poverty

Environmental Employment &

Sustainability Vocational Skills

Preference to local
Promoting Education
environment

Reducing child mortality

Combating HIV-AIDS,
and improving maternal
Malaria etc.
health
 The Current State of CSR in India
CSR Pyramid

• The Indian understanding of CSR

seems to be shifting from
traditional philanthropy towards
sustainable business.

• Nevertheless, philanthropic
patterns remain widespread in
many Indian companies.

• Community development still plays

the decisive role in the Indian CSR
agenda.

(Arora and Puranik, 2012) 17/16

 CSR Administrator
Foreign companies
 Is responsible for regulation of Country Registered Active
Indian enterprises in Industrial China 697 652
and Services sector.
USA 577 454
 Administration of Companies Singapore 416 285
act, 1956, 2013.
UK 316 256

 Limited Liability partnership Japan 286 202

act, 2008 and Korea 137 105
Australia 76 56
 Other allied Acts, rules &
regulation. Nigeria 16 16

Source: Ministry of Corporate Affairs, GOI.

CSR annual expenditure Rs. 15,000 - 20,000

 Registered Foreign Companies by sectors under CSR act 2013
S.No DESCRIPTION Total Number foreign Active C
companies registered
1 Agriculture and Allied Activities 2 1
2 Business Services 674 569
3 Community, personal & Social Services 1426 1006
4 Construction 59 47
5 Electricity, Gas & Water companies 18 15
6 Finance 91 82
7 Insurance 15 10
8 Manufacturing (Food stuffs) 10 7
9 Manufacturing (Leather & products thereof) 5 3
10 Manufacturing (Machinery & Equipments) 99 70
11 Manufacturing (Metals & Chemicals, and products thereof) 65 39
12 Manufacturing (Others) 9 9
13 Manufacturing (Paper & Paper products, Publishing, printing and reproduction of recorded media) 4 2
14 Manufacturing (Textiles) 18 12
15 Manufacturing (Wood Products) 3 2
16 Mining & Quarrying 61 56
17 Real Estate and Renting 3 2
18 Trading 57 50
19 Transport, storage and Communications 55 45
20 (blank) 1411 1242
21 Grand Total 4085 3269
Source: Ministry of Corporate Affairs, GOI
 CSR Initiatives of selected companies in India

Education Health
Working with NGO
 HIV programs
Helping NGO
Computer & IT Awareness campaign
Free education school
Nutritional program
Training programs
Organizing educational camp Medical camps
Water wastage
Environment Ailment treatment
 Energy conservation
 Pollution prevention
 Protection of natural Agriculture
environment
 Tree plantation
 Min. of plastic wastage ???
 Control water wastage
 Waste management & recycle
 Proper disposal of chemical
Source: Anupam et al, 2012
 Sector Ranking of Some companies activities

Company Health Education Environment

IBM 4 3.5 1st
TCS 2 2 7
Infosys 5 3.5 4.5
Wipro 8 6.5 4.5
Nestle 1st 10.5 10
ITC 9 1st 8.5
Coca-Cola 8 8 10
Britannia industries 8 9 8.5
Bajaj Auto 6 10.5 6.5
MRF Ltd 3 6.5 6.5
Maruti 7 5 2
ONGC 8 12 3

Source: Anupam et al, 2012

 CSR activities of companies

Source: Anupam et al, 2012

 CSR expenditure performance (Million Rupees)

Company` PAT CSR 2% of Variance Variance% Rank

spend PAT
Tata Steel 53,898 1,460 1,078 +382 35.4 1
Larsen & Toubro 44,565 700 891 -191 -21.5 2
Reliance 197,240 2,880 3945 -1,065 -27.0 3
Hindalco Ind. 33,970 280 679 -399 -58.8 4
Bharti Airtel 42,954 330 859 -529 -61.6 5
Mahindra &M. Ltd 28,790 220 576 -356 -61.8 6
Maruti Suzuki Ltd. 16,352 120 372 -207 -63.3 7

TCS 104,135 510 2,083 -1,573 -75.5 8

ICICI Bank 76,429 240 1,529 -1,289 -84.3 9
Tata Motors 135,165 150 2,703 -2,553 -94.5 10
Total 733,49 6,890 14,670 -7,780 -53.0

Source: Anup Tiwari& Shweta Shukla, May, 2013

 CSR India Index 2012 (Million Rupees)

Company Revenue AVG 2% of Actual

PAT PAT spent
1 Indian Oil Corporation 442,459 7,783 83 156
2 Reliance Industries 386,571 21,138 288 423
3 Bharat Petroleum corp. 223,315 1,438 8 22
4 Hindustan Petroleum C 195,891 1,118 27 22
5 Tata Motors 170,678 8,437 15 169
6 Oil & Natural Gas corp. 151,121 23,660 121 473

7 SBI 147,197 13,056 71 261

8 Tata Steel 135,976 3,895 146 78
9 PNG GILTS 104,628 29 NA 1
10 Hindalco Industries 82,549 3,595 28 72

Source: Forbes, 2012

 CSR India Index 2012 Million Rupees

Company Revenue AVG PAT 2% of Actual spent

PAT

11 Coal India 78,410 11,759 119 235

12 Bharati Airtel 71,506 6,511 33 130
13 MMTC 67,023 129 3 3
14 Essar Oil 63,428 -201 NA NA
15 ICICI Bank 37,995 6,366 24 127
16 Punjab National Bank 37,447 4,460 NA 89

17 Larsen & Turbo 64,960 4818 70 96

18 JSW Steel 36,964 1569 32 31
19 Infosys 33,734 7128 26 143
20 Ruchi Soya Industries 30,332 167 0 3
Source: Forbes, 2012
Highlight of companies activities
 HIV awareness & prevention
program for 3.5lakh drivers
 Picnic for orphanage & primary
school children

 Skills development programs in

welding, mobile repairing,
tailoring etc.
 Children`s learning centers.

 Provision of Drinking
 Rural health care
 Prevention & care for HIV
 Village adoption
 Ctnd…

 Covers 692 Village & 12 Urban

slums & reach out 26 lakh people  Preservation & Promotion of
country`s heritage.
 Construct dams, ponds & bore
wells.  150 sport scholarship annually.

 Women empowerment, health  Education support.

care, rural mobile medical Van
services.  Safe drinking water provision.

 Scholarships  Hospital & health care.

 Ctnd…

 Maternal & child health services

 Family planning  More than Rs.7.5 crore

scholarships & loan
 98% immunization in Jamshedpur
 Support 10,000 children project.
 Established football academy

 Archery academy

 Rural health care development.

 Natural disaster relief program

 Support over 500 schools

 Ctnd…

Spent >Rs. 130 crore annually

Spent ₹23.28 crore
 Maintain 18 hospital & 42 schools
 village development
 Women empowerment
 skill development and road safety
 Home for homeless
 construction of household toilets
 Self help microfinance
 upgrading Government schools
 Safe drinking water
 separate toilets for girl students
 Aditya Birla Group - Making a
Difference (Corporate Film).avi
 Issues India Challenges
 The Shrinking Role of Government.
 Demands for Greater Disclosure.
•Transparency
 Increased Customer Interest. •Narrow Perception towards
 Growing Investor Pressure . CSR Initiative
 Lack of Community participation in
•Non-availability of Clear
CSR Activities. CSR Guideline
•Lack of Consensus on
 Serious attention to Agriculture.
Implementing CSR Issue
 Competitive labour market.
 Need to Build Local Capacities.
 CSR whose benefit?
Environment
Company
• Greater material recyclability
• Improved financial performance
• Better product durability and
• Enhanced brand image and
functionality
reputation
• Greater use of renewable resources
• Increased sales and customer
• Integration of environmental
loyalty
management tools into business
• Greater productivity and quality
plans.
• More ability to attract and retain
employees
• Reduced regulatory oversight;

Society
• Charitable contributions
• Employee volunteer programs
• Corporate involvement in community
education, employment and
homelessness programs
• Product safety and quality.
 Why Social problem persist in the world?
Global priority luxury Global priority basic needs
Global Priority $U.S. Billions Global Priority $U.S.
Billions
Military spending in the 780
world Basic education for 6
all
Narcotics drugs in the 400
world Water and 9
sanitation for all
Alcoholic drinks in 105
Reproductive 12
Europe
health for all
Cigarettes in Europe 50 women
Basic health and 13
Cosmetics in the United 8 nutrition
States

Ice cream in Europe 11 Source:

http://www.globalissues.org/article/26/
poverty-facts-and-stats
Perfumes in Europe and 12
the United States