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A Case Study On Corporate Social Responsibility in NESTLE, TATA, ITC
A Case Study On Corporate Social Responsibility in NESTLE, TATA, ITC
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Dr Jagmet Bawa
Punjab Technical University
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Abstract
Since the times of the barter system to present era of plastic money, the
mankind has stridden out long path. There is no doubt in this that
“profitability” has always been the primary force and main motivation behind
all this development. This motive actually increased cut throat competition
between the business forms. Because of this competition, the companies
stated exploiting the quality of product as well as the environmental concern.
Slowly and gradually the business houses realized that they have to give back
to the society because they are surviving because of the society only. This
realization gives the birth to the concept of Corporate Social Responsibility.
However, the companies started using this concept for brand building more
than delivering it as a responsibility. The studies also revealed that the
companies used the corporate social responsibility for enhancing their profit
as well.
Introduction
Corporate Social Responsibility refers to the However, in the present era companies are
management is a management model using as most of a business strategy to take
according to which business firms take care of competitive advantage over others as well as
the society and environment as their social to enhance the profit to the companies.
responsibility. The society pay the price in
A properly executed CSR concept can result as
terms of pollution and other difficulties for
huge competitive advantages, such as better
business to run smoothly. Even the human
access to capital and markets, boosted sales
society suffered with a number of new diseases
and profits, operational cost reserves,
because of the environmental changes coming
enhanced productivity and quality, competent
because of the industrial pollution.
*
Chandigarh University (Research Scholar at Punjab Technical University).
**
Punjab Technical University.
***
Guru Gobing Singh Indraprastha University.
Correspondence to: Sanjeet Singh, Chandigarh University, Research Scholar at Punjab Technical University.
E-mail Id: singh.sanjeet2008@gmail.com
human resource, value-added added brand image, The 2013 Act played a vital role in converting
and status, improved customer loyalty, the Corporate Social Responsibility (CSR)
enhanced decision-making
making and risk activities as law from a voluntary activity. Now
management processes. The CSR can be the corporate houses have a legal obligation to
understood as a responsibility of business perform the CSR and have to spend 2% of their
wherein the business not only takes care of the profit in the societal works.
internal stakeholder (i.e., Shareholders,
The main objective of the CSR law is to
Workers) but also the external stakeholder
enhance the lives of the individuals and
(i.e., society, nature) as well.
exceeds profit-and-loss
loss matters for businesses
The 2013 Act offers a chance to catch up and or individuals. Thus the CSR can be defined as
make our corporate regulations more the responsibility to the business to defend,
contemporary, as also potentially to make our sphere and foster human values and endorse
corporate governing framework a model to socio-economic welfare.
imitate for other economic ic systems with
CSR is frequently understood interchangeably
similar physiognomies. The 2013 Act is more of
with philanthropy. While le philanthropy can be
a rule-based
based legislation comprising only 470
said to be a vital vehicle for doing welfare, it is
sections, which refers that the extensive part
certainly not homogeneously disseminated
to the regulation will be in the form of rules.
across time and space within the whole social
There are over 180 sections in the 2013 Act
sector. CSR is actually can be referred as the
where ruleses have been arranged and the draft
concentrated effort by the organizations to
rules were released by the MCA in three
coexist
xist with the society and nature (IFMR
batches. It is generally anticipated that the
investment newsletter (2014).
(2014)
2013 Act and undeniably the rules will stipulate
for phased execution of the provisions and in Now with the changing systems and the
line with this, 98 sections of the 2013 Act have activities, the previous concept of CSR has little
been notified and subsequently the analogous changed to be in more of isolated form and
section of the 1956 Act ceases to be in force profitable concept. To be known that basic six
(Grant, Thornton, an insight for growth 2013).
2013) core characteristics
aracteristics of CSR are as follows:
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The definition of the CSR is often, and on the CSR. A large number of corporate are
definition of the CSR is diverse in different not spending even 2% on the CSR. The average
countries. The EC (1) defines CSR as “the spent of the 147 companies is 1.28% of their
accountability of organizations for the profit. There are approx. 45 companies, which
influences on society." To meet the objective of spent average 1% on the CSR. (Utkarsh. Et,Al
social responsibility, companies “should have in 2016)
place a procedure to assimilate social,
The survey has been conducted to study the
environment, ethical, human rights and
spread patterns on CSR. It was found that only
customer apprehensions into the business
18% of the companies studied are currently
operations and main strategy in vital
complying with the 2% norm. Even the average
association with their stakeholders."
CSR spends as a percentage of PAT 147
CSR in India has conventionally been companies are 1.28%. This ratio is quite low.
understood as a charitable activity. And in Spread and spend both are the part of the CSR
keeping with the Indian tradition, it was an Matrix.
action that was executed but not
Spread + spend = CSR Matrix
considered.(2) In the Indian contingent, the
model of CSR is ruled by clause135 of the a) While according to the study, it should not
company’s act, 2013. CSR in India aims to keep be in the way, it happens. It should be
a watch on what is done with profits by the more concerned to the concept of
corporate once they receive it. (CII handbook sustainability factoring the social and
on CSR in India 2013) environmental influences of steering
business. That is how profits are made.
CSR Scores
Furthermore, the edge of sustainability has
It is evident that the Manufacturing companies been derived from the model of
score better than the other companies when it sustainable development, which is given as
comes to CSR. This finding shows that the issue "development, which satisfies the needs of
of CSR is more vital for the manufacturing the society without conceding the ability of
sector. The score for the Public and private the forthcoming generation to fulfill their
sector organization is similar. IT has been also own needs.”
observed that the companies performing CSR b) Both the terms, i.e. sustainability and CSR
responsibly are more sustainable than the is intervened together. In the project both
other companies. the scenario reanalyzed by taking the 3
Indian companies: TATA, ITC, NESTLE. All
CSR spends is a number of money companies these companies are at cut through
spends for Corporate Social Responsibility competition to gain their social
activities. The reports show that only 18 % of responsiveness. Each one of them is
the companies are spending the 2% of their engaged in CSR activities to be at the top.
profit in CSR as regulated by the law. The total However, also it has been seen that along
spent has been Rs 4281 cr during 2013-14 by with contributing socially there are many
the companies. factors, which are just overlooked by them
and somewhere gives negative impact to
Currently, just 27 organizations are fulfilling the
the society. So analyzing these factors few
norms of spending 2% or more of their profit
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Nestlé is the world’s leading nutrition, health For example: Nestlé purchase cocoa directly
and wellness company. There are 33 thousand from the farmers at all its plants and use it
employees working in this organization. Nestle make the products i.e., KIT KAT, AERO® and
is a MNC which operates in 83 countries with SMARTIES. The companies claim that by doing
the help of 461 factories. Nestle operates this they help to increase the profit of farmers
mainly in the developing countries. Approx. as well as to ensure the pure quality for the
50% of its plants operates in the developing consumers. Nestle is company work in more
countries. Nestle claims to protest the trust of than 80 countries and many of these countries
customers and stakeholders with the strong are developing. Thus it becomes the
principles. The principles and their related responsibility of the company to coexist by
policies are concerned with actions related to: create value for its stakeholders and at the
same time enrich the nature. This concept
• consumers refers as Creating Shared Value. Nestle tend to
• human rights and labor practices work for Creating Shared Value which includes
• employees the following of international laws, Codes of
• suppliers and customers countries with the principles of the company.
• The environment
Nestle gives special emphasis on creating value
Nestlé performs within the secondary sector of in for nutrition, water and rural development.
industry, producing and distributing products These are essential to its corporate activities
to consumers. It transforms raw materials into and vigorous for its value chain:
packed goods for customers to relish. Company
purchase the raw material from the primary
sector.
• Water: Because water is the life line for the • Rural development: Because the inclusive
people of society and at the same time it well-being of farmers, countryside
requires for the production. communities, workers and minor
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NESTLE Products
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• Falsely claiming “global policy” as the consumers to eat and fails to fulfill the norms
reason for not negotiating with unions. of food safety law of India.
• Lying about global policy on shift patterns.
• Excessive working hours in violation of the Nestlé Response
law.
Nestle responds with a denial from this
• Interfering in trade union elections.
accusation and said that Maggie is fully safe
• Coercing workers to stop the registration of
and there is no orders like calling back Maggie
a union.
from the market. Nestle responds with these
• Refusing the basic right to negotiate wages.
statements on their social media account and
• Banning the basic right to freedom of
the website.
assembly.
• Nestlé is now a serial offender when it A statement flashed on Nestle website stated
comes to violating when it comes to that “The quality and safety of nestle
violating international conventions and foodstuffs are the highest primacies for
guidelines. Company. Further the statement says that
• Also the most recent case of MAGGI in Nestle uses stringent food safety and quality
India has violated the role of CSR to the controls at Maggie factories. The company
society. claims that the do add glutamate or other
material to Maggie and if it found it may come
21st May 2015 – India issues the instructions from the natural arising sources. Companies
to recall of Maggie noodles: Indian food say that they are surprised with the content
agencies told Nestlé India to take back a batch purportedly found in the sample. They depict
of Maggie Noodles from the state of Uttar that the company monitors the lead content
Pradesh because they found in their test that frequently as a part of the controlling
the Maggie instant noodles are not safe for the requirements.”
TATA
TATA is the one of the prime organizations of 80 companies under their umbrella. TATA has
India. The business of TATA varies from the privilege to be the largest private
automobiles to Steel and telecommunications organization of India and there are more than 2
to consumer good. TATA group has more than Lac employees are working in its different
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companies. Ratan N Tata took the group to the "Corporate Social Responsibility should be in
new height under his chairmanship. He the DNA of every organization. Our processes
completed his study from New York's Cornell should be aligned so as to benefit the society. If
University and starts leading the company in society prospers, so shall the organization” –
1991. He also be a part of the board of the Ford Manoj Chakravarti, G M - Corporate Affairs &
Foundation and the program board of the Bill & Corporate Head - Social Responsibility, Titan
Melinda Gates Foundation's India AIDS Industries Limited in 2004.TATA group has
initiative. Recently he got down and always been recognized as a organization
transferred his responsibilities to the Cyrus which fulfill their CSR religiously. The founder
Mistry but after some time he got down from of TATA group was a personality who always
the post. supports the social causes. He was also a part
of the Gandhiji’s campaign in the South Africa.
Under the chairmanship of Ratan N Tata, the
Tata group gave a number of science and
organization achieved huge laurels and
research centre to the country which
milestones and went through noticeable
strengthen the growth of the country.
phases i.e., rationalization, globalization, and
JamshedIrani, Director, Tata Sons Ltd, says,
now invention, as it attempts to reach a
"The Tata credo is that 'give back to the people
reported $500 billion in revenues by 2020-21,
what you have earned from them'. So from the
which is equal the size of the revenue of the
very inception, Jamshetji Tata and his family
global giant Wal-Mart. Almost two third of the
have been following this principle." (A
equity of the parent firm, Tata Sons Ltd., is held
statement on the Tata group's website
by philanthropic trusts endowed by Sir Dorabji
www.tata.com). Tata group follow their
Tata and Sir Ratan Tata, sons of Jamsetji Tata,
principles in all their companies including the
the founder of today’s Tata empire in the
TCS which is the technological segment of the
1860s. Through these trusts, Tata Sons Ltd.
group.
uses on average between 8 to 14 percent of its
net profit every year for several social causes. Though the TCS is a technological company but
TATA groups continued their CSR work even it’s spent the CSR fund in the education, health
when the economic condition was adverse. In and environment. The Company’s ingenuities
the decade of 90 when the company was going in the community intend to craft influence
through the tough period, the company keeps through empowerment so that the living
increasing its CSR spent from Rs 670 million in standards and the quality of life improves for
1997-98 to Rs 1.36 billion in 1999-2000. The the population of the society. The company
group spent 3.37% of its profit on CSR in the works on the following four areas to increase
year 2012-13 and apart from this they spent the standers of living for their employees as
300 crores for the environment safety. the other humans of the society.
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plants have been ingrained in the Poona connected; thereby securing them
area. The organization instructed the financially. In the city of Lucknow TATA
suppliers to use alternate materials at the group created the healthcare facilities for
place of woods. countryside improvement& for delivering
• The Tata Motors Grihini Social Welfare healthcare to the countryside zones.
Society provide assistances to the • Human Capital of TATA motors provides
employees' women dependents; they the scholarships 211 students under the
make a various number of products, Vidyadhanam program.
oscillating from pickles to electrical cable
TATA Business
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ITC Limited
Little wonder that the consumer goods There's more to ITC's CSR initiatives than these
cigarette-hospitality firm's social investments backward linkages. In the last few years, the
have won plenty of accolades. ITC is serving to company has spent considerable money on
the 6 million people by generating sustainable developing renewable energy infrastructure.
livelihood opportunities under its CSR program. And now, renewable energy meets almost 38%
ITC has also attained the exclusive global of ITC's total energy requirements which is
peculiarity of being carbon affirmative for nine indeed remarkable considering the huge
successive years, water positive for manufacturing base and hotels. The target is to
continuously 12 years and solid waste recycling increase this to 50% over the next five years.
positive from the last seven years. All the superior luxury hotels are indorsed
green buildings making ITC the greenest luxury
The biggest reason for ITC's CSR success is the
hotel.
way almost all the major sustainability
initiatives have been wedded to the company's CSR Policy
core business, either providing an input source
for a business or backward integration. As a It is ITC's policy:
result, divisional chief executives and their
• ITC is supporting countryside progress;
teams lead each of the initiatives, making them
endorsing education; delivering
something more than just another CSR
precautionary healthcare, delivering
programme.
hygiene and drinking water; making
livelihoods for people, particularly those
For instance, the famed e-Choupals initiative from underprivileged sections of society, in
led by the agri-business division is a major countryside and city area of India;
sourcing base for the company's packaged food protective and promoting sports.
and FMCG business, while its social forestry • To progress the compulsory competence
programme supports the paper and and self-reliance of recipients at the grass
paperboard business. ITC has, in the last few roots, particularly of females, in the
years, undertaken massive animal husbandry credence that these are fundamentals for
initiatives covering ten lakh milk animals which social and economic development.
will form the base for the proposed foray into • To involve in confirmatory action
the dairy business early next year. involvements such as skill building and
vocational training, to improve
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ITC Products
Drawbacks of ITC
• The main product of the ITC is tobacco. ITC say that on every purchase company will
refers to Imperial Tobacco Company of contribute a specific amount for welfare. It
India Limited. It is fascinating that a is actually impacting the mind of the buyer
business that is now so involved in and even if the buyer have an option which
branding continues to use its original is cheaper than the classmate than also he
name, despite the deleterious relationship is buying the classmate. The question arises
of tobacco with poor health and untimely here whether the company is paying for
death. the welfare or the customer.
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3. Doing something good and using it for the group, it has been seen that there is no such
marketing major CSR issue. This is because TATA is the
4. Sustainability only Indian company which first brought the
5. Accountability and transparency concept of CSR into the business. It has all its
6. Governance policy in accordance to the CSR model. The
company carries out its work keeping in mind
Here lie some questions with consideration of
the CSR philosophy. I think this is the only
each company to find that whether they follow
reason that the company is growing so fast and
their CSR activities accordingly or not. It is
making profits instead of being so much
difficult to say that every factor is fulfilled 100%
involved in the marketing strategies. Besides
but an initiative can be taken to achieve it, so
this the major drawback of TATA is the SINGUR
that one can contribute to the society with its
case which lead to the dislocation of large slot
norms and regulation.
of common people which is against the ethics
It is true that each company has its own CSR and has negatively impacted the society. But
policies to follow, but these policies should be now it is diverting from its CSR goal and moving
made keeping in mind the major CSR more towards the making of a profit.
contributing factors which are essential to be
Similarly ITC is the company which initially
followed.
started with the production of the tobacco,
In case of NESTLE, the food products it is which if seen at the ethical level is not correct.
offering should be beneficial to the consumers, It is a company which is still earning its major
but recently Maggi and nestle baby milk the part of the revenue by selling its tobacco
highest consumed products are found to be products. It has 40% of its sale for this product.
adulterated. Also in case of NESTLE their lacks a No doubt the ITC Hotels are one of the most
transparency factor. Also the workers being luxurious hotels. But on the other hand the
employed in NESTLE are not given equal classmates’ registers it sells are highly costly
treatment and even the wages offered to them and emotionally force the consumers to buy it
are far less than the potential. And hence this is because they are contributing Re 1to help the
the only reason that in 2002 there exist a poor for the education. Even the concept of e-
NESTPREESURE movement across the world. choupals is not so successful because of lack of
the potential guidance.
On the other hand if we look at the TATA
Table 1.Comparative analysis between ITC, TATA, NESTLE
Factors NESTLE TATA ITC
Work in isolation and no integrated business model
Exploiting business strategy
Marketing and contributing
Sustainability
Accountability and transparency
Governance
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