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Summary of the Presentation
What is Corporate Social Responsibility? Importance of CSR Ratings for Stakeholders Results of the CSR Ratings of 1000 largest Indian Companies CSR Reporting Parameters of Karmayog CSR Ratings 2008 Sector Analysis Observations Mandatory and Non Mandatory Recommendations View on CSR by Group companies Recent Trends and Developments Closing Statement
What is Corporate Social Responsibility?
´Every company harms the environment!µ
(Just as an individual does)
Corporate Social Responsibility is thus only about two aspects: 1) Reducing the Negative Effects: Steps taken by a company to neutralise, minimise or offset the harmful effects caused by its processes and product-usage 2) Increasing the Positive Contributions: Further steps by a company using its resources, core competence, skills, location and funds for the benefit of people and the environment
This implies looking at impacts on all its stakeholders which in essence is the base of CSR .Triple Bottom Line and CSR TBL is a concept whereby a company will have to look at not just where the company should deploy its profits but how it made its profits in the first place .
and did not do any activity to benefit society Don¶t Drink and Drive is the CSR campaign of a leading company that makes alcoholic beverages A drug manufacturer in India provides gifts and vacations abroad to doctors who prescribe its products. India¶s national helpline for children in distress An FMCG company is working to protect and conserve endangered plant species in India through re-forestation programmes A construction company (in Mumbai) posted a 60 % profit in 2008 amounting to Rs.1400 cr.Did you know that«. A paper company manufactures paper from waste cloth to reduce the use of pulp from trees A Chemical manufacturer has protected the largest stretch of mangroves along Mumbai¶s coast A software company has developed a special call receiving software for 1098Childline . A power generating company is the highest CO2 emitter in India .
Importance of the CSR Ratings for different stakeholders .
Actual Stakeholders of Companies ENVIRONMENT GOVT. AGENCIES COMMUNITY/CITIZENS COMPANY SHAREHOLDERS EMPLOYEES CONSUMERS SUPPLIERS .
Government Bodies To develop industry-wise guidelines for CSR continued« .2% of turnover on CSR.Importance of the CSR Ratings for different stakeholders Some examples of each Board of Directors Industry and Trade Associations To sensitise employees about the value of CSR To understand the huge scale and magnitude of the benefits that are possible if an entire sector spends even 0.
Importance of the CSR Ratings for different stakeholders Media To highlight companies practising good CSR. and to negate those companies which are actually engaged in marketing of their products under the guise of CSR To know about the areas of CSR work undertaken by companies. Investors. Shareholders Students . thus enabling partnerships with them To ensure that our purchase choices align companies to do business in a way that reflect our desirable values for society To join a company that is working to benefit society and not one that is harming it NGOs Citizens.
Results of the Karmayog CSR Rating 2008 of the 1000 largest Indian companies .
Results of CSR Ratings 2008 of 1000 largest Indian Companies Karmayog CSR Rating Level 5 (highest) 4 3 2 1 0 (lowest) Total Number of Companies % of Companies 0 10 45 221 232 492 (no CSR) 1000 0% 1% 5% 22% 23% 49% 100% .
CSR Ratings BAR Chart Karmayog CSR Ratings 60% % of Companies 50% 40% 30% 20% 10% 0% 0% Level 5 Level 4 Level 3 Level 2 Level 1 Level 0 Rating Levels 1% 5% 22% 23% 49% .
Ballarpur Industries Ltd.Companies with the highest rating of Level 4 No. Kansai Nerolac Paints Ltd. Moser Baer Ltd. * Jubilant Organosys Ltd. Company 1 2 3 4 5 6 7 8 9 10 ACC Ltd. * Infosys Technologies Ltd. * Sector Cement Paper Finance Software and ITES Pharmaceuticals Paints Hardware Software and ITES Steel Watches & Jewelry * Indicates companies that received a Level 4 rating in the Karmayog CSR Ratings 2007 . Tata Consultancy Services Ltd. HDFC Ltd. Tata Steel Ltd. * Titan Industries Ltd.
Parameters of the Karmayog CSR Ratings 2008 .
. apart from this. and a combination of these determines the final rating. genetically modified crops have been given a Level 0 rating The criteria stated above are only the minimum criteria needed to qualify for a particular rating.Companies that manufacture liquor. tobacco. there are other negative and positive criteria that are also applicable.Minimum necessary parameters for different rating levels If undertaking any CSR Activity If CSR is linked to reducing the negative impacts of company¶s own products or processes If CSR initiatives are for the local community If CSR is embedded in the business operations If innovative ideas and practices are developed for CSR Level 1 Level 2 Level 3 Level 4 Level 5 Note: .
Sector±wise analysis of the CSR activities of the largest 1000 Indian companies .
Banking.2% of Sales. Entertainment and Media. Paper Poor performing sectors in CSR-Retail. Construction Each sector shows the the possible impact with the recommended CSR expenditure of 0. Mining .FMCG.Sector Analysis 35 industry sectors were studied Best Sectors in CSR. Software. .
CSR in 35 Industry Sectors An analysis of 35 sectors has been done for the 1000 companies (Number of companies in each sector is in brackets) Auto Ancillaries (48) Automobiles (13) Banking (40) Cement (30) Chemicals (63) Construction (56) Computers (7) Diversified (13) Electronics (18) Engineering (44) Entertainment and Media (15) Fertilizers (19) Financial Services (32) FMCG and Consumer Durables (60) Heavy Engineering (10) Hotels (9) Iron and Steel (93) Jewelry (11) Logistics (17) Metal (14) Mining (6) Miscellaneous (42) Oil and Gas (19) Packaging (10) Paper (13) Petroleum and Petrochemicals (8) Pharmaceuticals (48) Polymers and Plastics (10) Power (46) Retail (5) Software and ITES (40) Sugar (25) Telecommunications (20) Textiles (78) Trading (18) .
and possible impact with the recommended CSR expenditure Sector-specific guidelines Best practices for the sector Comparison between sectors Uniform norms can get created for processes and CSR activities for different sectors. their CSR initiatives.Importance of the Sector-wise analysis Snapshot of sector It presents a picture of an entire industry. & also a level playing field Benchmarking of best practices internal to & externally by the companies It presents a comparison between industry sectors with low and high CSR . including examples of companies doing good CSR Potential CSR impact It presents sales of the entire sector.
130 cr.Example of Poor Performing Industry sector Construction Sector Ratings Total of 57 companies were analyzed 70% 60% 50% % of Companies 40% 30% 20% 10% 0% 0% 0% 4% 18% 18% 61% 36 Companies are doing no CSR Only 3 Companies have disclosed the amount spent Two Level 3 companies are DLF and GMR Infrastructure Total Sales of 57 Companies is Rs. As per Karmayog¶s recommendation CSR expenditure amounts to Rs. Level 5 Level 4 Level 3 Level 2 Level 1 Level 0 Rating Levels .65000 cr.
Yes Bank) Mandatory regulations on CSR for PSU banks makes this sector high performance Total Sales of 40 companies is Rs.520 cr. If 0.2.Example of an industry sector with good CSR Banking Sector Ratings 45% 40% 35% 30% % of Companies 25% 20% 15% 10% 5% 0% Level 5 Level 4 Level 3 Level 2 Level 1 Level 0 Rating Levels 0% 0% 15% 23% 20% There are 6 Level 3 companies: (Andhra Bank.000 cr. ICICI Bank.2% of sales is spent on CSR (as per Karmayog¶s recommendation). then annual CSR expenditure would amount to Rs. Union Bank of India.60. PNB. 40 out of 1000 companies are in the banking industry 43% 57% of these companies do CSR 60% of the companies are working in the area of Rural development . Canara Bank.
Moser Baer Ltd. Kansai Nerolac Paints Ltd. Titan Industries Ltd. HDFC Ltd. Jubliant Organosys Ltd. Tata Steel Ltd. TCS Ltd.. Infosys Technologies Ltd.Some sector specific best CSR practices No. . Sector 1 2 3 4 5 6 7 8 9 Cement Paper Finance Software Pharmaceutical Paints Hardware Steel Watches and Jewellery Expected CSR Quarry Rehabilitation Farm Forestry programme generating rural employment Enabling access to affordable housing Developing software to improve public systems Reducing environment pollution through process improvement Development of environmentally-friendly paints Improvement in product design and use to benefit society Mitigating impact on the natural and human environment Employment of handicapped and village artisans Company that is undertaking this ACC Ltd Ballarpur Industries Ltd.
Observations from the Karmayog CSR Ratings .
.Observations 51% 2% 3% 10% 90% 40% 509 Companies reporting their CSR activities in either the Annual Report or Website 21 Companies have published a separate Sustainability Report 30 out of 1000 companies have reported the amount spent on CSR 107 out of 1000 companies are doing CSR through a trust or foundation More than 90% high impact companies have no separate environment report Widely done CSR area is Education followed by Healthcare and Rural upliftment.
the same CSR activities are listed for all companies of a Group Poor performing Sectors. Entertainment and Media. relating to employment) Individual companies that are part of a larger group do not list their individual CSR activities.Observations«.Construction. All PSU¶s undertake a basic minimum level of CSR based on mandatory regulations (e.Banking. FMCG. Paper . Mining. Software.Retail Best Sectors.g.
Mandatory CSR: our 5 Recommendations .
) at 0.) 226000 1800 880 500 310 100 Net Profit Rs.8 1.e. 100 CSR expenditure Crores) Table showing Rupee impact of 0. Rs.2 Indian Oil Corp.Mandatory CSR:. this = Rs. 20 Lakhs per Rs.000 crores If recommended minimum CSR is spent @ 0. 25.2% of its sales on CSR activities (i.2% of sales for CSR expenditure Size by Sales 1 200 400 600 800 1000 Company Sales in Rs.00.6 1. (cr.0 0. (cr.6 0. (cr.2% of sales.2% of Sales 452 3. 5000 crores . Indian Hotels Ahluwalia Contracts Trent Technocraft Industries Marathon NextGen Realty Total sales of 1000 companies: Rs.Our 3 Recommendations Every Company must do CSR 1) Minimum annual Every company must spend a minimum of 0.) 7000 370 51 30 30 60 Minimum CSR Rs.
plants.Mandatory CSR: Our 3 Recommendations« 2) Reporting Sustainability Reporting in the Annual Report A Corporate Sustainability section to be included in the Annual Report and preferably a separate Corporate Sustainability Report (as per the Global Reporting Initiative framework) to be published. etc. skills and strengths while undertaking CSR activities c) CSR linked to the location of a company Companies must first undertake CSR activities in the areas they are located in. offices. b) CSR linked to the skills of a company Companies must use their core competence. (factories. 3) Process for CSR .) and focus on improving conditions in the communities in which they operate. Health and Safety (EHS) applicable to most industries Industry-specific guidelines linked to the processes of that sector. a) Adoption of industry guidelines for processes Common guidelines on Environment.
Non Mandatory CSR: Our Recommendations .
with a special emphasis on the local community Every company should make efforts towards ensuring responsible behavior for their supply chain A company¶s unique skills and resources should be utilised to benefit its stakeholders & society for e.g.Some of our Voluntary Recommendations Define the company¶s vision and mission Create inclusive employment Ensure responsible behavior in supply chain Use core competence Link CSR to government¶s development plans Define the company¶s Vision and Mission: as this leads to the company¶s CSR philosophy being defined Create Inclusive Employment . Sarva Shiksha Abhiyan . e.: financial education program by banks Link CSR activities to government¶s development plans -It is important that companies CSR efforts are connected to and supplement the government¶s social & development goals and plans.g.for marginalised groups such as the physically-challenged.
heritage. endangered species of wildlife. etc . E. through the CSR activities that they undertake. work towards raising standards and setting benchmarks for their specific sectors Companies must extend their products and process to markets and areas that may not be as profitable to the company CSR activity linked to industry sector Expand Reach to benefit society Support areas and issues that are neglected Companies must come forward to take up these.Some of our Voluntary Recommendations« All employees to be involved in CSR A company should involve their employees in its social responsibility efforts. Sports such as chess. This ensures sustainability of CSR initiatives. as there is a commitment to CSR throughout the organisation Companies.g.
Karmayog·s views on Group Companies CSR .
it is necessary for each company to undertake its own CSR activities (linked to its processes and skills). as a result of which CSR is often not connected to the processes & core competence of the individual companies Same CSR reported Philanthropy CSR Expenditure Group Foundation While there are synergies and various managerial reasons for companies to do CSR activities at a group level. Mahindra Group.CSR by Group companies No. and Essar Group. Reliance (ADAG). of Groups in this study Of the 1000 companies studied there are 30 groups with individual companies ranging from 2 to 24 The 5 largest groups in this study are: Tata Group. instead the group expenditure is listed The common Foundation of the group undertakes all the CSR activities. while also contributing to the group¶s CSR work . Aditya Birla Group. Most of the companies under the group report the same CSR activities across the group Some Group companies contribute money to the group Foundation/ Trust as a part of their CSR Individual companies do not mention the amount spent by the company.
Recent Trends and Developments in CSR in India .
There is an increasing awareness and interest among the consumers towards CSR. Disclosure of social and environmental performance Almost every stakeholder is asking for more information on companies social and environmental performance. management colleges and students There are vast majority of stakeholders that have come to expect more from corporates which would extend beyond their profits. As a part of this move 2% of the companies have Sustainability Report and 5% have information on CSR on website or Annual report. More seminars and discussions are being held in management colleges to sensitize the CSR issue among the students Suppliers Responsibility Companies are encouraging suppliers to adopt socially responsible business practice. The government has become sensitive towards the CSR issue for eg: RBI notification for non financial reporting. .Recent Trends in CSR-2008 Expectations of the stakeholders Government¶s Role Increasing awareness amongst consumers.
2007 RBI Notification to all Banks & Financial Institutions recommending that Non Financial Reporting (NFR) be undertaken as a step towards µResponsible Banking¶ Ministry of Corporate Affairs has stated that it would like to encourage all companies to ³disclose on their balance sheets the social work that they do´ Government of Gujarat: mandates CSR expenditure . 2009 . mandates CSR for industry associations and corporate houses in the state Petroleum Ministry says that it will be mandatory for public sector oil companies to spend a minimum of 2% of their net profits on CSR activities June 2008 Sep.directs 6 PSUs to set aside 30% of their profit before tax to carry out welfare activities across Gujarat. 2008 Feb. Draft industrial policy of Gujarat Govt.Some developments in CSR in India since the first Karmayog CSR Ratings ² 2007 Dec.
have begun to realise that responsible practices enhance profitability and ensure long term survival.Closing Statement« Enlightened businesses worldwide. small and large.. «. reward or penalise them through our voices and our wallets. we. Companies not doing CSR will not survive ±it¶s only a question of when For those companies which disrespect the environment or living beings. . as responsible citizens. need to individually and collectively.
It is an internal process reflecting the soul of the Company.³We believe that Corporate Social Responsibility is not an externalised activity nor is it only philanthropy.´ Titan Industries Ltd. Corporate Social Responsibility Report 2008 .
org/csr2008 .Karmayog Corporate Social Responsibility Ratings 2007-2008 of the largest 1000 Indian Companies www.karmayog.
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