Transcript Making CSR Sustainable: Critical Assessment of Indian CSR

Making CSR Sustainable: Critical
Assessment of Indian CSR Policy
and Industrial Responses
Himadri Sinha
Head – Department of Research and Planning & Professor of Rural Development
Xavier Institute of Social Service
Ranchi, Jharkhand, India
email: [email protected] /[email protected]
(a) Assessing Indian government’s industrial policy for creating
a peaceful cohabitation of industries and people in
neighbourhood,
(b) Assessing the best practices of CSR to people’s trust and the
faulty CSR practices of some industrial bodies that decimate
industrial credibility,
(c) Identifying CSR practices contributing towards sustainable
inclusive growth and analyzing their social, environmental
and economical implication for larger appreciations, and
(d) Identify the principle of corporate governance for ensuring
sustainable development through CSR activities.
 The study included both desk and field reviews from secondary sources and
some evaluation studies of CSR activities conducted by the author in the
recent past.
 Governmental policy guidelines for CSR planning and execution and CSR
reports of industrial bodies will analyzed through desk review.
 Review included some industrial cases of exemplary CSR contribution and
some industrial cases of flawed CSR practices from India based secondary
information.
 Cases were selected purposively where author was allowed to access the
corporate data and the cases which were surveyed by the author as
institutional assignments to assess the impact of CSR activities.
 Case studies were based on the analysis of CSR policy of selected industries,
financial commitment of industry towards CSR execution, implication of CSR
activities on social, environmental and economical lives of people residing in
industrial vicinity (15 km radius as per national policy).
Methods
Desk Review
Govt. CSR Policies
and its
implications
Industrial
responses –
review of
published article
Limited Field
Study
Selected case
studies (Access
was given)
 General Concept - ‘The continuing commitment by business to
behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as
well as of the local community and society at large’
 The emerging concept of CSR in India – goes beyond charity
and requires the company to act beyond its legal obligations and
to integrate social, environmental and ethical concerns into
company’s business process.
 Shift from ‘shareholder alone’ to ‘multi-stakeholder’ focus
 The key components of CSR would therefore include the
following: corporate governance, business ethics, workplace and
labour relations, affirmative action/good practices, supply chain,
customers, environment and community
Full consultation
with all
stakeholders
Economic &
social
development of
community
GoI
Measures
Sustainable
development
Ethical
business
practices
Rights of worker &
no child labour
Human rights

No specific monitoring of ESG (environmental, social and
govern ace

Half hearted approach (Examples)
◦ towards fixing of land price as per World Bank/ADB guidelines for the
land losers
◦ No employment opportunities for land losers
 Weak institutional framework
Only 3 parameters were considered in the current study
Community
Development
Environmental
Commitments
Business Ethics

Its a mix bag
Industrial
Responses
Best
Practices
Faulty
Practices
Best
Practices
4 Indians /48
Heroes of
Philanthropy –
Forbes 2010
CSR spending
is increasing by
8-9% /year
Strong
Community
Dev. Prog
Ethical
business
Environmental
practices
CSR – Best Practices
4 Examples
TATA
GROUP
Aditya Birla
Group
Mahindra &
Mahindra
Vedanta
CSR – Best Practices
TATA GROUP
Planned Community
Development
Strong Business Ethics
Strict Code of
conduct
Education
Best educational
institute (IISc,
TISS)
Supports 7000 plus rural
schools
Health
Environmental Measures
Integrated
Dev
Green Practices
Mass plantation
Multispecialty &
Super-specialty
hospitals
Supports 7000
plus PHCs/CHCs
Peer group health
awareness
(TB/AIDS/RCH)
Green cities/
mines/colonies
CSR – Best Practices
Aditya Birla Group
Business Ethics
Environmental Measures
Community Development
Confidential
Education
Health
Integrated
Dev
Limited Green
Practices
Mass plantation
78 schools
15 hospitals
Adult education /NFE
programmes
Supports 5000
physically
challenged persons
Immunization – 15000
children, 2000 preg
women; 2000 TB
patient/ 100 leprosy
Agriculture
development
Vocational
training
CSR – Best Practices
Mahindra & Mahindra
Strong Business Ethics
Code of
Conduct
Community Development
Environmental Measures
Education
Green Practices
limited to factory
area
Talent scholarship –
300 students/year
Supports 34 rural & urban
schools
Vedanta
Business
Ethics
Own Code of
Conduct
Environmental
Measures
Planned Community Development
Agriculture
development
Around 200 villages covered
under sustainable agriculture
programme
Pisciculture/
Goat/Mushroom
farming were
promoted for
youth & women
Education
Model
R&R
Colony
Health
Talent
scholarship
Mobile Health
clinic network
Supports Mid Day
Meal in rural schools
Campaign for
STD/HIVAIDS/Anemia/
Malaria
Sports & games
dev. programme
Green Practices within
10 km radius from
plant
Faulty Environmental Practices
• Sponge iron – dumping of waste at road side & use polluting technology
• Chemical disaster – Weakness in legal framework – Union carbide and
& other polluting firms
Withholding the CSR contributions from communities
• R & R benefits
• Using Peripheral dev fund for infrastructure dev within factory and staff
colony
Opportunistic business practices
• Doing CSR through Govt. funding withholding their own contribution
• Doing CSR through Aid agencies’ contribution
Faulty Environmental Practices
Sponge Iron Factories
Facts
Mainly cause air pollution
It happens due to non-
installation or non-operation
of pollution control
equipment
inspection reports show
 92% had abnormally high emissions
from kiln
 100% of the sponge iron factories
bypassing pollution control equipment
(CSE report, 2009).
 In Odisha, evidences of soil and water
contamination , human health hazards
were found,
 In Chhattisgarh, more than 60
companies are functioning illegally
Faulty Environmental Practices
Perils of Union Carbide Bhopal
Facts
 In the early morning hours of




December 3, 1984, a poisonous grey
cloud (forty tons of toxic gases) from
Union Carbide India Limited
(UCIL's) pesticide plant at Bhopal
spread throughout the city.
The incident exposed more
than 500,000 people and
resulting in the direct deaths of
between 3,800 (UCIL estimate)
and 15,000 (unofficial Indian
Govt. figure).
No medical help could be provided
UCIL did not provide any help either
No adequate compensation has been
paid till death nor any perpetrators
had been punished till date
(Peterson, 2010).
Rehabilitation & Resettlement benefits
 Currently in India, company buys land that produces per capita income of US $
2 day/head/acre for a family of five (which is equal to US $ 3650/
household/year) at around US $ 2000 to Us $ 35,000 without providing any
employment to any of the family members.

Such land rates is far below World Bank/ ADB recommended replacement
value and therefore, highly inadequate

Monthly Pension/Annuity is barely US $ 25/ acre of land (in lieu of job)

Vocational trainings were given project affected youths without job placement

Forest dweller’s rights were not honoured in spurious manner

Low quality construction work in rehab colony
Withholding the CSR contributions from communities
Using Peripheral dev fund for infrastructure dev
within factory and staff colony
Problems
As per NPRR 2007 of GoI,
Infrastructure
within plant &
colony
Requirements
Only core area/villages
Development of 15 km
radius is mandatory
Creating corpus fund +
Annual allotment
CSR plan – Inclusive
growth model
To be implemented
through Area Dev
Council/Commtt
Community centres/health
centres are controlled by
company
Using CSR
funds for
Non implementing
forest rights act/
tribal dev plan
CSR & INCLUSIVE GROWTH
• Concern for Inclusive Growth (IC) has now become global.
• Sustained IC requires an optimal blend of three sets of actors and their respective
responsibilities namely government, corporate and personal social responsibility
(PSR) which means that every citizen above the poverty line must take her/his
seriously, to help a few below the Poverty Line.
• Job Outsourcing:- Vedanta Plc has out sourced most of transport, road
management, garden management and series of non technical and semi technical
jobs to displaced people and stabilised their livelihood. Number of power plants
has out sourced the job of fly ash brick making to local youths.
• Market Linkages: ITC and some other companies created village level sustained
market channel to promote sustainable business ventures for villagers.
• Rights based approach: Bill Gates Foundation supports UNICEF, DFID to strengthen
right based development approach in India. It has yielded positive result in Health,
Child rights, Women care & RCH
• Is it a Dream? Tata group earlier days absorbed good number of project displaced
placed people. But currently Tata is less willing to offer employment to the
displaced. In such event companies CSR needs to create alternative livelihood and
to support them till such livelihood ventures are stabilised. However, inclusive
growth is still a dream than reality in business parlance.
Principles of corporate governance for sustainable
development through CSR activities
Inter relationship
between industry
& society
Strong
institutional
regulations
Social &
Governmental
incentives for
good CSR
Principles of corporate governance for sustainable
development through CSR activities
Prioritizing social issues & CSR strategy
Generic social issues
Value chain social impacts
Social dimensions of
competitive context
Social issues - not
significantly affected by a
company’s operations nor
affect its long-term
competitiveness
Social issues - are
significantly affected by a
company’s activities in the
ordinary course of
business
Social issues in the external
environment that
significantly affect the
drivers of a company’s
competitiveness in the
locations where it operates.
Responsive CSR by
Transform value chain
assisting the govt
activities for the benefit of
programme implementation society with strategic CSR
Strategic CSR (Pro-active
vigorous CSR activities)
Thank You