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
