Corporate social responsibility in India.
Sharma, Seema
CSR--Identifying the Common Denominator
Any discussion on corporate social responsibility requires an
understanding of the term. In addition, it is also imperative to
understand as to who shall decide whether a corporate is socially
responsible or not. It is interesting to note that there are innumerable
definitions of CSR adding to confusion on what it constitutes. Carroll
(1994:14) had termed the situation as "an eclectic field with loose
boundaries, multiple memberships, differing training/perspectives and
multidisciplinary." At the same time the origin of most of the
existing definitions of CSR can be traced to the West. Thus the way CSR
is perceived and implemented is largely guided by the West to the rest
of the World.
Definitions of CSR range from basic to most demanding, from
specific reference to a number of necessary activities to demonstrate
responsibility, to a general call for a comprehensive, integrated and
committed pursuit of social and environmental sustainability (Aras &
Crowther 2009). It has been defined as an integration of
stakeholder's social, environmental and other concerns into a
company's business operations (EIU 2002:2). CSR is a process of
managing the cost and benefits of business activity to both internal
(workers, shareholders, investors) and external (institutions of public
governance, community members, civil society groups, other enterprises)
stakeholders (World Bank 2002). According to Carroll (1994), a
conscientious business should embrace economic, legal, ethical and
philanthropic responsibilities. Garriga and Mele (2004) consider CSR as
an obligation of the firm to use its resources in ways to benefit
society, through committed participation as a member of society, taking
into account the society at large, and improving welfare of society
independently of the direct gains of the company. Relying on
Parson's framework they have also mapped the territory in which
most relevant CSR theories and related approaches are situated. They
have thus classified the existing theories in four groups. In the first
group come theories which believe that corporation is an instrument for
wealth creation and that this is its sole social responsibility. This
group of theories, they call instrumental theories. The second set of
theories are called political theories as they emphasize on the social
power of the corporation specifically in its relationship with society
and its responsibility in the political arena associated with this
power. This leads the corporations to accept social duties and rights or
participate in certain social cooperation. The third group includes
theories which consider that the business ought to integrate social
demands. These theories usually argue that business depends on society
for its continuity and growth and even for the existence of business
itself. These they term as group integrative theories. The fourth group
of theories contends that the relationship between business and society
is cemented with ethical values. This leads to a vision of CSR from an
ethical perspective i.e. as an ethical obligation. These are termed as
group ethical theories.
The surge in definitions and also the initiatives that go in the
name of CSR, with flavours differing from region to region, implies that
what CSR means is open to contest. At the same time, diversity of issues
addressed under CSR umbrella precludes any attempt towards a singular
universal definition. Gallie (1956) proposed the essentially contested
concepts (ECC) theory to address concepts that, by their very nature,
invite perpetual disputes and are inevitably contested. CSR, on account
of factors such as diverse describability, internal complexity, open
character, aggressive and defensive uses is open to consideration for
being an essentially contested concept (Okoyo 2009).
The Debate
The debates on the role of CSR have taken place within specific
social, economic and political context, for instance, in USA during the
Great Depression (Berle 1931, Dodd 1932, Donham 1929); during the Cold
War (Abrams 1951, Spector 2006, 2008); with the onset of globalisation
(Palazzo & Scherer 2008). In case of India as well, the growing
debate on CSR and its adoption by large number of corporate
post--liberalisation can be seen in the context of the larger role being
played by the private sector in the economy. With the increasingly
receding role of the state in the country's economy and social
spheres, the corporate world, keen to exploit the available
opportunities and encash upon the liberal government outlook, has gone
all out to expand its economic frontiers by acquiring land and setting
up new ventures. CSR is many a time, thus, is used as one of the
instruments to win over the communities. At the same time becoming a
global player implies that these companies have to comply with
international standards in reporting their socially responsible
behaviour. Global compact and Global Reporting Initiatives help these
companies to project themselves as responsible corporate which do
ethical business.
There are differing views on the usefulness of CSR to business and
society. Friedman, one of the biggest critiques of CSR emphasized that
business should only take care of its business (1960). Social
responsibility thus comes from using resources and engaging in
activities so as to increase profit within the ambit of defined rules
(1970). Morris et al (2010) from Kellogg School of Management in their
study based on available data between 1999 and 2005 argue that firms
frequently use CSR initiatives as part of their "image
repertoire" when dealing with the threat of boycotts. CSR
initiatives are especially likely to be used by firms that have built
their reputation around being a "virtuous company." Crook
questions the locus standi of corporate in taking up social issues (The
Economist 2005) and that it is the responsibility of Government and its
elected representatives to set goals for society, deal with
externalities, to mediate amongst different interests, to attend to the
demands of social justice and provide public goods. The corporations
cannot take decisions on what the society wants. Opposing such arguments
is the view that business cannot neglect the long term social costs of
business and profits. This view goes further to state that the
justification of business is that it benefits society (Shaw & Berry
1992). This view thus looks at CSR as an ethical responsibility.
Who Decides?
There is increasing evidence in India that in the race to capture
greener pastures, corporate houses have been involved in unethical
dealings in collusion with the power structures of the state. India is
increasingly seeing gross violation of human rights in the form of
attack on the livelihoods of tribals and right to decent living by those
dispossessed of their land in the name of mining and other development
initiatives. Many a time the corporate houses engaged in such activities
are industrial giants and multinationals. India has seen big MNCs like
the Vedanta Group, which in connivance with the state power are involved
in violation of Forest Rights Act, Forest Conservation Act and
Environment Protection Act in Orissa in their haste to set up bauxite
mines and expand their refineries (Hindustan Times 2010). Thus the
question of deciding whether and to what extent a business is socially
responsible rests mostly with those communities and groups who are
directly affected by the business decisions of the company. Of course,
this is not to deny that there can be multiplicity of stakeholders in
any given situation.
Methodology of the Study
Fifty corporate houses were purposively chosen and contacted to
elicit their responses on their company's CSR initiatives. Those
who agreed to cooperate were administered a structured interview
schedule. The schedule focussed on the companys' profile,
information about their CSR department, their understanding of CSR and
about the initiatives taken by them under CSR. There were also questions
pertaining to the models used by them for implementation of their
initiatives, identification of stakeholders, their reporting initiatives
and the measures of success in CSR. As far as possible the heads of CSR
divisions were contacted and only in situations where the heads were not
available, the senior staff of the CSR unit was interviewed. Seventeen
corporate houses agreed to be a part of the study and their details are
given below.
Aid to Business
CSR seems to be having different meaning for different corporate
houses under study. There are broadly three categories under which these
meanings fall. First are those who look at CSR as a business decision
which adds to the company's bottom line. Four corporate houses out
of the seventeen maintain this stand on CSR as explained hereunder.
--CSR is a practice whereby the companies consider the impacts of
their activities on the community and then try to reduce the negative
impacts and maximize the positive impacts for their benefit. This
benefit is profit.
--CSR is the DNA of a company and is a hard core business decision
which is responsible for the company's financial sustainability.
--CSR is integral to value creation in business through enhancement
of human, natural and social capital complementing their economic and
financial growth in order to give the enterprise an enduring future and
also to serve a larger goal at all times.
--It is a charity which is done to ultimately get translated into
profit
Benevolence or Philanthropy?
Twelve corporate houses look at CSR as an act of charity. Yet there
is an implicit understanding among all that charity would positively
impact the business bottom-line. The responses as given are:
--CSR is a platform to help the poor (3)*
--CSR is giving back to society what society gives you (4)*
--CSR aims to provide social, environmental and economic benefits
to society
--CSR means working for the betterment of society
--CSR essentially implies working for the up-lift of communities
(3)*
* Indicate the number of companies with the response
Ethical Commitment?
This can be considered as the highest level of commitment to CSR as
this involves no ulterior motive of the corporate, where as in the other
two understandings the corporate either directly expects financial
returns or indirectly expects recognition through its benevolent
efforts. Only one organisation's response towards their
understanding of CSR falls under the category of an ethical commitment
This organisation defines CSR as:
--It is a social commitment that should be carried out without the
selfish motive of creating image or profit.
Thus, we see that for sixteen out of the seventeen corporate
houses, CSR is linked to profits directly or indirectly (i.e. through
charity). One can say that these corporate houses are guided by
enlightened self interest in their CSR initiatives.
CSR & Decision Making
The present study reveals that except for four organisations, all
other organisations have a CSR department which comprises social
workers, engineers, HR staff, corporate communications staff and
marketing professionals. Yet, it is the senior management that decides
the budget and the nature of initiatives that would be taken up under
CSR in thirteen out of the seventeen organisations. The decisions are
then implemented independent of engaging the stakeholders. In the
remaining four organisations, the staff opinion is sought as to what
initiatives they would like to suggest which may be taken up as CSR
initiatives. When the copororates were asked to identify their main
stakeholders, only ten could point out who the stakeholders were in the
CSR initiatives. Following were identified as stakeholders.
1. Employees and local communities
2. Employees, share holders, customers, community and environment
(2)*
3. Employees, customers, dealers, vendors, government, and
environment (2)*
4. Communities (2)*
5. Employees, distributors and local communities
6. Employees, communities and government
7. Farmers
* Indicate the number of corporate houses with the response
Interestingly only seven organisations consider their own staff as
stakeholders in the CSR initiatives. Only five organisations consult a
few of their stakeholders on the nature of initiatives to be undertaken.
Of these, four organisations consult their staff and one consults
farmers who are their major stakeholders. The initiatives are mostly
given shape at the head office and then launched. One organisation gives
freedom to their station CSR department to propose the nature of
initiatives and the expected financial requirements for implementation.
The remaining seven corporate houses cannot identify who their
stakeholders are in the entire process. Their interventions are based on
the area of interest of their senior management.
Nature of Initiatives
There is a variety of initiatives under the CSR in these corporate
houses. These initiatives can be broadly categorized under three heads.
First comes those that can be considered to be philanthropic. Almost all
the corporate houses studied are giving donations towards some cause or
the other. These range from donations of computers, old clothes, books
to libraries, holding blood donation camps, donations to orphanages,
hospitals, donations in cash or kind to homes for the aged and
scholarships for the weaker sections of the society especially the
scheduled castes and scheduled tribes. Donations during disasters and
free veterinary assistance were other modes of philanthropy. None of
these activities is sustainable and is more in the form of financial
contribution or contribution in kind. These initiatives have been taken
as a good cause. The second set of initiatives is those that fall in the
domain of infrastructure development. Many of the corporate houses
studied are involved in infrastructure development be it building of
roads, community centers, schools, tube wells, providing technical
assistance and infrastructure facilities in electricity generation/
distribution in select villages that are without electricity. Some are
also involved in enhancement of already existing infrastructures in the
community in the vicinity of the corporate house, for example adding
rooms or constructing separate toilets for the girls in government
school. Then come the initiatives that can be called as those aimed at
empowering communities. The initiatives taken by the corporate that come
under this category include skill building, vocational training,
education, livelihood issues, training of rural sportsmen, counseling to
parents of school going children or to the patients through help lines,
SHG formations and encouraging bee keeping and mushroom cultivation
through them, capacity building of farmers, training and employing
visually challenged people and improvement in existing health
initiatives. While vocational training by some of the organisations does
not have backward or forward linkages, the skills imparted are also not
the ones that the growing economy like India requires. Some examples of
the vocational training without backward or forward linkages are those
provided for plumbers, electricians, beauticians, tailoring, and
computer operating and driving. The communities are left to find jobs
for themselves after training. In contrast, the SHGs initiated by Dabur
India limited for bee keeping and mushroom cultivation are not only
linked to the organisation's core business but have full potential
of exploiting the existing market which is provided by Dabur and also
provide an assured income. KRIBHKO, a cooperative of farmers works and
trains them on farming techniques thus helping them to build their
strengths. Tata Indicom is training and employing visually challenged
persons for their call centers thus opening avenues for employment for
them. Much of the initiatives in the field of education are in the area
of informal and adult literacy and awareness building. Similarly, Ansal
API, which is into infrastructure development runs schools under their
CSR initiative. Interestingly, initiatives taken by Fortis Health group
such as providing on line medical tips, assistance and counseling are
considered part of their CSR.
Overlap between Core Competencies & CSR
A very crucial and important element of CSR initiatives is
reflected in the link between these initiatives and core competencies of
the firm. Management aims to link firm's capabilities with external
environment which has to be scanned to see where the organisation's
resources can provide maximum benefit to the stakeholders. This kind of
overlap is seen in the CSR initiatives of following corporate houses.
Table 2 indicates that eight corporate houses have a direct
correlation between their core competency/ main thrust area and the CSR
community interventions. This enables the organisations to strengthen
their CSR initiatives as they encash on their existing strengths.
Models, Success, Reporting & Funding
While nine organisations refused to divulge the amount earmarked
for their CSR initiatives, four organisations have indicated that a
fixed 1-2 percentage of their profits after tax is earmarked for CSR
initiatives. The remaining four have given rough estimates of the amount
spent on CSR during the previous year. Of these seventeen corporate
houses, twelve are using non-governmental organizations for
implementation of their CSR initiatives, three use employee volunteering
and one operates through their CSR department. One organisation directly
works through village leaders and community members. While those
corporates which work with NGOs for their CSR operations feel that NGOs
have the skill, knowledge and time to implement their initiatives, those
who use employee volunteering expect their employees to devote some time
in communities or in identified institutions and organisations. There
are some who engage directly with communities.
The success of the initiatives can be measured at two levels, one
at the level of effective fund utilization and other at the level of
impact. In the latter case, the stakeholders play a crucial role as only
they can give the correct feedback. The data analysis shows that only
eight organisations have audit of their fund utilization and only six
get impact evaluation of their programmes done. Of these, only four take
feedback from the stakeholders to find out their opinions and evaluation
of the interventions. The remaining three corporate houses did not
provide the required information.
The reporting here is seen in the context of whether the CSR
initiatives are reported both within the organisation and outside it.
These reports act as check on the CSR initiatives as there is a written
record of all the CSR activities and also used for enhancing
company's image. While only eight organisations prepare reports of
their activities, more than an equal number do not prepare reports. At
the global level, only six organisations are signatory to either Global
Compact or Global Reporting Initiatives (GRI).
Conclusions
The study of seventeen corporate houses in India demonstrates that
there is diversity in understanding of the term CSR. They look at CSR as
an aid to business or philanthropy or as an ethical commitment. A
majority looks at CSR as an aid to business. There is also a diversity
of activities that go in the name of CSR. They vary from one time
donations, organising camps to sponsoring causes or institutions. The
organisations may go for infrastructure development and also take up
initiatives that assist in empowering communities. A glance at some of
the CSR initiatives of the corporates shows that these are the
interventions that the Government of India should undertake. While
construction and maintenance of roads is the responsibility of the
government for which taxes are collected, adding some rooms or building
boundary wall or toilets for the government schools may be welcomed by
the children and school authorities but it amounts to making the
government less accountable at least in areas for which the money comes
through budgetary allocations. In such interventions, while the
companies get credit in terms of brand image and goodwill in the
community, the state gets to do away with its responsibility and may not
spend money on the very infrastructures and improvements for which it
has collected taxes from the citizens. It is the citizens who get to be
on the debit side as the taxes paid by them may not be effectively
utilized.
While duplicity is seen in some of the initiatives undertaken by
the corporate in areas like for example education and infrastructure
development, yet there is no collective effort by the corporate to make
a sound and concentrated impact largely because whatever reasons the
corporate may give for their CSR initiatives, it is an exercise in image
building and hence each corporate would like to be separately known for
it.
The study also shows that corporates lack clarity on who their
stakeholders are and consequently their interventions through CSR may
lack focus. Most of the initiatives get their life in closed boardrooms
and are then implemented. Interestingly, for many CSR implies
initiatives that reach out to communities, to the external institutions
and does not imply covering their own staff. The organisations are also,
in many cases, relying on NGOs to fulfil their obligations. The reasons
cited for the same are that these organisations are rooted in the
communities and hence best know the communities, their resources, issues
and needs. Also, as there are NGOs specialising in specific issues and
causes, by engaging NGOs one could get expertise to tackle those CSR
initiatives that require in depth knowledge of the problems and issues.
Thus, this serves as a symbiotic relationship. The NGOs get funds to run
their programmes from the corporate and the corporate get implementing
partners. In a country like India it is a big and debatable question
whether the NGOs should take up the role of implementing partners of the
corporate as this co-option has potential to weaken the resolve of the
NGOs to take up radical issues that are linked to the basic structure of
the society.
Social responsibility is increasingly becoming an accountable
process, yet the study shows that there are few impact evaluation and
social audit exercises undertaken by the corporate and very few prepare
reports of their CSR initiatives.
No discussion on CSR in India is complete without bringing into
focus the specific context in which CSR is taking shape in India. While
the concept of welfare state in India is gradually giving way to an
increasing role of the private sector in all aspects of life, thus
leaving a huge arena for private players to demonstrate their strength.
Globalisation of the economy also has its share in the spread of the
present form of CSR in India. The state is increasingly looking for
private players to bridge the existing gaps in the attempted inclusive
growth and development amongst sections of society and looks up to
corporate for public private partnerships. While the demand of the
Indian society from a socially responsible corporate in India would in
all likelihood be employment generation, that can ease out unemployment
and poverty situation, the globalised economy on the other hand is
putting pressure on the Indian corporate houses to develop an
"internationally acceptable" and "West promoted"
socially responsible behaviour. Thus, we find an increased focus on
skill building and vocational training by the corporate against the
backdrop of a jobless economic growth.
There is no denying that looking from certain perspective CSR can
be called a social construction. However, the concepts used in CSR are
not just abstracts or illusions without any reference to the 'real
world' (Kallio 2007). A global survey by the Economist Intelligence
Unit on "The Importance of corporate social responsibility"
indicated that whereas 54% of executives in 2000 said that the notion of
CSR was "central" or "important" to their corporate
decision-making, this figure had grown to 88% by 2005 (EIU 2005). Crook
(2005: 4) says that at the intellectual level "the corporate world
has surrendered" and started to praise
CSR, while at the level of action "when commercial interests
and broader social welfare collide, profit comes first," and thus
"for most companies, CSR does not go very deep." Looking at
the Indian scenario in CSR, one may not find a very different situation
because many of the corporate houses divert a fixed percentage of their
profits to CSR thus making it a dependent variable rather than an
integral part of the business.
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[email protected]
Table 1: Brief Information about the Organisations Studied
Name of the Type of Main product/
organisation Organisation service
Goodyear India Ltd. Multinational Truck tyres, passenger
Corporation vehicle tyres,
Tractor tyres
Infosys Technologies Multinational Software Development, BPO
Limited Corporation services, consulting services,
IT services and engineering
services
National Thermal Public Sector Engineering, construction
Power Corporation Undertaking and operating power
(NTPC) Limited generation plants and power
consulting. Coal mining,
equipment manufacturing,
power trading, ash business
Steel Authority of Public Sector Manufactures and sells a
India Limited (SAIL) Undertaking broad range of steel products.
Xerox India Multinational Manufacturer and supplier
Corporation of printer, photocopier,
BPO, IT outsourcing
TATA Indicom Private company Tele services, internet
services
National Hydro Public Sector Power Generation
Power Corporation Undertaking
(NHPC)
Maruti Suzuki Multinational Car manufacturing
Industries Limited Corporation
Ansal API Private company Real Estate- township, malls,
Hi-tech engineering,
hospitality and entertainment.
Amway India Multinational Products related to personal
Corporation care home care and cosmetics
category. Products in the
area of nutrition, wellness,
beauty and home as well
as commercial products.
TATA Consultancy Multinational Software Consultancy
Services Corporation
Dabur India Limited Joint Venture Food products such as juices,
home made pastes, sauce,
health supplements, oral care
and digestives aurvedic and
herbal personal products,
consumer health products
and medicated oils.
Metals and Mineral Public Sector Metal Trading, minerals,
Trading Corporation Undertaking fertilizers,agro products,
Limited coal, hydrocarbons and other
(MMTC Limited) trading
KRIBHCO Cooperative KRIBHCO has a fertiliser
complex to manufacture Urea,
Ammonia and bio fertilisers
Fortis Healthcare Multinational Health care
Limited Corporation
Steria India Multinational IT services, data management
Limited Corporation and business intelligence,
infrastructure services,
testing and quality assurance,
BPO, biometrics and identity
management, enterprise
application services.
North Delhi Joint Venture: Electricity distribution
Power Limited Tata power &
Delhi Govt
Name of the Company Annual
organisation Turnover/Profit.
Goodyear India Ltd. In 2009, Goodyear
posted net sales of
$16.301 billion.
Infosys Technologies For year 2010, revenue
Limited as posted in their
website is Us
$ 4.66 billion.
National Thermal Provisional and
Power Corporation un-audited profit after
(NTPC) Limited tax for year 2009-10
is Rs 8,656.53 crore.
Steel Authority of Profit after tax for the
India Limited (SAIL) year 2009-10 is
US $ 2.2 billion
Xerox India Total revenue for the
year 2009 is $ 15,179
million
TATA Indicom INR Rs. 2,51,543
Crore (US$ 62.5 billion)
National Hydro Profit after tax for
Power Corporation 2009-10 was
(NHPC) Rs 2090.50 crore.
Maruti Suzuki Revenue of Rs 301,197
Industries Limited million during the
fiscal year 2009-10
Ansal API Profit after tax for
year 2008-2009 was
Rs 5,221.52 lacs
Amway India Sale turnover of over
Rs 800 crore in 2007
(latest data
not available)
TATA Consultancy Profit after tax in 2009-
Services 10 was Rs7,001 crore
Dabur India Limited Rs 2834.11 Crore
(financial Year 2009).
Profit after tax for
2009 was Rs 391 crore
Metals and Mineral Rs 37,000 Crore. The
Trading Corporation net profit during 2008-
Limited 09 was Rs 1402 million
(MMTC Limited)
KRIBHCO Rs 2549.42 crore in
2008-09
Fortis Healthcare Rs 160.02 crore
Limited in 2008-09
Steria India 1.8 Billion Euros
Limited in 2008-09
North Delhi Rs 223.12 crores n
Power Limited FY 2008-09
Table 2: Complementariness between
Organization's Strength & CSR Initiatives
Name of the Main product/service CSR Initiatives
organisation /Core competency that are complemented
strength by organisation's
Infosys Technologies Software Development Computer literacy
Limited
NTPC Limited Generating and Decentralised
operating power Distributed Generation
generation plants and and Supply
power consulting.
TATA Indicom Tele services Helpline for parents
and teachers,
Interactive voice
response system for
the blind
Maruti Suzuki Car manufacturing Road safety, safe
Industries Limited driving and training
for becoming drivers
TATA Consultancy Software Consultancy Computer donations,
Services computer based
literacy and e-waste
disposal
Dabur India Limited Medicines using local Health check ups, Self
herbs and honey making Help Groups-bee
keeping, mushroom
cultivation, food
preservation.
KRIBHCO Manufacture of Urea, Development of farm
Ammonia and bio- technology, capacity
fertilisers of farmers building for
agriculture
Fortis Healthcare Health care Revival and
Limited upgradation of
hospitals, Dialysis
support initiative,
heart line.
North Delhi Power Electricity Energy club for energy
Limited distribution conservation and
Electrician training.
