Corporate Social
Responsibility
Nizwra Brahma
B.Com (Hons.) IIIrd year
SGTB Khalsa College
Declaration
This to certify that project titled “Corporate Social Responsibility”
submitted by Nizwra Brahma for the partial fulfilment of the
requirements of mentorship program of study leading to the
award of B.Com. (Hons.) 2009-012 embodies the bonafide work
done by her under my supervision.
Date:
Signature of Mentor
1
DECLARATION
I hereby declare that this project work “Corporate Social
Responsibility”, which I now submit for assessment on the
programme of study leading to the award of B.Com (Hons.)
2009-012, is entirely my own piece of work and has not been
submitted in whole or in part for assessment for any academic
purpose other than in partial fulfillment for that stated above. My
indebtedness to other works/publications has been duly
acknowledged at the relevant places.
Date:
(Nizwra Brahma)
2
ACKNOWLEDGEMENT
A number of people have contributed to the completion of this
research project, and to them I am deeply indebted.
Firstly, I am very much thankful to Ms. SukhmeenChahal, my
project supervisor, for her precious time, expert guidance and
company on the entire journey through my work. I also greatly
extend my appreciation for the kindness and support that she has
shown to me at all times
I am also grateful to all the respondents for their time and
cooperation in the process of data collection. Finally, thanks to
my family and friends for their much needed support and words
of encouragement throughout the preparation of this project.
3
Contents
Introduction.................................................................................................................................................5
Future Social Trends in India...................................................................................................................6
Executive Summary.....................................................................................................................................7
Education is No.1.....................................................................................................................................7
Image Does Matter..................................................................................................................................7
Challenges Galore....................................................................................................................................8
Objectives of Study......................................................................................................................................9
Sampling Methodology.............................................................................................................................10
CSR Initiatives by Companies.....................................................................................................................11
Year of Initiation of CSR activities..............................................................................................................12
Issues Covered and Priority Areas to be Covered under CSR Domain.......................................................13
Issues currently covered........................................................................................................................13
Rationale for Selection of CSR Initiatives...............................................................................................13
Objectives of CSR Policy.............................................................................................................................14
Stakeholders in CSR Implementation Process...........................................................................................15
Outcome of CSR Initiatives........................................................................................................................15
Benefits of CSR......................................................................................................................................15
Factors Leading to Corporate Houses forming Foundations for CSR Work................................................17
AREA AND TARGET GROUPS COVERED......................................................................................................18
Geographical Areas Covered.................................................................................................................18
Target Groups Covered..........................................................................................................................18
Fund Allocation for CSR Initiatives.............................................................................................................19
Fund Allocation for CSR Initiatives.........................................................................................................19
ROLE OF THE GOVERNMENT, CIVIL SOCIETY AND COMPANIES.................................................................20
Role of the Government in CSR Domain................................................................................................20
Current and Expected Role of NGOs / INGOs in the CSR Domain..........................................................20
CHALLENGES TO CSR INITIATIVES IN INDIA...............................................................................................21
Conclusion.................................................................................................................................................23
Bibliography...............................................................................................................................................24
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Introduction
At one end of the spectrum, CSR can be viewed simply as a collection of
good citizenship activities being engaged by various organisations. At the
other end, it can be a way of doing business that has significant impact on
society. For this latter vision to be enacted in India, it will be necessary to
build CSR into a movement. That is to say, public and private organizations
will need to come together to set standards, share best practices, jointly
promote CSR, and pool resources where useful. An alliance of interested
stakeholders will be able to take collective action to establish CSR as an
integral part of doing business.
Because of the growing size and power of multinational corporate houses,
bond rating agencies and investment funds are exerting increasing influence.
In particular, they are demanding an accounting for non-financial measures
of value creation as they seek to determine risk premiums. These include an
assessment of CSR activities, as well as governance practices, management
of intellectual capital, and transparency in reporting. There are now multiple
CSR rating agencies in North America and Europe. Socially Responsible
Investment Funds (SRI’s) now consider CSR activity when deciding whether
to invest in public traded companies.
A growing trend in large multinational corporations is the establishment of
special committees within the board of directors to oversee CSR and
sustainable business practices. More and more, executive compensation is
tied to specific outcomes in these areas. Groups of corporates are being
encouraged to come together to promote CSR. In 2006, Europe created the
European Alliance for CSR. It currently consists of 70 multinational corporate
houses and 25 national partner organisations and has become a unique
resource for building capability in CSR.
5
Future Social Trends in India
The CSR survey revealed, not surprisingly, those organisations targeted
most of their activities close to home — providing services for people who
live in villages, towns, and districts near where the organization operates.
Education, health, and the environment are the top priorities. More than
likely, these priorities will continue. There is one social trend in India that
looms larger than all others —the population tsunami. The current
population of India is now over 1.1 billion. Demographers now tell us that
India will overtake China by 2026 as the world’s most populous nation with
almost 1.5 billion people.
At the time of Independence in 1947, India’s population was approximately
350 million. Between now and 2026, India will add almost as many people
as there were in the entire nation in 1947. The implications of this are
staggering. Will the additional demands for food, water, housing, education,
and health care overwhelm the existing infrastructure? Or can all
stakeholders work together to build a literate, healthy, capable society with
enough jobs to meaningfully employ all those seeking work? The greater the
challenges, the greater the ingenuity required.
6
Executive Summary
The involvement of the corporate sector in CSR seems to have picked up
after 1991 as most of the participating organisations started CSR during
1991-2005. About two-third of the private multinational agencies and
private national agencies initiated CSR during this period, and one-third of
the PSUs too started their CSR programmes during this period. In half of the
cases, people living near the organisation or industry are covered as part of
the CSR programmes. The other groups under CSR initiatives include poor
people living in rural areas, tribal people, people selected in consultation
with NGOs and communities selected randomly. In the case of PSUs,
coverage of people living near the industry or organization and rural
population is more, while selection of people through Nongovernmental
Organisations (NGOs) is more common in the case of private enterprises.
Education is No.1
The selection of issues under CSR by organisations depends on host of
factors including organisational mandate, current relevance of issues and
demand from the community. The priority areas that the respondents felt
ought to be covered under CSR initiatives include education, environment,
health, women empowerment, livelihood promotion, sanitation,
microfinance, HIV/ AIDS, child care, slum improvement, disaster
management and agricultural development.
Image Does Matter
For most companies, CSR is a sure way to improve their public perception,
and over half of them do so to brand the company. Only one-tenth of the
organisations stated that they are into CSR because it is mandatory, and
just about two-fifth of them do it for tax exemption. Public goodwill and
branding are high on the agenda in the case of private multinational
agencies, and improved perception about the company is the motivation in
the case of PSUs. Currently, NGOs and International Non-governmental
Organisations (INGOs) are involved in implementation of development
projects, capacity building of beneficiaries, planning and execution and
scalability of projects. The organisations surveyed felt that NGOs and INGOs
ought to be more involved in project implementation, providing voluntary
support to corporate agencies, monitoring and evaluation of the ongoing
projects.
7
Challenges Galore
Some of the challenges faced by the companies in implementing CSR
programmes pertain to community participation and capacity building within
the organisation as well as those of NGOs that they tie up with. Especially in
the rural areas, companies face the problem of lack of well-organised civil
society groups that could identify the real needs of the society and work to
address them. Lack of transparency too is a problem they face. Companies
also identified the problem of having no way of scientifically researching and
gathering evidence on the impact of their CSR initiatives on the communities
they target and work for. Without knowing the impact of their programmes,
they felt it was difficult to tailor the programmes according to the needs of
the people they were meant for. The respondents rued that event-based
activities, which did not go a long way, narrowed the role of CSR. They also
felt that the non-availability of clear guidelines on CSR and lack of consensus
regarding areas of focus too hampered the ability of CSR initiatives to make
a greater difference to the lives of the needy and the underprivileged in their
respective areas of intervention.
8
Objectives of Study
Some of the important and broad-based objectives identified by the study
are as follows:
• To provide an understanding of the role played by corporate houses and
public sector undertakings
• To understand the perceptions amongst public about CSR
• To provide data on CSR practices in India and the role of Government in
strengthening CSR and to set the stage for interaction among various
stakeholders
• To understand various issues of social relevance under CSR
• To elicit views of business houses on CSR policies and role of NGOs and
review of existing regulatory mechanism, and
• To set a stage for interaction amongst various stakeholders and find out
challenges and recommend remedial measures.
9
Sampling Methodology
Data Used:
Secondary data sources have been used. Search engines like Google and
Wikipedia have been used to collect the information.
A survey that has been done by Times Foundation in partnership with TNS
India has been used to present different facts and figures.
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CSR Initiatives by Companies
A survey done byTimes Foundation, in partnership with TNS India, shows
that 90 percent of the replied in affirmative. Analysis by types of
organisations indicates that all the PSUs, about four-fifth of the private
national agencies and most of the private multinational agencies are
involved in CSR initiatives.
105
100
100
95 94
90
85
85
80
75
Private Multinational Private Agency PSUs
Agency
11
Year of Initiation of CSR activities
The involvement of corporate sector in CSR picked up after 1991 as three-
fifth of them started CSR activities and initiatives during 1991-2005.
Analysis by types of organisation reveals that about two-third each of the
private multinational agencies and private national agencies initiated CSR
activities during this period, while one-third of the PSUs also reported
likewise. Some of the PSUs started their CSR initiatives during 1971-1980
and 1980-1990.
Year of Initiation of CSR Initiatives (in percent)
40
37 37
35 3333
30 31
30
27
25
PSUs
20 18 18 18 Private Multinational Agency
17
National Agency
15
All
10 9 9 10 9 9 9 9 9
6 5
5 3
0
0
Before 1970 1971-1980 1980-1990 1991-2000 2001-2005 2006
onwards
12
Issues Covered and Priority Areas to be Covered under
CSR Domain
Issues currently covered
Education, health, environment, livelihood promotion and women
empowerment are the major thrust areas currently covered under CSR
initiatives of participating organisations. Proportion of organisations covering
themes of microfinance and livelihood promotion is less in case of private
multinationals and PSUs respectively.
Issues covered under CSR Initiatives
40
82
45 Education
Health
Environment
Livelihood Promotion
Women Empowerment
55 Micro Finance
77 Sanitation
57
66
Rationale for Selection of CSR Initiatives
Regarding the rationale for selection of initiatives covered under CSR by
participating organisations, the analysis indicates that the selection of
initiatives under CSR by the organisations depends on host of factors
including organisational mandate, current relevance of issues and demand
from the community.
13
Objectives of CSR Policy
The vision and objectives of CSR policy of the organisations are varied and
diverse and therefore can broadly be categorised in the following manner:
• CSR policy aims to uphold commitment to complement the efforts of the
Government in the nation-building process.
• The policy aims at providing localised rural employment and livelihood
opportunities to empower rural communities.
• The policy is committed towards raising the quality of life and social well-
being of community by contributing to basics of life in harmony with nature.
• The policy aims at creating business leadership ensuring social and
environmental sustainability in a responsible manner. This also aims at
upliftment of the deprived and creating a sustainable world in which NGOs,
Government and other stakeholders would work together to achieve
inclusive growth and equity.
• The policy also aims at improving the lifestyle of rural people, helping in
upliftment of the poor, especially scheduled caste and scheduled tribes, and
promoting education among slum dwellers.
• The policy adopts triple bottom line accounting methods expanding the
traditional reporting framework to take into account environmental and
social performance in addition to financial performance.
• The policy aims to create sustainable economies and transform stagnant
lives into active partnerships through synergised proactive handholding in
areas of infrastructure, education, training, health and environment. The
policy also aims at fostering innovation by partnering
with Indian universities and providing digital inclusion for people who do not
have access to Information and Communication Technologies (ICT).
• The policy pledges to work with international communities towards
mitigating global, human and environmental concerns.
• The participating respondents also viewed CSR policy of the organisations
as building blocks between communities and companies. The survey also
highlights that the vision and objectives of the organisations on how they
need to pursue CSR initiatives for the beneficiaries will play a key role in
streamlining and implementing CSR projects. The role of the Government as
‘enabler’ to deepen CSR engagement with communities was particularly
mentioned by all participating organisations.
• It is also found in the survey that respondents remain optimistic about the
ongoing interventions of the corporate houses on critical human
development issues such as education, health and environment.
It is also reported that there are already visible imprints of successful
engagement between local communities and businesses. The role of State
seen to be slowly aligning itself with community and locally operating
businesses is a welcome revelation of the survey.
14
Stakeholders in CSR Implementation Process
The CSR initiatives are implemented through companies own CSR project
managementinitiatives, voluntary organisations and by giving financial
support directly to community or community-based organizations. Most of
the participating organisations implemented regular programmes whereas a
small number of organisations implemented one time CSR events.
Outcome of CSR Initiatives
Benefits of CSR
CSR is seen as a catalyst in bringing positive social change. About three-fifth
of the organisations work on CSR to improve perception about the company,
while more than half do so to brand the company among people. Tax benefit
under 80G is a motivating factor in case of two-fifth of the organisations,
while one-tenth of the organisations reported to be taking up CSR work as it
is mandatory in their case.
Possible Benefits of CSR (in percent)
70
59
60
54
50
43
40
30
20
13
10
0
Mandatory by Govt. To get Tax Benefits To Brand Company Improve Perception
among People about company
15
Though goodwill is a common factor of CSR initiatives among all the three
types of organisations, branding seems to be higher on agenda in case of
private multinationalcompanies. On the other hand PSUs seem to be more
concerned about improving perception of the company in the eyes of the
public and their stakeholders.
Other possible benefits highlighted by the participating respondents include
the following:
• Positive and long-term relationship with communities
• Nation-building and prosperity of region of their operations and activities
• Providing support where Government’s support is inadequate and limited
• Helping supply chain management and
• Supporting creation of a healthy human resource base for the corporate.
16
Factors Leading to Corporate Houses forming
Foundations for CSR Work
According to the survey findings, the factors which lead the corporate
houses to form foundations for CSR-related work, include the following:
• Exclusive focus on CSR initiatives and activities
• Demarcation of commercial activities from the social activities
• Genuine social concerns for community
• Transparency in CSR activities and
• Generation of funds to support CSR activities
17
AREA AND TARGET GROUPS COVERED
Geographical Areas Covered
According to the survey done by Times Foundation, more than two-third of
the organisationscover 1-5 states, while two-fifth of the organisations cover
1-5 districts. Half of the organizations cover 1-3 towns and more than one-
fourth cover 1-10 villages.
Target Groups Covered
The findings of the survey also suggest that more than half of the
organisations cover people living near their organisations. The other groups
covered include poor people living in rural areas and tribal areas. Two-fifth
of the organisations indicated that they select the people in consultation with
NGOs while one-tenth select the communities randomly. In the case of
PSUs, coverage of people living near organizations and rural population is
more common while selection of people through NGOs is more common in
case of private sector.
Target groups covered under CSR
60
40
20
0
18
Fund Allocation for CSR Initiatives
In the survey done by the Times Foundation, more than two-third of the
organisations surveyed replied in affirmative on being asked if they have
separate allocation of funds towards CSR implementation. This was reported
more in case of private multinational agencies(81 per cent) followed by PSUs
(73 per cent) and private national agencies recording the lowest (59 per
cent).
On being further asked about the average percentage of annual budget
allocated for CSR initiatives in the last three years, more than half of the
organisations did not provide any specific information as participating
respondents felt that there is no relation between CSR allocation and annual
budget.
The respondents also argued that there are no specific budgets set for CSR
initiatives (14 per cent) and also suggested that allocation of resources for
CSR activities depends on the decisions of the board and the management
(13 per cent). One-tenth of the organisations did not provide any
information on the issue.
Fund Allocation for CSR Initiatives
90
80
70
60
50 all
Multinational agency
40 National Ageny
PSUs
30
20
10
0
Yes No Not stated
.
19
ROLE OF THE GOVERNMENT, CIVIL SOCIETY AND
COMPANIES
Role of the Government in CSR Domain
The Government has a role to play in providing facilitation to the agencies
that are involved in the implementation of various CSR initiatives. Role of
the Government in ensuring implementation of CSR initiatives, capacity
building and monitoring was adequately highlighted. The Government should
play a positive role in enabling CSR initiatives of the corporate houses
including policy development as the major area of its involvement
followed by capacity building, regulation and monitoring.
Current and Expected Role of NGOs / INGOs in the CSR Domain
Non-governmental organisations (NGOs) and international nongovernmental
organisations (INGOs) are currently involved in project implementation when
funded, capacity building, and planning. NGOs should be involved in
providing voluntary support to corporate agencies, and capacity building of
local communities. It is also suggested that NGOs/ INGOs should play more
active voluntary role and help build the capacity of the ground development
team for effective delivery of results and effective buy-in of the companies’
CSR programmes.
20
CHALLENGES TO CSR INITIATIVES IN INDIA
The challenges faced by organizations when practicing CSR are listed below:
• Lack of community participation in CSR activities: There is a lack of
interest of the local community in participating and contributing to CSR
activities of companies. This is largely attributable to the fact that there
exists little or no knowledge about CSR within the local communities as no
serious efforts have been made to spread awareness about CSR and instill
confidence in the local communities about such initiatives. The situation is
further aggravated by a lack of communication between the company and
the community at the grassroots.
• Need to build local capacities: There is a need for capacity building of the
local non-governmental organisations as there is serious dearth of trained
and efficient organisations that can effectively contribute to the ongoing CSR
activities initiated by companies. This seriously compromises scaling up of
CSR initiatives and subsequently limits the scope of such activities.
• Issues of transparency: Lack of transparency is one of the key
issuesbrought forth by the survey. There is an expression by the
companiesthat there exists lack of transparency on the part of the local
implementingagencies as they do not make adequate efforts to disclose
informationon their programmes, audit issues, impact assessment and
utilisation offunds. This reported lack of transparency negatively impacts the
process of trust building between companies and local communities, which is
keyto the success of any CSR initiative at the local level.
• Non-availability of well organised non-governmental organisations: It is
also reported that there is non-availability of well organised
nongovernmentalorganisations in remote and rural areas that canassess and
identify real needs of the community and work along withcompanies to
ensure successful implementation of CSR activities.This also builds the case
for investing in local communities by way ofbuilding their capacities to
undertake development projects at locallevels.
• Visibility factor: The role of media in highlighting good cases ofsuccessful
CSR initiatives is welcomed as it spreads good stories and sensitizes the
local population about various ongoing CSR initiatives ofcompanies. This
apparent influence of gaining visibility and brandingexercise often leads
many non-governmental organisations to involvethemselves in event-based
programmes; in the process, they often missout on meaningful grassroots
interventions.
21
• Narrow perception towards CSR initiatives: Non-
governmentalorganisations and Government agencies usually possess a
narrowoutlook towards the CSR initiatives of companies, often definingCSR
initiatives more as donor-driven than local in approach. As aresult, they find
it hard to decide whether they should participate in such activities at all in
medium and long run.
• Non-availability of clear CSR guidelines: There are no clear cutstatutory
guidelines or policy directives to give a definitive directionto CSR initiatives
of companies. It is found that the scale of CSR initiativesof companies should
depend upon their business size and profile. Inother words, the bigger the
company, the larger its CSR programme.
• Lack of consensus on implementing CSR issues: There is a lack
ofconsensus amongst local agencies regarding CSR projects. This lack
ofconsensus often results in duplication of activities by corporate housesin
areas of their intervention. This results in a competitive spirit betweenlocal
implementing agencies rather than building collaborative approacheson
issues. This factor limits company’s abilities to undertake impactassessment
of their initiatives from time to time.
22
Conclusion
CSR is not new to India, companies like TATA and BIRLA have been imbibing
the case for social good in their operations for decades long before CSR
become a popular cause. Inspite of having such life size successful
examples, CSR in India is in a very nascent stage. It is still one of the least
understood initiatives in the Indian development sector. It is followed by a
handful of public companies as dictated by the very basis of their existence,
and by a few private companies, with international shareholding as this is
the practice followed by them in their respective foreign country. Thus the
situation is far from perfect as the emphasis is not on social good but rather
on a policy that needs to be implemented.
A lack of understanding, inadequately trained personnel, non availability of
authentic data and specific information on the kinds of CSR activities,
coverage, policy etc. further adds to the reach and effectiveness of CSR
programmes. But the situation is changing. And CSR is coming out of the
purview of ‘doing social good’ and is fast becoming a ‘business necessity’.
The ‘business case’ for CSR is gaining ground and corporate houses are
realising that ‘what is good for workers - their community, health, and
environment is also good for the business’.
23
Bibliography
Web Sources:
www.google.com
www.wikipedia.com
www.timesfoundation.org
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