Making CSR Sustainable: Critical Assessment of Indian CSR Policy

and Industrial Responses

Himadri SinhaHead – Department of Research and Planning & Professor of Rural

Development

Xavier Institute of Social ServiceRanchi, Jharkhand, India

email: himadrisinha19@gmail.com /himadrisinha@xiss.ac.in

Objectives of the article

(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.

Methodology 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).

Methodology

Methods

Desk Review

Govt. CSR Policies and its

implications

Industrial responses – review of published article

Limited Field Study

Selected case studies (Access was given)

CSR Concept vis a vis GoI Policy 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

GoI Measures

Full consultation with all

stakeholders

Ethical business practices

Rights of worker & no child

labour

Human rights

Sustainable development

Economic & social

development of community

CSR Concept – Governmental Measures

CSR Concept – Weakness of GoI measur 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

Assessment of CSR Practices Only 3 parameters were considered in the current study

Community Development

Environmental Commitments Business Ethics

CSR and Industrial Responses in India Its a mix bag

Industrial Responses

Best Practices Faulty Practices

CSR – Best 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

Strong Business Ethics

Strict Code of conduct

Planned Community Development

Education

Best

educational institut

e (IISc,

TISS)

Supports 7000 plus rural

schools

HealthMultispecialty & Super-specialty

hospitals

Supports 7000 plus PHCs/CHCs

Peer group health awareness (TB/AIDS/RCH)

Integrated Dev

Environmental Measures

Green Practices

Mass plantation

Green cities/ mines/colonies

CSR – Best Practices

Aditya Birla Group

Business Ethics

Confidential

Community Development

Education

78 schools

Adult education /NFE programmes

Health

15 hospitals

Supports 5000 physically challe

nged persons

Immunization – 15000 children, 2000 preg women; 2000 TB patient/ 100 leprosy

Integrated Dev

Agriculture developme

nt

Vocational training

Environmental Measures

Limited Green Practices

Mass plantation

CSR – Best Practices

Mahindra & Mahindra

Strong Business Ethics

Code of Conduct

Community Development

Education

Talent scholarship –

300 students/year

Supports 34 rural &

urban schools

Environmental Measures

Green Practices limited to factory

area

CSR – Best Practices

Vedanta

Business Ethics

Own Code of Conduct

Planned Community DevelopmentAg

riculture

development

Around 200 villages covered under sustainable agriculture programme

Pisciculture/ Goat/Mushroom farming were promoted for youth

&

women

EducationTalent

scholarship

Supports Mid Day Meal in rural schools

Sports & games dev. programme

Model R&R

Colony Health

Mobile Health clinic

network

Campaign for STD/HIV-AIDS/Anemia/ Malaria

Environmental Measures

Green Practices within 10 km radius from plant

CSR – Faulty PracticesFaulty 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

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).

Faulty Environmental Practices

Withholding the CSR contributions from communities

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

As per NPRR 2007 of GoI,

Development of 15 km

radius is

mandatory

CSR plan – Inclusi

ve growth model

Creating

corpus fund + Annual allotm

ent

To be implemente

d through Area

Dev Council/Commtt

Infrastructure within plant &

colony

Only core area/villages

Community centres/health

centres are controlled by

companyNon implementing forest rights

act/ tribal dev plan

Using CSR funds for

Problems

Requirements

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 assisting the govt programme implementation

Transform value chain activities for the benefit of society with strategic CSR

Strategic CSR (Pro-active vigorous CSR activities)

Thank You