India's Best Companies For CSR 2014: How the 100 firms were selected
(We have attempted in our…)
By Utkarsh Majmudar, Namrata Rana and Neeti Sanan
Corporate India has seen in the last decade that the path towards growth is not linear. Expansion means a constant hunt for resources that go into manufacturing and invariably a conflict between man and nature.
The western world has simplified much of this debate into the climate change challenge which rests on this simple logic. The Indian challenge and that of any developing country like ours is much more complex. We need food for our teeming millions, education for our children and work for an increasingly young population.
While good governance and far reaching policies are part of the answer, much more needs to be done and the new Companies Act has asked Corporate India to step in with the provision that companies invest 2 per cent of their net profits in CSR.
With this the conversation in corporate circles has moved beyond 'should CSR be mandatory' to 'what should we do and how'? Indian companies are now new to sustainability reporting. In fact, there are companies that have been generating sustainability reports for ten years or more.
Global Reporting Initiative (GRI) that forms the basis for this reporting has several parameters that are far in excess of what the Indian Companies Act prescribes. It covers sustainability and CSR issues while at the same time also looking at employee standards, health and safety issues and much more.
Also read: India's Best Companies For CSR 2014
We have attempted in our study to examine GRI reports and publicly disclosed information online and via annual reports under the CSR lens. We believe that it is not sufficient for companies to merely invest in CSR projects and meet the 2 per cent norm, but we need to understand whether CSR is looked at strategically.
Do companies have a CSR policy? Is there board oversight? Is CSR information reported? And more than all this, do CSR activities cover all stakeholders? The study therefore examines and ranks companies on the basis of four criteria. These criteria are assigned weights of 20 per cent, 10 per cent, 50 per cent and 20 per cent respectively and form the basis of our ranking.
The study also draws on strategic frameworks like the Shared Value Framework to examine data. We rank companies on their focus on CSR and sustainability by creating a combined score that weighs each of the four parameters.
The scores are arrived at by evaluating each company's sustainability/GRI report by an analyst who scored based on a number of dimensions under of the four parameters. The scoring was kept objective by requiring the analyst to score based on the presence or absence of the dimension.
Also read: CSR for Mahindra Group is a mix of strategic philanthropy, shared values & sustainability
For example, if the company's website provided sustainability/GRI report on the website, then it received a score of 1 on that dimension else the analyst scores it 0. After the analyst has completed the review of one company, another analyst reviews the scores for a quality check.
Where there are differences of opinion on a score, they are resolved through mutual agreement or reference to the authors. Where sustainability/GRI reports were not available data was sourced through annual reports and websites.
The study looked at top 115 companies to arrive at the ranking. It covers industries as varied as automobiles, banks, diversified, FMCG, infrastructure, information technology, metals and mining, oil, power, steel, pharmaceuticals, telecommunications and others.
(From left: Utkarsh Majmudar and Neeti Sanan are faculty of IIM Udaipur. Namrata Rana is Managing Director of Futurescape.)
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