Saturday, September 24, 2016

CSR: an underrated approach to sustainable progress

CSR: an underrated approach to sustainable progress

The term corporate social responsibility (CSR) might have become popular in recent years, but it has existed in India, in different forms, for many decades now. For example, in the late 1800s, much before the multinational corporate system was in full swing in India, affluent merchants and businessmen shared a part of their wealth with the poor by helping them in times of drought and famine or by constructing temples. It was charity back then; it is responsibility today.
Image : Flickr
Image : Flickr
CSR is a commitment on the part of companies to contribute to the development of society as well as ensure ethical and sustainable business practices. In the years leading up to Independence, CSR as we know it today began to take shape with foremost industrial enterprises setting up trusts for education and research. Companies went from simply donating to a cause to starting institutions and programmes for development themselves.
A corporate organisation actively involved in the betterment of its stakeholders and the community at large tends to have a stronger public reputation. It is beneficial not just to the society but the company as well, which will attract more consumers and investors. The extent of CSR activities depends upon the size of the company as well as their profit. The greater the profit, the larger the scale of such projects. Regardless, the efforts of corporate organisations, big or small, can go a long way in the sustainable improvement of communities.
For a long time, CSR activities were voluntary. Several major community projects, which are functional even today, were started before CSR was made binding by law. For example, Tata Chemicals introduced the ‘Save the Whale Shark Campaign’ in 2004 to create awareness about the vulnerable species and conduct scientific research for their survival. The project helped save close to 200 sharks since its inception. Similarly, Mahindra & Mahindra set upProject Nanhi Kali under the K.C Mahindra Education Trust in 1996 to provide primary education to underprivileged girl children in the country. Today, more than one lakh girlshave been educated through the programme.
With the passing of the new Companies Act 2013 however, CSR has become mandatory for businesses with a specific annual turnover, worth or profit margin. Two percent of their profit after tax has to be directed towards issues like education, health, women empowerment, poverty alleviation, ecological sustainability or the Prime Minister’s National Relief Fund.
Corporate establishments now have separate CSR committees that are responsible for the planning and execution of such activities. Compulsory CSR is an assured and additional line of funding for state development. When the government falls short, corporates can help make up for it. In fact, after the act was implemented, the average spending of public sector firms on CSR saw a tremendous rise from 25 million rupees in 2012 to 147 million in 2013. Companies too can increase their profits by linking CSR initiatives to their products and services. For example, a company that uses eco-friendly methods of production or donates a certain amount of money from each product to a charity or NGO is likely to do better than its competitors.
The Tata group, which is one of the largest MNCs in the world is known for its CSR, especially for its strong commitment to sustainability. In the 2013-14 year, the companyspent 1,000 crore rupees on its social projects. Its key areas of interest are education, skill development, environment, education, infant mortality and protection of girl child. Unilever’s initiatives are also a leading example of the positive impact corporates can have on sustainable development. The company’s Sustainable Living Plan aims to enhance thehealth and hygiene of over a billion people by 2020 and reduce its impact on the environment by 50 percent by 2030.
Unfortunately, not all companies meet their requirements for CSR. According to a study by Futurescape, IIM Udaipur and the Economic Times, only 18 percent of the 216 surveyed companies fulfilled the two percent mandate. The CSR law has definitely increased the pressure on businesses, especially those who weren’t involved in it earlier. Lax monitoring can result in the bypassing of rules or inclusion of non-CSR spending under that of CSR on paper by some companies. Hence, the government should strictly ensure accountability and transparency in all CSR transactions for it to be a success.
Corporates need to understand their responsibility to the environment and society as well, because ultimately their survival depends on the existence of a sustainable world. United Way Worldwide, a non-profit organisation that mobilises citizens to take action for development, encourages companies to be socially responsible and partners with them to implement community development programmes. Its Bengaluru chapter’s flagship campaign ‘Wake the Lake’ has successfully brought together the civic body, businesses and citizens to save the city’s dying lakes.
CSR has great potential when it comes to sustainable progress and is capable of revolutionising the landscape. Corporates can relieve the government of a part of its burden as well as successfully involve the community in its progress. An ideal partnership between the government, citizens, NGOs and corporate companies will surely bolster inclusive growth and development in our nation.

Global chemical firms focus on India to promote TfS for sustainable supply chains

Global chemical firms focus on India to promote TfS for sustainable supply chains

Many Indian companies with large international exposure are showing their willingness to join Together for Sustainability (TfS) - a global initiative aimed at chemical suppliers

Handshake image via Shutterstock
Sustainability image via Shutterstock

With global chemical companies making ambitious growth plans, they are also taking steps to increase efficiency and improve productivity with minimum carbon footprint. For this, they are ensuring that processes are adopted not just within their production facilities but also beyond their factory boundaries. These chemical firms are increasingly taking steps, individually or in groups, to augment sustainability in their supply chains. 

One such initiative is (TfS), established in 2011 by six global chemical companies to create benchmarks for supply chains. has developed and implemented a global program to assess, audit and improve sustainability practices within the supply chains of the chemical industry. 

The initiative is increasingly gaining traction among the chemical industry as membership has more than tripled in the last five years to 19, with companies such as AkzoNobel, Arkema, BASF, Bayer, Clariant, Covestro, Evonik, Henkel, Lanxess, Solvay, etc, as its members. 

has established a standard approach for assessing and improving the sustainability performance of suppliers within chemical industry supply chains. Its assessments and audits are conducted to a pre-defined set of criteria and then shared across members, improving efficiency for all involved. The members currently share approximately 5,500 assessments and 580 audits.

India on a sustainability path
At the recently concluded India Chem 2016 conference, Union Minister for & Fertilizers Ananth Kumar stated that the Indian chemical industry is expected to grow at 9 percent annually to become a $ 226 billion sector by 2020 from present $ 147 billion, driven by growth in end-use industries and government initiatives. As India gears up to corner large pie of the global chemical industry market, it will have to align its manufacturing processes to international standards in terms of quality as well as sustainability quotient. 

Indian companies having large international exposure are increasingly showing their willingness to join TfS. “We have already started to implement our supplier engagement program in India. Approximately 300 suppliers have been assessed and 28 sites of Indian suppliers have been audited. We currently have more than 25 approved auditors in India that can conduct audits,” said a official. Due to the importance of the Indian market and supplier base, the members have chosen Mumbai as location for this year’s supplier conference, to be held on September 20, 2016.

With global companies looking at alternative avenues to source their raw materials, India, with its diversified manufacturing base that produces a wide range of products, has the potential to emerge as their reliable supplier. As a result, members are also looking to promote this initiative among their Indian suppliers. 

aligns well with our goal of responsibly procuring goods and services, along with partnering with supplier companies to standardise various processes and services. We are a part of the Indian chemical industry, which is setting global benchmarks when it comes to sustainability. Atherefore becomes imperative to the process. We are pleased to partner with globally and in India, to develop and implement a program to assess, audit and improve supplier sustainability practices,” said Biju Mathew, head - procurement, South Asia.

Through resources can be used more efficiently and with a minimum of administrative effort, among the member companies and their suppliers. This helps in better collaboration between member companies and their suppliers. “Our combined efforts help in providing standardised sustainability assessments and audit data of suppliers, while adhering to all compliance requirements; thus simplifying vendor review process. This leads to enhanced collaboration between member companies as well as suppliers, at an international level and will play an important role in developing a stronger future for the chemical industry,” added Mathew.

The suppliers’ perspective
Through TfS, the member companies have invested in developing a global program to conduct audits and assessment under pre-defined criteria on management, environment, health & safety, labour & human rights, and governance issues for their suppliers. offers single platform to assess supplier credibility for procurement, thus avoiding double audits and assessments for suppliers opting for this process. It also helps suppliers to engage with customers on sustainability requirements and build long-term business relationships with customers.

“Sustainability of business is must for all stake holders which is essential for business growth in global scenario. To become a preferred supplier Limited understood the significance of  TfS,” said Jayesh Ashar, chief operating officer, Ltd (VOL), which has opted for audit. 

VOL, a specialty producer with presence in over 22 countries, is one of the highest rated suppliers for TfS. This has helped the company to immensely enhance its exports business and to be among the top suppliers to the world’s leading chemical companies. 

“Our sustainability program is an overarching framework that supports our long-term business strategy and drives continual improvement. Sustainability is our business, which is reflected in our approach and structure. Clients, suppliers, communities and employees are part of our value chain. Engagement strengthens our understanding of stakeholder priorities. We place extraordinary focus on health and safety in everything we do, guiding principles and values drive our sustainability performance. Auditors audited our performance on all these fronts & get satisfied,” commented a VOL official. 

A windfall of opportunities awaits Indian chemical companies opting for as this initiative becomes a standardised platform for suppliers. This will also help them to be a part of the process of building supply chains throughout the global chemical industry.

Business needs and social good are in synergy

Business needs and social good are in synergy

By Sajid Ahmed

You want to help. Your heart is in the right place. You come with a pedigree. You are talented. You want to live with a spirit of generosity and integrity. Now what?

First, we must accept and concede that the technology to feed, cure, educate, transport and sustain 1.3 billion Indians does not exist yet. We cannot declare victory on a social cause. All we can hope for is to keep shifting the equilibrium through a series of small upgrades.

The pivotal challenge is to decide on the best ways to accomplish these upgrades — access to food, water, healthcare, safety, dignity and freedom. Where do we look for solutions? So far, we have found hope in the energy and enthusiasm of non-governmental organisations (NGOs), gracious government programmes, generous philanthropists, and other noble social outfits. Their abundant generosity has seen a consistent rise paralleling India’s economic growth. This has not translated into the results we hoped for, at least not at the pace we expected.

Whether you are an individual or an established social organisation, a corporate management approach to charity can help organise and simplify the process.

India is home to the largest number of registered NGOs. The heroic efforts of the government’s various projects like village outreach and childhood education initiatives are admirable. Social organisations are at the forefront of both social welfare and social reform. The altruism of our movie stars and cricketers eclipses their performances on the screen and the field. Yet, progress is neither proportionally fast nor sustainable because the cycle of fundraising has to be repeated periodically with unpredictable results, with no resources to scale. Scale is what business does best.

Many see business as the problem rather than a solution. Think of banking, the drug industry, the fast-food industry, the furniture industry or any other kind of manufacturing and you can see the justification for this attitude. Greed and exploitation mark most people’s perceptions of business operations — but that is a gross distortion of the role of business. It is true that profit motivates businesses to create resources. All wealth is created by business and only business can create, sustain and scale resources. It is this very repetition and scalability that moves the mass of humanity forward.

Donations, subsidies and exemptions can never be enough to solve extreme poverty. Moreover, it is disheartening that we tend to turn a blind eye towards the results after we receive our tax exemptions and accolades. Programmes like Corporate Social Responsibility (CSR), which urge businesses to give more and get more involved in social issues, have started yielding benefits in finite silos. For all its limitations, a business solution to social issues is the only self-sustaining one and by far the fastest one, considering that the cost of improving lives in India is startlingly low compared to other countries.

Far from being out of sync with each other, business needs and social good are in synergy. Lacking is the knowledge and awareness on ways to address social issues with a business model. Business owners must take the responsibility of good fortune and see themselves as agents of change and see philanthropy as the market for love and care. The most effective changes so far have come from partnerships between NGOs, governments and businesses to collaborate and share knowledge and techniques to scale.

The activist Dan Pallotta urges that in addition to businesses seeing themselves in a new light, the rest of us also need to look at non-profits differently, letting go of our many biases concerning their management.

Making money in the non-profit sector is uncomfortable for many. While we understand completely the need to make money in the for-profit sector, we treat the pursuits of doing well for oneself and doing well for the needy as mutually exclusive. Why is that?

Another bias is our stringent intolerance of operational costs and overheads in the use of our charity money. Advertising and marketing are as important in the non-profit sector as in the for-profit sector; yet our attitude becomes tight-fisted when we hear of money spent on promoting non-profits. How else will a non-profit raise awareness and donations?

Overhead costs have long been cursed for taking a percentage away from actual charity, but there is no distinction between the two. When we stop looking at overheads and start looking at impact, we realise that overheads allow charities to scale. Without overheads, charities would only have the seed capital collected from donations. Fundraising is an overhead and it allows charities to multiply seed capital.

Lastly, innovation in the non-profit sector is curbed because failure can put your character into question. Prohibiting failure kills innovation. An encouragement to take risks can generate new revenue ideas just like in the for-profit sector.

Our ability to solve social ills has not kept pace with our ability to create them. We need business leadership to step up in finding a cause and to support it consistently, because sustainable funding is a problem for all non-profits. As with any new venture, a savvy investment is one that yields maximum impact. Corporations can encourage accountability by requesting annual reports from the charities they support — and then measure effectiveness and impact, giving priority to numbers.

Corporations will have to take the entrepreneurial risk to fuse business and social issues. We need leaders who understand the new reality, and are audacious enough to break the mould of traditional thinking, to use the scientific method to test new ideas for social change and, above all, to use reason and empathy.

Miserly India Inc.: 66% companies don't spend compulsory amount on CSR

Miserly India Inc.: 66% companies don't spend compulsory amount on CSR

Indian companies ignoring Corporate Social ResponsibilityFile photo
Ever since the Companies Act came into effect in 2013, two-thirds of Indian companies have failed to comply with the mandatory 2% expenditure on Corporate Social Responsibility (CSR). This includes 32 of 50 NIFTY companies.
This information was revealed on Wednesday in a report titled "CSR in India, 2016", by Praxis India and Corporate Responsibility Watch at New Delhi. The report also exposes the low representation of women in corporates, which is mandated under Companies Act, 2013.
Here are some interesting findings from the report:
6,500-10,000 crore
  • Estimated amount of CSR expenditure by the top 100 listed companies in 2015, according to the Indian Institute of Corporate Affairs.
  • When the Companies Act came into effect, it was estimated that Rs 15,000 to Rs 25,000 crore would be spent.
  • The Ministry of Corporate Affairs sent a show cause notices to more than 100 companies for not meeting expenditure standards.

  • Only one company out of 100 analysed in the report involved communities in designing CSR projects.
  • Only 17 of the 100 companies carried a 'need assessment' for CSR projects.
  • Only 22 companies have options of independent assessment of projects by external audit agencies.


  • Only two of 98 Indian companies had more than 30% representation of women in 2014-15.
  • The Companies Act, 2013, also mandated that there should be representation of women in the board of directors of a company. The deadline was October 2014, and was later extended to April 2015.
  • However, despite two deadlines and threats of fines, 247 out of 1,451 companies did not comply.

How is CSR Law driving the Corporates towards Shared Value Approach?

How is CSR Law driving the Corporates towards Shared Value Approach?

During the last three decades, there has been significant changes globally regarding advancement of technology, globalization of markets, globalization of production, and growth of enterprises. Despite all these so-called achievements, the gap between developed and other economies is widening. The gap between wealthy and poor is growing. The environmental degradation is becoming a bigger challenge for the future generations. 

However, the majority of the countries address these challenges by relying on voluntary actions of the large corporates as well as populist measures by the government. There have been little efforts to collaborate and strategize the action plan for these issues or setup the outcome driven metrics for performance assessment as to what has been achieved, what not, and why? 
The launch of global initiatives like MDGs followed by SDGs however signifies a gradual recognition and acceptance of the social and environmental inequalities. The governments and corporates have started talking about collaborative actions, strategic CSR, metrics and assessment as a way forward. 

India has mandated Corporate Social Responsibility (CSR) activity for the corporates by introducing the CSR law on 1 Apr 2014. The first objective of CSR law is to raise the consciousness and motivation among the corporates to undertake social and environmental action as the core of the business model rather than a fringe activity. This is needed to achieve significant impact at the grassroots level. The second objective is to encourage the social and environmental impact measurement and reporting. During 2014 Independence Day, The Prime Minister of India, Sh. Narendra Modi put emphasis on "walk together, we move together, we think together, we resolve together, and together we take this country forward." 

The new CSR law mandates long-term orientation of social and environmental initiatives having better accountability and responsibility by the corporates. To be precise, there is an attempt to make a shift from pure capitalism towards a socially responsive mode of capitalism. This implies enabling a change in focus from checkbook charity based model to socially responsible, engaged and embedded business model where companies invest their time, capital and manpower on the long-term basis for sustainable social and environmental interventions. 

India, as a country represents a land of extremes and contrasts. One aspect of India highlights the country as a modernizing economy, which is dynamically becoming a force for social innovation. India is known as one of the largest emerging economies having a population of more than 1.25 billion. This represents 1/6th of the world's people. The majority of this population lies at Base of the Pyramid (BoP). India is also one of the fastest growing economies having an average GDP growth rate of around 7% (2011-15). According to UN Report, India has the world's largest youth population of 356 million (10-24 years old). Another contrasting aspect of India involves low rating on Human Development Index (HDI) and Social Progress Index (SPI) calculated by UNDP and Social Progress Imperative respectively. HDI 2015 ranks India at 130 among 180 nations while SPI 2015 ranks India at 101 among 133 countries. HDI ranks the countries on the basis of three dimensions - to lead a long and healthy life, ability to acquire knowledge, and ability to achieve a decent standard of living. SPI measures the social progress of a nation on the basis of three dimensions - basic human needs, foundation of well-being, and opportunity. The majority of the population in India lives in the rural areas; lacks access to the formal market ecosystem for the fulfilment of their basic needs and transacts in an informal economy. Around two-third of the population in India earns less than $2/day (USD 1990 PPP level) and lives and transacts in an informal economy. 

Traditionally, large Indian corporates have contributed to social and environmental issues by undertaking convenience based philanthropic initiatives at random, which are not necessarily integrated into the core of the business. However, this approach has created a limited impact on the society and environment. The basic needs and challenges faced by the underserved segment in India require systemic solutions, which are scalable, replicable, integrated and sustainable over a long term. These solutions need to have top management buy-in and involve continuous monitoring with proper impact assessment and evaluation. The companies need to integrate the social and environmental focus areas into the core of their business model, something which had been missing from the social and environmental initiatives of the majority of the companies before the introduction of CSR law. 

There exist many examples in India where social and ecological focus areas are getting integrated into the core business model of the company. In FMCG, companies like HLL have engaged the rural women as "Shakti Ammas" for selling its products in the villages. This is a shift from the traditional wholesaler-to-retailer distribution and delivery model. The rural women get trained in the sale of daily use products like soaps, detergents etc. door-to-door. At one end, this leads to last-mile channels for creating awareness and delivery thereby generating volumes. At another end, this creates viable income opportunities for rural women. In agriculture, companies like Mother Dairy have brought together the marginal farmers and milk producers to bring their products like fruits, vegetables, and milk to the market. The marginal farmers get transparent pricing for their products being sold to Mother Dairy besides getting market exposure, training and consultancy on improving the quality of their offerings. In Telecom, Airtel has launched "Apna Choupal", a voice-based value added service for delivering information on day-to-day activities like agriculture, job, education, weather and health to the customers in rural and semi-urban areas. In inter-state bus transport, redBus has created a multi-sided technology platform, which provides a real-time interface between the unorganized small bus operators and bus travellers regarding seat availability and booking. redBus has eliminated the information asymmetry between bus operators and inter-state bus passengers thereby reducing the high bargaining power of travel agents. The small bus operators no longer depend on travel agents for selling their seat inventory. The bus passengers no longer depend on travel agents for booking their tickets. Then, there are other companies likeMahindra group, which have created a digital platform - "Spark the Rise" to stimulate social innovation by crowd-sourcing the best ideas from the individuals and groups related to energy, technology, agriculture and rural development issues. 

What acts as a differentiator in the above examples is the willingness of the companies to view the social and environmental issues from the same angle as the need for economic growth and financial performance. That implies getting CEO and top leadership on board to be a part of social and environmental initiatives, integrating the social and ecological focus areas into the core of the business as well as ensuring that appropriate social and environmental impact metrics are identified, assessed and reported to all the stakeholders in a similar manner as financial performance. 

However, to enable large scale adoption of shared value philosophy and compliance with CSR law, there is a need for systemic focus and concerted efforts of the government, consulting organizations and other social institutions towards awareness building and behavior change orientation among the corporates. Creating Shared Value is indeed a strategic approach for the corporates, who are aiming to make a sustainable social and environmental contribution to the needs of the underserved segment after the introduction of the new CSR law in India. 

The artcle has been authored by Sandeep Goyal (CEO, Shared Value Initiative India) and Amit Kapoor (Honorary Chairman of Institute for Competitiveness, India; President & CEO, India Council on Competitiveness)