The Indian automotive industry is not new to CSR. Speak to anyone in the automotive industry and they will talk of the investment in communities near their manufacturing plants. However, a company of the 21st century needs to do more, because for CSR to be effective, it needs to be strategic.
Automotive companies need to care about CSR as it improves brand image, minimizes negative press and harmful impact on share prices, improves ability to attract and retain the best employees, less regulatory oversight and improves long term sustainability of the business. Hence reporting, signals to the world contribution towards CSR.
Even though CSR / Sustainability reporting is a recent development, veterans like TATA Motors have been reporting for almost a decade. Unlike the Tatas, we found that 84% of the SIAM registered passenger car and two wheeler companies that we studied don’t prepare India based CSR / Sustainability reports.
Out of 25 companies in the passenger car and two wheeler segments only 4 companies Mahindra, Maruti, Toyota and Tata have India based GRI compliant reports. Some companies like Bajaj mention CSR initiatives on their websites or as part of their Annual reports. Several International companies however make a mention of India specific CSR information as part of their Global Sustainability reports. This low level of India specific CSR reporting is not surprising. One, the field of sustainability reporting is rather new, Two, the cost involved in collating the data may not be worthwhile. Or, thirdly, not enough work is going on to report. The landscape is likely to change with 2% mandatory spend on CSR based on conditions that will cover several automotive companies.
Sustainability reports can be compartmentalised into two parts – environment and CSR. Our review suggests that environment gets the bulk of the attention. Environmental problem solving lends itself to easier reporting and quantifiable output. CSR is relatively more multifaceted.
Given this, we asked – what do automotive companies do for CSR? They carry out CSR activities in 10 broad areas Rural Development, Healthcare, Education, Community Development, Vocational Training, Environment, Women Empowerment, Road Safety, Traffic related, Safety / Training Related activities. However our analysis of sustainability reports has revealed that most of these activities are directed towards employees and communities. For most, with the exception of Maruti a strategic push to extend CSR across stakeholders such as dealers, suppliers, and customers is missing.
The CSR performance of Indian automotive companies is still at the primary stage as compared global advanced standards. Indian automotive companies need to address the CSR issues by increasing the degree of awareness, attention and participation.
INDIA SPECIFIC CSR / SUSTAINABILITY INFORMATION AVAILABILITY
The table below lists out the companies on the basis of 4 categories.
A – India specific CSR / Sustainability report
B – India specific CSR information is available in either the Annual Report or the Website
C – Global Sustainability Report of the company mentions India based activities
D – No India specific CSR information is available
Based on data taken from websites as on 20 Oct 2013
This study was supported by IIM Udaipur. We would like to thank Prof Janat Shah, Director IIM Udaipur for his contribution and support.
Article coauthored with Utkarsh Majmudar and originally published in Economic Times.