Strategic Approach towards Automotive CSR – Part 2

The Automotive industry is fairly new to non-financial reporting, such as sustainability and CSR reporting. Most global companies now produce an annual sustainability report and there are a wide array of ratings and standards around. The most common one being Global Reporting Initiative (GRI).

In Global reports, CSR in India is a passing reference

In our study of Indian two-wheeler and passenger car companies we took a look at 14 global sustainability reports. While 9 of the 14 global reports mention India specific CSR and Sustainability activities, overall, they make a passing reference to CSR and CSR in India. Also much of the narrative centres around sustainability issues of water and waste management, energy conservation, hazardous materials management and more around manufacturing plants.

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All data in the Indian reports does not pass the materiality test

The companies that have India based GRI reports showcase extensive work in CSR across stakeholders, they also talk of other initiatives that perhaps do not pass the materiality test. Customer Satisfaction Surveys, Customer loyalty programs, Conversations through social networks, Customer/ Dealer / Supplier meetings/events are perhaps better suited to be written about elsewhere.

Employees emerge as a key stakeholder group across reports

Conventional wisdom is that company CSR initiatives are driven principally by customers or investors and shareholders. But our analysis found that employees are the largest stakeholder with most initiatives centred around them. Community initiatives too are mostly around manufacturing plants where families of employees are likely to be residing. CSR Initiatives are largely focused around rural development, education, vocational training, and healthcare.

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Customers and Safe Driving – A missed opportunity

The low priority accorded to customers has significant implications for India and its customers. Indians tend to have poor driving skills and are willing to take daring risks. An F-1 driver, recently commented on how shocked he was by the manoeuvres of Indian drivers. All this leads to India having the highest number of accidents. This is compounded by customer communication that promotes unsafe driving. A quick look at some of the car and two-wheeler advertisements reveals a disturbing trend.

– Two wheelers can drive over pavements, jump over street vendors and demonstrate stunts on busy roads
– Cars specially SUV’s must be taken into pristine forests and lakes while disturbing animal habitat
– Celebrities must be shown conducting car chases that clearly break all rules

This clearly seems to contradict the fundamental ethos of social responsibility and sustainability. Most companies operating in India don’t address traffic and road safety at all.

Interestingly enough, the study of Global Sustainability and CSR reports conducted by us has revealed that many of the global sustainability reports mention large customer focused initiatives. Nissan has initiatives like Hello Safety, Be Safe with Nissan and Safe Driving Forum. BMW creates School route maps for children and has a Safely to School project for children. A traffic school for children between the ages of two and six is regularly held at BMW Welt in Munich, where children are taught the basic rules and potential risks of road traffic.

In India, while Hyundai and Toyota have road safety initiatives, Maruti Suzuki, is perhaps the only Indian automotive company that has significant focus on road safety and focuses on this across stakeholder groups. Various road safety initiatives are conducted across dealers, suppliers, customers, employees and communities. Changing customer habits and expectations are causing manufacturers to rethink how they build and sell vehicles. Safety of the car and safe driving habits are strategic and core to any transportation provider. Can automotive companies look at CSR more strategically and come together to make our roads safer?

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.

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