Corporate India has seen in the last decade that the path towards growth is not linear. Constant expansion also 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. And we need all this and more NOW! While good governance and far reaching policies are part of the answer, much more needs to be done. The new Companies Act has asked Corporate India to step in with the provision that companies invest 2% 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’?
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% 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 4 criteria:
– CSR Stakeholders
These 4 criteria are assigned weights and form the basis of our ranking. The study also draws on strategic frameworks like the Shared Value Framework to examine data.
1. Tata Steel Ltd
2 . Tata Chemicals Ltd.
3 . Mahindra & Mahindra Ltd
4 . Maruti Suzuki India Ltd
5. Tata Motors Ltd
6. Siemens Ltd.
7 . Larsen & Toubro Ltd
8. Coca-Cola India Pvt. Ltd
9 . Steel Authority of India Ltd
10. Infosys Ltd.
Some key findings of our study are:
– Manufacturing companies fare marginally better than Service companies. Public companies are better than private companies.
– Companies are reasonably strong on governance, weak in disclosure, weak on stakeholder based CSR and, surprisingly, weak on sustainability.
– 27 companies are pace-setters (high CSR scores, high CSR spend) whereas 24 companies are starting out (low CSR scores, low CSR spend).13 companies are smart utilizers -they get more bang per buck. 10 companies need to figure out ways to improve.
– Pace setter industries include auto, diversified, infra, steel and oil. Smart utilizer industries include Banks and IT. Low efficiency companies range across industries. Starting out industries include banking, infra, power and telecom.
– IT companies are relatively strong in governance and disclosure. Diversified companies are strong in stakeholder based CSR and sustainability. Automobile companies and telecom companies are strong on sustainability. Disclosure practices are weak across all industries.
– The Companies Act 2013 (and its rules) prescribe 10 areas in which companies will be required to invest. Currently companies focus least on armed forces veterans/war widows; protect national heritage; support artists, sportsmen and musicians, eradicating hunger and poverty, and initiatives for senior citizens.
Article coauthored with Utkarsh Majmudar and based on published report in Economic Times, Corporate Dossier Nov / Dec 2014.