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Corporate Social Responsibility –Outlook of India Inc.
Report presenting an analysis of Indian corporate outlook towards CSR and social organizations
November 2014
A Z R e s e a r c h P a r t n e r s P v t L t d
Introduction
AZ Research Partners has worked extensively with both social sector and corporate sector. We have audited both social & corporate projects over the last 10 years
This report explores the outlook of India Inc. to CSR in the aftermath of Section 135, as per which, listed companies may need to report CSR spends with declaration of social organizations they work with
Activities challenging following issues have been considered as CSR:
Eradication of hunger and poverty Promotion of education and gender equality, empowerment of women Reduction in child mortality and improvement in maternal health Combat of HIV and other diseases Environmental sustainability Vocational training Contribution to the Prime Minister’s National Relief Fund or any other fund set up
by the Central or state governments Welfare of SC/STs and OBCs
CSR – Outlook of India Inc.
The study context:
Corporates that invest heavily into CSR that AZ Research has studied
CSR – Outlook of India Inc.
Lions Krakens Sharks
Multiple SBUs under same corporate umbrella - uniformethos, varied systems
Multiple SBUs under different corporate umbrellas – varied ethos & systems
Single large corporate unit with uniform corporate ethos & systems
Abbott India Bajaj Eveready Godrej Jaypee Group Larsen & Toubro Reliance Group RPG Group TATA Group
Arvind Mills Bharti Group Britannia Cholayil Hindustan Unilever ITC Group Mahindra & Mahindra MTR Schneider Electric P&G Wipro
Acer Asian Paints Aventis Pharma AVT Axis Bank Gokaldas HDFC Bank Hyundai ICICI Bank Maruti Suzuki India
We studied 3 categories of listed companies:
Note: We have considered only those corporates who are listed and have annual turnover > INR 1,000 Cr – as these corporates will eventually define benchmarks w.r.t CSR practices
CSR initiatives undertaken by these corporates
CSR – Outlook of India Inc.
Following are the various CSR activities undertaken
Lions Krakens Sharks
Holistic projects involving transformative change –expanded projects
Wide ranging projects requiring infrastructure development –enabling incremental change
Issue based projects involving“issue understanding” & “making a difference” – focused projects
Adult literacy & education Animal conservation
projects Agricultural productivity
increase & increase in farmers’ standard of living
Community-based health care services in rural areas
Composite Human Development Index audit in rural areas
Skill development Women’s empowerment
Clean drinking water Education for underprivileged
girls Environment Free surgery initiatives Grants, scholarships & prizes Hospitals & healthcare Livelihood training Slum upgradation Sports and culture Up-gradation of municipal
schools Urban infrastructure Women’s empowerment
Balwadis for children in slums Quiz programmes on disease
awareness for underprivileged children
Skill development programmes for youth in backward districts
Support & scholarships for rural schools
Rural healthcare Women’s empowerment
Corporate mind-sets w.r.t CSR
Key differentiating factor is whether the corporate has a separate CSR department (or foundation), if not, then how open is the corporate to set up a separate CSR department
In general, companies for whom CSR has been well-integrated have a dedicated CSR department
Companies for whom CSR is yet to make a real positive difference, in general do not have one yet – however, some companies are relatively more open to set up one than others
Second key factor is what types of CSR projects the corporate is running –how many, and how long-running are these projects
CSR – Outlook of India Inc.
Companies have varying CSR systems. The types of projects they undertake also vary:
Corporate mind-sets w.r.t CSR
CSR – Outlook of India Inc.
There are 5 different mind-sets that operate amongst corporates w.r.t CSR:
Closed / no defined time frame to set up separate CSR department
Uniform systems with separate CSR department (even before section 135)
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View CSR as a Growth channelMost Lions fall in this category
View CSR as an obligationMost Krakens fall in this category
View CSR as Positive PRA mix of all 3 corporate
groups
View CSR as regulation –open to explore benefits
Most Sharks fall in this category
View CSR as regulation, do not have a viewpoint
Mostly Sharks & few Krakens
Open to set up CSR department, with defined time frame
Note: These mind-sets are not mutually exclusive – the same corporate can hold multiple mind-sets w.r.t CSR. The descriptors above represent the dominant mind-sets
Mind-set 1: View CSR as a growth channel
CSR – Outlook of India Inc.
Companies with this mind-set are largely the Lions:
• A company can grow only by positively influencing the environment in which it operates Through inclusive growth
Driving attitude
• Win-win for corporate & community – both grow together
• Long-term community entrenchment
• Recruitment from community – larger scale, lower costs
Motivations
• Selection of social organization
• Auditing of projects
• Ensuring complete transparency
• Achieving long-term transformation
Key challenges
Nature of CSR Activity – Transformative change (not boxed in by issues)
Mind-set 1: View CSR as a growth channel (Contd.)
CSR – Outlook of India Inc.
An example of company that views CSR as an opportunity for inclusive growth:
Mind-set 1: View CSR as a growth channel (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
Mind-set 1: View CSR as a growth channel (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
RPG Group’s stand on CSR “Corporate Social Responsibility can never be just an added function to the business. It should be ingrained in core
business operations”
RPG Group’s CSR cover 3Es – Education, Employability, Environment
Fun & Learn pedagogy that enables the child to learn English without any stress and with a lot of joy
Flagship technical education programme to transform students into technically qualified and skilled adults with an overall grooming and confidence to work in the manufacturing sector
RPG is converting all its plants into green facilities & also, celebrated World Environment Day to create awareness about recycling wastes, by planting 3,500 saplings with the support of the forestry department at Palej and Mundra
Mind-set 2: View CSR as an obligation
CSR – Outlook of India Inc.
Companies with this mind-set are largely the Krakens:
• A company needs to give back an equivalent of what it takes from the society/ community for continuing its operations
Driving attitude
• To obtain societal sanction Community sanctions growth of the corporate
Motivations
• Making visible change within short time period
• Achieving time-defined results
Key challenges
Nature of CSR Activity – Incremental change through enabling activities
Mind-set 2: View CSR as an obligation (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
Initiatives by manufacturing companies – this pharmaceutical company and this manufacturing company decided to do CSR activities closely related to their primary business activities –
CSR thus sprung up as a leaf-shoot out of the primary business bark, giving back to the communities & families from where their workers originated
Enabling reach of medicines in rural India
Building life-skills of women in rural Rajasthan
Mind-set 2: View CSR as an obligation (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end (Contd.)
Quiz programmes for underprivileged children
Initiative by another international pharmaceutical company in India – linking CSR with disease related education
Mind-set 2: View CSR as an obligation (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end (Contd.)
Mind-set 3: View CSR as PR activity
CSR – Outlook of India Inc.
Companies with this mind-set are a mix:
• Relationship between corporate & community is in delicate balance – a corporate must work proactively to strengthen it
Driving attitude
• To build positive public image and goodwill for the corporate
• In turn build positive associations, thus strengthen the equity of the corporate
Motivations
• Selection of social organizations with positive rub-off on the corporate – value sync
• Transparency
• Media management for both corporate & social organization
Key challenges
Nature of CSR Activity – Focus on current socially relevant issues that the larger public relates to, and wants addressed
Mind-set 3: View CSR as PR activity (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
• Sahara Group’s Pulse Polio programme initiative was completely unrelated to their primary business
• However, it was heavily publicized and impacted Sahara’s public image positively
Mind-set 3: View CSR as PR activity (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
• Lifebuoy’s much famed “Help a child reach 5” campaign was very heavily publicized
• This campaign completely redefined the brand image in Indian public mind space
• Hyundai’s green campaign & Britannia’s nutrition foundation are on similar lines
Mind-set 3: View CSR as PR activity (Contd.)
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
• Dettol followed suit with Surakshit Parivarprogramme which received considerable appraise and publicity
• This impacted not only the brand image but also had a strong rub-off on the corporate good will of Reckitt Benckiser
Mind-set 4: View CSR as regulation & open to explore benefits
CSR – Outlook of India Inc.
Companies with this mind-set are largely the Sharks:
Nature of CSR Activity – Focus on any & all activity that qualifies as CSR ...
• CSR is a pre-requisite to manage corporate taxation
• Additionally, CSR will soon become a legal imperative
Driving attitude
• CSR spend is a mandate by Govt. and any mandate by Govt. is in the best interests of the nation
• Tax deductibility
• Growth of capital assets of company *
Motivations
• Lack of full clarity on what constitutes CSR & what does not
• What if the CSR indirectly ends up benefiting business
• Selection of social organizations
Key challenges
* E.g. Construction of a hospital or a school or a testing lab will result in increase in capital assets of the company
Mind-set 4: View CSR as regulation & open to explore benefits
CSR – Outlook of India Inc.
Examples of a few projects undertaken towards this end:
• Despite not being an Indian enterprise, Acer India is exploring CSR in India with a positive & fresh outlook
• Acer India established a CSR Club by raising social and environmental awareness among its local employees
• 35 Acer employees across India are on board promoting many initiatives• “Acer's Green” inspires power and electricity
conservation in the workplace, the donation of second-hand/ renewable resources
• “Share Your Space” program is aimed at encouraging employees living in the same region, or along the same route, to begin car pooling to cut back on gas consumption
• “Adopt a Plant” was held in keeping with the World Environment Day; about 50 saplings were distributed to employees interested in caring for a tree
• Many creative power-saving measures and community outreach services have been successfully organized
Mind-set 5: View CSR as regulation, but non-committal
CSR – Outlook of India Inc.
Companies with this mind-set are largely the Sharks & few Krakens:
Nature of CSR Activity – Focus on any & all activity that qualifies as CSR ... Most corporates with this mind-set opt for work in rural or underprivileged areas
• CSR is a Govt. mandate with the added benefit tax deductibility
Driving attitude
• Tax deductibility
• Govt. mandate –cannot be questioned
Motivations
• Belief that corporate is not an individual & is difficult to mandate in terms of quantum of CSR, choice of CSR and choice of social organization – on a longstanding basis
Key challenges
Mind-set 5: View CSR as regulation, but non-committal
CSR – Outlook of India Inc.
Unlike the top listed companies with turnover > 1000 Cr, bulk of India Inc. currently looks at CSR as regulation and is non-committal
Therefore, it is the responsibility of Social organizations to build relevance and commitment amongst India Inc.
What is the outlook of corporates towards social organizations?
CSR – Outlook of India Inc.
Expectations are a function of how corporates view social organizations – this lies on a continuum of low to high integration with the corporate:
Like an extension
of the corporate
Like a corporate investment
++
I sponsor, they execute what I can’t
++++
Inte
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n w
ith
co
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rate
Low
Hig
h
Many corporate Lions view the social organization this way
• Want to work closely on long-running projects with the social organization
• Expect complete accountability • Want to conduct audits themselves to
revalidate NGO’s reports
• Want social organizations with strong positive equity so that corporate can benefit from the association
• Expect VISIBLE change in short time spans & diligent reporting
Few corporate Lions & many krakens view the social organization this way
Almost all corporates
• Want complete transparency from the social organization
• Should not get constant funding requests
How to engage India Inc.
CSR – Outlook of India Inc.
Corporates that view CSR as regulation, non-committal
Key engagement points –
1) Optimized funds
2) Complete transparency
3) Short-term results
4) Assurance on tax deductibility
Corporates that view CSR as regulation, open to explore
Key engagement points –
1) Assurance on dedication to cause & relevance of cause
2) Involvement of employees – make it an enjoyable activity
3) Assurance on tax deductibility
Corporates that view CSR as PR activity
Key engagement points –
1) Assurance on dedication to cause and SOCIAL RELEVANCE of the cause
2) Assurance on VISIBLE change
3) Media presence or resources to engage/ manage media (can be a deal-maker)
How to engage India Inc.
CSR – Outlook of India Inc.
Corporates that view CSR as obligation
Key engagement points –
1) Assurance on dedication to cause and SOCIAL RELEVANCE of the cause
2) Credibility assurance by the NGO
3) Complete transparency
Corporates that view CSR as growth channel
Key engagement points –
1) On-ground network of the NGO
2) Credibility assurance by the NGO – by way of longstanding presence or Govt. certification or association with other large corporates with positive reviews
3) Complete transparency
4) Neutral third-party audits of all projects, with allowance of corporate involvement in project audits for evaluation
CSR – Outlook of India Inc.
With this understanding, let us study the key associations, perceptions and imagery of Rotary Club amongst corporates in India …
Eminent
+++Premium
++++
Prestigious
++++
Influential members
+++Tough intake
standards
++
Club services
++++
Blood donations
+++
Cricket tourneys
++
Associations with Rotary Club
CSR – Outlook of India Inc.
Corporates associate the following with Rotary Club spontaneously:
Lions
•Gold standard when it comes to philanthropic clubs•Very strong equity in India and internationally•However, very little in common between “how they
operate & how we operate”•Key gap Unaware of the on-ground volunteer
network of Rotary club, as “most of the press is about influential members of the club”
Krakens
•Expression of “nostalgia” w.r.t Rotary Club•Very strong “during our parents’ times” – but
“philanthropic clubs in general are losing relevance due to mushrooming of NGOs” “They do not submit reports for the business community to consume”
Sharks
•Traditional, old school, quite strict in memberships•There is no “ONE” Rotary club in India – “every city has a
club & every club is different & works differently”
Sentiments expressed about Rotary Club:
Rotary club activities that most corporates are aware of …
CSR – Outlook of India Inc.
Very high awareness about Rotary club’s:
• Pulse Polio programme interventions• Blood donation camps• Cricket tourneys
These activities emerge as the most salient, relevant and defining activities of the Rotary club
Rotary club activities that most corporates are not well aware of …
CSR – Outlook of India Inc.
Most corporates at large are not yet aware of the activity Rotary club does with the elderly at old age homes …
… nor are they well aware of educational or livelihood projects undertaken by the Rotary club with rural youth …
Corporates that are aware of these have a more entrenched positive outlook towards Rotary Club …
Rotary Club get-togethers and parties – very prominent on press!!
CSR – Outlook of India Inc.
Most party photographs make it to the media photo galleries which hit public eye:
The resultant imagery of typical Rotary club member
High-end
Socialite
Exclusive
Influential
Celebrity
Media savvy
Way forward
Key areas that Rotary clubs needs to address in order to engage India Inc. better are:
Establish the central base of Rotary Club clearly – as there seems to be a perception that Rotary Club operates differently in different cities and there is no “one Rotary Club”
Communicate the complete range and scope of Rotary Club activities
Focus more on press about the on-ground network as corporates feel there is little information about this
Tackle the high-end socialite imagery of Rotary Club – as this conflicts with philanthropic image that corporates desire to see in the social organization that partners them
Reconsider use of the word “club” as it connotes socializing … most media focuses on the socializing
CSR – Outlook of India Inc.