‘Corporates derive a lot of benefits from society … it is their responsibility to give back some of that to society.’ This is the view of NGOs and many other stakeholders in India, but is it shared by companies themselves?
Between May and October 2003, Partners in Change (PiC) surveyed 536 companies on ‘Corporate involvement in social development in India’. The survey, the third of its kind, asked why businesses engage in CSR; how it is built into corporate strategies; what forms does it take; and who are its stakeholders.
Role and involvement in CSR-related activities
What emerged was the clear view that companies have a responsibility beyond compliance to local laws, creating employment, paying taxes, etc which was the dominant view a decade ago. About 90 per cent of the companies believe that they have a CSR role to play, compared with 86 per cent in 2000. It was noticeable that older companies and those with greater turnover tended to be the most convinced of this. There was some difference between the public and private sector, at 96 per cent and 86 per cent respectively, a proportion that was also reflected in CSR activity.
Why do it?
Companies involved in CSR consider ‘philanthropy’ (64 per cent) and ‘reputation’ (42 per cent) as the two main motives, while ‘building the morale of employees’ and ‘ethical reasons’ were also important. Views on CSR alternate between two extremes: at one pole was the belief that a company that complies with the law is being socially responsible, and at the other the belief that a socially responsible company is one that gives without expecting a return or benefit.
Who are the stakeholders?
The main stakeholders were employees, according to nearly 80 per cent of respondents. Other important groups included communities, shareholders and the government. Nearly a third of the companies mentioned specifically local communities as stakeholders, and about the same proportion thought that stakeholders should include the community more generally.
Who drives CSR policy?
The top management, including the owner of the company and the CEO, were the prime movers in instigating CSR policy. Another indicator of the growing importance of CSR in India is the increased number of companies surveyed with a written CSR policy – about 17 per cent, compared with 8 per cent in the 1997 survey. Companies from the services (3 per cent) and textiles (7 per cent) sectors were much less likely to have a written policy than those from other sectors. Those who didn’t gave as their main reason that they are fully occupied in their business (44 per cent).
What do they do and who benefits?
461 of the companies surveyed engaged in CSR-related activity, with education (66 per cent) and health services (56 per cent) emerging as the two main activities, followed by natural resource management (38 per cent), community support (28 per cent) and infrastructure development (23 per cent). The poorer sections of society were the major beneficiaries, especially from indigenous companies, at 43 per cent, followed by employees with 37 per cent. Children and rural communities were also important with 34 and 29 per cent, respectively. Multinationals (MNCs) had a particular focus on children.
How they implement CSR
Cash donations (81 per cent) were the most common means of supporting activities, while staff volunteering was popular among MNCs and public service units (PSUs). Communities received 66 per cent of contributions directly, but ‘trusts’ or ‘foundations’ affiliated to or initiated by companies also received a large proportion of donations. Large NGOs were more favoured by MNCs than by Indian companies. Though MNCs and PSUs showed some inclination towards partnership with NGOs, only 16 per cent of respondents were actually involved in such partnerships.
Other CSR-related surveys
Two other CSR surveys were conducted in 2001 and 2002. While TERI surveyed members of the public, workers and company executives, UNDP-CII surveyed representatives from companies. Both reinforce some of PiC’s findings, especially the growing tendency among Indian companies to see accountability to all stakeholders as an integral part of doing business. The surveys also show Indian companies’ continued commitment to participating in poverty reduction programmes in partnership with the government and NGOs.
Sudhir K Sinha is Programme Manager at PiC. He can be contacted at email@example.com
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