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Making CSR Sustainable: Critical Assessment of Indian CSR Policy and Industrial Responses Himadri Sinha Head – Department of Research and Planning & Professor.

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Presentation on theme: "Making CSR Sustainable: Critical Assessment of Indian CSR Policy and Industrial Responses Himadri Sinha Head – Department of Research and Planning & Professor."— Presentation transcript:

1 Making CSR Sustainable: Critical Assessment of Indian CSR Policy and Industrial Responses Himadri Sinha Head – Department of Research and Planning & Professor of Rural Development Xavier Institute of Social Service Ranchi, Jharkhand, India

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3 (a) Assessing Indian government’s industrial policy for creating a peaceful cohabitation of industries and people in neighbourhood, (b) Assessing the best practices of CSR to people’s trust and the faulty CSR practices of some industrial bodies that decimate industrial credibility, (c) Identifying CSR practices contributing towards sustainable inclusive growth and analyzing their social, environmental and economical implication for larger appreciations, and (d) Identify the principle of corporate governance for ensuring sustainable development through CSR activities.

4  The study included both desk and field reviews from secondary sources and some evaluation studies of CSR activities conducted by the author in the recent past.  Governmental policy guidelines for CSR planning and execution and CSR reports of industrial bodies will analyzed through desk review.  Review included some industrial cases of exemplary CSR contribution and some industrial cases of flawed CSR practices from India based secondary information.  Cases were selected purposively where author was allowed to access the corporate data and the cases which were surveyed by the author as institutional assignments to assess the impact of CSR activities.  Case studies were based on the analysis of CSR policy of selected industries, financial commitment of industry towards CSR execution, implication of CSR activities on social, environmental and economical lives of people residing in industrial vicinity (15 km radius as per national policy).

5 MethodsDesk Review Govt. CSR Policies and its implications Industrial responses – review of published article Limited Field Study Selected case studies (Access was given)

6  General Concept - ‘The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’  The emerging concept of CSR in India – goes beyond charity and requires the company to act beyond its legal obligations and to integrate social, environmental and ethical concerns into company’s business process.  Shift from ‘shareholder alone’ to ‘multi-stakeholder’ focus  The key components of CSR would therefore include the following: corporate governance, business ethics, workplace and labour relations, affirmative action/good practices, supply chain, customers, environment and community

7 GoI Measures Full consultation with all stakeholders Ethical business practices Rights of worker & no child labour Human rights Sustainable development Economic & social development of community

8  No specific monitoring of ESG (environmental, social and govern ace  Half hearted approach (Examples) ◦ towards fixing of land price as per World Bank/ADB guidelines for the land losers ◦ No employment opportunities for land losers  Weak institutional framework

9 Only 3 parameters were considered in the current study Community Development Environmental Commitments Business Ethics

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11  Its a mix bag Industrial Responses Best Practices Faulty Practices

12 Best Practices 4 Indians /48 Heroes of Philanthropy – Forbes 2010 CSR spending is increasing by 8-9% /year Strong Community Dev. Prog Ethical business Environmental practices

13 CSR – Best Practices 4 Examples TATA GROUP Aditya Birla Group Mahindra & Mahindra Vedanta

14 CSR – Best Practices TATA GROUP Strong Business Ethics Strict Code of conduct Planned Community Development Education Best educational institute (IISc, TISS) Supports 7000 plus rural schools Health Multispecialty & Super-specialty hospitals Supports 7000 plus PHCs/CHCs Peer group health awareness (TB/AIDS/RCH) Integrated Dev Environmental Measures Green PracticesMass plantation Green cities/ mines/colonies

15 CSR – Best Practices Aditya Birla Group Business Ethics Confidential Community Development Education 78 schools Adult education /NFE programmes Health 15 hospitals Supports 5000 physically challenged persons Immunization – children, 2000 preg women; 2000 TB patient/ 100 leprosy Integrated Dev Agriculture development Vocational training Environmental Measures Limited Green Practices Mass plantation

16 CSR – Best Practices Mahindra & Mahindra Strong Business Ethics Code of Conduct Community DevelopmentEducation Talent scholarship – 300 students/year Supports 34 rural & urban schools Environmental Measures Green Practices limited to factory area

17 Vedanta Business Ethics Own Code of Conduct Planned Community Development Agriculture development Around 200 villages covered under sustainable agriculture programme Pisciculture/ Goat/Mushroom farming were promoted for youth & women Education Talent scholarship Supports Mid Day Meal in rural schools Sports & games dev. programme Model R&R Colony Health Mobile Health clinic network Campaign for STD/HIV- AIDS/Anemia/ Malaria Environmental Measures Green Practices within 10 km radius from plant

18 Faulty Environmental Practices Sponge iron – dumping of waste at road side & use polluting technology Chemical disaster – Weakness in legal framework – Union carbide and & other polluting firms Withholding the CSR contributions from communities R & R benefits Using Peripheral dev fund for infrastructure dev within factory and staff colony Opportunistic business practices Doing CSR through Govt. funding withholding their own contribution Doing CSR through Aid agencies’ contribution

19 Sponge Iron Factories Facts  Mainly cause air pollution  It happens due to non- installation or non-operation of pollution control equipment  inspection reports show 92% had abnormally high emissions from kiln 100% of the sponge iron factories bypassing pollution control equipment (CSE report, 2009). In Odisha, evidences of soil and water contamination, human health hazards were found, In Chhattisgarh, more than 60 companies are functioning illegally Faulty Environmental Practices

20 Perils of Union Carbide Bhopal Facts In the early morning hours of December 3, 1984, a poisonous grey cloud (forty tons of toxic gases) from Union Carbide India Limited (UCIL's) pesticide plant at Bhopal spread throughout the city. The incident exposed more than 500,000 people and resulting in the direct deaths of between 3,800 (UCIL estimate) and 15,000 (unofficial Indian Govt. figure). No medical help could be provided UCIL did not provide any help either No adequate compensation has been paid till death nor any perpetrators had been punished till date (Peterson, 2010). Faulty Environmental Practices

21 Rehabilitation & Resettlement benefits  Currently in India, company buys land that produces per capita income of US $ 2 day/head/acre for a family of five (which is equal to US $ 3650/ household/year) at around US $ 2000 to Us $ 35,000 without providing any employment to any of the family members.  Such land rates is far below World Bank/ ADB recommended replacement value and therefore, highly inadequate  Monthly Pension/Annuity is barely US $ 25/ acre of land (in lieu of job)  Vocational trainings were given project affected youths without job placement  Forest dweller’s rights were not honoured in spurious manner  Low quality construction work in rehab colony

22 Withholding the CSR contributions from communities Using Peripheral dev fund for infrastructure dev within factory and staff colony As per NPRR 2007 of GoI, Development of 15 km radius is mandatory CSR plan – Inclusive growth model Creating corpus fund + Annual allotment To be implemented through Area Dev Council/Commtt Infrastructure within plant & colony Only core area/villages Community centres/health centres are controlled by company Non implementing forest rights act/ tribal dev plan Using CSR funds for Problems Requirements

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24 CSR & INCLUSIVE GROWTH Concern for Inclusive Growth (IC) has now become global. Sustained IC requires an optimal blend of three sets of actors and their respective responsibilities namely government, corporate and personal social responsibility (PSR) which means that every citizen above the poverty line must take her/his seriously, to help a few below the Poverty Line. Job Outsourcing:- Vedanta Plc has out sourced most of transport, road management, garden management and series of non technical and semi technical jobs to displaced people and stabilised their livelihood. Number of power plants has out sourced the job of fly ash brick making to local youths. Market Linkages: ITC and some other companies created village level sustained market channel to promote sustainable business ventures for villagers. Rights based approach: Bill Gates Foundation supports UNICEF, DFID to strengthen right based development approach in India. It has yielded positive result in Health, Child rights, Women care & RCH Is it a Dream? Tata group earlier days absorbed good number of project displaced placed people. But currently Tata is less willing to offer employment to the displaced. In such event companies CSR needs to create alternative livelihood and to support them till such livelihood ventures are stabilised. However, inclusive growth is still a dream than reality in business parlance.

25 Principles of corporate governance for sustainable development through CSR activities Inter relationship between industry & society Strong institutional regulations Social & Governmental incentives for good CSR

26 Principles of corporate governance for sustainable development through CSR activities Prioritizing social issues & CSR strategy Generic social issuesValue chain social impacts Social dimensions of competitive context Social issues - not significantly affected by a company’s operations nor affect its long-term competitiveness Social issues - are significantly affected by a company’s activities in the ordinary course of business Social issues in the external environment that significantly affect the drivers of a company’s competitiveness in the locations where it operates. Responsive CSR by assisting the govt programme implementation Transform value chain activities for the benefit of society with strategic CSR Strategic CSR (Pro-active vigorous CSR activities)

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