Corporate social responsibility leaves out elderly
India Inc will not be obliged under law to share their profits for the betterment of the elderly, about 8.5% of the population.
The Companies Act, which came into force earlier this month, doesn’t mention senior citizens as one of the beneficiaries of the corporate social responsibility (CSR) obligation of public and private sector companies. The law mandates companies worth more than `500 crore should spend at least 2% of their profit for society’s betterment through nine different listed CSR activities.
The company’s CSR board is required to pick any of the activities like eradicating hunger and poverty, promoting education and gender equality, reducing child mortality and improving maternal health from the seventh schedule in the law.
Alternatively, companies can donate money to the Prime Minister’s relief fund or other government fund for betterment of scheduled castes, scheduled tribes, other backward classes, minorities and women.
“While all other societal aspects of corporate social responsibility have been included, old age has not been touched upon,” Himanshu Rath, director of an advocacy group for elderly Agewell Foundation said, in a letter to corporate affairs minister Sachin Pilot.
The government can seek corporate India’s help to provide succour to elderly as the law empowers the Centre to amend the schedule (under section 467) and include more activities for corporate social responsibility.
From 103 million in 2011, the number of elderly is expected to triple by 2020, constituting 20% of the population. A World Health Organisation report in 2010 said that, with increase in affluence, the old were getting marginalised both socially and economically as India does not have a social and health security system for senior citizens.
India forces companies to start charitable giving
AFP New Delhi, September 19, 2013
Indian government still struggles to provide reliable basic services to a majority of its citizens, trapping hundreds of millions of them in poverty. Now the country's richest firms have been told they must help.
Under the new amended Companies Act passed last month by Parliament, large businesses have been asked to spend 2.0% of their profits each year on "Corporate Social Responsibility" (CSR).
"The idea is that if we could divert some corporate energy and the corporate way of doing business into our development sector, for a country like India it could help enormously," the head of the Indian Institute of Corporate Affairs (IICA), Bhaskar Chatterjee, explained to AFP.
CSR is broadly -- some say vaguely -- defined in the law to mean funding programmes for education, poverty alleviation, protecting the environment or tackling disease, among others.
It's one of the first such laws of its kind in the world, promising a cash bonanza for charities and non-government organisations (NGOs) while raising serious concerns the funds could worsen India's endemic corruption.
CSR has been imposed across much of corporate India. Any business with sales of more than 10 billion rupees ($156 million), a net worth of 5.0 billion rupees, or bottom-line profits of 50 million rupees is liable.
They must set up a board to implement and report on the company's CSR policy, in theory ensuring that an average of 2.0% of the net profits of the previous three years is spent annually.
Failure to report on this spending, as with other financial disclosure requirements, will result in fines and possibly imprisonment for a company's directors.
IICA, a business group established by the ministry of corporate affairs, calculates that 7,000 companies qualify, creating a possible annual pool of funds estimated at 120-150 billion rupees ($1.9-2.4 billion).
Sidharth Birla, president-elect of business group FICCI, says that corporate India lobbied hard against previous drafts of the law that would have forced companies to spend their profits.
"If they had made it mandatory then what would have stopped any other authority from imposing a burden on the company?" he told AFP, reprising one of the arguments against mandatory spending.
The final law says companies should set aside 2.0% of profits for CSR and must report on their activities, but it also gives them an easy get-out by claiming there is nothing suitable to spend the money on.
"We have been given to understand that you could well report that 'I have seen everything and I can't spend it'," Birla said.
Good intentions, horrible consequences
The success of the CSR revolution will therefore depend on how companies approach the new rules, says Samir Saran from the New Delhi-based think-tank Observer Research Foundation.
The money could become a sort of "slush fund" channelled into charities and NGOs run by politicians -- "a legal way of bribing," says Saran -- or into foundations run as pet projects by the family members of business owners.
"We have to be sure that this is not another policy with good intentions and horrible consequences," he told AFP. "It is how it is implemented that will decide its success."
One early alarm bell was the government in the central state of Chhattisgarh asking companies to deposit their CSR funds with the chief minister's Community Development Fund earlier this week.
Saran favours mandatory CSR overall as a way of forcing good corporate behaviour. The Indian private sector "is notorious for not having participated in the social agenda," he says.
Though broadly true, not all can be tarred. The sprawling Tata conglomerate, owner of Jaguar LandRover and India's biggest software company, is a global leader in corporate giving and is controlled by a charitable trust.
The founder of software group Wipro, Azim Premji, has followed the example of US billionaires Bill Gates and Warren Buffett by handing large parts of his fortune to his education charity.
But for the majority of companies with little or no experience in CSR, they will depend on external charities, foundations and NGOs amid questions about their capacity to absorb the cash.
India's charity sector is rich in organisations -- 1.2 million, according to the Charities Aid Foundation (CAF) -- and low in regulation.
In November 2011, the national audit authority published a damning report showing that only 3.5% of the NGOs which received grants from the environment ministry completed their projects.
Peter ter Weeme, co-founder of international sustainability consultancy Junxion, which has an office in New Delhi, stresses that capacity as well as corruption is a huge problem.
"I've seen in North America where large corporations wrote one-million-dollar cheques to NGOs," he told AFP. "The NGOs couldn't handle that sort of money."
State-run companies have been subject to mandatory CSR for years but they are sitting on cash piles with "no idea how to spend it," he said.
He commended India becoming "probably the first country to have the most broad far-reaching legislation on the subject" -- Nigeria and Malaysia are considering something similar -- but there are obvious flaws.
"One of the biggest issues it doesn't address is corruption. If anything it might even exacerbate it," he concluded.
Top Indian firms low on CSR spends
First Published: 00:40 IST(9/8/2013) | Last Updated: 00:42 IST(9/8/2013)
The corporate social responsibility (CSR) spending by top 100 listed firms in India is a mere Rs. 2,300 crore, which is around 0.82% of their net profits, according to a study conducted by Socio Research and Reform Foundation.
The study said that CSR investment is led by the Reliance Industries Ltd that spent around Rs. 357 crore during 2012-13. Other leading firms with high CSR spend include Tata Steel (Rs 146 crore), SBI (Rs 123 crore) and ICICI (Rs 117 crore).
Most other companies do not meet the proposed Companies Bill's requirement that necessitates a company to spend 2% of its net profit on CSR.
The study also dispelled the popular perception that CSR programmes are directly implemented by companies themselves and indicated that around 76% companies implement their CSR programmes through NGOs.
Steel giant takes to organic farming
Orin Basu, Hindustan Times Kolkata, June 17, 2013
First Published: 09:19 IST(17/6/2013) | Last Updated: 09:23 IST(17/6/2013)
In a one-of-its-kind initiative, iron and steel giant Shyam Group has started organic farming in its plant at Jamuria in Burdwan district to cater to the kitchen requirements of around 3,000 staff who work in the plant.
The plant covers an approximate area of 400 acres of which the company identified around one acre of surplus land on the premises to utilise it for growing different kinds of vegetables to meet the canteen requirements.
The plant, set up in 2008, produces TMT bars, ferro alloy and sponge iron and has a capacity of 1.1 million tonne and a 1,000MW power plant. Company officials have experimented with organic farming on a pilot basis since 2011-end.
“At present, we have initiated organic farming on a pilot basis on 15 cottahs and are able to meet around 30% of our canteen requirements. When the full one acre would be utilised, which we are hopeful of in another three years, the plant would meet 75% of its kitchen requirements,” claimed Arun Talwar, corporate social responsibility (CSR) and brand in-charge of the Jamuria plant.
As the area comprises sandy loam soil, it has only made the task of agriculture difficult. But as Talwar puts it, a combination of cow dung and cakes of mustard oil and neem after being mixed with the soil has increased the fertility. “The farming is part of our CSR project,” Talwar said.
The farm produces cauliflower, brinjal, cabbage, cucumber, ladies finger, papaya, gourd and other leafy vegetables. Company officials, buoyed by the success of the project, now plan to replicate the idea in all their future plants.
Big businesses are trying to make more with less
First Published: 22:28 IST(27/4/2013) | Last Updated: 23:16 IST(27/4/2013)
Earlier this month, the PM released an expert report that calls for a fresh look at national accounting with the purpose of ‘greening’ it — adopting a sustainable model of development taking into account our natural and human resources.
While the state is responding to this situation — India has committed to reduce its carbon footprint by 20-25% under the UN millennium development goals — big business is also innovating and adopting sustainable business models. “The idea is to do more with less,” says Damandeep Singh, director, Carbon Disclosure Project India.
When Thailand faced severe flooding in 2011, auto giant Honda’s operations in the country were affected for six months, incurring huge losses. It forced the company to rethink its strategy with suppliers to check such mishaps in the future. Similarly, Intel lost around $1 billion in the floods. According to a report by the Centre for Climate and Energy solutions, it caused a combined insurance claim of $15 billion to $20 billion that also included multinationals like Dell, HP and Daimler. Climate change, considered an ill effect of unsustainable living and business practices, in turn has a worldwide effect on industries like garments, automobiles, computers and even casinos.
While, debates on the effect of global warming on climate change continue, such unexpected incidents have forced companies the world over, including in India to look for long term solutions.
“The landscape is changing,” says Harsha Yadav, co-founder, Efficient Carbon, a Hyderabad-based consultancy on sustainable energy solutions, pointing out that three years back, when his company started analysing sustainability initiatives taken by industry, very few companies were forthcoming. But, “now most companies are talking about sustainability, though much is yet to be done.”
For the first time, says a survey by consulting firm Ernst & Young, companies are taking climate change into consideration for the future. According to the survey, 75% of respondents have set a goal for greenhouse gas reduction. Three-fourths of them publicly report greenhouse gas emissions and another 16% plan to do so in the next five years.
Singh says that though a few companies in the country are taking sustainability measures on par with international companies, a lot more needs to be done. “The government has to set an example by making its own ventures sustainable. It needs to act quicker and incentivise those who comply with sustainability measures and penalise those who don’t,” Singh suggests.
Corporate initiatives in India
A water-less garmentAccording to a survey conducted by consulting firm, Ernst and Young, nearly 80% of the respondents see water-related issues affecting their business in the next five years. As a response, Levi’s, a garment producer, has come up with its Water-less jeans that significantly reduces the consumption of water, in some cases by up to 96%. — Himani Chandna
Reduces water footprint
In a country like India where 100 million people face water shortage, reducing wastage of water in washing clothes is a noble idea. A cloth needs 3 to 4 buckets generally to rinse it properly. Magic Water Saver, a product by FMCG giant Hindustan Unilever brings down the consumption of water while washing clothes. — Rachit Vats
Sustainable connection
With an estimated 900 million mobile users in India, the cell phone towers are ubiquitous. To maintain uninterrupted phone signal in electricity starved country, diesel comes to help to run the tower. Bharti Airtel has initiated installing solar powered telecom towers to make their operation sustainable and thus reducing carbon footprint. — Manoj Gairola
Taking back e-waste
A large amount of electronic waste is generated in the country as more households and business are dependent on electronic instruments than ever for their survival. Indian IT giant Wipro, which is one of the top companies from India on Carbon Disclosure list, collects back to recycle the electronic waste. It disposed off more than 260 tonne of e-waste in the year 2010-11 by taking it back from users. — Vivek Sinha
Saving lifelines
As the major content of beverages being water, its conservation and proper utilisation is all-important for the beverage company, Pepsico. One of the company’s initiative reduces water usage in paddy transplantation — by using direct seeding technology that reduces water consumption drastically. The company has also started a bio-methanation plant that saves up almost 260 tonnes of LPG in a year. — Rachit Vats
A carbon-based index
The Bombay Stock Exchange has introduced Carbonex (an index of 100 companies), the first-of-its-kind index in India or any emerging market which tracks the performance of companies in terms of their commitment to reduce emission of green house gases. By looking at Carbonex, investors can get the sense of how companies are faring on their commitment to reduce emission of green house gases. — Sachin Kumar
Thinking green is good for bottomline, says HUL chief
First Published: 20:55 IST(22/4/2013) | Last Updated: 20:56 IST(22/4/2013)
Hindustan Unilever's sustainability initiative is helping drive business while, at the same time, reducing costs and risks.
Speaking exclusively to HT in Delhi on Thursday, Nitin Paranjpe, CEO of HUL, said: "At current levels of consumption, we will need the resources of three earth-like planets if India consume like the UK and five such planets if it consumes like the US."
The short point he was making was this: we need to develop a new model that decouples growth from resources.
But it isn't about altruism. The new model, he added, is leading to a virtuous cycle of growth at HUL in India and across Unilever globally by lowering units costs, increasing savings and generating higher sales. "This is not CSR. A hundred per cent of our business plan is geared towards this initiative," he said.
"Our sustainable initiative enabled us to save €300 million (about Rs. 2,200 crore) globally over the last 3-4 years by reducing waste, use of less energy and less water. So, you see, it makes good business sense," he added.
The company has taken the initiative to reduce diarrhoeal and respiratory diseases by encouracing hand washing. Millions of children die every year because of diarrhoea. HUL's Lifebuoy handwashing programme reached 17 million people in 2012.
Providing safe drinking water, improving health and well being by reducing saturated fats, removing trans fats and cutting down on calories in its food products are other initiatives that HUL has taken as part of its sustainable living plan.
"We're partnering with the governments in various states, NGOs and other stakeholders to help us meet our sustainability goals in the environmental, social and financial spheres," the HUL CEO said, adding: "A lot more needs to be done. But we believe we have the leadership commitment and the organisational discipline to do well while doing good."
