India may become the world’s first country to make corporate social responsibility mandatory
Jul. 10 – Paths have been cleared for reintroduction of the Companies Bill, 2011, in the monsoon session. If the bill is passed after endorsing all the propositions made by the Parliamentary Standing Committee on Finance, corporate social responsibility (CSR) would become mandatory for the first time in the world in any country.
The statement advocates that those companies with net worth above Rs. 500 crore, or an annual turnover of over Rs. 1,000 crore, shall earmark 2 percent of average net profits of three years towards CSR. In the draft Companies Bill, 2009, the CSR clause was voluntary, though it was mandatory for companies to disclose their CSR spending to shareholders. It also suggested that company boards should have at least one female member.
Examples of Corporate Social Responsibility in India
Tata Group in India has a range of CSR projects, most of which are community improvement programs. For example, it is a leading provider of maternal and child health services, family planning, and has provided 98 percent immunization in Jamshedpur. The company also endorses sports as a way of life. It has established a football academy, archery academy, and promotes sports among employees. It offers healthcare services all over the country with programs like rural health development.
Tata Group also has an organized relief program in case of natural disasters, including long-term treatment and rebuilding efforts. It did laudable work during the Gujarat earthquakes and Orissa floods. It also supports education, with over 500 schools, and also is a benefactor of the arts and culture. It has done abundant work in improving the environment and local populations around its industries.
Aptech a leading education player with a global presence that has played a broad and continued role in encouraging and nurturing education throughout the country since its inception. As a global player with complete solutions-providing capabilities, Aptech has a long history of participating in community activities. It has, in association with leading NGOs, provided computers at schools, education to the deprived, and training and awareness-camps.
Infosys is aggressively involved in a variety of community growth programs. In 1996, the company created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1 percent of profits after tax every year. Moreover, the Education and Research Department at Infosys also works with employee volunteers on community development projects.
The management team at Infosys continues to set examples in the area of corporate citizenship and has involved itself vigorously in key national bodies. They have taken initiatives to work in the areas of research and education, community service, rural outreach programs, employment, healthcare for the poor, education, arts and culture, and welfare activities undertaken by the Infosys Foundation.
Mahindra & Mahindra
At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the purpose of promoting education. Its vision is to renovate the lives of people in India through education and financial assistance across age groups and across income strata. The K. C. Mahindra Education Trust undertakes a number of education plans, which make a difference to the lives of worthy students. The Trust has provided more than Rs. 7.5 crore in the form of grants, scholarships and loans. It promotes education mostly by the way of scholarships. The Nanhi Kali (children) project has over 3,300 children under it and the company aims to increase the number to 10,000 in the next two years by reaching out to the underprivileged children, especially in rural areas.
Methodology of Corporate Social Responsibility
CSR is the procedure of assessing an organization’s impact on society and evaluating their responsibilities. It begins with an assessment of the following aspects of each business:
Triumphant CSR plans take organizations ahead of compliance with legislation and lead them to respect moral values and respect people, communities and the natural environment. Corporate social responsibility is sustainable – involving activities that an organization can uphold without negatively affecting the business goals
CSR is not only about ecological accountability or having a recycling policy. It is about considering the whole representation of the company, from internal processes to your clients, taking in every step that a business takes during day-to-day operations. Rising economies such as India have also observed a number of companies enthusiastically engaged in CSR activities.
Organizations in India have been quite sensible in taking up CSR initiatives and integrating them in their business processes. It has become progressively projected in the Indian corporate setting because organizations have recognized that besides growing their businesses, it is also important to shape responsible and supportable relationships with the community at large. Companies now have specific departments and teams that develop specific policies, strategies and goals for their CSR programs and set separate budgets to support them. Most of the time, these programs are based on well-defined social beliefs or are carefully aligned with the companies’ business domain.
Corporate Social Responsibility – The French Way
France was the first nation to make public company reporting compulsory. The rules require public companies to comprise information on a series of topics in their yearly report, such as:
- Status of employees
- Mobility of staff
- Work hours
- Social relations
- Health and safety
- Health policy
- Profits distribution
They must also illustrate their manners when it comes to communities who are concerned by their activities in the countries where they have offices. They must explain the ways in which their sub-contractors respect International Labor Organization agreements. They must also report on ecological issues such as the measure of progress in terms of energy effectiveness and dipping environmental impacts; conditions on use of land, air and water; and documentation obtained in the area of environmental safety.
At Alstom, people, sustainability, and the environment are positioned at the heart of corporate strategy. Alstom offers rail transport, power generation and transmission solutions that defend the environment while ensuring financial expansion and social progress, providing a major contribution to global sustainable development. Alstom expects to further its cooperation with the local communities and people in the countries they are operating in.
Indo-French Chambers of Commerce and Industry Event
The Indo-French Chambers of Commerce and Industry (IFCCI) Mumbai is organizing an event on CSR on July 14, 2012 at Sofitel in Mumbai. The event emphasizes the best practices in CSR and will be attended by the president of IFCCI, the Honorable French Consul of Mumbai, and many corporate leaders.
Presently in India, it is hard for one sole entity to bring about change, as the gauge is vast. Organizations have the know-how, strategic thinking, manpower, and financial strength to enable widespread social transformation. Operative partnerships between corporations, NGOs and the government will place India’s social development on a developing mode.
A concern for social and environmental development should be made a part of every corporate entity through its inclusion in the annual agenda backed by strong and genuine programs. It’s up to the lobbying groups and governmental agencies to convince the corporate power houses to come forward and take up the challenge by making them aware of the associated advantages that these companies stand to gain from effective CSR campaigns.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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