Perspectives on CSR presented at Corporate Governance Week by ICSI
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The Institute of Company Secretaries in India (ICSI), Pune Chapter organized corporate governance week in Aug, 2012. I was invited to share my perspectives on Corporate Social Responsibility (CSR) at the closing ceremony. CSR is a much talked about topic in India right now due to government's decision to make businesses pay certain parts of their profits for CSR.
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Perspectives on CSR presented at Corporate Governance Week by ICSI
- 1. Copyright of Thinking Hut IT Solutions Pvt LtdCopyright of Thinking Hut IT Solutions Pvt Ltd Corporate Social Responsibility (CSR) A Perspective by Uday Bhaskarwar uday.bhaskarwar@thinkinghut.com
- 2. Copyright of Thinking Hut IT Solutions Pvt Ltd CSR? 2
- 3. Copyright of Thinking Hut IT Solutions Pvt Ltd CSR? 3
- 4. Copyright of Thinking Hut IT Solutions Pvt Ltd A few leading questions… 4 Should companies voluntarily engage in CSR? Is the 2% mandate proposed by government sensible/justified? Does your company engage in CSR? Is CSR another word for charity? Who should be responsible for social welfare in general?
- 5. Copyright of Thinking Hut IT Solutions Pvt Ltd Definition • Wikipedia.com – CSR (also called corporate conscience, corporate citizenship, social performance, or sustainable responsible business) is a form of corporate self-regulation integrated into a business model. Business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making, that is the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit. – Proponents argue that corporations make more long term profits by operating with a perspective, while critics argue that CSR distracts from the economic role of businesses. – CSR is titled to aid an organization's mission as well as a guide to what the company stands for and will uphold to its consumers. ISO 26000 is the recognized international standard for CSR (currently a Draft International Standard). Public sector organizations (the United Nations for example) adhere to the triple bottom line (TBL). It is widely accepted that CSR adheres to similar principles but with no formal act of legislation. • European commission – A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. 5 Giving, Responsibility, Society and Environment, Voluntary, Outside core business
- 6. Copyright of Thinking Hut IT Solutions Pvt Ltd Examples of CSR? 6 A company gives it’s old PCs to the local school A company employs local people rather than machines A company gives Rs. 100cr for earthquake relief A company educates local college teachers about latest in IT
- 7. Copyright of Thinking Hut IT Solutions Pvt Ltd A LOUD Suggestion… 7
- 8. Copyright of Thinking Hut IT Solutions Pvt Ltd Different Entities, different Roles… 8 Government NGOs Businesses
- 9. Copyright of Thinking Hut IT Solutions Pvt Ltd Different Entities, different Roles… 9 Government NGOs Businesses Govern / Rule Law and order Justice National security Healthcare & Education Social equality Disaster management Environment Public Welfare
- 10. Copyright of Thinking Hut IT Solutions Pvt Ltd Different Entities, different Roles… 10 Government NGOs Businesses Govern / Rule Law and order Justice National security Healthcare & Education Social equality Disaster management Environment Public WelfareManufacturing / Services Revenue and Profit Growth Shareholder value Employee welfare Create economic value Pay Taxes!
- 11. Copyright of Thinking Hut IT Solutions Pvt Ltd Role of Government vs Businesses Govern / Rule Law and order Justice National security Healthcare & Education Social equality Disaster management Environment Public Welfare 11 Manufacturing / Services Revenue and Profit Growth Shareholder value Employee welfare Pay Taxes! Create economic value! Government Businesses
- 12. Copyright of Thinking Hut IT Solutions Pvt Ltd Why it still makes sense for businesses to engage in CSR? 12
- 13. Copyright of Thinking Hut IT Solutions Pvt Ltd Why it makes sense for businesses to engage in CSR? 13 • It’s in Businesses’ own best interest • Government’s priorities may not be aligned with businesses’ requirements • CSR doesn’t have to be pure “charity” • While CSR is all about “giving back” to the society, it can make economic sense – “Giving back” -> “Coming back” – Multiplier effect Investment in ecosystem Better ecosystem Longer term gains
- 14. Copyright of Thinking Hut IT Solutions Pvt Ltd How companies can differentiate between Charity & CSR? 14 Aspect Charity CSR Investment Trail Ends Begins! Expected Benefit Humanitarian Humanitarian + Business Effectiveness Rarely measured Rigorous measurement Value add to business No direct value add Yes but longer term Sustenance Not necessarily there A must The “Loop” Incomplete Complete
- 15. Copyright of Thinking Hut IT Solutions Pvt Ltd CSR Scores of the examples 15 A company gives it’s old PCs to the local school (3/10) A company employs local people rather than machines (6/10) A company gives Rs. 100cr for earthquake relief (1/10) A company educates college teachers about latest in IT (8/10)
- 16. Copyright of Thinking Hut IT Solutions Pvt Ltd Slide 167/11/2010
- 17. Copyright of Thinking Hut IT Solutions Pvt Ltd Examples of companies doing well on CSR… 17 Level 4 (of 5) on Karmayog CSR Rating 2010 Tata Steel Infosys HDFC
- 18. Copyright of Thinking Hut IT Solutions Pvt Ltd What are they spending on… 18 Tata Steel •Education •Tribals culture •Income generation for tribals •Healthcare •Environment Infosys •Healthcare •Social rehabilitation and rural upliftment •Learning and education •Art and culture HDFC •Shelter Assistance Reserve •Anandwan - A way of life •Kinship for children •Ramakrishna Mission Students' Home •Childline @ Ten Nine Eight
- 19. Copyright of Thinking Hut IT Solutions Pvt Ltd What role can a Company Secretary play? 19 ICSI does list out CSR as one of the CS services CS can be an evangelist - there is no need to wait for a regulation The CS can help formulate and implement the CSR policy Pick up what’s relevant for the company and has direct business benefits
- 20. Copyright of Thinking Hut IT Solutions Pvt Ltd Why the 2% rule does not make sense? 20 Businesses that want to give are already giving Businesses that do not want to give will never give! 2% levy would lead to further business malpractices…
- 21. Copyright of Thinking Hut IT Solutions Pvt Ltd Meanwhile, Capitalism needs to evolve… 21 Share value Growth Profitability Share value Profits & growth Planet People “3Ps” - Triple bottom-line
- 22. Copyright of Thinking Hut IT Solutions Pvt Ltd In a nutshell… 22 We live in a society that has various entities which play various roles CSR is all about Giving but… Be “selfish” while giving – “Give” with expected benefits Value add to the business must be kept in mind Look at it from a long term perspective. Make it sustainable. Effectiveness must be measured – the loop must be complete The CS can play a pivotal role in CSR activities Triple Bottom-line should become the mantra for businesses!
- 23. Copyright of Thinking Hut IT Solutions Pvt LtdCopyright of Thinking Hut IT Solutions Pvt Ltd Q & A uday.bhaskarwar@thinkinghut.com