Study Finds that Largest Indian Companies Need to Improve CSR Activities and Reporting

Source: SocialFunds.Com, 21 April 2009

In its second annual report on the corporate social responsibility (CSR) activities of the 1,000 largest Indian companies, Karmayog, a Mumbai-based online organization, has found that on a scale of zero to five, 494 companies (49%) received the lowest score of zero. No companies received the highest score of five.
Karmayog’s report gave ten companies— ACC, Ballarpur Industries, HDFC, Infosys Technologies, Jubilant Organosys, Kansai Nerolac Paints, Moser Baer, TCS, Tata Steel, and Titan Industries—a score of four.

The report, entitled Corporate Social Responsibility Study and Ratings of Indian Companies, asserts that CSR ratings are important for a number of reasons. Government bodies can use them to develop industry-wide CSR guidelines. Industry and trade associations can set benchmarks of CSR for companies to follow. Non-governmental organizations (NGOs) can use them to study the most up-to-date CSR efforts undertaken by corporations. The companies themselves can learn from the CSR activities of their peers.

Karmayog believes that corporate CSR activities consist of two predominant aspects. The negative effects caused by a company’s processes and products can be neutralized, minimized, or offset. Among the positive steps a company can take include using its resources, core competence, skills, location, and funds for the benefit of people and the environment.

The criteria used by Karmayog to determine its rankings include corporate CSR activities and CSR reporting. Negative criteria that limit a company’s possible score include the manufacturing of harmful products, violations of laws and regulations, and high impact processes that that severely damage the environment.

The report found that although 51% of the companies studied were found to practice CSR in some form, only 2% publish a separate sustainability report, and only 3% report the amount they spent on CSR. Many individual companies under a group report the same CSR activities across the group, and several companies repeat the exact same CSR information every year. The report also found that many companies spread their CSR expenditures thinly across many activities.

Karmayog offered several recommendations for Indian companies to follow to improve their CSR efforts. Companies should spend at least 0.2% of its sales on CSR activities. Companies should also follow Global Reporting Initiative guidelines by publishing a separate CSR report annually, or at the very least, include a CSR section in their annual reports. Finally, he recommended that companies adopt a comprehensive set of industry guidelines to improve their CSR processes.