The topic chosen is Topic Number 20 - "An Organisation's Corporate Social Responsibility Policies, including Business Ethics, and their impact on Business Practice and Key Stakeholders".
It is always believed that the development of a nation rests in the hands of corporate houses and this becomes more important in a developing country like India, where governments are always criticised and corruption a major problem. Thus, CSR becomes an important issue and the effects are already seen where many Indian Corporate Houses undertaking wide range of initiatives to help develop communities.
CSR is no longer fringe activity that companies engage in to look good. Effective CSR today is that which relates directly to givers core competencies and offers real value, not just philanthropy. It is no longer considered good for business, but simply good business.
The organisation chosen is second largest producer of steel in India and sixth largest globally - TATA STEEL, INDIA also known as TISCO (Tata Iron and Steel Company Ltd)
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One of the worlds' pioneering steel companies, Tata Steel manufacturer wide range of steel products. The major Tata companies are Tata Steel, Tata motors, Tata tea, Tata chemicals, Tata Consultancy Services (TCS), Indian Hotels and Tata communications. Tata companies have operations in every major international market - United Kingdom, Europe, Africa, USA, Asia Pacific, Middle East and China.
Tata name has been respected in India for 140 years for its adherence to strong values and Business Ethics.
1.2 Reason for choosing the Topic and Organisation
The foremost objective of companies has always been to generate wealth for its shareholders. Over the years, however there has been a sea change in the way companies do business. Addressing Social and Environmental issues is now viewed as a long term investment in creating a stable society in which to do business.
Also, CSR is a topic which I personally prefer and have an interest. The theoretical knowledge was gained through studying ACCA Paper P1 Professional Accountant but this project has given me an opportunity to analyse, how companies address these issues in practical and serve the society.
CSR is an emerging issue in current environment. Problems such as Global warming, increasing use of fossil fuels and environmental degradation has put pressure on companies to minimise their carbon footprint and present themselves as good corporate citizens. Companies are actively demonstrating to investors that CSR makes good business sense, and the firms are already seeing the benefits it can bring them in terms of risk management and attracting investment.
The organisation selected is "Tata Steel" manufacturer of steel products. Tata steel is a respected name in India, for its support and development of weaker sections of society. Tata Steel has over the year's undertaken wide range of activities to tackle Poverty, Illiteracy and diseases such as HIV, Malaria and has been quite successful to an extent. It has won range of awards for its activities and support to the people in and around its factory.
Another reason for choosing Tata steel is easy access to information. It ranks in the Top 5 companies in India. Being such large enterprise wide information is available.
1.3 Project Objectives and Research Questions
To give an overview as to what is Corporate Social Responsibility and its role in current business environment.
To give an insight about the Business ethics and Business Practices of the organisation and how it affects its key stakeholders.
To analyse the various CSR initiatives of the organisation concerned and to conclude whether the organisation could be referred as a true Corporate Citizen.
To analyse and conclude whether the organisation satisfies the requirements of the Business Model used.
Personal objective: To enhance my intellectual and presentational skills as well as my ability to prepare reports and apply my theoretical knowledge in practical terms and have an insight and in-depth knowledge of the topic chosen.
Whether the organisation satisfies the true CSR Business Model Of Carroll Archie B (Pyramid of Corporate Social Responsibility)
Whether the organisation chosen has appropriate Business Ethics(Code of Conduct) and how it affects its key stakeholders
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How its Major Stakeholders are affected by its CSR activities.
1.4 Overall Research Approach
This Research and Analysis project was prepared under the guidance of a mentor. The overall framework under which I have conducted by research can be summarised as follows.
This was the starting point of my research. Relevant and detailed information about the organisation chosen was necessary which I obtained by visiting corporate website, online newspapers and Articles. As I would explain in Part 2 of this report in detail, I have solely used secondary sources of information in order to conduct my research which meant I had to go through a significant volume of information in order to extract relevant information.
I have used Carroll's Pyramid of Corporate Social Responsibility in order to answer my research questions as thoroughly as possible. After gathering information about various CSR activities of TATA STEEL, I have analysed them to be able to draw conclusions whether the organisation fulfils the responsibilities of each level of Carroll's Pyramid.
By selecting the above model, I have attempted to build a coherent picture of the organisations CSR activities and hopefully the narrative that emerges during analysis will be consistent with the overall picture.
I have used illustration tools such as pictures and charts in order to present results in a way that communicates the outcome clearly. I have also added text based analysis paragraphs that accompany all the illustrations so as to interpret and evaluate information that has been illustrated.
Following on from analysis section is the conclusion. Here I have tried to summarise the results from my analysis and have attempted to give a 'Final Verdict' whether TATA STEEL fulfils all the 4 levels of Carroll Pyramid of CSR, and whether it could be referred to as a Good Corporate Citizen in real terms.
2. Information gathering and Business /Accounting Techniques
2.1 Sources of information
In gathering information for my research, I had two options
Collecting Primary Information
Collecting Secondary Information
In my opinion, the need to carry out primary research was reduced by the fact that there was sufficient secondary information available to successfully achieve my project objectives and answer all of my research questions. I have thus, had sole recourse to secondary information only.
The secondary sources which I have used include:
Tata Steel Annual Report - 2008-09, 2009-10
Corporate Websites - Tata Group, Tata Steel & JSW Steel Ltd
Internet Search Engine (Google, Yahoo!, Ask)
Online Newspapers - Financial Times, Times of India
Online Business articles
ACCA Kaplan P1 Professional Accountant Textbook
Abstracts from books on CSR by various Authors
2.2 Method of Gathering Information
1. General Reading
During the writing phase of Research and Analysis Project, I read a few books relating to chosen topic. One of the books which I read was The World Guide to CSR: Country by Country Analysis written by Wayne Visser. This book provided detailed information about the evolution and practice of CSR. The book is also referred as a reference guide for managers, NGO's and academics. I also read a book called, CSR and non-financial reporting for business written by Hoskins & Tony. This book offered expert guidance to help identify and assess relevant CSR issues. Besides this, I also referred to Kaplan P1 Professional Accountant Text Book as and when required.
2. Internet Research
I began my internet research by visiting the corporate websites of TATA STEEL and TATA GROUP and accessed through Tata Steel Annual Report for the year 2008-09 and 2009-10 in order to gather data about its various CSR projects. I also accessed JSW Steel website so as to gather data about its operations and accessed its annual reports to collect financial data for analysis with Tata Steel.
I also accessed online Business Articles published time to time during my research and report writing in order to keep my knowledge about company and its activities up to date. Online newspapers such as Financial Times and Times of India were also useful internet tools. I would access these newspapers regularly as it was an important source to know public response about company activities.
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Internet search engines (Google, Yahoo! and Ask) provide wide articles and information about the organisation although all of them cannot be relied upon. These search engines were extensively used during the data collection stage of my project.
2.3 Limitations of gathering information
Exclusive usage of secondary sources has imposed numerous limitations on my research. Amongst the ones I felt most are:
Historical information: Secondary sources suffer from being outdated if they have not been updated before I gathered for my research and this means that aspects of analysis that would require the very latest information, in order to be meaningful, become hard to justify based on historical sources alone.
Reliability: It was not possible for me to gather any primary data and therefore secondary data gathered may not be as accurate and reliable. Although articles on internet tend to be very thoroughly referenced, sometimes it is impossible to trace the sources down to their origin. However, I have attempted to double check all references used here so as to obtain reasonable assurance that my citation is indeed true.
Accuracy: Certain sources of information, such as Wikipedia, are 'open source' portals where anyone can alter, edit or delete information available and thus the accuracy and objectivity of these sources can be called into question. Also articles in press, newspapers are opinions of others which may be harder to rely as the basis of their opinion may not always be known. Therefore, wherever I have quoted an opinion, I have tried my best to cross check information through other sources as to ascertain its reliability.
Suitability: The nature of secondary research is such that the sources used are unlikely to yield the exact information being sought, so a number of information sources, although technically instructive in their content, are unlikely to be of much use for the purposes of research. This was an issue I faced frequently during my research. In order to minimize its effect, I have attempted to be as thorough as possible with my research.
2.4 Ethical Issues & Resolution
The ethical issues that I felt arose during my research were related to:
Integrity: This issue arose particularly in terms of Plagiarism i.e. using other people's work without acknowledging their contribution. In order to safeguard against this threat, I have stated clearly, that I have relied solely on secondary sources of information for my research. Additionally I have attempted to reference my work as thoroughly as possible.
Objectivity: The RAP preparation guide states that you should be unbiased when undertaking your research and you should not only use those information sources that support your view of the company. To safeguard against this threat, I have attempted, as best as I can, to consider information sources that are relevant to my analysis and not only those that paint Tata Steel in a favorable light.
Confidentiality: The organization's information is widely available to public because of its size and regulations governing it, hence there were no ethical issues relating to the confidentiality of information acquired.
2.5 Business Techniques Used and their Limitations
In my analysis of the various CSR activities of chosen organisation and to arrive at a conclusion, I have used Carroll's Business Model of Corporate Social Responsibility also known as Pyramid of CSR. The model consists of 4 parts - As Below.
Economic Responsibilities: The organization should perform in a manner consistent with maximizing earnings per share. It is important to be committed to being as profitable as possible and maintain a strong competitive position.
Legal Responsibilities: The organization should perform in a manner consistent with expectations of government and law. It is important to comply with various federal, state and local regulations to be a law abiding corporate citizen.
Ethical Responsibilities: The organization should perform in a manner consistent with the expectations of societal mores and ethical norms. Good corporate citizenship is defined as doing what is expected morally or ethically.
Philanthropic Responsibilities: The organization should perform in a manner consistent with the philanthropic and charitable expectations of society. It is important that managers and employees participate in voluntary and charitable activities within their local communities and projects that enhance a community's 'quality of life'.
Not a perfect metaphor: No metaphor is perfect, and the CSR pyramid is no exception. It is intended to portray that the total CSR of business comprises distinct components that, taken together, constitute the whole.
Not mutually Exclusive: Though the components have been treated as separate concepts for discussion purposes, they are not mutually exclusive and are not intended to juxtapose a firm's economic responsibilities with its other responsibilities.
Components of CSR in Dynamic Tension with One another: At the same time, a consideration of the separate components helps the manager see that the different types of obligations are in a constant but dynamic tension with one another. The most critical tensions, of course, would be between economic and legal, economic and ethical, and economic and philanthropic.
2.6 Organisation involved in CSR
Following is the brief on Tata Steel:
Tata Steel was founded in 1907, as a materialisation of its Founders dream of a prosperous and independent India. Jamsetji Nusserwanji Tata's vision helped Tata Steel to overcome several periods of adversity and strive to improve against all odds.
Tata Steel has always believed that mutual benefit of communities, corporations and countries is the most effective route to growth. The Company has always had significant impact on the economic development in India and now seeks to strengthen its position of pre-eminence in international domain by continuing to lead by example of responsibility and trust.
"We aspire to be the global steel industry benchmark for Value Creation and Corporate Citizenship"
Consistent with the values and vision of the founder Jamsetji Tata, Tata Steel strives to strengthen India's industrial base through the effective utilization of staff and materials. The means to achieve this are high technology and productivity, consistent with modern management practices.
Core Beliefs and Values
The five core Tata values underpinning the way we do business are:
Integrity: We must conduct our business fairly, with honesty and transparency. Everything we do must stand the test of public scrutiny.
Understanding: We must be caring, show respect, compassion and humanity for our colleagues and customers around the world, and always work for the benefit of the communities we serve.
Excellence: We must constantly strive to achieve the highest possible standards in our day-to-day work and in the quality of the goods and services we provide.
Unity: We must work cohesively with our colleagues across the group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.
Responsibility: We must continue to be responsible, sensitive to the countries, communities and environments in which we work, always ensuring that what comes from the people goes back to the people many times over.