Introduction

Definition and History of CSR

Corporate social responsibility (CSR) means considering the wellbeing of humanity by taking responsibility of the impact of organizations actions on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the surroundings.

Organizations have realized that in addition to growing businesses it is also very important to build responsible and sustainable relationships with the large community. Hence, CSR has become increasingly famous in the Indian corporate scenario and is one of the key drivers of CSR.

It was in the early 1970s when the term “CSR” came in to ordinary use after many international corporations were formed, but rarely abbreviated. The term stakeholder means those impacted by organization’s activities.

Corporate Social Responsibility (CSR) defined as “the principled behavior of a company towards the general public,” evident itself in the form of such noble programs initiated by for-profit organizations.

Additional motive for this rapid acceptance of CSR is the state of the Indian society. Though India is one of the fastest growing economies, socio-economic issues like poverty, illiteracy, lack of healthcare etc. are still universally present and the government has limited resources to embark upon these challenges. This state of affairs has opened up several areas for businesses to contribute towards social development.

CSR is not a latest notion in India. Corporates like the TATA, ITC, Aditya Birla, and Indian Oil Corporation, are few to name who are involved in helping the society ever since their foundation. Several other organizations through donations and charity events have been doing their part for the society.

Today, CSR in India has gone ahead of only charity and donations. It is approached in a more organized and structured fashion. It is now considered as an essential part of the corporate strategy. Companies have CSR teams that develop specific policies, strategies and goals for their CSR programs and set aside budgets to sustain them.

These programs are based on a clearly defined social philosophy or are closely aligned with the company’s business expertise. Employees volunteer their time and contribute their skills, to implement them and are considered as the backbone of these initiatives. Overall development of a community to supporting specific causes like education, environment, healthcare etc. forms part of CSR programs.

Organizations like Bharath Petroleum, Maruti Suzuki India, and Hindustan Unilever, adopt villages where they focus on holistic development. They provide better medical and sanitation facilities, build schools and houses, and help the villagers become self-reliant by teaching them vocational and business skills. This is one of the examples of CSR.

On the other hand GlaxoSmithKline’s CSR programs primarily focus on health and healthy living. They work in tribal villages where they provide medical check-up and treatment, health camps, health awareness programs, etc. They also provide money, medicines and equipment to non-profit organizations that work towards improving health and education in under-served communities.

Many CSR initiatives are implemented by corporate in partnership with Non-governmental organizations (NGOs) who are well versed in working with the local communities and are experts in tackling specific social problems.

SAP India in partnership with Hope Foundation, an NGO that works for the enhancing the poor and the needy throughout India, has been working on short and long-term transformation initiatives for the tsunami victims. Together, they also started The SAP Labs Center of HOPE in Bangalore, which serves as a home for street children, where they provide food, clothing, shelter, medical care and education.

Take the following illustration:

Companies need to answer to two aspects of their operations:

1. The quality of their management – both in terms of people and processes (the inner circle). 

2.The nature of, and quantity of their impact on society in the various areas.

Outside stakeholders are taking an increasing interest in the activity of the company. Most look to the outer circle – what the company has actually done, good or bad, in terms of its products and services, in terms of its impact on the environment and on local communities, or in how it treats and develops its workforce. Out of the various stakeholders, it is financial analysts who are predominantly focused – as well as past financial performance – on quality of management as an indicator of likely future performance.

Why is CSR important?

• Consumers & investors: growing expectation for organisations to behave responsibly
• Consumer awareness: ‘Green’ and ‘Ethical’ consumerism
• Legislation: H&S, EPA, Sustainability, Codes of Practice
• Globalisation: Adoption of ‘Best Practice’, Consumer & Legal Acceptance.

Business advantages of CSR:

Human Resources

• Recruitment, retention and morale of Staff

Risk Management

• Investment in ‘ethical brand equity’
• ‘Greenwash’ effect?

Brand Differentiation

• As USP
• Build brand loyalty
• Reputation and brand attractiveness

Business Development

• New markets, products and services

Resources Management

• Better management and conservation of strategic assets

Stakeholder Management

• Better internal and external relationships
• Freedom of operation: reduce government, public, NGO intervention in organisation

History of Tata Group

“In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence.”

– Jamsetji N. Tata, Founder, Tata Group

The Trust’s Vision:

Shri Ratan Tata’s thoughts, in 1913, on the manner in which the Trust’s fund could be used:

“.. for the advancement of Education, Learning and Industry in all its branches, including education in economy, sanitary science and art, or for the relief of human suffering or for other works of public utility…”

“To engage qualified and competent persons to study into matters that pertain to the social, economic or political welfare of the Indian community, the object being to design schemes of a practical nature calculated to promote the well-being of the said community, care being taken that such work is not undertaken from the stereotype point of view but from the point of view of fresh light that is thrown from day to day by the advance of science and philosophy on problems of human well-being”

Further he also directed that:

“No experiment and no venture should be aided or undertaken unless the scheme thereof is carefully prepared…”

“No institution or organization should be aided of which the accounts are not subject to periodical audits and are not regularly issued and which would not be open to inspection and examination.”

Industry Profile of the TATA Group

• The Tata Group comprises 114 operating companies in seven business sectors:
• Tata Auto Comp Systems – Automotive
• Tata Steel – Materials
• Tata Power – Energy
• Rallis India – Chemicals
• Tata Realty and Infrastructure – Service
• Tata Tea – Consumer Products
• Tata Technologies – Information Systems and Communications

Globally: The Tata Group has operations in more than 54 countries. The companies export products and services to 120 nations, across six continents.

The Tata Group is one of India’s principal and most valued business multinationals, with revenues in 2005-06 of $21.9 billion (Rs 967,229 million), the equivalent of about 2.8 per cent of the country’s GDP, and a market capitalization of $55.1 billion.

Tata company’s total employee strength is around 2,46,000.

Amongst the 28 public listed enterprises of Tata Group are Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea – have a combined market capitalization that is the maximum among Indian business houses in the private sector, and a shareholder base of over 2 million.

The five core values of Tata family are integrity, understanding, excellence, unity and responsibility.

Purpose of the TATA Group:

“To improve the quality of life of the societies they serve.”

The Group brings a unique set of competences through leadership in sectors of national economic significance.

This requires them to grow assertively in focused areas of business.

Their legacy of returning to society what they earn put forward trust among consumers, employees, shareholders and the community.

The “TATA” represents leadership with trust in a exceptional way.

Milestones:

• 1868 – In the mid 19th century, TATA Group was started by Jamsetji Nusserwanji Tata
• 1874 – The Group entered into textiles by setting up the ‘Central India Spinning, Weaving and Manufacturing Company’.
• 1902 – Taj Mahal Palace and Tower, India’s first luxury hotel, opened in 1903.
• 1907 – India’s 1st Iron and Steel plant in Jamshedpur is The Tata Iron and Steel Company (now Tata Steel) & the plant began its production in 1912.
• 1968 – India’s 1st software Services Company is established as a division of Tata Sons called Tata Consultancy Services (TCS).
• 1995 – Tata QMS institutes the JRD QV Award, modeled on the Malcolm Baldrige National Quality Value Award of the United States, this laid basis of the Tata Business Excellence Model.
• 1998 – Tata Indica, started by Tata Motors is India’s first indigenously designed and manufactured car.
• 2000 – The first major acquirement of an international brand by an Indian business group was Tata Tea acquiring the Tetley Group, UK
• 2006
  • Launched Credit Card
  • In Kolkata, the foundation stone for the Tata Medical Centre was shown.
  • MCA-2, India’s largest e-governance initiative was launched by TCS.
  • For the third time, Tata Steel ranked world’s best steel maker by World Steel Dynamics.
• US-based Eight O’ Clock Coffee was acquired by Tata Coffee.
• Tata Sky satellite television service was launched across the country.
• 2007
  • In a wider leap, the Anglo-Dutch steel major Corus has vaulted the former to the fifth position from 56th in global steel production capacity, in the Tata Steel’s acquisition TATA Singur project
  • MB Kulkarni, General Manager (Construction) of Tata Motors’, “Our work plans are planned in such a way that whatever are the product target dates, in 2008 rolling of the vehicle will take place.” Group Chairman Ratan Tata’s dream “people’s car” will be rolled out by next year.
  • For the factory 700 acres of land will be used and manpower has been planned and organized for the construction.

TATA’s Corporate Social Responsibility

SILVER LININGS

The company has streamlined its CSR activities into four major areas:

• HEALTH
• EMPLOYABILITY
• EDUCATION
• ENVIRONMENT

Health:

The World Health Organization defines health “as a state of complete mental, physical and social well-being and not merely the absence of infirmity or disease”.

The health status is usually measured in terms of life expectancy at birth, fertility rate, infant mortality rate, crude birth/death rate.

According to the Country Health System Profile, World Health Organization, public health infrastructure in rural India consists of a 3 tier system:

1. A sub centre for every 5,000 population with a male and female worker,
2. A Primary Health Centre (PHC) for every 30,000 population with a medical doctor and other paramedical staff, and
3. A Community Health Centre (CHC) for every 100,000 population with 30 beds and basic specialists.

In urban areas, it is 2 tier systems with Urban Health Centre (UHC)/Urban Family Welfare Centre (UFWC) for every 100,000 population followed by general hospital.

The existing public health infrastructure is not evenly distributed across the States.

Many institutions are not functional due to staff shortage and non-availability of drugs and consumables and essential equipment.

As a result of such inadequate public health facilities, it has been estimated that less than 20 percent of the population, which seek OPD services, and less than 45 percent of that which seek indoor patient treatment, avail of such services in public hospitals.

A large portion of population seek medical care services from private sector despite the fact that most of these patients do not have the means to make out-of-pocket payments for private health services (National Health Policy 2002).

Keeping these figures in mind, the Company has launched several initiatives for improving the health status of community members in the CSR project areas across locations.

The initiatives include both preventive as well as curative health care services.

In addition, infrastructural development for ensuring a perennial supply of clean drinking water and improved health through better sanitation facilities is also included in the CSR program of the Company.

Figures for 2006 :

Alignment to Millennium Development Goals

Impact in 2007-08

Millennium Development Goals 5:

Improve Maternal Health

• Institution of Village Health Workers established – Community members identified and trained for providing basic health care to village communities
• Antenatal cate and anaemua detection and treatment for 590 women

Millennium Development Goals 6:

Combat HIV/AIDS, Malaria and other diseases

• Curative & Preventive health services were provided to over 92,390 people through the Company’s community health programmes, including immunization drives for polio, measles.
• Special country-wide programmes were conducted for drivers during service camps. 46,548 drivers availed of the free general health and eye check-up camps and AIDS awareness programmes

Employability

Employability facts

• Annually India’s labour force is growing at a rate of 2.5% and employment only by 2.3%
• India’s workforce is self-employed by 60%.
• Around 30% are casual workers i.e. they work only when they are able to get jobs and remain unpaid for the rest of the days
• In the “Unorganized sector” Approximately, approximately 90% of the labour force is employed, i.e. sectors which do not provide other benefits of employment combined with the social security “Organized sector”.

In addition to the Apprenticeship programmes that are run within the premises of the manufacturing units, as per the Apprenticeship Act 1961, the Company has also initiated several efforts to enhance employability of youth.

To upgrade the quality of Industrial Training Institute (ITIs), the company has built public-private partnership with government authorities. In the year 2007-08, the upgradation process has been initiated in four it is, who are equipped with latest machines and tools. To understand the manufacturing processes, the students have been taken on exposure visits and for their faculty, ‘Train the Trainer’ programmes have been organized. Technical and vocational programmes are run for rural youth from the project areas, like Motor Mechanic Vehicle Trade Course, electrical, welding, a/c refrigeration, computer skills, bee-keeping, etc. Special programmes are also run for women including sewing training, beautician courses, manufacturing food products and utility items and cable harnessing and assembly work. More than 9,000 youth and women have benefited from these programmes across Company’s locations.

Alignment to Millennium Development Goals

Impact in 2007-08

Millennium Development Goals 1:

• Eradicate extreme poverty and hunger
• The Company has identified 10 ITIs across the country to upgrade their facilities and enhance the relevance of their programmes to industry needs, as a part of its skill development programme, In 2007-08, four ITIs have been covered.
• Training in various technical and vocational trades was given to around 1,085 youth from areas adjecent to the Company’s plants. Over 350 local youth have been trained in partnership with the government and the social sector, making them employable at the new plant location of Singur.
• All 18 students of the Company-supported Mechanic Motor Vehicle Trade Course, 2007-08, in association with the Ramakrishna Mission at Sakwar, Thane district, Maharashtra, have been successfully placed at the Company’s dealerships. Two students from the previous batch have been facilitated to become entrepreneurs and have opened their own workshop on the Mumbai-Ahemedabad Highway

Millennium Development Goals 3: Promote gender equality and empower women

To make the women economically independent, around 1,058 women have been trained in utility items, manufacturing food products and, beautician courses, sewing

Education

“The root of poverty often lies in illiteracy. Social infrastructure like education is as important as physical infrastructure, not only for sustaining high growth but also for enhancing welfare.”

Education Facts About India

• Less than half of India’s children between the age 6 and 14 go to school
• A little over one-third of all children who enroll in grade one reach grade eight
• Children aged 6 – 14 years do not attend school, the count of which is atleast 35 million
• 52% of girls in the age group of 5 to 9 years are illiterate
• 53% of habitation has a primary school
• 20% of habitation has a secondary school
• In nearly 60% of schools, not more than one or two teachers are there to teach Classes I to V
• The reasons for leaving given by 3 in every four drop-outs are need to work to support their families, little interest in studies and high cost of private education

Contribution of Tata Motors towards improving education through infrastructural development for promoting schooling among the villagers and through upgradation of educational facilities like building computer laboratories, sports ground, etc. and organising training to teacher’s programmes to better the quality of education.

Alignment to Millennium Development Goals

Impact in 2007-08

Millennium Development Goals 1:

Achieve universal primary education:

• From over 25 villages, infrastructure was improved in 13 schools, promoting higher education for 2,000 children.
• From across 33 schools, Shiksha Prasar Kendra, a Tata Motors society at Jamshedpur, supported 18,000 students of which 7,500 are girls

Quality of education improved:

• In 4 schools Teacher’s training programme was conducted
• With participation from over 4,300 students, extra-curricular activities was organised in 31 schools
• In West Bengal at Beraberi High School, Singur, computer labratory was built
• 375 students were awarded with scholarships for higher studies

Environment

Climate Change is the environmental issue facing the world today, which is any long-term significant change in the “average weather” experienced by a given region.

Facts on Environment

Reports concluded by the Intergovernmental Panel on Climate Change (IPCC) are:

• “Since the mid-20th century most of the observed increase in globally averaged temperatures is very likely due to the observed increase in anthropogenic greenhouse gas concentrations.”
• “From new estimates of the combined anthropogenic forcing due to greenhouse gases, land surface changes and aerosols, it is likely that human activities have exerted a substantial net warming influence on climate since 1750.”
• “Anthropogenic aerosols produce a net negative radiative forcing (cooling influence) with a greater magnitude in the Northern Hemisphere than in the Southern Hemisphere”
• The IPCC, which represents consensus in the scientific community, defines “extremely likely,” “virtually certain”, “very likely,” and as indicating probabilities greater than 90%, 95%, and 99%, respectively.

Tata Group places a special emphasis on environmental and ecological issues in view of the threat to environment. The Group’s efforts to preserve and regenerate environment find expression in the slew of projects and programmes it has undertaken in and around its facilities and operations. In this context a focus area for the group is the climate change crisis. Tata Motors’ beliefs on sustainability have led to a corporate policy that emphasises environment preservation, the Company works on projects that include reducing effluents and emissions, maintaining local ecologies, repairing green cover and improving long term corporate sustainability.

Alignment to Millennium Development Goals and Bharat Nirman Target

Impact in 2007-08

Millennium Development Goals 7: Ensure environment sustainablity

With an 80% survival rate, over 175,242 saplings have been planted.

To promote use of environment-friendly practices smokeless chullahs has been constructed. Agricultural training was given to minimize the use of environmentally hazardous methods and materials. Provide awareness camps on environment related issues.

Bharat Nirman Target: 10 million hectares of additional irrigarion capacity to be created by 2009

Check dams and community irrigation wells have been constructed at villages near Pune, improved irrigation to augmenting incomes of families. In Jamshedpur, in over 152 acres tree plantation has extensively been carried out and 85 acres of land has been brought under irrigation

Other CSR Objectives

Sumant Moolgaokar Development Foundation

Sumant Moolgaokar Development Foundation (SMDF) has been founded in memory of our ex-chairman Late Shri Sumant Moolgaokar with a view to perpetuate his exemplary work in rural development.

Tata Steel has evolved, over the years, an encompassing culture of social responsibility that not only sustains but also enriches the lives of the communities it supports.

The company’s corporate social responsibility (CSR) strategy was inspired by Jamsetji Tata’s conviction that, “In a free enterprise, the community is not just another stakeholder, but is, in fact, the very purpose of its existence.” Tata Steel’s approach to its business has evolved from this concept and the wealth it has created is continuously returned to the people through its community initiatives.

And they are following the saying of their ancestors as:

Tata Steel CSR team was to work for the welfare of the socially and economically disadvantaged communities living in and around its areas of operation, including the mines and collieries serving the plant.

The basic concept of ‘Tata Steel Parivar’ originates from the century old Corporate Social Responsibility of the Company, which is aptly defined as:

“Tata steel believes that the primary purposes of the business is to improve the quality of the life.”

New Life’ with a ‘New Hope’

The Commitment of Tata Steel for improving the quality of life of the displaced families has led to the creation of the ‘Tata Steel Parivar’ concept and each displaced family will be a member of the Tata Steel Parivar.

Over the years, its initiatives have encompassed provision of:

• Healthcare services,
• Drinking water,
• Rain water harvesting,
• Tribal development,
• Relief and rehabilitation endeavors,
• Income and employment generation,
• Women’s health and education,
• Awareness programmers on the ill-effects of drugs,
• Alcohol and HIV/AIDS, and
• Patronage to sports and cultural activities.

Achievements of TATA Group’s CSR

Tata Steel’s Corporate Social Responsibility (CSR) initiatives have earned the steel giant the UK trade & Investment (UKTI) India Business Award 2009.

Besides acquiring businesses around the world, the Tata group now plans to introduce the world to the Tata way of doing business. The group plans to take overseas the Tata trusts and all the community work that it does as part of its international corporate social responsibility.

Tata’s Endeavour to strengthen the fabric of India has manifested itself in multiple ways. A crucial component of the Tata idea of nation building was, and remains, the creation and sustaining of exceptional institutions of learning, research, knowledge and intellectual capital. It had created a land mark

in educational sector and environmental sector, this can be seen as:

TATA GROUP is boomining in every sector whether it is business or corporate social responsibility because:

TATA’S Commitment to the Environment:

The Tata ethos places a special emphasis on environmental and ecological issues. Its efforts to preserve and regenerate the environment find expression in the slew of projects and programmers it has undertaken in and around its facilities and operations. A focus area, in this context, is the climate change crisis.

Tata companies work on projects that include repairing green cover, reducing effluents and emissions, maintaining local ecologies and improving long term corporate

The Tata group has a set of explicit guidelines on environmental and ecological issues, and a broad range of policies aimed at helping Tata companies protect, conserve and restore our natural resources.

The Three Pillars of Sustainability 2020

Adapting to New Markets: Internal Sustainability

Jamsetji Tata, the founder of the Tata Group, predicated economic success on putting the community first and investing patiently in social initiatives 140 years ago. Till date, this strategy has enabled Tata to excel in India. A big reason for this is the brand recognition that Tata enjoys in India. However, brand recognition is less of a competitive advantage as Tata expands globally. Many argue that given the current heightened pace of globalization and change in technology, Tata’s tenet of investing in long-term social initiatives threatens its short-term competitiveness.

The first challenge that Tata must address is to align its existing Corporate Social Responsibility policies, both internal (in regards to the treatment of its workers and green initiative) as well as external (support for surrounding communities) with the customs and challenges of the new markets in which it operates. While Tata created a synergy between Corporate Social Responsibility and profits in India, it must recognize that, going forward, no one-size-fits-all Corporate Social Responsibility strategy exists.

In order to facilitate a more effective alignment of local concerns with Tata’s global Corporate Social Responsibility efforts, we propose setting up a New Markets Corporate Social Responsibility Committee under the TCCI that will be tasked with collaborating with local executives, as well as civic and governmental leaders to identify and drive social initiatives that will best benefit the communities in the new markets that Tata operates in. As the Tata Group’s operations grow physically segregated, it becomes more difficult to align activities with their values and purpose. To ensure this, we propose that the voluntary Tata Index be made mandatory and moved under the TQMS group. To ensure fairness across companies that have different levels of operations within and outside India, the New Markets Corporate Social Responsibility Committee will be responsible for formulating the New Markets Multiplier Factor, which will normalize the Tata Index to a common denominator for all group companies.

The next 10 years will be vital in the evolution of Tata as a global brand, and these steps will ensure that domestic operations support the continued growth of Tata’s global brand and its reflection of leadership in the field of corporate social responsibility.

Stepping it up a Notch: Evaluating Product Lifecycle Impact on Society

Throughout its history, the Tata group has been considered a poster child of ideal corporate citizenship throughout India. As Tata continues to expand globally, its responsibilities towards its stakeholders – investors, employees, and communities – are changing. If anything, they are on the rise. Tata must increasingly look beyond its own operations, and consider the impact of its products, both good and bad, on not just the group’s direct shareholders, but on the society as a whole. This focus on stakeholders will lead to a sustainable competitive advantage and increased profits both.

To this we propose a Product Lifecycle Impact Metric (Exhibit 3). This metric will quantify the projected impact of the Tata Group’s products and services over their expected lifetimes. While taking the positive impact of the products and services (such as increased customer productivity, above average fuel mileage, more affordable products etc.) into consideration, this metric will also account for the negative impacts on society (such as increased traffic clogging, environmental effects etc.). While an exact measurement would be impossible to obtain, by working within a structured framework, and with the input of social and civic leaders, Tata could effectively estimate these impacts across their various industries.

We are aware that certain businesses or products, though highly profitable, are more prone to have higher negative impacts on society. For instance, while some concerns regarding the Nano have already been mentioned, one would be hard pressed to find many negative lifecycle impacts of the watches manufactured by Titan Industries (besides the manufacturing, shipping, and eventual dispos