Understanding CSR with a special mention to CSR initiatives of TATA Group Companies

Friends, Thank you very much for taking out time from your busy schedule to read my blog(s). Sharing knowledge with you has become my passion now. I feel encouraged after reading your feedback in the comments column.  Today I’m very happy to present 106th Blog “Understanding Corporate Social Responsibility (CSR) with a special mention to CSR initiatives of TATA Group.”

Friends, Corporate Social responsibility or CSR is a continuing commitment by businesses to integrate social and environmental concerns in their business operations. Changes in the global environment increasingly challenge business around the world to look beyond financial performance, and to integrate social and environmental concerns into their strategic management.

Friends, concept of CSR originated in the 1950‘s in United States of America but it became prevalent in early 1970s. At that time America had lots of social problems like poverty, unemployment and pollution. Consequently a huge fall in the prices of Dollar was witnessed. Corporate Social Responsibility became a matter of utmost importance for diverse groups demanding change in the business. During the 1980‘s to 2000, corporations recognized and started accepting a responsibility towards society. CSR focuses on the wealth creation for the optimal benefit of all stakeholders including shareholders, employees, customers, environment and society. The term stakeholder means all those on whom an organization's performance and activities have some impact either directly or indirectly.

CSR has both ethical and philosophical dimensions and implies some sort of commitment, through corporate policies and actions which are reflected in a business social performance, which can be assessed by how the business manages its community relationships, its social impact and the outcomes of its CSR policies and actions.

Friends, CSR in India has been seen as a philanthropic activity and was influenced by family values, traditions, culture and religion. It was believed that every business has a moral responsibility to play an active role in discharging the social obligations, subject to the financial health of the business. On 29th August 2013, The Companies Act 2013 replaced the Companies Act of 1956. The New Act introduced far-reaching changes that affect company formation, administration, and governance, and incorporates an additional section i.e. Section 135 - clause on Corporate Social Responsibility – CSR obligations for companies listed in India. The clause covers the essential prerequisites pertaining to the execution; fund allotment and reporting for successful project implementation.

India became the first country to legislate the need to undertake CSR activities and mandatorily report CSR initiatives under the new Companies Act 2013. This is the beginning of a new era for CSR in India. Mandatory provisions of CSR under section 135 of the Companies act, 2013 became effective from 01.04.2014.

The importance of inclusive growth is widely recognized as an essential part of India's quest for development. In line with this national endeavor, Corporate Social Responsibility - CSR was conceived as an instrument for integrating social, environmental and human development concerns in the entire value chain of corporate business. Ministry of Corporate Affairs had issued 'Voluntary Guidelines on Corporate Social Responsibility, 2009' as a first step towards mainstreaming the concept of Business Responsibilities. This was further refined subsequently, as 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011'.

The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business released by the Ministry of Corporate Affairs in July 2011, is essentially a set of nine principles that offer Indian businesses an understanding and approach to inculcate responsible business conduct. However, taking into account the national and international developments in the arena of sustainable business since 2011, the NVGs have been updated and released as ‘National Guidelines on Responsible Business Conduct’ (NGRBC) in March 2019 to reveal alignments with the United Nations Guiding Principles on Business & Human Rights (UNGPs), UN Sustainable Development Goals (SDGs), Paris Agreement on Climate change etc. The NGRBC provides a framework for the companies to grow in an inclusive and sustainable manner while addressing the concerns of stakeholders.

These guidelines urge businesses to actualize the principles in letter and spirit. These principles are:

Ø  Businesses should conduct and govern themselves with integrity in a manner that is Ethical, Transparent and Accountable

Ø  Businesses should provide goods and services in a manner that is sustainable and safe

Ø  Businesses should respect and promote the well-being of all employees, including those in their value chains

Ø  Businesses should respect the interests of and be responsive to all their stakeholders

Ø  Businesses should respect and promote human rights

Ø  Businesses should respect and make efforts to protect and restore the environment

Ø  Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent

Ø  Businesses should promote inclusive growth and equitable development

Ø  Businesses should engage with and provide value to their consumers in a responsible manner

The 21st Report of the Parliamentary Standing Committee on Finance is one of the prime movers for bringing the CSR provisions within the statute. It was observed by the Standing Committee, that annual statutory disclosures on CSR required to be made by the companies under the Act would be a sufficient check on non-compliance. Section 135(4) of the Companies Act 2013 mandates every company qualifying under Section 135(1) to make a statutory disclosure of CSR in its Annual Report of the Board.

Friends, in India, every company having net worth of Rs.500cr. or more, turnover of Rs.1000cr. or more, net profit of Rs.5cr. or more before tax during the immediately preceding financial year shall establish a Corporate Social Responsibility Committee of the Board involving of three or more directors, out of which at least one director shall be an independent director. Provided that where a company is not required to appoint an independent, it shall have in its Corporate Social Responsibility Committee two or more directors.

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities are Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation and making available safe drinking water, promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects, promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.,  ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro forestry, conservation of natural resources and maintaining quality of soil, air and water,  protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts; measures for the benefit of armed forces veterans, war widows and their dependents,  training to promote rural sports, nationally recognized sports, Paralympics sports and Olympic sports, contribution to the prime minister’s national relief fund or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women, Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities etc., rural development projects and slum area development.

In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence. ~ Jamshedji Nusserwanji Tata

Friends Corporate Social Responsibility has always been taken care of by the Tata group. The founder Mr. Jamshedji Tata used to grant scholarships for further studies abroad in 1892. He also supported Gandhi ji‘s campaign for racial equality in South Africa. Tata group has given country its first science center and atomic research center.

A bird eye view of CSR Activities of Tata Companies & Societies:

Tata group keeps on heading towards the fulfillment of corporate social responsibility through its various group companies. Some of them are…..

Tata Steel has adopted the Corporate Citizenship Index, Tata Business Excellence Model and the Tata Index for Sustainable Development. Tata Steel spends 5-7 per cent of its profit after tax on several CSR initiatives.

Tata Motors is the first Indian Company to introduce vehicles with Euro norms. To make environment friendly engines it has taken the help of world-renowned engine consultants like Ricardo and AVL. It has manufactured CNG version of buses and also launched a CNG version of its passenger car, the Indica.

Tata Chemicals Ltd is making an effort for sustainability that means honesty and transparency towards stakeholders, environmental protection, generating economic value, promoting human rights and creating social capital. Its main operations for environment protection include optimal use of resource, finding and/or generating alternative sources of fuel and raw materials, and maximizing reuse and recycling.

Tata Tea has been working hard since the 1980s to fulfill the needs of specially-abled people. It has set up the Srishti Welfare Centre at Munnar in Kerala State; its various programs provide education, training and rehabilitation of children and young adults with special needs. Tata Tea’s ‘Jaago Re’ campaign exemplifies the social cause marketing initiatives.

TISCO was awarded The Energy Research Institute (TERI) award for Corporate Social Responsibility (CSR) for the fiscal year 2002-03 in recognition of its corporate citizenship and sustainability initiatives. As the only Indian company trying to put into practice the Global Compact principles on human rights, labor and environment, TISCO was also conferred the Global Business Coalition Award in 2003 for its efforts in spreading awareness about HIV/AIDS.

TELCO at Pune started community development activities for the benefit of the local residents in 1973. TELCO is also fighting against Leprosy at Jamshedpur.

Tata Consultancy Services aims at the Tata group‘s philosophy of building strong sustainable businesses community. The elements that make for strong corporate sustainability at TCS includes fair, transparent corporate governance,  strong strategy for long-term growth, best-in-class HR processes, initiatives for community betterment and welfare.

To conclude;

For bringing back and maintaining the general balance in the economic and social arena it is evident to think deeply and act wisely about CSR. Every business owes some responsibility towards the society, nation and world in general which provide it with all human, material and natural resources. Considering the long run growth and sustainable development following the norms of CSR, devising new policies and effective implementation is inevitable to bring and sustain a balance between corporate world and society, present generation and upcoming generation, man and nature

Thank you for reading the blog.

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