A

RESEARCH PROJECT

ON

Corporate Social Responsibility

Submitted In Partial Fulfilment Of

Master of Business Administration Degree
Of The University Of Kota,

2010-2012

Under the guidance of: Submitted by:

Dr. R.A.Gupta Mukesh Kumar Yadav

(Professor) (Roll No……………)

Department of Commerce & Management

University Of Kota
Kota (Raj.)

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 DEPARTMENT OF COMMERCE AND MANAGEMENT

UNIVERSITY OF KOTA, KOTA

CERTIFICATE

This is to certify that Mukesh Kumar Yadav of M.B.A. sem-4

batch (2010-2012) carried out entitled “Corporate Social Responsibility”
as a live case study under my supervision for the partial fulfillment of
award of Degree of “Master of Business Administration”

I have examined this report and it fulfills the entire requirement

for the award of the degree of Master of Business Administration
(M.B.A.) from University of Kota, Kota.

SUPERVISED BY:-

Dr. R.A.Gupta

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 DECLARATION

I, Mukesh kumar yadav, hereby, declare that the project report entitled “Corporate Social

Responsibility”, submitted in partial fulfillment for the degree of Master of Business

Administration, is my original work and the project report has not formed the basis for the

award of any diploma, degree, fellowship or similar other titles. It has not been submitted to

any other university or institution for the award of any degree or diploma.

Place:

Date: MUKESH KUMAR YADAV

MBA – IV Sem.

ACKNOWLEDGEMENT

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First of all I am grateful to the Omnipresent by the blessing of whom I become able to
complete this project. I am also thankful to all those persons who have helped me directly or
indirectly in completion of this great research work.

I am very grateful my mentor and guide Dr. R.A.Gupta for providing me a great guidance
leading to enhancement in my excellence and finishing of this research work. Without the
guidance and critical assessment of sir R.A.Gupta it could not have been possible for me to
come with such great research work. Due to his valuable guidance this research project has
become a great learning path for me.

I am also thankful to Dr. Meenu Maheshwari, HOD. Department of commerce and

management for giving me right direction to work in. It is my privilege to express my sincere
thanks to her for inspiring me to bring out with such an excellent research work.

And finally I am thankful to other staff members of my college for their genuine guidance,
help and provision of relevant information that has enabled me to complete this project.

I wish to acknowledge the help of those people who really took pain for me, directly or
indirectly, by guiding me in my research project from beginning to end.

I express my sincere and heartiest respect originating from bottom of my heart for organized
retail store owners who shown interest in helping me to come up with plethora of reliable
data for analysis.

At last, I would express my deep gratitude towards my all friends who helped me during my
research project.

CHAPTER PARTICULAR

CHAPTER 1 INTRODUCTION OF CORPORATE SOCIAL

RESPONSIBILITY
CHAPTER 2 RESEARCH METHODOLOGY
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  Title of the Study
 Duration of the Project
 Objective of Study
 Type of Research
 Sample Size
 Questionnaire
 selecting sample
 * Scope of Study

CHAPTER 3 COMPANY PROFILE

CHAPTER 4 EVALUATION OF CSR POLICIES

CHAPTER 5 CONCLUDING REMARKS AND RECOMMENDATIONS

SUGGESTION

APPENDIX
 Bibliography

CHAPTER-I

CORPORATE SOCIAL RESPONSIBILITY

Conceptual Framework
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 Corporate social responsibility (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. CSR policy functions as a
built-in, self-regulating mechanism whereby 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.
Furthermore, CSR-focused businesses would proactively promote
the public interest by encouraging community growth and development,
and voluntarily eliminating practices that harm 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 honoring of a triple bottom line: people, planet,
profit.
The term "corporate social responsibility" came in to common use in the
late 1960s and early 1970s, after many multinational corporations
formed. The term stakeholder, meaning those on whom an
organization's activities have an impact, was used to describe corporate
owners beyond shareholders as a result of an influential book by R.
Edward Freeman, Strategic management: a stakeholder approach in
1984. 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. Others argue CSR is
merely window-dressing, or an attempt to pre-empt the role of
governments as a watchdog over powerful multinational corporations.
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.
Development business ethics is one of the forms of applied ethics that
examines ethical principles and moral or ethical problems that can arise
in a business environment. 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
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principles but with no formal act of legislation. The UN has developed
the Principles for Responsible Investment as guidelines for investing
entities.

Concept
Some commentators have identified a difference between
the Continental European and the Anglo-Saxon approaches to
CSR. And even within Europe the discussion about CSR is very
heterogeneous.
An approach for CSR that is becoming more widely accepted is
community-based development approach. In this approach, corporations
work with local communities to better themselves. For example, the Shell
Foundation's involvement in the Flower Valley, South Africa. In Flower
Valley they set up an Early Learning Centre to help educate the
community's children as well as develop new skills for the adults. Marks
and Spencer is also active in this community through the building of a
trade network with the community - guaranteeing regular fair
trade purchases. Often activities companies participate in are
establishing education facilities for adults and HIV/AIDS education
programs. The majority of these CSR projects are established in Africa.
JIDF For You, is an attempt to promote these activities in India.
A more common approach of CSR is philanthropy. This includes
monetary donations and aid given to local organizations and
impoverished communities in developing countries. Some
organizations do not like this approach as it does not help build on the
skills of the local people, whereas community-based development
generally leads to more sustainable development.
Another approach to CSR is to incorporate the CSR strategy directly into
the business strategy of an organization. For instance, procurement
of Fair Trade tea and coffee has been adopted by various businesses
including KPMG. Its CSR manager commented, "Fair trade fits very
strongly into our commitment to our communities."
Another approach is garnering increasing corporate responsibility
interest. This is called Creating Shared Value, or CSV. The shared value
model is based on the idea that corporate success and social welfare
are interdependent. A business needs a healthy, educated workforce,
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sustainable resources and adept government to compete effectively. For
society to thrive, profitable and competitive businesses must be
developed and supported to create income, wealth, tax revenues, and
opportunities for philanthropy. CSV received global attention in the
Harvard Business Review article Strategy & Society: The Link between
Competitive Advantage and Corporate Social Responsibility [1] by
Michael E. Porter, a leading authority on competitive strategy and head
of the Institute for Strategy and Competitiveness at Harvard Business
School; and Mark R. Kramer, Senior Fellow at the Kennedy School at
Harvard University and co-founder of FSG Social Impact Advisors. The
article provides insights and relevant examples of companies that have
developed deep linkages between their business strategies and
corporate social responsibility. Many approaches to CSR pit businesses
against society, emphasizing the costs and limitations of compliance with
externally imposed social and environmental standards. CSV
acknowledges trade-offs between short-term profitability and social or
environmental goals, but focuses more on the opportunities for
competitive advantage from building a social value proposition into
corporate strategy.
Many companies use the strategy of benchmarking to compete within
their respective industries in CSR policy, implementation, and
effectiveness. Benchmarking involves reviewing competitor CSR
initiatives, as well as measuring and evaluating the impact that those
policies have on society and the environment, and how customers
perceive competitor CSR strategy. After a comprehensive study of
competitor strategy and an internal policy review performed, a
comparison can be drawn and a strategy developed for competition with
CSR initiatives.

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Social accounting, auditing, and reporting
Taking responsibility for its impact on society means first and foremost
that a company must account for its actions. Social accounting, a
concept describing the communication of social and environmental
effects of a company's economic actions to particular interest groups
within society and to society at large, is thus an important element of
CSR.
Social accounting emphasizes the notion of corporate accountability. D.
Crowther defines social accounting in this sense as "an approach to
reporting a firm’s activities which stresses the need for the identification
of socially relevant behavior, the determination of those to whom the
company is accountable for its social performance and the development
of appropriate measures and reporting techniques." An example of
social accounting, to a limited extent, is found in an annual Director's
Report, under the requirements of UK company law.
A number of reporting guidelines or standards have been developed to
serve as frameworks for social accounting, auditing and reporting
including:

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 Account Ability's AA1000 standard, based on John
Elkington's triple bottom line (3BL) reporting
 The Prince's Accounting for Sustainability Project's Connected
Reporting Framework
 The Fair Labor Association conducts audits based on its
Workplace Code of Conduct and posts audit results on the FLA
website.
 The Fair Wear Foundation takes a unique approach to verifying
labour conditions in companies' supply chains, using interdisciplinary
auditing teams.
 Global Reporting Initiative's Sustainability Reporting Guidelines
 Good Corporation's Standard developed in association with the
Institute of Business Ethics
 Earthcheck www.earthcheck.org Certification / Standard
 Social Accountability International's SA8000 standard
 Standard Ethics Aei guidelines
 The ISO 14000 environmental management standard
 The United Nations Global Compact promotes companies
reporting in the format of a Communication on Progress (COP). A
COP report describes the company's implementation of the
Compact's ten universal principles.
 The United Nations Intergovernmental Working Group of Experts
on International Standards of Accounting and Reporting
(ISAR) provides voluntary technical guidance on eco-efficiency
indicators, corporate responsibility reporting, and corporate
governance disclosure.
 Verite's Monitoring Guidelines
The FTSE Group publishes the FTSE4Good Index, an evaluation of
CSR performance of companies.
In some nations, legal requirements for social accounting, auditing and
reporting exist (e.g. in the French bilan social), though international or
national agreement on meaningful measurements of social and
environmental performance is difficult. Many companies now produce
externally audited annual reports that cover Sustainable
Development and CSR issues ("Triple Bottom Line Reports"), but the
reports vary widely in format, style, and evaluation methodology (even
within the same industry). Critics dismiss these reports as lip service,
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citing examples such as Enron's yearly "Corporate Responsibility Annual
Report" and tobacco corporations' social reports.
In South Africa, as of June 2010, all companies listed on
the Johannesburg Stock Exchange (JSE) were required to produce
an integrated report in place of an annual financial report and
sustainability report. An integrated report includes environmental, social
and economic performance alongside financial performance information
and is expected to provide users with a more holistic overview of a
company. However, this requirement was implemented in the absence of
any formal or legal standards for an integrated report. An Integrated
Reporting Committee (IRC) was established to issue guidelines for good
practice in this field.

Corporate Social Responsibility in India

Today, we live in an age in which companies, businesses and society

are more connected and interactive than ever before in the past.
Corporations are more aware of their role towards the society. They are
responsible bodies that feel a sense duty towards commonwealth and
the environment that comes with a growing realization that they, as an
integral part of this society themselves, can contribute to its upliftment
and empower of the entire country in turn. And consumers and citizens'
campaigns can make all the difference. This is the foundation thought
behind the golden handshake between tripartite—companies, society
and nation; Corporate Social Responsibility or CSR.

CSR is a crucial bridge between organizations and society and also a

means to create awareness amongst corporates, NGOs, civic bodies
and government of the value and importance of social responsibility to
bridge the gap between the privileged and the disadvantaged of society.
It facilitates and creates the environment for true good partnership
between civil society and business. More and more companies and
organizations are creating an interface to encourage industry commerce
and globalization that can, in turn, improve the bottom line by social
good.

Corporate Social Responsibility (CSR) is the soul of every business

these days. It has also become the password to not only overcome
competition but to ensure sustainable growth. It has been supported not
only by the shareholders but stakeholders by and large encompassing
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the whole community. CSR in truth is the alignment of business
operations with social values. It takes into account the interests of
stakeholders in the company's business policies and actions. It focuses
on the social, environmental, and financial success of a company - the
so-called triple bottom line - with the aim to achieve social development
while achieving business success. More importantly, CSR is the point of
convergence of various initiatives aimed at ensuring socio-economic
development of the community which would be livelihood oriented as a
whole in a credible and sustainable manner. There does seem to be a
glimmer of hope from the rapidly growing field of CSR and from the
greater involvement of companies in providing private funds for relief.

For example, the Aditya Birla group today is involved deeply in issues
related to vocational training, education (has 35 odd schools), leprosy
eradication, widow remarriage and orphanages. Some companies, not
all, are realizing the sense in linking corporate strategy with philanthropy.
In order to work out a comprehensive plan for its not-for-profit initiatives,
the Tata group has instituted the Tata Council for Community Initiatives
— a central body that acts as a facilitator for the entire group’s social
initiatives. While the Tata group companies may continue to provide
health services, education and other tangible benefits, its focus is more
on building self-reliant communities, and working towards sustainable
livelihoods. For this the company intends to involve volunteers from
within the group who will be project leaders. They will be responsible for
measuring human impact on a five-point scale of human excellence.
Their purpose is to improve the quality of lives of the people at all times.
We need to encourage such projects. Most villages in India need basic
infrastructures like schools, medical facilities, vocational centres, parks,
computer centres, counselling centres for employment. This needs the
cooperation of NGO’s, government organizations and corporations that
can together create complete and empowered villages. With the
involvement of more and more companies, a sense of competition would
arise as they would eventually vie for honours that would create a win-
win situation for all.

Business houses, right from the inception of human race, have been
regarded as constructive partners in the communities in which they
operate. Though they have been instrumental in creating employment,
wealth, products and services, yet the pressure on business to play a
role in social issues involving employees, stakeholders, society,
environment, government etc. is continuously increasing. The society is
questioning the existence of business houses, especially after the
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scandals and scams conducted by the business houses like Satyam,
UTI, Enron, and WorldCom. In response to it, the organizations around
the globe are forced to wake up to the need for being committed towards
Corporate Social Responsibility. Over the years this concept of
Corporate Social Responsibility (CSR) has gained unprecedented
momentum in business and public debate and has become a strategic
issue crossing the departmental boundaries, and affecting the way in
which a company does business. It has become so important that many
organizations have rebranded their core values to include social
responsibility. Almost all corporate websites/ policies/reports talk about
their endeavours for CSR which has become a way of ensuring that the
organization is fulfilling all the obligations towards society and thus is
eligible for the license to operate. It assures that the organization can
grow on sustainable basis.

The Early Altruists

The landmark Birla Mandir in Delhi is called the Lakshmi Narayan temple. But
like scores of others around the country, this one, too, is better known by the
name of its patron — the late G.D. Birla, one of India’s better known
philanthropists of the pre-Independence era.

Nation building drove that generation of philanthropists — such as Lala

Shriram, Jamnalal Bajaj and Gujarmal Modi — to build noted educational
institutions and hospitals. In fact, Birla and J.R.D. Tata had co-authored the
Bombay Plan, which defined how CSR could help build a nation. “Birla was a
great leveller, Tata a great unifier,” says Rajashree Birla, chairperson of Aditya
Birla Foundation.

On top of the list of philanthropists of the era were the Tatas. The family
members transferred a majority of their holding in group companies primarily
into two trusts. First came the Sir Ratan Tata Trust, set up in 1913 by the
younger of Jamsetji’s sons. Then Sir Dorabji Tata Trust was established by his
elder son by donating all his wealth, estimated at Rs 1 crore then. The reason
why the Tata family members don’t make it to our list of personal
philanthropists is because they own very small fractions of the group. And these
trusts, besides doing philanthropic work, also control 66 per cent of the shares
of Tata Sons, the group holding company. In 2009-10, the Tata trusts and
companies would spend $151 million on social welfare. Much of philanthropy
in the old era was on religious grounds. But 100 years ago, Jamsetji evolved a
more secular way. Tata Trusts, established “without any distinction of place,
nationality or creed”, went on to build the Indian Institute of Science, Tata
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Institute of Social Sciences, Tata Institute of Fundamental Research and the
Tata Memorial Hospital. “...what advances a nation or a community is ... to lift
up the best and the most gifted, so as to make them of the greatest service to the
country”, said Jamsetji.

Down south, noted banker Annamalai Chettiar founded the Sri Meenakshi
College in Chidambaram in 1920, adding a few more institutions that formed
the Annamalai University in 1929. In 1920, Ardeshir Godrej donated Rs 3 lakh
to the Tilak Swaraj Fund for the upliftment of the downtrodden. Recently,
Ahmadabad-based Sarabhais set up a few notable institutions. Vikram Sarabhai,
father of Indian space programme, founded the Physical Research Laboratory in
Ahmadabad, the IIM-Ahmadabad, the Nehru Foundation for Development and
the Indian Space Research Organisation. Anu Aga, Former chairperson,
Thermax Donated: 10 per cent of the family income Area: Education
Infrastructure magnate G.M. Rao says he has willed half of his 25 per cent
share, which he shares with his wife (his two sons and son-in-law own 25 per
cent each, too), to the GMR Varalakshmi Foundation — amounting to Rs 2,500
crore. Mahindra & Mahindra vice-chairman Anand Mahindra gave away $10
million (Rs 45 crore) of his personal money to the humanities programme at
Harvard University, where he graduated from. Larsen & Toubro’s managing
director A.M. Naik has given away Rs 20 crore for a cancer hospital and
schools. He has pledged to donate 25 per cent of his wealth to charitable causes.
In March last year, Vineet Nayyar, vice-chairman, managing director and CEO
of Tech Mahindra gave a third of his equity shares worth Rs 30 crore to the
Essel Social Welfare Foundation run by his wife.

Biocon’s chairman and managing director Kiran Mazumdar-Shaw, one of

India’s richest women, has also parted with Rs 200 crore from her personal
money. The funds have been used to run an insurance programme, Arogya
Raksha, which now reaches 200,000 people; to set up a Biocon Cell for
innovation management at the Indian School of Business and a cancer research
scholarship at MIT, among other initiatives.

Infosys Technologies co-founder Nandan Nilekani has given away $12 million
in endowments. While his wife Rohini, who found her share in Infosys, had
grown into a personal fortune well beyond their needs, has since parted with Rs
190 crore. It includes the $5-million endowment to Yale University, but largely
(Rs 150 crore) funds favouring Arghyam, a charitable foundation working in the
area of water and sanitation. She also chairs Pratham Books, which publishes
children’s books. And she isn’t done giving yet.

The global CSR agenda – from self regulation to multi-stakeholder initiatives

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The global CSR agenda goes hand in hand with the significant changes
in state-market relations which have characterized the contemporary era
of globalization. While these developments were eroding the role of the
nation state as the main regulating institution, the importance of the
private corporate sector was growing. Corporate social responsibility,
understood mainly as voluntary business self-regulation designed to
improve aspects of company performance in the areas of social and
sustainable development and human rights, thus found its way on to the
agenda. However, the various shortcomings of the pure form of the
voluntary business self-regulation approach that became evident after
some time proved to be fertile ground for increased activity by many
national and international civil society organizations. As a result, the
CSR concept developed from self-regulation approaches into a more
comprehensive framework of co regulation based on multi-stakeholder
initiatives.

What is meant by CSR?

The concept of corporate social responsibility is based on the idea that

not only public policy but companies, too, should take responsibility for
social issues. In more recent approaches, CSR is seen as a concept in
which companies voluntarily integrate social and environmental
concerns into their business operations and into the interaction with their
stakeholders. The idea of being a socially responsible company means
doing more than comply with the law when investing in human resources
and the environment.

In general terms, the CSR approach seeks to motivate companies to

assume responsibility for problems and challenges that used to be
addressed by state regulation. Despite various attempts at an
unambiguous description of CSR, the concept still lacks a uniform
definition. Consequently, the various stakeholders define CSR in their
own way, and several approaches to CSR exist.

The two poles of the existing approaches are self-regulation and legal
regulation. Between those two extremes, the multi stakeholder initiatives
stand for the alternative approach of co-regulation. The dimensions of
the CSR triangular concept can be characterized as follows:

• The self-regulation approach is characteristic of most company-related

initiatives. In this case, companies decide for themselves how far to
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engage in CSR and which CSR measures to implement. As the role of
the state is limited, liability is limited, too.

• In legal regulation, the government is the most important player. This is

reflected in multinational initiatives which are based on binding legal
commitments. Individual codes of conduct for companies form one side
of the spectrum, the legal instruments the other.

• Multi-stakeholder initiatives, such as the Global Compact or the OECD

Guidelines for Multinational Companies are located between the two
extremes and can be defined conceptually as co-regulation approaches
in which stakeholders are involved in a company’s CSR policy-making
process. In this “third way” NGOs, business associations, governmental
organizations and multilateral institutions, among others, work together
in a constructive manner to achieve complementary goals in the CSR
process. It is important to bear in mind the difference between internal
CSR, where workers, shareholders and investors are the beneficiaries,
and external CSR, where communities, civil society groups, other
companies or institutions are the main beneficiaries. Internal and
external CSR should be seen as complementary if the sustainable
development of CSR policies is to be achieved.

CSR in India

Given India’s long tradition in this field, its CSR agenda continues to be
characterized mainly by philanthropic and community development
activities. On the other hand, the survey also revealed that Indian
companies and stakeholders are beginning to adopt some aspects of the
mainstream agenda, such as the integration of CSR into their business
processes and engagement in multi-stakeholder dialogues.

To understand the current state and future prospects of CSR and the
role of the UNGC in India, the country’s political and economic history
must be taken into account. Against this background, the development
of CSR in India can be divided into four main phases. The four phases of
CSR development in India These phases parallel India’s historical
development and resulted in different CSR practices.

First phase: CSR motivated by charity and Philanthropy

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The first phase of CSR 14 is predominantly determined by culture,
religion, family tradition, and industrialization. Business operations and
CSR engagement were based mainly on corporate self-regulation. Being
the oldest form of CSR, charity and philanthropy still influence CSR
practices today, especially in community development.

In the pre-industrial period up to the 1850s, merchants committed

themselves to society for religious reasons, sharing their wealth, for
instance, by building temples. Moreover, “the business community
occupied a significant place in ancient Indian society and the merchants
provided relief in times of crisis such as famine or epidemics throwing
open godowns of food and treasure chests”.
Under colonial rule, Western types of industrialization reached India and
changed CSR from the 1850s onwards. The pioneers of industrialization
in the 19th century in India were a few families such as the Tata, Birla,
Bajaj, Lalbhai, Sarabhai, Godrej, Shriram, Singhania, Modi, Naidu,
Mahindra and Annamali, who were strongly devoted to philanthropically
motivated CSR. “The early pioneers of industry in India were leaders in
the economic, as also in the social fields”.

Nevertheless, it has been pointed out that their engagement was not
only altruistic and stimulated by religious motives: “It had business
considerations in supporting efforts towards industrial and social
development of the nation and was influenced by caste groups and
political objectives”

The underlying pattern of charity and philanthropy means that

entrepreneurs sporadically donate money (e.g. to schools or hospitals)
without any concrete or long-term engagement. Charitable and
philanthropic CSR is practiced outside the company, focusing on such
external stakeholders as communities and general social welfare bodies.

Second phase: CSR for India’s social development

The second phase of Indian CSR (1914-1960) was dominated by the

country’s struggle for independence and influenced fundamentally by
Gandhi’s theory of trusteeship, the aim of which was to consolidate and
amplify social development. During the struggle for independence,
Indian businesses actively engaged in the reform process. Not only did
companies see the country’s economic development as a protest against
colonial rule; they also participated in its institutional and social
development. The corporate sector’s involvement was stimulated by the
vision of a modern and free India. Gandhi introduced the notion of
17
trusteeship in order to make companies the “temples of modern India”:
businesses (especially well established family businesses) set up trusts
for schools and colleges; they also established training and scientific
institutes. The heads of the companies largely aligned the activities of
their trusts with Gandhi’s reform programmes. These programmes
included activities that sought in particular the abolition of untouchability,
women’s empowerment and rural development.

Third phase: CSR under the paradigm of the “mixed economy”

The paradigm of the “mixed economy,” with the emergence of PSUs and
ample legislation on labor and environmental standards, affected the
third phase of Indian CSR (1960-1980). This phase is also characterized
by a shift from corporate selfregulation to strict legal and public
regulation of business activities.

Under the paradigm of the “mixed economy”, the role of the private
sector in advancing India receded. During the Cold War, India decided to
take a third course between capitalism and communism. In this scenario,
the public sector was seen as the prime mover of development. The
1960s have been described as an “era of command and control”,
because strict legal regulations determined the activities of the private
sector. The introduction of a regime of high taxes and a quota and
license system imposed tight restrictions on the private sector and
indirectly triggered corporate malpractices.

As a result, corporate governance, labor and environmental issues rose

on the political agenda and quickly became the subject of legislation.
Furthermore, state authorities established PSUs with the intention of
guaranteeing the appropriate distribution of wealth to the needy
However, the assumption and anticipation that the public sector could
tackle developmental challenges effectively materialized to only a limited
extent. Consequently, what was expected of the private sector grew, and
the need for its involvement in socio-economic development became
indispensable. An initial and cautious attempt at reconciliation was made
by Indian academics, politicians and businessmen at a national
workshop on CSR in 1965. According to this agenda, businesses were
to play their part as respectable corporate citizens, and the call went out
for regular stakeholder dialogues, social accountability and
transparency. Despite these progressive acknowledgements, this CSR
approach did not materialize at that time.

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The fourth phase: CSR at the interface between philanthropic and business
approaches

In the fourth phase (1980 until the present) Indian companies and
stakeholders began abandoning traditional philanthropic engagement
and, to some extent, integrated CSR into a coherent and sustainable
business strategy, partly adopting the multi-stakeholder approach.

In the 1990s, the Indian government initiated reforms to liberalize and

deregulate the Indian economy by tackling the shortcomings of the
“mixed economy” and tried to integrate India into the global market.
Consequently, controls and license systems were partly abolished, and
the Indian economy experienced a pronounced boom, which has
persisted until today. This rapid growth did not lead to a reduction in
philanthropic donations; on the contrary,
“the increased profitability also increased business willingness as well as
ability to give, along with a surge in public and government expectations
of businesses”.

Against this background, India has meanwhile become an important

economic and political actor in the process of globalization. This new
situation has also affected the Indian CSR agenda. With more TNCs
resorting to global sourcing, India has become an attractive and
important production and manufacturing site. As Western consumer
markets are becoming more responsive to labor and environmental
standards in developing countries, Indian companies producing for the
global market need to comply with international standards.

Current state of CSR in India

India’s economic reforms and its rise to become an emerging market

and global player have not resulted in a substantial change in its CSR
approach.

Contrary to various expectations that India would adopt the global CSR
agenda, its present CSR approach still largely retains its own
characteristics, adopting only some aspects of global mainstream CSR.
The empirical results of the present study show that Indian CSR is still in
a confused state. This is evident from the following:

19
• The Indian understanding of CSR seems to be shifting from traditional
philanthropy towards sustainable business. Nevertheless, philanthropic
patterns remain widespread in many Indian companies.

• Community development still plays the decisive role in the Indian CSR
agenda.

General understanding of CSR

Recent trends reveal a shift from a purely philanthropic approach (e.g.

selective donations) to a more comprehensive CSR approach. This shift
is apparent primarily in the perceptions of CSR, the professionalism of
community development and the integration and organization of CSR
within a company. Irrespective of these aspects, the empirical results
lead to the conclusion that CSR still has a philanthropic connotation
because of its emphasis on external stakeholders, particularly
communities

Perceptions of CSR

Where Indian companies’ perceptions of CSR are concerned, the

findings of the study paint an ambiguous and even contradictory picture.
On the one hand, companies point out that CSR is now no longer
philanthropic but an important aspect of a sustainable business strategy.
On the other hand, they continue to feel a strong responsibility to “give
something back to society”.

When expressing this responsibility, companies in India are thinking not

of such internal stakeholders as employees but of surrounding
communities. Accordingly, CSR can still be described as being in a
“confused state”.

When Indian companies are asked what their understanding of CSR is,
only a minority regard their own commitment as purely philanthropic.
Interestingly, all the PSUs interviewed saw their CSR as philanthropic.
This attitude reflects the special role PSUs have been allotted in the last
fifty years. About one third of Indian companies detect a recent change
in their understanding of CSR, stating that “giving something back to
society” is now no longer merely philanthropic. Half of the Indian

20
companies and all of the foreign companies included in the survey
consider CSR to be part of “sustainable business”.

Despite the Indian companies’ assertion that CSR is seen as part of

sustainable business rather than as philanthropy, the imbalance
between internal and external CSR dimensions is huge. The vast
majority of Indian companies include only the external dimension in their
understanding of CSR. In contrast, less than 20 per cent of the Indian
companies surveyed referred to such internal aspects as working
conditions and environmental practices.

Professionalism of community development

According to the statements made by the companies, community

development in recent times has become more professional than before.
Indian companies put considerable effort into identifying beneficiaries,
since they regard correct identification as one of the major challenges in
their CSR engagement. Various Indian companies either seek
assistance from established trusts or leave the identification process to
NGOs or development agencies. More than half of the Indian
companies’ surveyed claim that they try to engage with their external
stakeholders in a sustainable manner. However, what they meant by
“sustainable engagement” was not absolutely clear from the companies’
answers. Typical of the statements made were:

• “Our aim is to make the village self-sufficient.”

• “We build sustainable partnerships with communities.”

• “With our sustainable engagement we want to provide livelihoods for

the villagers.”

CSR-Relevant Context Political, Social and Economic System

India is often known as the world’s largest democracy and increasingly

as a transitional/developing country that, together with China, represents
the “Asian” powerhouse in terms of economic growth and political clout.
Its constitutional democracy is based on a vibrant and competitive party
system. India has a federal structure of governance, whereby the
balance of political power is shifting towards its linguistically divided
regions and away from the formerly powerful center. State autonomy
21
therefore remains structurally restricted as a result of India’s federal
political system, its social and political pluralism and its concurrent
dependency on coalitionbuilding as a way of constructing a viable
government.

A key public sector actor is the influential but cumbersome bureaucracy.

As a major provider and user of good, it remains reluctant to share
power and resources, especially with nonstate actors. India’s importance
as an international actor is growing, determined by economic growth
rates as well as strategic importance vis-à-vis its most important
neighboring countries, Pakistan and China. Key organizations in which it
is a member include ASEAN (dialogue partner), ILO, IMF, SAARC, UN,
UNCTAD, UNDOF, UNESCO, UNHCR, UNIDO, WHO, WIPO and WTO.
India is also signatory to a number of international environmental
agreements, none of which, however, has been ratified. These include
the Antarctic Environmental, Biodiversity, Climate Change and Kyoto
protocols. Linguistically and ethnically, India’s society is highly diverse.
The country’s population considers itself to be religious, with Hindus
making up roughly 82 percent of the population, Muslims about 12
percent and Christians, Buddhist and Jains making up about 5 percent.
Social differences are vast, not only created by income inequalities but
also by the caste system, which at the same time lends itself well to the
politics of electoral mobilization. The internally diverse system of
religious, spiritual and philosophical thought that characterizes Hinduism
contributes to the prevalence of both tolerance and conflict in India’s civil
society. Its spiritual attitude supports the notion of tolerance whereas the
dominance of certain castes through Hinduism has sharpened
socioeconomic differences. Although Indian society values its traditions
and ancient culture, pride is also taken in its liberal democratic system,
which is characterized by dissent, debate and the proliferation of various
voluntary associations. The national culture is therefore considered to be
open to changes and to unstructured ideas and situations (cf. Khilani,
1997 ; Guha, 1997).

The openness that characterizes Indian politics and society was not
always reflected in the economic system, which was tightly controlled
following political independence in 1947 until the first moves towards
liberalization in 1991 (cf. Kohli, 2004). Liberalization was gradual,
beginning with the trade and industrial sectors within the domestic
market and it was only later, as of the late 1990s, that liberalization took
place in terms of India’s integration into the international system of trade
and finance. It is noteworthy that there has been relative stability in
economic policymaking despite a succession of coalition governments.
22
With projections of 7- to 8-percent growth rates in the coming decade,
economic growth remains strong but is still dependent on the IT services
sector in the main. Moves are now under way to prioritize manufacturing
for exports 2 and to boost domestic consumption. Key concerns facing
Indian policymakers are the inflation rate of 6.7 percent, volatile oil prices
and differences over how to set targets for agricultural subsidies. In
industry, sustaining gas and power supplies are issues of major concern.
A major task for India’s democratic government is making growth
inclusive in view of some indications of social unrest, as well improving
intervention in critical areas such as education and health. Widespread
illiteracy (39 percent, UNDP 2006) and the high rate of HIV/AIDS (0.9
percent, UNDP 2005) pose serious challenges to India’s political,
economic and social health.

Relationship between Societies, Economy and Government

The relationship between the state and civil society has generally been
an authoritarian one, being a legacy of the socialist days of democratic
centralism as well as characteristic of most post-colonial developmental
states. However, governmental authority was first seriously challenged in
1977, when the Congress government under Indira Gandhi was seen to
subvert democracy by introducing centralist, dictatorial rule during
theperiod called “The Emergency.” This period saw civil society
becoming very vocal in its opposition to the government for the first time.
Since then the print media
have become one of the mainstays of Indian civil society, acting as
watchdog and popularizing the activities of various NSMs (New Social
Movements). Other, more recent challenges to the authority of the
central government have come from a diverse range of NGOs
concerned with unequal economic development, environmental
degradation and social unrest; from regionalcenters of political and
economic power; and increasingly from those sections of Indian big
business that see themselves as being undermined as a result of
policies of economic liberalization that welcome foreign investment and
the presence of MNCs into the country. The relationship between the
government and civil society is therefore characterized by tension and
conflict in the main, rather than by cooperation.

There has been some improvement in the relations between the

government and business sectors, especially after 1991, partly as a
result of the Indian state’s commitment to privatization and economic
liberalization. In the last three years the growth of the Indian economy
23
has been clearly driven by the private sector. As such, the public sector
is trying to move to a model where social priorities are decided by the
government, with resource utilization left in the hands of the private
sector (cf. Kohli, 2004).
The relationship between the business sector and society had been
either cordial or nonexistent until the 1990s. Big industries, whether
privately owned or state-owned, often acted paternalistically towards
wider society. However, the relationship has increasingly become one of
unease and occasional conflict, not in the least driven by NGO
opposition to the perceived economic power of MNCs. These conflictual
movements are often understood as part of wider relations, which are
being affected by the depth and speed of economic and cultural
globalization. The 1995 crisis regarding the Dabhol Power Company of
Enron was possibly the first instance of civil opposition to a business that
was ill-conceived and defended by the public sector with deliberate
misinformation. In recent years, much of the opposition to business has
been driven by strategic and temporary alliances of political groups and
NGOs. Examples are the opposition to Kentucky Fried Chicken and the
controversy over pesticide levels in Coke and Pepsi-Cola.

There are some significant societal movements that violently oppose

both the government and business sectors, notably the radical leftist
Naxalite movement. At the moment, Naxalites and various NGOs have
similar agendas in opposing the creation of SEZs (Special Economic
Zones) in the country, citing developmental terrorism by the state on
behalf of business. The government’s response has been in stressing
the benefits of the dual strategies of continued privatization and
liberalization, as well of addressing long-standing problems of
unemployment, especially in the rural sector, and growing
socioeconomic divides (cf. Bhaduri, 2007; Singh, 2006).

The Role of CSR or Potential business benefits

The scale and nature of the benefits of CSR for an organization can vary
depending on the nature of the enterprise, and are difficult to quantify,
though there is a large body of literature exhorting business to adopt
measures beyond financial ones (e.g., Deming's Fourteen
Points, balanced scorecards). Orlitzky, Schmidt, and Rynes found a
correlation between social/environmental performance and financial

24
performance. However, businesses may not be looking at short-run
financial returns when developing their CSR strategy.
The definition of CSR used within an organization can vary from the
strict "stakeholder impacts" definition used by many CSR advocates and
will often include charitable efforts and volunteering. CSR may be based
within the human resources, business development or public
relations departments of an organisation, or may be given a separate
unit reporting to the CEO or in some cases directly to the board. Some
companies may implement CSR-type values without a clearly defined
team or program.
The business case for CSR within a company will likely rest on one or
more of these arguments:

Human resources

A CSR programme can be an aid to recruitment and retention,

particularly within the competitive graduate student market. Potential
recruits often ask about a firm's CSR policy during an interview, and
having a comprehensive policy can give an advantage. CSR can also
help improve the perception of a company among its staff, particularly
when staff can become involved through payroll giving,
fundraising activities or community volunteering. See also Corporate
Social Entrepreneurship, whereby CSR can also be driven by
employees' personal values, in addition to the more obvious economic
and governmental drivers.

Risk management

Managing risk is a central part of many corporate strategies. Reputations

that take decades to build up can be ruined in hours through incidents
such as corruption scandals or environmental accidents. These can also
draw unwanted attention from regulators, courts, governments and
media. Building a genuine culture of 'doing the right thing' within a
corporation can offset these risks.

Brand differentiation

25
In crowded marketplaces, companies strive for a unique selling
proposition that can separate them from the competition in the minds of
consumers. CSR can play a role in building customer loyalty based on
distinctive ethical values. Several major brands, such as The Co-
operative Group, The Body Shop and American Apparel are built on
ethical values. Business service organizations can benefit too from
building a reputation for integrity and best practice.

License to operate

Corporations are keen to avoid interference in their business

through taxation or regulations. By taking substantive voluntary steps,
they can persuade governments and the wider public that they are taking
issues such as health and safety, diversity, or the environment seriously
as good corporate citizens with respect to labour standards and impacts
on the environment.

Criticisms and concerns

Critics of CSR as well as proponents debate a number of concerns

related to it. These include CSR's relationship to the fundamental
purpose and nature of business and questionable motives for engaging
in CSR, including concerns about insincerity and hypocrisy.

Nature of business

Milton Friedman and others have argued that a corporation's purpose is

to maximize returns to its shareholders, and that since only people can
have social responsibilities, corporations are only responsible to their
shareholders and not to society as a whole. Although they accept that
corporations should obey the laws of the countries within which they
work, they assert that corporations have no other obligation to society.
Some people perceive CSR as in-congruent with the very nature and
purpose of business, and indeed a hindrance to free trade. Those who
assert that CSR is contrasting with capitalism and are in favor
26
of neoliberalism argue that improvements in
health, longevity and/or infant mortality have been created by economic
growth attributed to free enterprise.
Critics of this argument perceive neoliberalism as opposed to the well-
being of society and a hindrance to human freedom. They claim that the
type of capitalism practiced in many developing countries is a form of
economic and cultural imperialism, noting that these countries usually
have fewer labour protections, and thus their citizens are at a higher risk
of exploitation by multinational corporations.
A wide variety of individuals and organizations operate in between these
poles. For example, the REALeadership Alliance asserts that the
business of leadership (be it corporate or otherwise) is to change the
world for the better. Many religious and cultural traditions hold that the
economy exists to serve human beings, so all economic entities have an
obligation to society (see for exampleEconomic Justice for All).
Moreover, as discussed above, many CSR proponents point out that
CSR can significantly improve long-term corporate profitability because it
reduces risks and inefficiencies while offering a host of potential benefits
such as enhanced brand reputation and employee engagement.

Motives

Some critics believe that CSR programs are undertaken by companies

such as British American Tobacco (BAT), the petroleum giant BP (well-
known for its high-profile advertising campaigns on environmental
aspects of its operations), and McDonald's (see below) to distract the
public from ethical questions posed by their core operations. They argue
that some corporations start CSR programs for the commercial benefit
they enjoy through raising their reputation with the public or with
government. They suggest that corporations which exist solely to
maximize profits are unable to advance the interests of society as a
whole.
Another concern is that sometimes companies claim to promote CSR
and be committed to sustainable development but simultaneously
engaging in harmful business practices. For example, since the 1970s,

27
the McDonald's Corporation's association with Ronald McDonald
House has been viewed as CSR and relationship marketing. More
recently, as CSR has become mainstream, the company has beefed up
its CSR programs related to its labor, environmental and other practices
All the same, in McDonald's Restaurants v Morris & Steel, Lord Justices
Pill, May and Keane ruled that it was fair comment to say that
McDonald's employees worldwide 'do badly in terms of pay and
conditions' and true that 'if one eats enough McDonald's food, one's diet
may well become high in fat etc., with the very real risk of heart disease.'
Royal Dutch Shell has a much-publicized CSR policy and was a pioneer
in triple bottom line reporting, but this did not prevent the 2004 scandal
concerning its misreporting of oil reserves, which seriously damaged its
reputation and led to charges of hypocrisy. Since then, the Shell
Foundation has become involved in many projects across the world,
including a partnership with Marks and Spencer (UK) in three flower and
fruit growing communities across Africa.
Critics concerned with corporate hypocrisy and insincerity generally
suggest that better governmental and international regulation and
enforcement, rather than voluntary measures, are necessary to ensure
that companies behave in a socially responsible manner. Others, such
as Patricia Werhane, argue that CSR should be considered more as a
corporate moral responsibility, and limit the reach of CSR by focusing
more on direct impacts of the organization as viewed through a systems
perspective to identify stakeholders.

Ethical consumerism

The rise in popularity of ethical consumerism over the last two decades

can be linked to the rise of CSR. As global population increases, so
does the pressure on limited natural resources required to meet rising
consumer demand (Grace and Cohen 2005, 147). Industrialization, in
many developing countries, is booming as a result of both technology
and globalization. Consumers are becoming more aware of the
environmental and social implications of their day-to-day consumer
decisions and are therefore beginning to make purchasing decisions
related to their environmental and ethical concerns. However, this
practice is far from consistent or universal.
28
Globalization and market forces

As corporations pursue growth through globalization, they have

encountered new challenges that impose limits to their growth and
potential profits. Government regulations, tariffs, environmental
restrictions and varying standards of what constitutes "labor exploitation"
are problems that can cost organizations millions of dollars. Some view
ethical issues as simply a costly hindrance, while some companies use
CSR methodologies as a strategic tactic to gain public support for their
presence in global markets, helping them sustain a competitive
advantage by using their social contributions to provide a subconscious
level of advertising. (Fry, Keim, Meiners 1986, 105) Global competition
places a particular pressure on multinational corporations to examine not
only their own labor practices, but those of their entire supply chain, from
a CSR perspective.

Social awareness and education

The role among corporate stakeholders is to work collectively to

pressure corporations that are changing. Shareholders and investors
themselves, through socially responsible investing are exerting pressure
on corporations to behave responsibly. Non-governmental
organizations are also taking an increasing role, leveraging the power of
the media and the Internet to increase their scrutiny and collective
activism around corporate behavior. Through education and dialogue,
the development of community awareness in holding businesses
responsible for their actions is growing. In recent years, the traditional
conception of CSR is being challenged by the more community-
conscious Creating Shared Value concept (CSV), and several
companies are refining their collaboration with stakeholders accordingly.

Ethics training

The rise of ethics training inside corporations, some of it required by

government regulation, is another driver credited with changing the
29
behavior and culture of corporations. The aim of such training is to help
employees make ethical decisions when the answers are unclear.
Tullberg believes that humans are built with the capacity to cheat and
manipulate, a view taken from (Trivers 1971, 1985), hence the need for
learning normative values and rules in human behavior. The most direct
benefit is reducing the likelihood of "dirty hands" (Grace and Cohen
2005), fines and damaged reputations for breaching laws or moral
norms. Organizations also see secondary benefit in increasing employee
loyalty and pride in the organization. Caterpillar and Best Buy are
examples of organizations that have taken such steps.
Increasingly, companies are becoming interested in processes that can
add visibility to their CSR policies and activities. One method that is
gaining increasing popularity is the use of well-grounded training
programs, where CSR is a major issue, and business simulations can
play a part in this.
One relevant documentary is The Corporation, the history of
organizations and their growth in power is discussed. Corporate social
responsibility, what a company does to in trying to benefit society, versus
corporate moral responsibility (CMR), what a company should morally
do, are both important topics to consider when looking at ethics in CSR.
For example, Ray Anderson, in The Corporation, takes a CMR
perspective in order to do what is moral and he begins to shift his
company's focus towards the biosphere by utilizing carpets in sections
so that they will sustain for longer periods. This is Anderson thinking in
terms of Garret Hardin's "The Tragedy of the Commons," where if
people do not pay attention to the private ways in which we use public
resources, people will eventually lose those public resources.

Laws and regulation

Another driver of CSR is the role of independent mediators, particularly

the government, in ensuring that corporations are prevented from
harming the broader social well, including people and the environment.
CSR critics such as Robert Reich argue that governments should set the
agenda for social responsibility by the way of laws and regulation that
will allow a business to conduct them responsibly.

30
The issues surrounding government regulation pose several problems.
Regulation in itself is unable to cover every aspect in detail of a
corporation's operations. This leads to burdensome legal processes
bogged down in interpretations of the law and debatable grey areas
(Sacconi 2004). For example, General Electric failed to clean up
the Hudson River after contaminating it with organic pollutants. The
company continues to argue via the legal process on assignment of
liability, while the cleanup remains stagnant. (Sullivan & Schiafo 2005).
The second issue is the financial burden that regulation can place on a
nation's economy. This view shared by Bulkeley, who cites the
Australian federal government's actions to avoid compliance with
the Kyoto Protocol in 1997, on the concerns of economic loss and
national interest. The Australian government took the position that
signing the Kyoto Pact would have caused more significant economic
losses for Australia than for any other OECD nation (Bulkeley 2001, pg
436). On the change of government following the election in November
2007, Prime Minister Kevin Rudd signed the ratification immediately after
assuming office on 3 December 2007, just before the meeting of the UN
Framework Convention on Climate Change. Critics of CSR also point out
those organizations pay taxes to government to ensure that society and
the environment are not adversely affected by business activities.
Denmark has a law on CSR. On 16 December 2008, the Danish
parliament adopted a bill making it mandatory for the 1100 largest
Danish companies, investors and state-owned companies to include
information on corporate social responsibility (CSR) in their annual
financial reports. The reporting requirements became effective on 1
January 2009. The required information includes:

 information on the companies’ policies for CSR or socially

responsible investments (SRI)
 information on how such policies are implemented in practice, and
 Information on what results have been obtained so far and
management’s expectations for the future with regard to CSR/SRI.
CSR/SRI is still voluntary in Denmark, but if a company has no policy on
this it must state its positioning on CSR in their annual financial report.
More on the Danish law can be found at CSRgov.dk

31
Crises and their consequences

Often it takes a crisis to precipitate attention to CSR. One of the most

active stands against environmental management is
the CERES Principles that resulted after the Exxon Valdez incident in
Alaska in 1989 (Grace and Cohen 2006). Other examples include
the lead poisoning paint used by toy giant Mattel, which required a recall
of millions of toys globally and caused the company to initiate new risk
management and quality control processes. In another
example, Magellan Metals in the West Australian town of Esperance was
responsible for lead contamination killing thousands of birds in the area.
The company had to cease business immediately and work with
independent regulatory bodies to execute a cleanup. Odwalla also
experienced a crisis with sales dropping 90%, and the company's stock
price dropping 34% due to several cases of E. coli spread through
Odwalla apple juice. The company ordered a recall of all apple
or carrot juice products and introduced a new process called "flash
pasteurization" as well as maintaining lines of communication constantly
open with customers.

Stakeholder priorities

Increasingly, corporations are motivated to become more socially

responsible because their most important stakeholders expect them to
understand and address the social and community issues that are
relevant to them. Understanding what causes are important to
employees is usually the first priority because of the many interrelated
business benefits that can be derived from increased employee
engagement (i.e. more loyalty, improved recruitment, increased
retention, higher productivity, and so on). Key external stakeholders
include customers, consumers, investors (particularly institutional
investors), communities in the areas where the corporation operates its
facilities, regulators, academics, and the media.
Branco and Rodrigues (2007) describe the stakeholder perspective of
CSR as the inclusion of all groups or constituents (rather than just
shareholders) in managerial decision making related to the
32
organization’s portfolio of socially responsible activities. This normative
model implies that the CSR collaborations are positively accepted when
they are in the interests of stakeholders and may have no effect or be
detrimental to the organization if they are not directly related to
stakeholder interests. The stakeholder perspective suffers from a wheel
and spoke network metaphor that does not acknowledge the complexity
of network interactions that can occur in cross sector partnerships. It
also relegates communication to a maintenance function, similar to the
exchange perspective.

Efforts to implement CSR

A very large number of social and voluntary organizations are

contributing to the field of Corporate social responsibility by making it an
important agenda where they clearly harp for all the corporate bodies to
adhere to the norms of CSR at all costs. In fact, these voluntary
organizations always go on devising newer and more
pragmatic/stringent norms of application of the requirements of
Corporate social responsibility. A few of them are In India, despite
government initiatives, corporate social responsibility (CSR) remains low
on the agenda of corporate sector. Only 10 percent of funding comes
from individuals and corporates, and "a large part of CSR initiatives are
artfully masqueraded and make it back to the balancesheet". The
widening income gap between the rich and the poor over the years has
raised fears of a social backlash. 
Examples (lead partner Equal) Community Action Dacorum (lead partner
IiC Hertfordshire) Council for Voluntary Service St Albans District BITC -
Business In the Community CSR (India) - a subsidiary of IRDS, a
Lucknow based Voluntary organization.

33
Factors for implementing CSR

 Vision and High Level Commitment to CSR—All companies

interviewed recognised that having high-level commitment was
necessary for transforming their organisations and integrating CSR
into the way they conduct business. High-level commitment
provides leadership for the change process, ensures that the
needed resources are made available, and that any barriers to
change, such as lack of incentives or skills, are addressed. Two
companies had board-level committees responsible for stewarding
their CSR activities. For some companies (Husky, Weyerhaeuser,
VanCity and Home Depot), commitment to CSR originated in the
personal beliefs of their founders that being socially responsible
was the "right thing to do". For others, senior management
commitment to CSR was a relatively new phenomenon, which had
been brought about by external pressures from stakeholder groups
or recognition of the business benefits of CSR.
 Skills and Tools—Most companies (eight out of ten) identified
skills and tools among the success factors of their CSR programs.
Surprisingly, few explicitly identified specific tools or training
programs as a means for developing the needed skills, although all
companies had these in place. Four companies (Teck Cominco,
Weyerhaeuser, Husky, CPR) mentioned that success depended to
some extent on hiring people with the right skills, especially when
these skills were innate (e.g., interpersonal skills) and could not be
easily taught.
 Incentives, Motivational Factors and Employee Buy-In—Seven
of the ten companies interviewed reported that corporate
34
 recognition programs, bonus or profit-sharing schemes and
accountability systems made an important contribution to the
success of their CSR efforts. Companies who view their supply
chains as part of their own overall performance (Syncrude and
Teck Cominco) also use recognition programs to encourage
improvement in the performance of their suppliers. Seven
companies operated internal training programs geared towards
increasing employee awareness and understanding of the
company's vision, values and policies and their relationship to the
company's core business practices. These often include
presentations by the CEO and president to further drive home the
importance of CSR to the company's business objectives and help
promote buy-in among employees.
 Information and Data—six companies mentioned that success in
managing improvement in CSR performance requires setting
measurable targets within fixed timetables and assigning clear
responsibilities. To work, targets assigned to individuals need to be
realistic and achievable.

Other success factors noted by the companies included strong

stakeholder engagement programs, assigning adequate internal
resources to CSR, reporting, hiring the right people and developing a
strong business case. The companies noted a number of challenges for
implementing CSR including: changing the corporate culture; developing
performance measures; and, ensuring continuity of CSR programs in the
face of management and staff turnovers.

The study also looked at the role government can play to support CSR.
At least half of the companies are looking for government to:

 Develop and / or support programs that help companies with CSR

(e.g., roundtables on CSR, partner with organisations already
working in this area, help with developing CSR metrics, etc.);
 Act as a role model—communicate what government is doing;
 Disseminate best practices (like the case studies project);
 Recognise companies that are leaders in CSR / provide incentives.

35
Another key role for government identified was to help make sense of
competing terms and standards in this area and to clarify what CSR
means in terms of expectations on performance.

Major challenges for the implementation of CSR

Generally speaking, every CSR instrument has some major challenges

to address. The evaluation of the UNGC’s impact therefore includes
these issues. Among the major challenges are the following:

• The business case for CSR

• Monitoring, certification and reporting

• Mainstreaming CSR in the supply chain

• The role of public policy in CSR

As a rule, the business case is a precondition for CSR. In other words,

if CSR engagement is to be financially sustainable, the financial benefits
must, in the long run at least, outweigh the costs. However, the empirical
findings revealed a complex picture in India. On the one hand,
stakeholders referred to the business case as by far the most relevant
motive for a company to engage in CSR; on the other hand, only 15 per
cent of the company representatives saw it as a precondition for their
engagement. These contradictory statements can be partly explained by
the widespread philanthropic approach.

The survey also showed that the influence of CSR engagement on a

company’s economic performance is most relevant to brand values,
employee productivity/motivation and cost savings through efficiency
gains.
The question of monitoring, certification and reporting is crucial for
the credibility and reliability of CSR activities in general. However, the
overall level of external and also internal CSR evaluation in India must
be regarded as low. On the other hand, the role of credible reporting on
CSR has become increasingly relevant. An indicator of this trend is the
spread of sustainability reports confirmed by many respondents in the
36
survey. These reports are also read by other companies, as 44 per cent
of the companies interviewed confirmed. The publication of CSR reports
obviously also contributes to competition among companies for the
position of best CSR performer.

Despite the Global Compact’s high credibility rating, the accountability

and verification of the companies adhering to it is lacking, although there
is a reporting mechanism. As the UNCG Communications on Progress
do not yet have a specific format, their quality varies widely.

In addition, company awareness of these reporting instruments remains

low. Even though 61 per cent of the companies included in the survey
had published COPs, a mere 23 per cent claimed to have read other
companies’ COPs. Hence competition or pressure among UNGC
companies arising from the publication of COPs does not yet exist in
India.

The dissemination of CSR practices in the supply chain and effective

monitoring of compliance with CSR standards hardly exist in India.
According to the companies operating in India, their supply chain
responsibility focuses mainly on basic labour standards.

As regards the monitoring mechanism in the supply chain, the survey

revealed that there is no systematic approach, this activity usually
consisting of random inspections or surprise visits. Compared to
companies, stakeholders were generally more critical of these
monitoring activities. The survey shows, moreover, that only a few
companies take active additional steps to ensure the spread of CSR in
the supply chain, such as capacity-building and providing financial
support. In principle, the UNGC has recognized the need to spread CSR
practices along the global supply chain and calls on companies to adopt
the ten principles within their sphere of influence. The study shows that
many companies are aware of their supply chain responsibility.
However, the UNGC has not helped to mainstream CSR in the supply
chain. Very few companies said that they had achieved a better standing
with their suppliers because of the UNGC’s credibility. The role of public
policy in regulating and creating an enabling environment for CSR is
crucial. In general, public policy can take on four key roles for CSR:
mandating, partnering, facilitating and endorsing. According to the
survey, companies and stakeholders in India placed most emphasis on
the government’s mandating and partnering roles. The majority of the
interviewees agreed that no additional legislation was needed. However,
a more proactive government approach to law enforcement in the areas
37
of anti-corruption, environment protection, health care and labour
standards (e.g. minimum wages) was demanded. On the question of the
partnering role of public policy, interviewees underlined that further
partnerships with private business and civil society organizations are
needed. However, when the role of public policy was considered in
greater depth, the picture became more diverse. While stakeholders
emphasized the need for additional financial incentives for the private
sector, it was interesting to find that more businessoriented stakeholders
and other CSR experts also saw this as a risk, particularly when budget
constraints occur. In their view, public policy should focus on its
mandating and partnering roles, rather than offering financial incentives.
The survey revealed a broad consensus that the UNGC should take on a
more proactive role in tackling the four challenges referred to above.

38
 CHAPTER-II

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research
problem. The research methodology included various methods and
techniques for conducting a research. Sciences define research as “ the
manipulation of things, concepts or symbols for the purpose of
generalizing to extend, correct or verify knowledge, whether that
knowledge aids in construction of theory or in practice of an art.”

Research is thus, an original contribution to the existing stock of

knowledge marketing for its advancement, the purpose of research is to
discover answers to the questions through the application of scientific
procedure.

My research report has a specified framework for collecting the data in

an effective manner. Such framework is called “Research Design”. The
research process which was followed by me consisted following steps.

Defining the problem

It is said, “A problem well defined is half solved”. The step is to define

the report under study and deciding the research objective.

To enhance the knowledge and understanding about Corporate Social

Responsibility.

Literature Review of the Study

Different researchers at different points of time have emphasized the

critical importance of HR for the proper implementation of CSR and the
39
role that HR can play in developing the process where the business
objectives are assessed and values re-aligned to match them with staff
expectations.
Greening & Turban (2000) found that job applicant and employee
perceptions of a firm’s CSR determines their attractiveness towards the
organizations. Moving on the same track Cropanzano et al (2001)
demonstrates that employee attitudes and behaviors are heavily
influenced by fairness of organizational actions towards them. In a
survey conducted by Cherenson group, a New Jersey based public
relations and recruitment ad agency; in 2002 found that the most
important factors affecting the reputation of an organization as a place to
work in are the way the employees are treated and the quality of its
products and services
(http://www.hrmguide.net/usa/commitment/employer_branding). Further
Good relationships with employees also allows a company to gain
additional benefits including improving their public image, increasing
employee morale, and support from the community (Zappala and Cronin,
2002). Nancy (2004) while discussing the role of HR in developing CSR
culture in organizations emphasized that with the growing importance of
human capital as a success factor for today’s organizations, the role of
HR leadership has become more critical in leading and educating
organizations on the value of CSR and how best to strategically
implement CSR policies and programmes domestically and abroad. In
view of this HR must be aware that effective CSR means respect for
cultural and developmental differences and sensitivity to imposing
values, ideas and beliefs when establishing global HR policies and
programmes.

Redington (2005) with the help of twelve case studies, while underlining
the HR professionals’ key role in managing the changes required for
CSR activities to succeed, stated that employees are the most neglected
though most important stakeholder of the organization for conducting
CSR activities. While accentuating on this issue he said that having a
good reputation socially implies that a company’s behaviour towards its
people is consistent and is of a particular standard in which they are
valued in as much as the external stakeholders. Rupp et.al (2006)
accentuated that CSR plays a role about fostering positive social
relationships between organizations and communities. They highlighted
that employees will turn to CSR to assess the extent to which their
organization values such relationships and so high levels of CSR can
meet employees’ need for belongingness with the organization and the
society. A survey by Sirota Survey Intelligence (2007) affirmed that
employees who are satisfied with their organization’s commitment to
40
social and environmental responsibilities are likely to be more positive,
more engaged and more productive than those working for less
responsible employers and when employees are positive about their
organizations’ CSR commitment, their engagement rises to 86 per cent.
On the other hand, when employees are negative about their employer’s
CSR activities, only 37 per cent are highly engaged. Similarly, Murray
(2008) on the basis of survey stated that more than one-third of
respondents pointed that working for a caring and responsible employer
was more important than the salary they earned and nearly half would
turn away from an employer that lacked good corporate social
responsibility policies.

However Fenwick & Bierema (2008) has pointed that HR department,

which has the potential to play a significant role in developing CSR
activities within the organization, found to be marginally involved or
interested in CSR. Mehta (2003), in a survey, found that only 13 per cent
of the companies involved their employees in undertaking the various
CSR activities. Moreover, the employees have also been less likely to
fully internalize the corporate culture (Rupp, et. al, 2006). The
implementation of the CSR policy has also traditionally been in the
hands of ‘management’ and ‘employees’ as the non-management
workforce have been less likely to be involved in developing and
implementing a policy on business responsibility towards society. There
are large variations in the understanding of CSR in the head office and
the local plant or sales office of an organization (Young, 2006). The
perceptions of workers and management also differ about whether an
organization is complying with such regulations as related to labour or
working conditions (Mehta, 2003).

Agarwal (2007) stated that with the adoption of HR policies, such as,
periodic review of employee performance, adequate training for the
workforce and career advancement norms for its personnel, creating
motivation, and commitment in the workforce the organization can reap
the full business benefits and become successful to the great
satisfaction of all its stakeholders. This is also reinforced by Malikarjunan
(2006). Emphasizing upon such dimensions Krishnan & Balachandran
(2004) pointed out the role of HRM in incorporating responsible practices
within an organization. It is due to the lack of involvement of employees
and failure to embed the socially responsible values into the
organizational culture that many CSR initiatives inevitably fail and they
just become an exercise in public relations (Mees & Bonham, 2004).

41
The above verdicts of different researchers at different points of time
entail that no doubt they have underscored the role of employee
involvement through HR in various socially responsible initiatives of
organization. But they have paid little attention on this aspect that how
the internalization of CSR culture can happen with the initiatives of HR
department of organization. How the company’s values and policies for
corporate responsibility can be reflected through various HR functions
and consequently how the HR function can be a powerful agent in
effecting company-wide progress in its CSR performance. With this
backdrop in mind present study has designed.

Justification of Study

When it comes to determining whether or not the Global Compact is

having an impact on a company’s CSR performance, it must be stressed
that this report regards corporate social responsibility as an advanced
tool for addressing the challenges posed by changes related to
globalization. Historically, the nation state was the main institution that
had the capacity to regulate undesirable market trends during the major
part of the last century. With the advent of neoliberal economic theory
and economic deregulation in the 1970s, however, the situation
changed. Political power shifted from governments towards corporations
operating internationally. As companies and finance became more
transnational, they were able both to influence and to evade the actions
of states. Business increasingly spread its activities to countries where
regulation was weakest. Against this background, the UN Secretary-
General’s CSR initiative seeks to launch “a global compact of shared
values and principles, which will give a human face to the global market”
(McKinsey 2004). In line with this notion, the government of India has
committed itself to establishing a modern “market economy with a
human face”. India already has a long tradition of CSR dating back to its
pre-colonial history. From the 1850s onwards, companies were strongly
committed to philanthropically motivated CSR. After independence and
until the end of the Cold War, India adopted its own concept of the
“mixed economy” and applied more legalistic approaches focused on
state actors and state-owned enterprises. Meanwhile, India has dropped
the “mixed economy” concept2 and initiated basic economic reforms.
Since the 1990s it has been liberalizing and deregulating its economy.
State controls have been gradually eliminated. As a consequence, the
Indian economy has posted an annual growth rate of 6 to 8 per cent.

42
The present study assesses the Global Compact’s role in shaping
corporate and environmental responsibility in India.

Research Objectives

The main objective of the study is as follows:

 To understand the improvement in employee understands about
the key issues related to the CSR.

 To study the CSR as a self assessment tool.

 To study the employee satisfaction and understand the current

CSR scenario in India.

 To study the Role of CSR of the PSU’s in India.

 To find out the future trends and challenges related to CSR.

Research Approach

Surveys are best suited for Descriptive Research. Surveys are

undertaken to learn about people’s knowledge, beliefs, preferences,
satisfactions and so on and to measure these magnitudes in the general
public.

Therefore I have done this Survey for the Descriptive Research Process.

Research Design:-
Sample Size : 100
Sample Frame : Jodhpur, Jaipur
Sample Unit : Railway Employees
Sampling Method : Stratified Random Sampling
Constraints : Time, Number of Respondents
Sampling Error : Non-response- 40
Desicive – 30
Inesicive - 10

43
 Response- 60
Survey : Questionnaire

This questionnaire will help you think about your company’s efforts
towards responsible entrepreneurship by raising questions on the
possible ways you could improve your business in a profitable and
sensible manner. The questionnaire will also help you identify further
actions you can take to strengthen your business, its reputation and
performance.

The questionnaire should take no more than ten minutes to complete.

Tick the most appropriate responses for you and your enterprise, since it
is for your own use. There are no right or wrong answers – rather the
questions should prompt consideration of actions you can take. Once
complete, it is yours to keep for future reference. It is not to be submitted
to or collected by the event organisers.

Tools of Data Collection

Since the study is based on both the primary and secondary data, a
questionnaire has been provided to evaluate the data under traditional
methodology of the primary data collection and used many articles,
magazines and websites for secondary data collection.

44
 QUESTIONNAIRE

Sampling Method: Stratified Random Sampling

Division is done on the basis of Age and Gender.

Age: 1. 21-25, 2. 26-35, 3. 36-45, 4. 46 and

above

Gender: 1. Male, 2. Female

Q1) Rate the importance of CSR on the scale of 1 to 10.

a) Below 4 b) Between 4-6

c) Between 7-9 d) Perfect 10

Asking respondents to rate the importance of CSR to development of the

country, tended to be high, with the average rating on a scale of 1-10,
and for the Indian PSU’s, 8.05.

Our intent in designing the interview guide was to compare these self-
reported ratings to a somewhat more objective measure of the relative
importance of CSR investments.

It was seen that the male below 45 years of age showed more keep
interest in the implimentation of CSR policies than the male above 45
years of age.

It was seen that the females between 35 and 45 were more in favour of
the CSR as shown in the diagram below. The graph drastically drops in
the age above 45 years. This holds true for the newly recruit women in
the organisation as well.

45
 10

8
Repondents in percentage

6
Non-Respondents
5 Male
4

0
21-25 26-35 36-45 46 and above

7
Respondents in percentage

5 Non-Respondent
Female
4

0
21-25 26-35 35-45 45 and above

Q 2) Rank the sustainability of their company’s CSR investments in

India on a scale of 1-10.
46
a) Below 4 b) Between 4-6

c) Between 7-9 d) Perfect 10

Among 50 percent of the male population who had taken this questionnaire
ranked Railways between 7 and 9. Among 60 percent of the female population
answered between 4 and 6.

6
Respondents in percentage

4
y-axis in Percentage
3 Male

0
21-25 26-35 36-45 45 and above
Axis Title

It is seen the male between the age group of 21-25 and the age above 45 years
has the maximum number of non respondents.

47
 7

6
Respondants in percentage

4
Non-Respondents
Female Respondents
3

0
21-25 26-35 35-45 46 and above

Q 3) Do you feel the need for Social Auditing for the activities
involving CSR in PSU’s?

a) Yes b) No

c) Don’t Know d) Not Applicable

Social auditing is a process that enables an organisation to assess and

demonstrate its social, economic, and environmental benefits and
limitations. It is a way of measuring the extent to which an organisation
lives up to the shared values and objectives it has committed itself to.

Since people are realizing the need for social auditing in order to assess
the actual impact of corporate social responsibility both on the internal
and external environment.

Eighty percent of the male said yes they want a period social auditing
scheduled for the Railways.

Seventy five percent of the female population said yes.

48
 Responents in percentage

Female
Male

Yes No Don't know Not Applicable

Q 4) rank the four major categories of CSR in descending order of

importance to their company.

a) Social, with a mean ranking of 1.4

b) Economic, with a mean ranking of 2.2

c) Environmental, with a mean ranking of 2.8

d) Corporate Governance, with a mean ranking of 3.2

Most of the males working in the Railways organization ranked CSR as

first economic, with a mean ranking of 2.2, then Social, with a mean
ranking of 1.4, Environmental, with a mean ranking of 2.8, Corporate
Governance, with a mean ranking of 3.2.

Female ranked it accordingly with economic being the first, social and
corporate governance and then the environmental.

49
 6

5
Male Respondents in percentage

3 Male

0
a b c d

4.5
Female Respondents in percentage

3.5

2.5 Female

1.5

0.5

0
a b c d

Q 5) what public sector roles, in their opinion, would be most

helpful to their company’s CSR efforts in India?
50
a) Mandating laws and regulation

b) Facilitating incentives, guidance, and deterrents;

c) Partnering with business and/or civil society

d) Endorsing political support, awards, leadership by example

Males of the age group of 21-25 voted for facilitation incentives,

guidance and deterrents, while males belonging to the age group of
26-35 voted for endorsing political support, awards, leadership by
example. Males between the age from 36 and above showed a lack
of interest in providing their opinion on this question.
Females on the other hand from age 21-25 voted for partnering with
business and civil society. Belonging to the age group of 26-35
were rooting for mandating laws and regulations. Above that age
group wanted facilitating incentives, guidance and deterrents.
Male Respondents in percentage

Male

21-25 26-35 36-45 45 and above

51
 Female Respondents in percentage

Female

21-25 26-35 36-45 45 and above

Axis Title

Q 6) what do you think about the current CSR efforts employed by

your company? Are you satisfied with the present scenario?

a) Should maintain the current level of CSR involvement

b) Should monitor the changing CSR trends

c) Should increase their current levels of CSR involvement

d) Should plan to develop a more systematic and/or focused

approach to CSR design and implementation.

Most of the respondents suggested that those government

companies whose net profit is less than Rs 100 crore have to
contribute 3% of their income for CSR, PSUs with profits between
Rs 100-500 crore would be required to earmark 2-3%.

Further, those companies earning a profit of Rs 500 crore and

above, CSR spending should be between 0.5% and 2% of the net
profit.

52
 8

7
Respondents in percentage

5
Female
4 Male

0
21-25 26-35 36-45 46 and above

Q 7) Does Railway consider the potential environmental impact

when developing new services (eg. Assessing energy usage,
recyclability or pollution generation?

a) Yes b) No

c) Don’t know d) Not Applicable

This question had a typical response. Both the genders didn’t want
to comment. Either they didn’t know or they said not applicable.

Developing new services always has a hazardous impact on the

environment. So it was an important question in that respect. Got
some mixed responses.

53
 8

7
Respondents in percentage

5
Female
4 Male

0
21-25 26-35 36-45 46 and above

Q 8) What do you think about the future public sector role in CSR?

a) Mandating laws b) Facilitating incentives

c) Partnering activities d) Political support

7 out of 15 respondents did not comment on this category. Among

those commenting, three called for more clarity, consistency and/or
stability in the development and application of laws pertaining to
business licensing, land ownership, and labour, tax and
environmental law; two called for government of India to get more
involved in such areas as micro-credit & SME development, and in
setting benchmarks for local content above the current levels.

4 out of 15 respondents did not comment. Other responses varied,

though two companies mentioned financial incentives, the
development of enterprise zones, qualification as potential areas
for government of India action.

2 out of 15 respondents did not comment on this category. Other

responses varied, with respondents mentioning NEPAD, the need
for better coordination among businesses, and the need for more
businesses with which to partner.
54
3 out of 15 respondents had no comment, one thought GoI had “no
role” to play in this area, one misunderstood the question, while
one – and only one -- mentioned lack of transparency and the need
for cross-sector cooperation as well as political leadership to solve
this problem.

7
Respondents in percentage

5
Female
4 Male

0
21-25 26-35 36-45 46 and above

Q 9) Can you think of ways in which your company could use the
sustainability of its services?

a) Yes b) No

c) Don’t know d) Not Applicable

Most of the respondents said yes to this question. Railways are doing a lot of
work in the field of corporate social responsibility as well. Respondents
working in Railways comply with the fact that railway being the largest earning
public sector organisation understands it’s responsibility towards the society
and its causes.

55
 Respondents in percentage

Female
Male

21-25 26-35 36-45 46 and above

Limitations of the Study:

 The possibility of respondent’s responses being biased cannot be ruled out.

 Limited access to secondary data pertaining to performance in other regions

or any other information was another problem in finding a correct response.

 Since a smaller sample was chosen so it may not be true representative of

population under study.

 Most of the times people don’t give appropriate information.

 The survey was to be conducted in a limited span of time which also posed a
limiting factor.

 The employers are so busy in their business so that they did not show actual
picture of the situation.

 Omission of some important information due to response biases and time

constraints.

CHAPTER-III
56
 COMPANY PROFILE

Indian Railway Finance Corporation Ltd. (IRFC) is a dedicated

financing arm of the Ministry of Railways.  Its sole objective is to raise
money from the market to part finance the plan outlay of Indian
Railways. The money so made available is used for acquisition of rolling
stock assets and for meeting other developmental needs of the Indian
Railways.

The borrowing programme of IRFC is guided by the requirements

projected by Ministry of Railways.  The company has successfully met
the targeted borrowings year after year, through issue of both taxable
and tax-free Bonds, term loans from banks/financial institutions and
through off shore borrowings.  IRFC also makes use of innovative
financial instruments to diversify the debt portfolio and to minimize the
cost.  Its contribution to infrastructure build-up in Railways is very
significant. Till 31st March, 2010, Rolling Stock assets - Locomotives,
Coaches and Wagons - valued at Rs. 60,163 crore have been added to
the asset base of the Indian Railways with funding assistance from
IRFC. IRFC’s funding has support technology infusion   in the Railways
and has enabled Ministry of Railways to purchase new generation
Locomotives from General Motors (USA) alongwith transfer of
technology and new generation Coaches from Germany for use in high
speed/Shatabdi trains.

 
 IRFC’s share in funding of the most productive high capacity wagons
and high horse power locomotives is very significant. Acquisition of high
capacity & efficient assets with IRFC funding has gone a long way in
increasing traffic output and revenue growth over the years. Around 50%
of the revenue earning rolling stock assets operating on the Indian
Railways network is funded by IRFC. 
 
Since its inception, IRFC has consistently earned profits and paid
dividend adding upto Rs. 1468 crore till 2009-10 on a paid up capital of
Rs. 500 crore which has been increased to Rs. 800 crore from 2nd June,
2009.     Dividend payments for the year 2005-06, 2006-07, 2007-08, 
2008-09 and 2009-10 are Rs. 150 crore, Rs. 160 crore, Rs. 100 crore,
Rs. 100 crore and   Rs. 100 crore  respectively and are the highest ever

57
paid by a Railway PSU.The networth of IRFC as on 31st March, 2010  is
Rs. 3405.48 crore.
 
Rolling Stock assets funded by IRFC are leased to Ministry of Railways,
which pays lease rentals to the company every half year.  The Ministry
has already made repayments in respect of assets valued at Rs
21,065.68 crore.  It is also a constant endeavour of the company to
reduce cost to the Ministry.  Under the guidance of its dynamic and
proactive leadership, IRFC has successfully brought down cost of
incremental borrowings to Ministry of Railways from 14.97% p.a. in
1996-97 to 8.21% in 2009-10.
 
The Company’s performance has been rated excellent for eleven   years
in a row by the Department of Public Enterprises. Specially worth
mentioning is the ranking of IRFC among the top ten Government
Undertakings for the last four years in succession. For the years 2001-
02, 2002-03 and 2003-04, Company has received Award from the
President of India, Prime Minister of India and Vice President of India
respectively.  For the year 2005-06, 2006-07, 2007-08 and 2009-10. The
Company has achieved   the Perfect Score of 1.
 
 
International:  For the financial year 2009-10, three international credit
rating agencies - Standard & Poor’s, Fitch and Moody’s - assigned to
IRFC "BBB-"(Stable)", "BBB-(Negative)" and "Baa3(stable)" rating. 
Besides, the Company obtained credit rating of "BBB+(Stable)" from
Japanese Credit Rating Agency in respect of its Samurai Bond issuance
of March 2007.

Future direction/plans of the Company: To focus on its existing business

and further consolidate its position as a low-cost funding source for
MOR.

Credit Ratings:  Domestic: During the financial year 2009-10, the

Company was awarded the highest rating of "AAA/Stable", "LAAA" and
"AAA" by CRISIL, INCRA and CARE respectively for domestic
borrowing. International:  For the financial year 2009-10, three
international credit rating agencies - Standard & Poor’s, Fitch and
Moody’s - assigned to IRFC "BBB-"(Stable)", "BBB-(Negative)" and
"Baa3(stable)" rating.  Besides, the Company obtained credit rating of
"BBB+(Stable)" from Japanese Credit Rating Agency in respect of its
Samurai Bond issuance of March 2007.  

58
Future direction/plans of the Company:
               To focus on its existing business and further consolidate its
position as a low-cost funding source for MOR.
 
To establish it’s pre-eminence as the only market borrowing arm of MoR
by providing funding support to Ministry of Railways (MOR) for induction
of new technologies in areas of rolling stock, etc.
 
Selectively to diversify its activities through funding financially viable and
remunerative railway projects involving port connectivity or specific
industry based new lines/gauge conversion projects.
 
To engage in advisory services in financial structuring.

Growth of Railway in India

In 1849, the first contract was given to East Indian Railway Company
for the construction of a railway line for Calcutta towards Mirzapur. In the
same year, another contract was made with the Great Indian Peninsula
Company for the construction of another railway line from Bombay to
Kalyan.

In pursuance of the contracts mentioned above, the first section

from Bombay to Thane consisting of 35 kms was opened on 22 nd
August, 1854. The construction of railway line, since then, continued and
by the end of 1868, the Railway kilometrage had increased to about
6043 kms.

Lord Dalhousie was keen to connect large cities and

presidencies with each other as well as the principal ports in order to
promote social, political and commercial development of the country.
With this object in view, he recommended the construction and working
of railway through private agencies but under the supervision and direct
control of the government. This was over the construction of Railway in
the month of March, 1869. By the end of 1879, about 12455 kms of
railway line had been constructed in all, out of which about 3285 kms by
the government.

The great famine of 1878 stressed the need for further and
rapid development of railways, but due to funds, the government had to
resort to the company construction. The Indian states were also asked to

59
undertake the construction of Railways in their own territories and these
states constructed about 7500 kms of Railways.

The railway lines were constructed at a faster pace after the

advent of twentieth centaury and the railway kilometrage increased from
about 37130 kms in 1900 to about 51900 kms in 1913-14 and now
exceeds 64015 kms.

In pursuance of recommendations by Railway Enquiry

Committee of 1921, the management of Railways was taken over by the
Government and now all the Railways in India (except a couple of small
branch line sections) are owned and managed by the state.

Organisation of Railway Board

The Indian Railways are Asia’s largest Railway system and the world’s
second largest Railway system; next to the Railway system of U.S.S.R.
Indian Railways are the nation’s largest undertakings, employing more
than 14 lakhs employees. Indian Railways are owned and managed by
the Central Government, being the principal mode of inland transport,
linking the entire length and breadth of the country, healthy growth of
Railways is essential for India’s social, regional, economic, industrial and
agricultural development.

The responsibility for the administration and management of

the railways vests with the Railway Board under the overall supervision
of the Minister for Railways assisted by the Dy. Minister. The Board is
empowered to function as a Ministry of Government of India and
exercises all the powers of the Central Government in respect of
regulation, construction, maintenance and operation of the Railways.
The Railway Board as the top executive body consists of six members
having ex-officio status of Secretaries to the Government of India. The
chairman has a special position as Principal Secretary to the
Government of Indian in the Ministry of Railways in the Railway Board
and exercises full powers of the Government of India to Railways
Finances. The other members of the Railway Board are members of
staff, engineering, transportation.

The Board is assisted by Director General Railway Health

Services, Director General Railway protection force & security and some
advisor industrial relations, advisor staff, advisor vigilance, advisor
commercial etc. The Director Generals are in the pay scale of 22,400-
60
26,000 which scale is also applicable to the General Manager of Indian
Railways applicable to additional Secretaries the to Government of India.

The Board’s establishment is organised as functional

Directorates, each under an Executives Director who is responsible for
the disposal of day-to-day technical and professional work within the
policy as laid down by the Board. The Executive Director is assisted by
Directors, Joint Secretaries, Joint Directors, Deputy Secretaries, and Dy.
Directors. The entire Secretariat is supervised by Secretary, Railway
Board who is co-ordination officer between the different Directorates.
The Secretary holds the rank of Additional Secretary to the Government
of India. The Executive Directors are in Senior Administrative Grade,
Director in the selection Grade, Joint Directors are in Senior
Administrative Grade and Dy. Directors are in senior scale.

National Rail Vikas Yogna

With a view to complete strategically projects within a stipulated

period of time, a non-budgetary investment initiative for the development
of Railways has been launched. Under the scheme all the capacity
bottlenecks in the critical sections of Railway Network will be removed at
an investment of Rs. 15,000 Crore over the next five years. These
projects would include:

 Strengthening of the Golden Quadrilateral to run more long

distance mail/express and freight trains at a higher speed of 100
kmph.

 Strengthening of Rail connectivity to ports and development of

multi-model corridors to hinterland.

 Construction of four mega bridges – two over river Ganga, one

river Brahamaputra, and one over river Kosi.

 Accelerated completion of those projects nearing completion and

other important projects.
Tie-up with Foreign Railways

Indian Railway is in constant touch with Railways across the world

to bring in state of the art facilities in its system. Towards this, a

61
Memorandum of Understanding was signed during the Eighth Session of
Indo-Austria joint economic commission held in Vienna.

This seeks to promote and deepens long-term infrastructure

specific cooperation between Indian and Australian Railways to their
mutual benefit.

A three day international conference of Union Railways was

organised by Indian Railways in New Delhi in which hundreds of
delegates from various industries and Railways around the world
participated.

Honours and Awards:

Darjeeling Himalayan Railways attained the world heritage status

from UNESCO. Fairy Queen, the oldest functioning steam engine in the
world, which finds a place in the Guinness Book of World Records, got
Heritage Award at the International Tourist Bureau, Berlin in March,
2000.

On operational front, Delhi Main Station entered the Guinness Book for
having the World’s largest route interlocking system.

Social Obligations and care for weaker sections

Senior citizens, students, disabled persons etc, enjoy concessional

benefits from Railways. New initiatives in this area during the last three
years including reduction of age limits for special concession to senior
women citizen from 65 to 60 years, blind and mentally challenged
persons can travel in AC classes on concessional rates. Free second
class monthly season tickets for school going children up to tenth
standard for travel between home and school was also introduced.

RAILWAY RECRUITMENT BOARD – Railway Recruitment Boards are

situated at following places which does the recruitment of different
categories of Group C in Railway.

1. Mumbai 2. Guwahati 3. Bangalore 4. Patna

5. Kolkata 6. Bhopal 7. 8. Ranchi
Bhubaneswar
62
9. Chennai 10. Chandigarh 11. Gorakpur 12.
Secundrabad
13. Allahabad 14. Ajmer 15. Jammu 16. Trivandrum
17. 18. 19. Malda 20. Bilaspur
Muzaffarpur Ahmadabad
21. Siliguri

Training Centres

1. RAILWAY STAFF COLLEGE BARODA- The staff college Baroda is

imparted the training to all officers.

2. INDIAN INSTITUTE OF CIVIL ENGG. (IRICE) PUNE- This institute

imparts training to officers of Civil Engg. Department.

3. INDIAN RAILWAY INSTITUTE OF SIGNAL ENGG. AND TELECOM

ENGG. (IRISET) SECUNDRABAD- It imparts the training to officers of
signal and telecommunication department.

4. INDIAN RAILWAY INSTITUTE OF ELECTRICAL ENGG. (IRIEE)

NASIK-
This institute imparts the training to officers of electrical department.

5. INDIAN RAILWAY INSTITUTE OF MECHANICAL ENGG. (IRIMIE)

KHARAGPUR- It imparts the training to officers of Mechanical
Department.

CHAPTER-IV

EVALUATION OF CSR POLICIES

Up to now, CSR has been treated as a periphery of business

management, and as a social issue. However, recently it is beginning to
63
be understood as a major part of management, and as an economic
issue. It was seen that companies that caused social problems used to
be asked their responsibilities, and they came under pressure from
social movements outside the marketplace. But since the 1990s, not
only boycott activities, but the criterion of CSR has been incorporated
into investment, finance, transaction and procurement. Rating and
choosing companies in the market by the criteria of CSR is starting to
become main stream. The following are the main five reasons for
demanding CSR in the market.

1) Purchasing Standards of Consumers （ boycott ／ boycott ） ： NGOs

monitoring the corporate activities and providing information have grown
and gained public support.

2) Code of Conduct ： Standards of corporate activities set by NGOs,

international institutions and management organizations. ISO now
discusses the setting for a new guidance on the social responsibility of
an organization; ISO26000 (http://www.iso.org/sr).

3) Standards of Investment ： The total assets of Socially Responsible

Investment (SRI) have grown for the past ten years, and have increased
in popularity (SIF2006). A growing number of institutional investors,
mainly in pension funds, are beginning to carry out SRI.

4) Standards of Finance：Development of environment-CSR conscious

financial products. UNEPFI established the Principle of Responsible
Investment (PRI) in 2006 (http://www.unepfi.org).

5) Standards of CSR Procurement：A standard of CSR is incorporating

into transaction and procurement conditions. CSR is becoming
incorporated also into government procurement.
By setting a standard of rating corporations in the market beyond costs
and the quality of products and services, CSR is growing in demand, and
corporations are asked whether their production process is proper or not,
and whether their management system is accountable or not. CSR
elements will get involved with criteria in consumers buying products,
investors evaluating corporations to invest, and financial institutions
making a loan. Also, CSR is beginning to be included in procurement
agreements with suppliers. Environmental and social aspects are joining
with subjects such as quality, and cost and delivery date, and CSR
procurement is appearing in the market. Through incorporating CSR into
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the base of economic activities, a new norm is gradually developing in
the marketplace, and is leading to the formation of a new standard of
corporate evaluation.
With these trends in the marketplace, companies have no choices other
than to respond to CSR issues properly whether they can afford to
“invest” or not. Of course that does not mean CSR is already
incorporated and fixed as a mainstream of the marketplace. But in the
past ten years, such movements have gradually spread around the US
and EU markets. It can be said that the discussion of CSR is maturing
and comes to stay as one of the norms in the market.

The Function of SRI

Next, we will confirm the functions and meanings of SRI and CSR
procurement system. Let’s focus on the following two styles of SRI.
Social Screen：Selection of investment stocks, by rating corporations by
both the financial index and the social index and the establishment of
SRI mutual funds.
SRI assets in the USA rose more than 3.6 times from ＄ 639billion in
1995 to ＄2.29 trillion in 2005 （SIF2006). This is 9.4 ％ of the ＄24.4
trillion in total assets under professional management. Nearly one out of
every ten dollars is involved in SRI.
In England, total assets by social screen stood at ￡224.5billion in 2001,
12.7 ％ of the market （ Sparkes2002 ） . It grew about 10 times
comparing to ￡ 22.7billion in 1997. One of the reasons of this growth,
especially with the revision of Pension Act in 2000 as a turning point, is
that pension funds incorporated SRI into their performance.

65
In Japan, the size of SRI is still very small, it is composed of only SRI
mutual funds and just a few corporate pension funds. As of the end of
March 2006, there were 24 SRI funds, their total assets ￥ 258.5 billion
(http://www.morningstar.co.jp). The helping individual/institutional
investors to grow are also required.

With the trend of SRI becoming a mainstream as indicated above, the

mainstreams in finance have tended to include SRI in their financial
scheme recent years. In financial institutions, a trend of incorporating
Environment（E）Society（S）and Governance（G）into investment
standards is beginning to spread. The rating of corporations is based on
financial data in the mainstream, but in the mid-and long- term,
environmental risks and an inadequate governance system influence the
financial performance. There is such a movement to try to take on these
material elements into corporate evaluation. It is said that this style
involves only socially critical risk factors and differs from the basic SRI
style that covers all of the social and environmental issues. However, as
the market matures, mainstreams in finance face to meet these needs
responsively. It is said that the rating systems for corporations have
been gradually changing.

Asset Management Working Group of UNEP FI issued a report

“Materiality Report” on June 2004. ２ Materiality is a term that means
having an important impact on corporate management and evaluation.
UNEPFI is considering an investment principle for institutional investors
those points out that those factors such as Environment, Society and
Governance have a great impact on the investment portfolio of
institutional investors. The United Nations secretary general Kofi Annan
launched “The Principle of Responsible Investment” in April
2006(http://www.unpri.org). This is a guideline of how to consider E, S
and G when financial institutions make investment decisions and involve
themselves in the stock market. The importance of a rating style called
“Materiality Evaluation” is starting to be realized now.

The Function of CSR Procurement

Next, we will look at how CSR procurement works. If CSR comes to be

incorporated as a part of procurement standards, corporations will get
influenced directly by its movement. Along with a spread of production
network, not only for parents companies but subsidiaries, supply chains
and subcontractors both at home and abroad, their business process
and CSR systems are beginning to be questioned. Quality, cost and
66
delivery dates are indispensables for purchase agreements. In addition,
“environmental procurement” which outlines standards for the
environment has been incorporated into purchasing criteria and has
spread and stabilized over the last ten years. Along with the globalization
of production activities, strict environmental standards are required also
in local production factories. In addition, compliance followed by labour
and human rights issues is to be included in the criteria.

As a negative part of globalization, the “sweatshop” problem, forced

labour under poor working conditions, has been revealed in the
developing countries. NGOs criticizing and monitoring labor, human
rights and environmental issues in factories in developing countries are
growing. Should the boycott movements become spread in the market,
corporate reputations would get severely damaged. In this situation,
companies including suppliers and their partners abroad are beginning
to engage in making procurement standards on labor, human rights and
environmental issues. IT companies in the US and Europe establish an
unified platform of CSR procurement.

For instance, Hewlett-Packard has been active in CSR procurement

since 2003. The following companies have joined HP: Del, IBM, Cisco
Systems, Microsoft and Intel and so on. They collaborated to establish a
uniform standard of CSR procurement “Electronics Industry Code of
Conduct” （EICC ） in the fall of 2004 (http://eicc.info). EICC have been
outlining standards to promote industry criteria for socially responsible
business across the globe since 2005. The Code is made up of five
sections. That is, 1) Labor, 2) Health and Safety, 3) Environmental, 4)
Management System, 5) Ethics, （ Version 2.0 October 2005 ） . The
companies work collaboratively with suppliers to develop harmonized
approaches for the monitoring, reporting, and auditing of the social and
environmental issues and programs to enhance supplier capabilities.
In Europe, Global e-Sustainability Initiative （ GeSI ） is developing a
supplier standard based on CSR in the information and community
industry （ http://www.gesi.org ） . The core members of the working
group, CSR on supply chains, are BT, ERICSSON, Vodafone, Motorola,
Deutsche telecom and Panasonic mobile. EICC and GeSI established a
partnership in the fall of 2005. HP and Cisco system are the same
members of this group. They are expected to establish a unified method
of monitoring suppliers and of risk assessment.
Some Japanese companies are also making efforts to set CSR
procurement standards. Sony participated in EICC in 2005. NEC has
incorporated CSR into fundamental policies of their procurement
standards since 2005, and they are demanding their suppliers to
67
consider CSR. The following six points are indicated as major issues
especially from the point of risk management: 1) Quality and safety risk
of products, 2) Environmental risk, 3) Information security risk, 4)Risk of
fair-trade, 5) Occupational safety and health risk, 6) Human rights risk.
According to NEC’s CSR section, they have already dealt with 1) ~ 4),
but haven’t started to commit 5) and 6) in the developing countries. A
lack of understanding CSR in the developing countries can be seen
among most of the Japanese companies.

In implementing CSR procurement, it’s important to make collaborative

efforts with group companies and suppliers without a one-sided rule for
subcontractors, the same way as environmental procurement is
conducted. For example, the CSR manager of Mitsubishi Plastics, Inc.
says that they are aiming for sustainable development with their partners
as following the standard, not focusing on selecting their business
partners ４ . In contrast, Wal-Mart in China takes a strong position to
have no commitment or to even cancel their contracts with companies
without a certain achievement of CSR.

As the network of CSR procurement spreads in the market society, its

influence becomes much stronger. NEC is included as one of the top 40
suppliers of HP from the beginning when it started in 2003, and NEC
were also demanded CSR procurement from Vodafone in England. But
they could not manage issues such as improving working conditions and
human rights in developing countries although they were preparing for
their CSR management system. They had to grasp the situations of
suppliers and take a serious approach to CSR consistently on a global
scale. With their group companies, they reviewed their code of conduct,
and have started to develop a new approach to those issues since April
2004.

There is global pressure on many Japanese companies concerning CSR

procurement because they have not properly managed their local
subsidiaries’ and suppliers’ activities in developing countries. Domestic
suppliers and small and medium-sized companies are finding
themselves in a situation where they can’t say they have enough
resources to carry on CSR any more. The requirements of CSR
procurement will spread more in the near future.
When implementing CSR procurement, we face financial burdens. It
costs a lot for manufacturers to develop their own standards of behavior
in order to operate and improve systems that supervise, manage and
monitor their suppliers. To reduce such costs and prevent the companies
which are already committed from being disadvantaged, it is a good idea
68
to construct common platforms. For the suppliers, it’s tough work to meet
the demands of compliance with each standard from different
manufacturers. If a unified standard comes to be specified by industry,
that would lead to cost saving.

Development of CSR Public Policy

The development of CSR public policymaking will depend significantly

on the dynamic state of India’s economy, politics and social movements.
Ideas of the social responsibility business should assume are rooted in
British rule and the notions that were transmitted thereby, e.g.
Fabianism. At the same time, Gandhianism led to a pervasive focus on
philanthropy and the concept of trusteeship as legitimate ways of
ensuring a balance between private and societal interests. Gandhianism
was also based on Hinduism’s religious and spiritual traditions that laid
great importance on the act of giving to the needy.

India’s philanthropic tradition, an outcome of modern Fabianism and

traditional Hinduism, thus has had a long-lasting influence on the
development of the country’s CSR agenda and on CSR public policy and
is beginning to address those priorities that had long been set by
business-based, philanthropic institutions, such as family planning,
education, health and sanitation. However, the socialist era of post-1947
also saw the rise of a strong and democratic state, which recently has
begun to disburden itself through policies of liberalization and
privatization.

The corporate sector now is far more integrated in the global market,
leading to the need for the formulation of CSR policies that take
international developments in CSR norms and policies into account. This
is the external dimension of CSR public policymaking. The internal
dimension is represented by India’s strong democratic tradition of
conflictual relations between incumbent governments and the electorate,
which is becoming increasingly vocal regarding the growing gaps in
wealth and personal opportunity. CSR policymaking therefore also takes
domestic pressures and needs into account.

Thus, in terms of issues, the development of CSR shows an alignment

between the demands made by investors and buyers, in light of both
international standards and domestic concerns. Social and
environmental issues, corporate governance and employee rights are
the three major areas of responsive policymaking. Examples of the first
set of issues are bonded and child labor, local community development,
69
health, education and inclusive growth. The second major area is that of
corporate governance and of consumer protection. The third, where the
government’s CSR agenda has been traditionally strong, is safe working
conditions in large industrial enterprises and responsible labor practices.

In light of the country’s complex societal structure, which includes a

caste system along with other dimensions such as class and gender, a
CSR public policy development that is unique to India has to do with its
conception of CSR as relating to community affairs. This notion is
embedded within the public sector as well as within Indian nonstate
actors, including corporate actors. Within the country’s philanthropic
traditions, community affairs were often seen through the lens of
development work in the areas of health and education, and in the areas
of folk culture and the performing arts. Given India’s rapid economic
growth, however, which has so far been based on capital-intensive
rather than labor-intensive sectors such as IT, current CSR public
policymaking is also attempting to respond to challenges and threats
posed to fragile and potentially disruptive intercommunity relations,
especially those determined by caste differences, by rapid, inequitable
development. The biggest issues here are education, training and
unemployment.

The government’s CSR public policy efforts are therefore now directed at
integrating so-called backward castes into the economy through
affirmative action, especially in the tertiary education and employment
sectors. So far, affirmative action, known in India as “reservation,” has
been restricted to training and employment opportunities in the public
sector. New and hotly contested proposals are being drafted that seek to
broaden the scope of affirmative action to the private sector as well.

CSR Policy Rationale

India’s future economic development and sociopolitical stability rely on

the dual bases of economic growth and good governance. Both bases
are necessary to ensure continued and sustainable wealth creation, on
the one hand and the equitable distribution of added wealth, on the
other. However, the growth of an export-oriented economy cannot
happen without an international license to operate, which entails
acceptance of international norms, especially in the areas of labor,
corporate governance and environmental protection. Yet growing gaps in
wealth and personal opportunity within society can and do lead to
unrest, which will continue to burden the world’s largest democracy and
70
dampen its economy. Thus, CSR in India must take place in the space
dominated by international demands and internal needs.

On the one hand, CSR promotion is related to the government’s desire

to facilitate India’s deepening economic and political integration into the
globalizing world. External pressure by international actors and donors
has a clear influence on CSR-related policymaking in that India is a
signatory to a number of international conventions. As a result, some of
the external demands to legislate in the areas of labor rights and
environmental law are voluntarily accepted, in the spirit of India’s long-
standing self-perception as a cooperative member of the international
community, one wanting to play an increasingly important role, e.g.
through a permanent UN Security Council seat. Other sources of
pressure have been international NGOs such as Greenpeace.

On the other hand, the democratic government is also required to

respond to demands made by various interest groups seeking to
address the problems stemming from a growing and resource-intensive
economy, in a country where the state has failed to deliver
comprehensive and universal public goods. Here, however, notions of
CSR have to do not so much with the redistribution of goods but with the
provision of equal opportunity, especially within the sectors of education,
training and employment. It is in this context that the government’s
preoccupation with the question of persistent caste discrimination is to
be understood, as well as its search for partners for addressing this
problem. The private corporate sector, with its philanthropic traditions
and as the main provider of employment, is viewed by the Indian
government as its key partner for domestic CSR policymaking.

CSR Situation CSR Public Policy: Understanding, Strategy

Although the current coalition government under Prime Minister

Manmohan Singh has indicated interest in putting CSR on its policy
agenda, the approaches are still sketchy.

The main points of criticism are generally the lack of a single vision by
the government on CSR and a scattershot approach regarding CSR
instruments. CSR is seen as a means of rectifying societal imbalances,
i.e. unequal relationships between wealthy corporates, a shrinking public
sector, a vocal but less influential civil society and the impoverished
masses. Moreover, philanthropy remains the strongest driver for CSR in
India. The most visible strategy pursued by the government is currently
the attempt to promote affirmative action in India’s industrial sector,
71
along with various efforts in the areas of environmental degradation,
employee rights and corporate governance. Regarding affirmative
action, the government so far has voiced support for demands made in
2003 by members of parliament belonging to the group of Scheduled
Castes and Tribes.

To this effect it has scheduled meetings for dialogue with industry in

2007 to arrive at a consensus and pave the way for formal policymaking.

CSR Public Policy: Instruments and Activities

Mandatory Framework Several laws are in place that deals with CSR-
relevant issues, although difficulties are posed by the lack of a general
enabling environment and by problems in implementation. The main
areas in which CSR public policy is formulated are the environment,
labor standards and corruption. International conventions have therefore
so far provided the main impetus for CSRrelated policy in the area of
labor. Here, the ILO is of particular importance, providing guidelines for
labor laws, including those covering child labor and collective bargaining
and dispute settlement.

With the legacy of the English legal system, India has one of the world’s
best corporate governance laws, but poor implementation together with
the socialistic policies of the pre-reform era have affected corporate
governance (Chakrabarti, 2005). India thus falls far short of international
standards in corporate governance (cf. Khanna / Palepu, 2001).

Since liberalization, however, serious efforts have been directed at

overhauling the system, with the SEBI (Securities and Exchange Board
of India) instituting clause 49 of the listing agreements, which deals with
corporate governance. Corporate governance of Indian banks is also
undergoing a process of change, with a move towards more market-
based governance. A few tentative developments in the area of socially
responsible investing (SRI) also exist, apart from activities designed to
incorporate environmental, social and governance (ESG) factors into
investment decisions by major foreign institutional investors (FII). At the
level of policymaking, the focus is mainly on laws for foreign direct
investment (FDI), guidelines for FDI and laws for public procurement.

All of these are concerned almost entirely with the prevention of the
pervasive problem of corruption, e.g. through pricing distortions. Thus,
SRI is in its nascent stage in India but is increasingly receiving much

72
coverage, with both investors and the government agreeing on its
importance for the country’s future economic development.

In terms of environmental issues, the establishment of major new

facilities or the expansion of existing ones now requires a professional
environmental impact assessment (EIA). NGOs study these EIAs to
ensure that they are properly conducted, and they participate in the
mandatory public hearings. Legal requirements therefore also cover
stakeholder activities. Apart from the requirements to consult
shareholders in investmentrelated decisions, the most important legal
requirement is the holding of a public hearing during major plant
establishment or expansion as part of the EIA process.

Soft Law The government does not engage in the development of

national voluntary codes of conduct or regulation. The most important
exception to this is the Press Council and the Bar Council, relating
respectively to the selfregulation of the press and to standards of
professional conduct and etiquette and standards of legal education.
The Press Council promotes both responsible journalism and training,
and has the reputation for having preserved and fostered India’s well-
known quality and freedom among print media. The Bar Council also
promotes the training of underprivileged lawyers, in addition to playing a
role in legal reform.

Initiatives and Partnerships Two dialogue forums are directly relevant to

CSR policy development. One is the Coordination Committee to
Promote Affirmative Action in the Indian Industry (since 2006). The
second is the India Partnership Forum, a forum for multi-stakeholder
dialogue to promote CSR. Regarding the Coordination Committee to
Promote Affirmative Action in the Indian Industry, it comprises the
relevant government ministry offices (mainly the Industry of Commerce
and Industry), the presidents of CII and ASSOCHAM (Associated
Chambers of Commerce and Industry of India), FICCI (Federation of
Indian Chambers of Commerce and Industry), as well as senior
representatives of industry. The aim of the partnership is to finalize a
Code of Conduct on Affirmative Action, which has so far been done by
CII and ASSOCHAM, to set up an ombudsman with regional benches to
monitor the compliance of the voluntary code of conduct by its members,
and to intensify their efforts in developing the skills sets of Scheduled
Caste and Scheduled Tribe (SC/ST) persons. The members of the
committee are already participating in a public-private partnership
launched by the Union Ministry of Labor and Employment to adopt 300
industrial training institutes during the current year and develop them as
73
centers of excellence. Another element of affirmative action agreed to by
industry was a commitment to developing entrepreneurial abilities
among SC/ST persons. There is also general agreement that there
should be positive discrimination in employment in favor of SC/ST
persons, i.e., other things being equal, SC/ST candidates would be
given preference in employment. This approach, according to industry
representatives, should result in a sizeable increase in employment of
these persons within organized industry.

The India Partnership Forum (IPF), a joint initiative of UNDP India and
CII, has the backing of the Indian government, which is also involved in
this multi-stakeholder dialogue forum. IPF has a more CSRfocused brief
and addresses issues other than affirmative action, its areas of interest
being the adoption and operationalization of a social code for business,
the formulation of CSR, providing support to public policy measures on
CSR, ensuring the mainstreaming of CSR education in business
schools, capacity building for community development, capacity building
for sustainable reporting processes and indices, building a CSR
knowledge base, initiating thematic partnerships under the UNDP CP
and providing communication and advocacy on CSR.

Incentives Corporate philanthropy is facilitated through tax incentives.

There are also awards by the Income Tax Department for good
compliance.

Awareness Raising awareness of CSR takes place mainly through public

praise and award ceremonies. At the top bureaucratic and political
levels, private sector CSR award ceremonies and conferences receive
patronage.

Although there is no systematic public sector activity to encourage

companies to incorporate CSR into their core business, incentives to
raise CSR awareness are also provided by encouraging labeling
programs by the public sector and by cooperating with business to
endorse pro-CSR production and consumption. Examples of labeling
programs are the Food Products Order and the

Agmark Scheme. Similarly, ISO 14000 & 9000 certification is also

encouraged, with subsidies given to small enterprises for such efforts.

Other tentative signs of the desire to take CSR activities seriously can be
seen in developments in the area of education. For example, the All

74
India Council for Technical Education has added CSR to the curriculum
of some business schools

CSR floor for India Inc

The government has watered down its proposal on corporate social

responsibility (CSR) by not including a provision in the Companies Bill
that would have mandated firms to spend 2% of their profit on social
causes.

The final proposal only requires a company to have a policy that targets
to spend 2% of its profit on CSR. The bill, however, seeks to make it
compulsory for a company to give details of the money it has spent on
CSR in its annual report. It is not entirely voluntary or not mandatory. It is
somewhere in between.”

The proposal is a dilution of the government’s stance before the

Parliamentary Standing Committee on Finance that it was considering
making the CSR spend mandatory.

The government had suggested that it could ask companies having a

minimum net worth of Rs 500 crore, or an annual turnover of Rs 1,000
crore, or a net profit of Rs 5 crore in a year to spend at least 2% of their
average net profit during the three preceding fiscals on CSR.

While the general view is that companies would welcome a dilution in the
government’s stance, some in the corporate world say there is actually
no dilution. “This is mandating a 2% CSR spend without actually
mandating it,” the representative of an industry body said.

“How can a company declare in its annual report it has not spent on
corporate social responsibility?”

In a presentation to the government, the Confederation of Indian

Industry had demanded that the new law should not specify an amount
to be spenton CSR, and that a decision on the actual spend be left to
company boards. The industry body had suggested that CSR should be
voluntary and backed by a system of state recognition and honour.

The actual spend of most companies on CSR is well below the 2%

threshold, and much of it would not be considered if a strict definition is
applied.

75
But central public sector enterprises have a policy that requires them to
spend 0.5-5% of their net profit on CSR activities.

CSR reporting

The Western markets until the late 1990s the industry focused more on
philanthropy rather than social responsibility. As the call for socially
responsible behaviour gained importance so was gaining the call for
CSR reporting and as a part of sustainable development process across
the world, corporate social and environmental reporting has received
importance and attention in recent years.

There exist stand-alone reporting practices in India but the content and
information is limited (Baxi & Ray, 2011). This can be very well
contrasted with reporting practices in Europe which include Eco-
Management and Audit Scheme (EMAS). In India these reports are
qualitative rather than quantitative in nature. Systematic formulation of
Environmental Management System is the major lag in these reports.
With the introduction of GRI (Global Reporting Initiative) in 2000, the era
of sustainability reports were introduced. GRI has set certain guidelines
to social, environmental and financial reporting of many companies.
Indian corporate are now increasingly adopting the GRI framework of
reporting standard. There are eight Indian companies which follow GRI
guidelines (Table 1).

Rather than focussing on impact on the society professional companies

are more inclined towards reporting their effort. Again in India the family
owned business is the prevalent organizational ownership the corporate
social responsibility of most of the firms depends on the family’s core
emotional values and therefore to look at the impact these firms does not
focus on the reporting standards and disclosure with proper quantitative
measures. As a part of a company’s accountability towards all its
stakeholders there is an urgent need to develop a transparent reporting
standard in India.

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Indian Company Reports Published in 2011 Following GRI
Guidelines
Name Guidelines Application Status
Organization Level
Ambuja GRI-G3 A+ Third party
Cements cheked
JSW Steel GRI-G3 B GRI - Checked
Paharpur GRI-G3 B GRI - Checked
Business
Center
Transport GRI-
Corporation Of Referenced
India (TCI)
Ultra Tech GRI-G3 A+ GRI-Checked
Cement
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CSR Indian Railways 2010-2011

Indian Railway Budget 2010-11 (No Increase in the Passenger Fares)

Railway Minister Mamata Banerjee has presented the Rail Budget in the

Parliament on Feb 24, 2010. According to budget draft there will be no
increase in the passenger fares of any class or category of trains.
Freight tariffs will also remain the same for 2010-11.

Railway has proposed INR 41,426 crore, the highest ever plan
investment to provide efficient, customer focused and modern railway
77
network. Out of this allocation, INR 4,411 crore has been proposed to
achieve the target of 1,000 kilometers for new lines and INR 1,302 crore
for passenger amenities. The Plan would be financed through gross
budgetary support of INR 15,875 crore, Diesel Cess of INR 877 crore,
internal resources of INR 14,523 crore and EBR of INR 10,151 crore
including market borrowing through IRFC of INR 9,120 crore.

Railway is committed to take up socially desirably projects connecting

backward areas of the country. Surveys for 114 projects for such areas
will be updated and surveys for 55 new lines will be taken up during the
year. 800 kilometer Gauge Conversion and 700 kilometers of doubling
the rail line will be achieved during the year besides a number of new
projects on cost sharing with state governments or through PPP route.

Target has been set to add 25,000 kilometers of new lines in next 10
years.

In order to bring more transparency in freight business, the Railway

Minister announced RFID technology will be introduced for tracking of
wagons, allotment of the rakes would be accessible through the web.

In order to upgrade railway infrastructure, the Minister said that a centre

for Railway Research will be set up at IIT, Kharagpur for research in key
areas of railway technology and a state-of-the art advanced loco pilot
training centre at Kharagpur and an advanced railway track training
centre at Beleghata.

To overcome of the shortage of coaches, new coach factories are being

set up at Rae Bareilly, Kancharapara and Palakkad. A wagon repair
shop will be set up at Badnera and a new Rail Axle Factory will be set up
at New Jalpaiguri through PPP or Joint Venture mode. Besides 5 state-
of-the-art wagon factories also through joint venture and PPP mode at
Sikandrabad, Barddhaman, Bhubneshwar/Kalahandi, Guwahati and
Haldia.

Proposing several new initiatives for freight business, the Minister said
that Railways will introduce a modified wagon investment scheme for
high capacity general purpose and special purpose wagons for carrying
iron ore, coal and cement. A scheme to run special freight train by
private operators for commodities such as automobiles, vegetable oil,
molasses, chemicals and petrochemicals will be notified.

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Reiterating Railways’ commitment for time bound completion of
dedicated corridors, the Minister said preliminary Engineering-cum-
Traffic Surveys for North-South, East-West, East-South and South-South
corridors will be taken up this year. She also said that Railways is also
working on high speed passenger rail corridors, a National High Speed
Rail Authority will be set up for planning, standard setting and
implementing these projects.

In order to promote industrial activity, Kumari Mamata Banerjee said that

Railways would welcome investment through PPP mode for providing
rail connectivity to important ports. Additional 2,000 kilometers routes will
be electrified within two years.

Vision 2020

Following the Rs 14, 00,000 crore investment requirement estimated in

the Vision 2020 document for the next 10 years, the railway budget
needs to contain out-of-the-box measures for raising revenues on a
much larger scale than hitherto. Roughly, the required annual investment
to meet this target is 3.5 times the highest amount of Rs 40,000 crore
allocated in 2009-2010. Of the total, 64% or Rs 8, 96,000 crore is to
come from internal resources, supported by prudent borrowing and PPP
initiatives. And around 36% or Rs 5, 00,000 crore is to come from the
general revenues.

The figures are mind-boggling: the annual budgetary support has to

increase over three-fold from around Rs 9,000 crore in 2008-09, to Rs
28,000 crore; internal resources have to go up over three-fold from Rs
28,000 crore to Rs 92,000 crore; revenues need to be boosted three-fold
from around Rs 90,000 crore to Rs 2,70,000 crore; and IR’s share in the
GDP should rise to 3%. A number three syndrome all round!

All these necessitate Indian Railways (IR) tackling a few crucial issues
on priority. The first of them is raising additional revenues through fare
collections. Now there is heavy cross-subsidisation of coaching services
(passenger and allied services) by the freight services. These social
obligations, which stood at Rs 4,875 crore in 2000-01, are expected to
settle at Rs13,958 in 2010-11. Since IR closes the annual operations
with a profit, it is obvious that the bulk of the social service burden is
borne by the freight service

And the rail users in the freight sector have been complaining, rightly,
about this overcharging. It also has an impact on inflationary pressures,
79
since higher freight charges inevitably get passed on to the consumers.
Even on the basis of the not-too-scientific costing procedures of IR, not
more than 70% of the cost is recovered from passenger services, while it
is over 125% from freight services. A 10 to 15% increase in the basic
fare for second class, wi th proportionate adjustments for other classes
needs to be considered. To meet corporate social responsibility, suitable
concessions, targeted at deserving groups can be built in. If small
revisions in the passenger fares are not made annually, a stage may be
reached when it becomes impossible to bridge the gap between cost
and recovery.

Highlights of Railway Budget 2010-11

» No fare hike for passengers. 

» Railways not to be privatised; It will remain with the government, says

Banerjee. While not privatising, Railways have to develop business
models for improving earnings, says Banerjee. 

» Railways 2020 vision document will contain short, medium and long-
term goals. Commitments fulfilled to the maximum. Out of 120 trains
announced in last budget, only three remain to be flagged off because of
lack of broad-gauge lines, says Banerjee. 

» Plans to launch a pilot project for fire detection.The government also

plans to construct more underpasses for safety, the minister said while
presenting the Railway Budget.

» Railways to start six water bottling plants in places like Ambala,

Thiruvananthapuram, Farakka, Amethi and Nasik to provide clean and
cheap drinking water to passengers. 

» Indian Railways aims to add 25,000 route kilometers by 2020. The

railways currently has 64,015 route kilometers, she said.

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» India's railways has set up a special task force to clear investment
proposals in 100 days

» Indian Railways plans to keep rail freight rates unchanged, Bloomberg-

UTV news channel reported, without saying where it got the information.

» Railways to set up mobile e-ticketing centers at hospitals, universities,

courts, IITs, IIMs, district headquarters and village panchayats. All
13,000 unmanned level crossings to be manned in the next five years. 

» Railway Protection Force to be strengthened through amendments in

RPF Act; women's wing to be formed in RPF to ensure security of
women. Ex-servicemen to be inducted in RPF. Railways will be the lead
partner in the Commonwealth Games in Delhi. 

» Railways to set up Rabindra Museum in Howrah and Geetanjali

Museum in Bolpur -- both in West Bengal -- to commemorate
Rabindranath Tagore's 125th birth anniversary.

» Railways will provide houses to all its employees in the next 10 years
in collaboration with the Urban Development ministry. 

» Railways to enhance contribution to central staff benefit fund. Centre

for Railway Research to be set up at IIT-Kharagpur. Chittaranjan
Locomotive Works capacity to be augmented from 200 to 275 engines a
year.

» Work on Rae Bareli Coach Factory in Uttar Pradesh to start within a

year. Wagon Repair Shop to be set up in Badnera near Amravati in
Maharashtra.

» Integral Coach Factory in Chennai to be modernised and a new unit to

be set up there. If land is available, Railways willing to set up a Diesel
Multiple Unit factory in West Bengal. 

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» No forcible acquisition of land for freight corridor project. One member
of each family of land losers to be given employment in the freight
corridor as also in the new projects. 

» High-speed dedicated passenger corridors to be constructed; National

High Speed Rail Authority to be set up. 

» Revenue from non-core business of Railways to go up from Rs 150

crore to Rs 1,000 crore. Indian Railways has set a target to transport 944
million tons of goods in the year beginning April 1. 
» Railways expects to increase earnings from non core activities. The
government aims to increase non core earnings to Rs10 billion rupees
from Rs1.5 billion. 

» Railways expects to increase earnings from non core activities. The

government aims to increase non core earnings to Rs10 billion rupees
from Rs1.5 billion. 

» Despite slowdown, Railways to exceed freight loading target by eight

million tonnes during 2009-10. Freight loading target for 2010-11 fixed at
944 million tonnes, 54 million tonnes more than the current year's
revised target. Gross traffic receipt for 2010-11 pegged at Rs 94,765
crore. 

» Allocation for construction of new lines increased from Rs2848 crore to

Rs 4411 crore. 

» Rs1,302 crore provided for passenger amenities in the 2010-11 railway

budget against Rs 923 crore last year. 

» Indian Railway Finance Corporation (IRFC)will borrow 91.2 billion

rupees ($1.97 billion) from the market in 2010-11. 

» Railways to have master plan for North Eastern region. Special train
between India and Bangladesh to be started to commemorate 150th
birth anniversary of Rabindranath Tagore. 

82
» 101 additional services to start on Mumbai suburban railways. Survey
will be conducted to connect Sealdah and Howrah stations in West
Bengal. To commemorate Rabindranath Tagore's 150th birth
anniversary, 'Bharat Teertha' trains to connect several pilgrimage
centres across the country. 
» Indian Railway Finance Corporation will borrow Rs91.2 billion ($1.97
billion) from the market in 2010-11.

CHAPTER-V

CONCLUDING REMARKS AND RECOMMENDATIONS

On the basis of the survey findings, the following chapter focuses on

concluding remarks and presents recommendations for strengthening
the impact of CSR and the Global Compact in India.

Concluding remarks

The CSR agenda in India

The CSR agenda in India is changing and beginning to follow global

CSR trends: it is, for example, integrating CSR into core business
processes, ensuring that CSR takes root in top management and
assigning CSR responsibilities to corporate departments.

Nevertheless, as the analysis of the results has demonstrated, CSR in

India has unique features. Although the Indian CSR agenda seems to be
becoming more comprehensive, philanthropic patterns remain and
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community development is still the decisive element. For Indian
companies, community development is very important since it paves the
way for good relations with communities and also has an appreciable
public relations effect. However, community development projects must
be viewed critically since they lack transparency, the involvement of
relevant authorities is questionable, and community development may
conceal malpractices or violations within a company. Indian CSR is not
well balanced between internal and external stakeholders. Indian
companies tend to aim their CSR engagement at external stakeholders –
especially communities – rather than internal stakeholders.
However, the long tradition of CSR in India indicates – and the recent
changes in the Indian CSR agenda further underline – that CSR in India
has considerable potential for improving corporate environmental and
social conduct.

The multi-stakeholder concept in India

The multi-stakeholder concept was placed on the agenda as a

consequence of the shortcomings of business self-regulation and the
weaknesses of legal regulation. It calls for NGOs, business associations,
governmental organizations and multilateral institutions, among others,
to work together in a constructive and cooperative manner in meeting
the various expectations and achieving complementary goals in the CSR
process. In India’s case, the full potential of the multi-stakeholder
concept has yet to be tapped. This is mainly due to two factors: firstly,
there are only a few civil society organizations cooperating in the field of
CSR. Any multistakeholder processes initiated are not therefore self-
perpetuating. Secondly, Indian companies are reluctant to adopt a multi-
stakeholder approach on the grounds that CSR needs to be business-
rather than NGOdriven. India’s weak multi-stakeholder performance
must be improved. In general, legal regulation in India is regarded as
very poor, and self-regulation is not an effective or valid option from
society’s point of view. The Indian CSR agenda therefore needs to
embrace and incorporate various stakeholders and their expectations.

The Global Compact as a multi-stakeholder approach to promoting CSR

in India

The study comes to the conclusion that, in India’s case, the national
UNGC networks are still perceived to be inactive because stakeholders
unattached to business are not equally integrated into the Indian network
and the activities undertaken by the latter are limited. The multi-
84
stakeholder forums are expected to work through the mechanisms of
collective learning and knowledge-sharing by means of reporting and
policy dialogues. These are highly appreciated by the Indian participants;
however, their potential is not being fully exploited. Among the reasons
identified are the weak structure of the Indian networks, the lack of
stakeholder involvement, unclear benefits for participants and a lack of
information and awareness. The UNGC has no significant impact on
companies’ CSR engagement or, broadly speaking, on the Indian CSR
agenda as a whole. This is due, firstly, to the long Indian tradition of
CSR, secondly, to a network perceived as being very weak, which limits
collective learning, and thirdly, to what companies see as a lack of
support from the UNGC. However, the current shortcomings must be
viewed in the context of the relative newness of the Indian Global
Compact networks. Nearly all those interviewed expect the Global
Compact and the national networks to have a positive future. As a
prominent international multi-stakeholder concept, the Global Compact
provides fertile ground for broadening and deepening CSR in India.
Further activities therefore need to be undertaken to turn the Global
Compact into a successful initiative in India.

The Global Compact’s role in tackling major challenges to the

introduction of CSR

The Indian Global Compact networks have yet to take on their role in
tackling major challenges to CSR, which is partly due to their relative
newness and inadequate capacity, but mainly to the lack of
engagement.

As regards the business case, companies’ awareness must still be

regarded as relatively limited. Despite this, the UN Global Compact was
recognized as a business case in itself, since the UN is a highly
reputable “brand.” Monitoring and verification were not designed to be
part of the UNGC, but have been demanded by stakeholders since they
are not yet widespread in India. The publication of the COP was
considered a minimum requirement. Spreading CSR along the supply
chain is highly relevant in a country like India, where SMEs account for
the major part of the economy. The importance of mainstreaming CSR in
the supply chain and of downstreaming CSR in accordance with the
leadership principle has been recognized by the Global Compact.
However, the improved implementation of social and environmental
standards has not received enough support from the Indian UNGC
networks. While India has far-reaching legal regulations, law
enforcement lags behind. CSR partnerships between public authorities,
85
companies and various stakeholders have not developed sufficiently.
With public-sector undertakings rarely playing a role model for CSR,
existing incentives to improve CSR engagement in the form of tax
reductions could increase the already strong engagement in community
development. The Global Compact and the Indian UNGC network have
been aware of the need to involve public authorities more closely in
CSR. Practical action has yet to be taken to encourage public policy to
create an enabling environment for CSR and to lend support in this
respect.

Recommendations for strengthening CSR and the Global

Compact in India

The recommendations are addressed, in particular, to the Indian Global

Compact Society, private and public corporations operating in India,
Indian public authorities, civil society organizations and development
agencies. They focus on the following areas:

• CSR in general

• The Global Compact

• The business case for CSR

• Monitoring and verification of CSR

• CSR in the supply chain

• The role of public policy.

General suggestions for strengthening the impact of CSR

86
The comprehensive CSR approach, which Indian companies are
beginning to adopt, needs to be strengthened further. Companies should
therefore

• integrate the UNGC principles and their CSR engagement into their
business processes;

• anchor the UNGC principles/their CSR commitment in top

management and create a specific CSR body to supervise the
company’s CSR engagement;

• Proactively disseminate CSR throughout the company to raise

awareness among employees. Such measures might include regular
staff meetings on specific CSR aspects to ensure that CSR does not
remain an abstract term and the development of a code of conduct to be
signed by each employee or the participation of employees in
stakeholder meetings at which CSR issues are discussed .
As community development is a very important feature of the Indian
CSR agenda, these projects should be aligned with a company’s main
business. 83 Likewise, to tap their full potential, community development
projects need to be coherently planned, implemented and monitored,
preferably in partnership with NGOs and local government. Owing to the
weakness of the multi-stakeholder approach and civil society’s
engagement in CSR, interaction between NGOs and companies is still
rare and needs to be strengthened.

• As regards civil society in India, a stronger NGO scene is needed to

give civil society a respected voice in the shaping of the CSR
multistakeholder agenda.

• Companies should be more open to stakeholder engagement and

broaden their definition of stakeholders to include NGOs other than
agencies implementing community development projects.

• Development cooperation can fuel the interaction process with

capacity- building relating to CSR issues and by bringing together
different networks and players from both companies and stakeholders.

Suggestions for improving the Global Compact

87
As this survey concentrates on the UNGC in India, the recommendations
will focus on India’s specific concerns and so have no bearing on the
Global Compact Office in New York.

• The Global Compact Society (GCS) should improve its interaction with
the UNGC participants by means of continual communication.

• The GCS should insist on an increase in awareness of the UNGC in

India and in the number of participants so as to lengthen its reach.

• As intended by the UNGC, the GCS should open its doors to a variety
of stakeholders, including labour organizations and other civil society
organizations involved in the CSR agenda.

• The GCS should improve its support in two areas to facilitate

knowledge-sharing: first, it should initiate follow-up to conventions, and
second, it should concentrate on specific issues (i.e. sector-wide
approaches, SME concerns, diffusion throughout the supply chain) with
a view to translating abstract guidelines and principles into practical and
business-oriented advice on ongoing implementation.

• The GCS should further encourage companies to report their CSR

activities in the required Communication on Progress format and
stakeholders to oversee and comment on these reports. To put these
recommendations into practice, the resources (funds and manpower) of
the GCS need to be increased. As the GCS depends on financial
contributions from members, the implementation of the
recommendations may be constrained and restricted. However, a
merger of the IPF and GCS may have synergetic effects and increase
the UNGC’s impact. Technical and financial support provided by the
international development community might also increase the GCS’s
efficiency and efficacy.

Strengthening the business case for CSR

The considerable credibility and reputation enjoyed by the UNGC

provide companies with fertile ground for the business case. This fact
should therefore be made known to more companies. Generally
speaking, the role of the business case as a precondition for sustainable
CSR engagement should be emphasized in the knowledgesharing and
collective learning forums. The exchange of best practices and

88
experience of the business case could significantly enhance companies’
CSR activities.
In particular, the relevance of efficiency gains and employee productivity
can be easily understood. This is also extremely important for SMEs,
which are expected to benefit in particular from information and
capacitybuilding measures.
Suggestions for improving the monitoring and verification of CSR

The existing certification and reporting schemes can be regarded as

important, though not yet widespread among Indian companies. Since
the publication and use of the COPs are still very limited, awareness-
raising will play a major role in strengthening the reporting on CSR. As
an example, the Global Compact should encourage companies to
publish their COPs in accordance with the GRI guidelines.

As regards CSR awards in India, more holistic monitoring and reporting

mechanisms should be used as selection criteria so that comparisons of
companies’ overall CSR performance can be more easily made. The
whole process of monitoring, reporting and publicizing the engagement
of smaller companies in particular needs to be further improved, which
should be made possible with financial assistance and capacity-building
measures.

Suggestions for the diffusion of CSR along the supply chain

Supply chain management’s awareness of CSR must still be regarded
as weak. Consequently, the awareness of supply chain responsibility
and the diffusion of CSR among business partners must be
strengthened among companies, stakeholders and even public policy
agencies. Furthermore, companies must do more to make a greater
commitment to monitoring regularly and effectively their business
partners’ compliance with standards.These accord with fostering
dialogue and knowledgesharing and also capacity-building and training
for suppliers. If companies adopt a sector-wide CSR approach and
standardize their introduction of CSR to some extent, downward
pressure from competitors aimed at lowering standards and creating
competitive disadvantages can be minimized. A cooperative and sector-
wide CSR approach would further help to disseminate CSR along the
supply chain.

The role of public policy in improving CSR

89
Public policy should rethink its role in CSR. In particular, public policy
agencies need to accept companies as partners in development. They
should acknowledge the potential of the business community’s dynamic
and modernizing elements, and partnerships with companies and stake
holder organizations should therefore be fostered. International
cooperation could also be more active in promoting dialogue and
collaboration on CSR between companies and development agencies.
As law enforcement is said to be poor in India, public agencies and
officials need to enhance their commitment to the more effective
application of national regulations. To create an enabling environment
for CSR, government agencies should also foster stable and transparent
policies and regulations. Where corruption is concerned, public
institutions should advocate zero tolerance of all forms of corruption, and
public-sector undertakings should act as role models.

The railways and CSR and a way forward

The Indian Railways is 150 years old and believed to be the lifeline of
the country since it is the biggest civilian employer in the world with over
17 lakh employees. CSR has always been an integral part of the Indian
Railway’s functioning and the activities range from transportation of
drinking water & fodder free of cost to drought affected area, enhanced
fare compensation for
cancer patients, catering to more than 10,000 shelters less people and
investments in IIT-Kharagpur to develop the largest research center.
The highlights of the recent Indian railways budget in 2011 emphasized
economic viability and social responsibility. The main consideration was
on inclusive growth and expansion of rail networks for social and
economic development.

The vision 2020 of the Indian Railways spells out that the Indian
railways shall provide efficient, affordable, customer focused and
environment friendly sustainable integrated solutions, shall give due
considerations to Inclusive development both geographically and socially
and pledges to reduce carbon footprints.

We ended the presentation by asking how CSR could be incorporated

into the Indian Railway’s business operations and here is some of the
ideas and suggestions generated!
90
1. Increased plantation of trees to compensate for new railway line
projects

2. Afforestation programs

3. Organize the unorganized sector involved with the Indian Railways

(IR)

4. Construction of houses and slum rehabilitation centers for

disadvantaged stakeholders

5. Livelihood and employment creation for disadvantaged stakeholders

6. Land from unused IR areas should be allocated for agriculture and

fruit plantations which shall generate revenue. Convert waste dumping
lands into habitats with greenery and fauna. Unutilized lands nearby
railway tracks can be used in bio-diesel plants like jatropha thus gaining
carbon credits. This land can also be used for shelter, schools for girls,
hospitals, etc.

7. Collaborations and revenue models like Highway 4 expressway

concept should be explored

8. Options of cause related marketing and advertising for corporates to

ensure cleanliness and advocate other important social causes

9. Ensure an eco friendly waste management system in addition to

educating the masses and enforcing rules for waste disposal

10. Promote the use of biodegradable materials- switch to biodegradable

packaging in place of non biodegradable packaging like polythene

11. Use bio fuels and other renewable sources (for supply inside
coaches and for traction if possible) like solar, biogas, extensively

91
12. Follow pollution norms

13. Incorporate regenerative break system which can utilize the energy
obtained from the system like the Delhi Metro

14. Build toilets in villages through which the line is going so that they
don’t use rails for the purpose

15. Idle accident relief medical vans can be used for conducting health
camps in rural areas

16. Healthcare facilities and education programs for disadvantaged

stakeholders should be extended by IR services

17. Specific disposal of waste from rails, toilets and wagons and use of
separate dedicated dustbins in coaches for collection of waste

18. All India campaigns like polio vaccinations, India heritage

awareness, Anti alcoholism campaigns, HIV Aids, child labour, missing
children and beggars, etc. may be conducted by using railway networks

19. Invest in new technology for cleaner ecological outputs

20. Provide technical support to training schools and colleges in tribal

belts or other disadvantaged places.

21. Railways should ensure labour laws are adhered to

22. Connect remote areas to the existing train network

23. Improvement in human resource management especially regarding

Class IV and II employees

92
24. Invest in environment friendly infrastructure

25. Invest in villages along the railway network (Adoption of some

villages/pockets)

26. IR must be apolitical with reference to irrational political intervention

and the organization should be restructured internally which will make
the administration more efficient

27. Priority should be given to micro and small enterprises in any

outsourcing activities

28. Progressive fare structure with discounted schemes for students,

elderly, handicapped, etc. – One of the reasons for IR making losses is
the low fares of passenger traffic. So the railways need to be more
commercial as other PSu’s or corporates, rather than emphasizing its
CSR to an extent that its operations won’t remain economically viable.

29. Prohibition of use of plastics anywhere on railway property

30. Railway passes through many tribal areas and villages and can be
involved in collection of handicrafts and other artisan products which can
be sold in towns for economic benefits thus playing an important part in
reducing the connectivity issues of the rural areas to the market

We also had opposing views like “Railways has done and is doing a lot
of social responsibility and cannot be overwhelmed with so-called
inclusive growth/development. IR is doing enough by serving the poor,
catering to environmental issues, ensuring economic growth,
employment provision, etc.”

This is one group we targeted to generate opinions and ideas regarding

CSR and hope you can share some of your experiences and provide us
suggestions and ideas as to how CSR can be used as a tool to ensure a
sustainable and equitable world by businesses incorporating CSR
initiatives into their core business operations and competencies.

93
Abbreviations
CCC Clean Clothes Campaign
CEO Chief Executive Officer
CII Confederation of Indian Industry
COP Communication on Progress
CSR Corporate Social Responsibility
FICCI Federation of Indian Chambers of Commerce and Industry
FLA Fair Labor Association
FSC Forest Stewardship Council
GCO Global Compact Office
GCS Global Compact Society (India)
GRI Global Reporting Initiative
ICAI Institute of Chartered Accountants of India
ILO International Labour Organization
ICSI Institute of Company Secretaries of India
IPF India Partnership Forum
ISO International Organization for Standardization
NFCG National Foundation for Corporate Governance
NGO Non-governmental organization
OECD Organisation for Economic Co-operation and Development
OHCHR Office of the High Commissioner for Human Rights
PSU Public Sector Undertaking
SME Small and Medium-sized Enterprises
TNC Transnational Corporation
UN United Nations
UNDP United Nations Development Programme
UNEP United Nations Environment Programme
UNGC United Nations Global Compact
UNIDO United Nations Industrial Development Organization
UNODC United Nations Office on Drugs and Crime

94
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