CHAPTER-6 EMERGING TRENDS OF CORPORATE SOCIAL RESPONSIBILITY 6.2 CSR LEVEL AND TREND AT NATIONAL LEVEL 6.3 CSR TREND IN KARNATAKA (STUDY SITES)

Transcription

1 CHAPTER-6 EMERGING TRENDS OF CORPORATE SOCIAL RESPONSIBILITY CHAPTER AT GLANCE 6.1 INTRODUCTION 6.2 CSR LEVEL AND TREND AT NATIONAL LEVEL 6.3 CSR TREND IN KARNATAKA (STUDY SITES)

2 6.1 Introduction The Indian business has traditionally been socially responsible. From inactive philanthropy to the incorporation of the stakeholders' interest in the business model, the Indian business sector practices various methods of discharging its social responsibility. While a lot of human and economic energy is available for utilization in this area, a suitable mechanism is required to channelize this energy for which the Government, corporate sector and the communities need to partner together. The conceptualization of corporate social responsibility until the 1990 s was purely in terms of philanthropy or charity. Welfare programs or initiatives were introduced not as a duty or a responsibility but as a form of charity that was supposed to indicate the virtues of the company or the organization. Gradually, attitudes of business and its relationship with society are changed and shaped by outside events. These demonstrations of social problems that substantially change the environment within which companies do businesses, which are partially or wholly caused by business activities, or which businesses are likely partners in finding solutions. The concept of corporate social responsibility of large industrial groups has occupied a prominent place in the greater national discourse on economic issues since the pre-independence era in India. Gandhi described large business as trusts of the wealth of the people and thus emphasized on the larger social purpose that industrial wealth should serve in independent India. In the early days of the post- independence period, the Indian state under the heavy influence of Nehruvian socialism encouraged private industries to play an active role in the economic and social development of the backward sections of the society, while at the same time setup a mammoth public sector for serving larger societal interests. As Nehru s gentle socialism gave way to the more radical policies of nationalization and extensive state regulation of the Indira Gandhi era, industrial groups desperate to avoid the draconian state policies and regulations in economic affairs resorted to large scale corporate welfare programs to demonstrate that private wealth also played a important role in poverty alleviation and the socio-economic development of the nation and was not anti-people. An impending crisis in Indian economy led the Rajiv Gandhi and Narashima Rao governments to dismantle the license raj and introduce much-needed economic reforms in the country, which marked the beginning of the economic liberalization 156

3 and the free market economy in India. The major impact of these economic reforms has been the increased presence of transnational corporations in the country and transformation of Indian businesses into large global enterprises. In this scenario, there is an increased focus on the social role of these private enterprises by both the proponents and opponents of liberalization in India. By any count, the world is changing faster than ever before. Human numbers are growing faster, and the impact of our activities is being felt in more and more ways. This change has profound implications for business, and means that the world of corporate social responsibility or how businesses respond to society's expectations - is at the forefront of this change. So it's worth looking for what are the current trends and where are they heading. In present study the researcher tries to understand the trend of corporate social responsibility in India as well as from the study area Karnataka. The trend refers to a measurable change in behavior that develops among a population of individuals. As opposed to fads, trends are usually longer lasting and indicative of a broader cultural shift. While trends can result from technological change (the Internet and cell phones facilitated home-offices and flex-time, for example), the reverse is more common, as exemplified by the broad adoption of green technologies in response to a widespread cultural embrace of environmentalism. In present study trend means change in practice of corporate social responsibility activity from earlier practice. In present chapter the researcher tries to study the trend in two major parts, in first part researcher study the trend of corporate social responsibility at national level with the help of secondary data and in second part the researcher analyse the trend from studied organisations and opinion of beneficiaries about any change observed in corporate social responsibility implementation in their community. 6.2 CSR Level and Trends at National Level The Karmayog corporate social responsibility study and ratings of Indian companies was undertaken to explore and understand the role that corporates were playing and can play in finding meaningful solutions to the problems facing by India today. The Karmayog Corporate Social Responsibility (CSR) study and ratings present a snap-shot of the largest 500 companies in India, with specific focus on their corporate social responsibility initiatives. The study enables an understanding of how different kinds of companies (Government owned, private limited multi-national) 157

4 from different industry sectors are responding to global and local conditions that demand and need more responsible behavior by all stake-holders, especially corporates. CSR Rating criteria: The study undertaken by the Karmayog organisation was adopted 6 levels of rating system, the corporate social responsibility rating criteria was as following: 0 rating was given for no corporate social responsibility initiation from the organisation, level 1 rating was given if organisation undertaking any corporate social responsibility Activity, level 2 rating was assigned to organisation fulfill the level 1 criteria and corporate social responsibility was linked to reducing the negative impacts of company s own products or processes, level 3 was given to organisations fulfill the level 2 criteria and corporate social responsibility initiatives were focused on local community, level 4 rating was given to organisations fulfill the level 3 criteria and corporate social responsibility was embedded in the business operations and level 5 rating was given to organisation fulfill level 4 criteria and innovative ideas and practices were developed for corporate social responsibility by the organisation. Karmayog CSR Study Methodology: The lists of the 500 largest (by consolidated sales) publicly listed companies in India were taken based on data from the Bombay Stock Exchange (BSE) as on August Information on the 500 companies and corporate social responsibility activities was taken from the company s website and annual report. Wherever either or both of the above sources was unavailable or did not contain the required information, other sources have been used. (e.g. website of the Ministry of Corporate Affairs), consolidated sales and profits are listed for each company. For each company, a standard form was filled with details of the company and its corporate social responsibility activities, companies could also fill and submit the corporate social responsibility form on their own. A form, once filled was sent by to the respective company (through the official IDs provided by the companies themselves) with a request to check the correctness of information and revert, if there are any mismatch. New information, corrections (if any) sent by the company were added to the form and used for the analysis. 158

5 Table 6.1: Distribution of companies based on Karmayog corporate social responsibility rating of 500 largest companies in Indian CSR Rating 2010 No. of cos. Percentage Level 5 (highest) 0 0 % Level 4 12 * 2 % Level % Level % Level % Level 0 (lowest) % Total % As per the concept of corporate social responsibility it is important to begin with the trail of understanding the importance of corporate social responsibility activities which enable sustainable and replicable solutions to problems faced by society. The study conducted by Karmayog organisation provides an opportunity to study the appropriateness of 500 largest companies with the help of rating. It is clear from the table 6.1 that, still 23 percent of largest companies were rated at 0 levels, which means 113 of 500 largest companies haven t undertaken any corporate social responsibility activities and 77 percent of 500 largest companies were initiated at least any kind of corporate social responsibility activities. Further analysis of companies based on level of rating shows that only two percent of 500 companies corporate social responsibility activities form a part of the daily business activities of the company, 13 percent of the company s corporate social responsibility activities that were focused on those who are affected directly by the company and 32 percent of the companies were rated at level two which means corporate social responsibility activities that aim to improve processes and products of the company and 23 percent of companies were rated in level one, where any kind of social, developmental or community work undertaken. The above mentioned table 6.1 gives an room for the further discussion, around the 23 percent of largest companies which were not yet initiated the corporate social responsibility activities, then the status of corporate social responsibility initiation or implementation will be even less among medium scale industries and it 159

6 will be even less in small scale industries. So it is important to carry on some sort of field level study to understand the level of corporate social responsibility implementation with the help of systematic sampling to represent all sort of companies in India. Table 6.2: Comparison of ratings: , as per the results of the Karmayog corporate social responsibility ratings of the 500 largest Indian companies No. of companies Level Level Level Level Level Level Graph 6.2: Trend of CSR implementation, As per the results of the Karmayog CSR Ratings of the 500 largest Indian companies Comparison of CSR Ratings No. of companies Year of CSR ratings Level 5 Level 4 Level 3 Level 2 Level 1 Level 0 Once the level of corporate social responsibility is understood, it is important to see through the changes (trend) over the year in corporate social responsibility implementation rating. Above graph and Table 6.2 provides the trend of corporate social responsibility implementation since 2007 to 2010 i.e. 4 years. The graph shows that there is significant fall in level 0 rating of companies apparently increase in level 160

7 one rating of companies, there was no remarkable change observed in level two, three and four rating of companies. It clearly indicates that there has been increase in corporate social responsibility implementation among large companies of India but stop at first level where corporate social responsibility activities that aim to improve processes and products of the company, it is amazing that even after 22 years of globalisation, none of the Indian largest companies were rated in level five, which was expected to enable sustainable and replicable solutions to problems faced by society through corporate social responsibility activities. Graph 6.2: Percent distribution of organisations by years of Initiation of CSR Activities. (As per the TNS India and Times Foundation, 2008) The survey conducted by TNS India and Time foundation using a sample size of 250 companies those were involved in corporate social responsibility activities through a method of online administration of questionnaire. However only 82 organisations were responded for the survey and the results revealed through the above graph 6.2 that involvement of corporate sector in corporate social responsibility picked up only after 1991 as three-fifth of them started corporate social responsibility initiatives during Analysis by types of organisation reveals that about two-third each of the public, multinational agencies (70 per cent) and private agencies (67 per cent) initiated corporate social responsibility activities during this period, while one-third of the public sector units (36 per cent) also reported likewise. Some of the public sector units started their corporate social responsibility initiatives during (18 per cent) and (27 per cent) respectively. 161

8 It was found from the both the national level corporate social responsibility survey that the involvement of companies in CSR has been increasing in recent past that is more so after So it can be concluded that there is increasing trend in involvement of corporates in corporate social responsibility activities after the India accepted the policy of globalisation. 6.3 Trend in Study sites The above analysis and discussion clearly indicate that the concept of corporate social responsibility is picking up in India and most of the organisations (especially large scale) were initiated corporate social responsibility. It also shows that the corporate social responsibility is changing from philanthropy to sustainable development which includes over all development of organisation as well as all other stakeholders such as environment, society, shareholders, Govt., media and so on. It will be quite interesting to pass on from macro level to micro level to understand. Now it is time to see the trend of corporate social responsibility at study sites with the help of primary data collected by the researcher. The following discussion will be focused on trend of corporate social responsibility implementation by study organisations in Karnataka. Graph 6.3: Years since the organisation started corporate social responsibility Initiative 162

9 Table 6.3: Number of years the organisation have been working in community as part of CSR Type of Org Since organisation started CSR initiatives (in years) Average Years of working GOVT GOVT-2 14 GOVT-3 6 MNC MNC-2 9 MNC-3 3 PVT PVT-2 42 PVT-3 4 Average 11 The information on trend in terms of years the organisation working was available through two different surveys at national level. The researcher was more curious in understanding the trend in Karnataka, especially in study area, because there are no such surveys conducted at sub national level in India. The study data (graph and table no 6.3) also support the fact (two national surveys) that, the involvement of corporates in corporate social responsibility was recent phenomena. Most of corporate (eight of nine) were initiated corporate social responsibility within last 15 years, further observation reveals that four out of nine corporates were started corporate social responsibility activities within last six year, which is similar finding to Karmayog corporate social responsibility survey and TNS India and Times foundation survey. 163

10 The sector wise analysis it is clearly visible that there is a clear cut differences existing between the organizations and their number of years experience in starting the CSR initiative from the beginning till today, generally every one considered the decadal criteria to study the conceptual change in any subject unlike the present corporate social responsibility activities implementation part was concerned. Over a period of time out of nine organization from a study area only three organization that to from three different categories (Govt., private and multinational companies) were found to be started corporate social responsibility initiatives on an average from more than a decade i.e. (11 years) otherwise remaining six organization were doing the same corporate social responsibility activities only from recent past. When we try to study the average duration of years the different organizations were working in implementation of corporate social responsibility activities in a rural communities of Karnataka state. And it was observed that the private limited companies (16.3 years) were succeeding over Govt. and multinational organization as for as duration of years of working on CSR activities were concerned. Graph 6.4: Trend in budget allocation, to

11 Table 6.4: Trend in budget allocation (Rupees in Lakhs) Type of org GOVT GOVT-2 NA NA NA NA GOVT-3 NA NA NA NA MNC MNC MNC PVT PVT PVT Average NA= Data Not Available/ Information not disclosed by organisations The concept of trend can be studied even through the budget allocated by the organizations to the CSR activities in their annual plans. From this point one can make out the view and vision adopted by different types of organizations. From the above table and graph no 6.4 totally nine organizations from three different categories were part of the study. When we try to do the comparative analyse, it was found that irrespective of type of organization all were working on corporate social responsibility implementing program over the year i.e to the respective organizational budget allocation to implement the CSR activities remained the same on an average, with little edge shown by the private sector organization accept one organization that is for ahead than any of these remaining organization by allotting 800 laks towards the corporate social responsibility activities on the contrary there is no clear picture available from two of the Govt. organization out of three, it shows their seriousness about the communities development and sustainability s point of view. The trend analysis shows that there was slight decline in budget allocation in study area but the decline was not (144 lakh in v/s 139 lakh in ) significant. 165

12 The earlier paragraph tries to through lights on the trend in terms budget and duration of work experience in the corporate social responsibility field. While the next forthcoming paragraphs tries to study the trend through the opinion of beneficiaries towards corporate social responsibility activities in different combinations such as type of organizations, corporate social responsibility unit head, duration of work in community, mode of implementation and so on. Table 6.5: Distribution of respondents those observed change in CSR strategy by type of organisation Type of organisation Yes No Total Public Sector Undertaking Private Agency (National) Multinational Corporation (MNC) Count Percent 65.8% 34.2% 100.0% Count Percent 69.5% 30.5% 100.0% Count Percent 72.7% 27.3% 100.0% Total Count P=0.435 Percent 69.3% 30.7% 100.0% After studying the trend set by the different types of organization in taking initiative, of understanding or implementing the corporate social responsibilities from the organizations view point, it will be further interesting to analyse the same concept from the of stakeholder side i.e. beneficiaries or respondents point of view. It is clearly visible from the above table no 6.5 that quite a lot of changes have taken place while implementing the corporate social responsibility activities undertaken by the multinational since from their starting year till today i.e percent in comparison to their counterparts like public and private sector organizations i.e percent and 65.8 percent respectively. However the Pearson chi-squire test value too at 0.4 levels suggests that there is no co relationship between the type of organization and the 166

13 implementing trend fallowed by the companies as for as there consistency was concerned. Eventually the multinationals were found to be more flexible in implementing corporate social responsibility activities in comparison to the public and private sector organizations were concerned. Table 6.6: Distribution of respondents those observed change in CSR strategy by type of CSR unit head Head of CSR unit Yes No Total CSR Unit Count Percent 71.1% 28.9% 100.0% HR Unit Count Percent 65.8% 34.2% 100.0% Total Count Percent 69.3% 30.7% 100.0% P=0.254 In early days of industrialization too different organizations use to undertake community welfare schemes without taking the help or advise fro the subject experts. But in this modern era everything is planned and rooted through the more specific and specialized way. This way the corporate social responsibility concept was also caught under the impact of fully advanced specialization called corporate social responsibility unit and human resource management unit who supposed to head and take the responsibility to make the innovative as well as need full path-way and advise the organizations to operate in certain specified areas with a proper direction. However, the above table no 6.6 unfold similar scenario from the present corporate social responsibility research study that 71.1 percent of the study respondents stated they had observe lot of changes in corporate social responsibility implementing part from different organizations over a period of time, where the corporate social responsibility unit is headed by the corporate social responsibility trained person found to be more compact and composed in functioning in comparison to the one 167

14 which is headed by general human resource management trained or even that matter untrained person being head of the CSR unit. The Pearson chi-squire test value too suggest that there is no inter co relationship between the independent and dependent variables like type of trained personal headed by the corporate social responsibility unit and the changing trend in corporate social responsibility activities, as such. Table 6.7: Distribution of respondents those observed change in CSR strategy by Age of Organisation Time Duration Yes No Total 5 years or less Count Percent 63.2% 36.8% 100.0% More than 5 and less than 10 years Count Percent 75.2% 24.8% 100.0% 10 years or more Count Percent 79.5% 20.5% 100.0% Total Count Percent 69.9% 30.1% 100.0% P=0.006 The word practical experience is always valued high in comparison to the theory and it has been proved true from the literature time and again. Moreover, finding from the present study from the above mentioned table no 6.7 indicates that there was a sea changes occurred in the percent implementing trend by different type of organization using their time duration (in terms of years) being in the field of under taking corporate social responsibility activities towards the community level. As it was observed that there is positive relationship between duration of organizations presence in the community and respondents opinion about change in implementing strategies. Moreover, the Pearson chi-squire test value too suggest that there stands a positive co relationship between two variable like duration of organization presence in 168

15 community as part of corporate social responsibility and respondents opinion about changes that have been occurred in their organisation implementation as such. Table 6.8: Distribution of respondents those observed change in CSR strategy by organisations directly or with collaboration Method of implementation Yes No Total Directly Count Percent 69.2% 30.8% 100.0% Through NGO Count Percent 69.6% 30.4% 100.0% Total Count P=0.993 Percent 69.3% 30.7% 100.0% From the above table no 6.8 the researcher try to made an attempt to find out is there any change that occurred in the field of corporate social responsibility activities trend which were implemented or initiatives taken up by the different organization by adopting different approaches or strategy implementation directly or in collaboration with some other originations. However, there is no change was (69.2 percent and 69.6 percent) found in the corporate social responsibility implement action by the organizations in the study area either by directly or in collaboration with the second partners like Non-Govt. organisations, Govt. body s or village committee. Even the Pearson chi-squire test value also indicates that there is no inter related impact between the independent and dependent variable as such. 169

16 Table 6.9: Distribution of respondents those observed change in CSR strategy by type of area the organisation working Type activities Yes No Total Sanitation Count Percent 61.8% 38.2% 100.0% Empowerment Count Percent 84.0% 16.0% 100.0% Infrastructure development Count Percent 72.9% 27.1% 100.0% Food/Nutrition Count Percent 52.0% 48.0% 100.0% Health Care Count Percent 96.0% 4.0% 100.0% Alternative Power Generation Count Percent 57.0% 43.0% 100.0% Education Count Percent 82.0% 18.0% 100.0% Total Count P=0.000 Percent 69.3% 30.7% 100.0% Glancing through the Karmyog report one can make out these days many organization were coming forward to undertake corporate social responsibility activities on different burning issues which were supposed to carry forward to develop the village communities towards the sustainable level. Different reports form surveys tell us that when we do the comparative analysis from ancient period, we came to know that corporate social responsibility traveled through stereo type activities to need based cafeteria approach where variety of unmet needs can be met. As the above 170

17 table no 6.9 unveils that more than the majority of the beneficiary that is study respondents did mentioned that (96.0 percent, 84.0 percent 82.0 percent and 72.9 percent respectively) that the organization s had changed their gear to top with the clear intention fulfilling the of modern days community requirement like providing batter quality health care facilities, providing knowledge on banking transition system, giving modern technical education. Much more than that developing need based basic infrastructural development at the village community level, the people who were denied from long waited 60 years of independence. The Pearson chi-squire test value also suggests that there stands a strong co relationship between the variables like the target area and the corporate social responsibility activities undertaken by the organisation at community level. Table 6.10: Distribution of respondents those observed change in CSR strategy by management skill course Qualification of CSR Head Yes No Total Management course Count Percent 64.6% 35.4% 100.0% Community Oriented Course Count Percent 76.3% 23.7% 100.0% Technical courses Count Percent 67.7% 32.3% 100.0% Total Count P=0.058 Percent 69.3% 30.7% 100.0% In the modern contemporary society getting success in any field or subject not only depend fully upon the concerned personals relevant specialized qualification but also their hunger for timely upgrading new subject skills through the higher studies while being on duty itself. The above table no 6.10 highlights about the same as 76.3 percent of the respondents explained that they observed the change in implementing part of the corporate social responsibility activities if the unit is led by the person who 171

18 completed community oriented course compared to other courses like management course or any other technical course. Even Pearson chi-squire test value also suggest that there is a inter co relationship between the independent and dependent variable like community oriented course and the successfully implementing the corporate social responsibility activities as such. Sum up The study shows that, still one-fourth of (largest) companies were not initiated any kind of corporate social responsibility activities. This gives an room for the further discussion that the CSR initiation or implementation will be even less among medium scale industries and it will be even less in small scale industries. It was found from the both the national level corporate social responsibility survey that the involvement of companies in corporate social responsibility has been increasing in recent past that is more so only after So it can be concluded that there is increasing trend in involvement of corporates in corporate social responsibility activities. Moreover the study conducted by researcher also supports the fact (2 national surveys) that, the involvement of corporates in CSR was recent phenomena. 172