Hope Indian leaders learn from global leaders in benefitting from CSR
CSR in India though made mandatory since April 2014 is considered a liability by the business leaders who have not ventured into integrating CSR into their business thinking and processes to benefit from CSR. However, CSR VISION, who has been promoting the thought that CSR is an asset not a liability, is an investment not an expenditure contrary to the dominating thinking in majority of the companies in India except few irrespective of their big talk on CSR.
To supplement our point of view and induce Indian companies to embrace CSR by heart and integrate CSR into their business thinking and processes, CSR VISION presents the most successful corporate leaders in the world in the domain of benefitting from CSR and Sustainability such as Unilever, Siemens and Golden Agri-Resources.
No business leader would deny that a companys ultimate goal is to make money. While focusing on corporate responsibility can come at a cost, it can also have a positive net effect on a companys bottom line.
However, responsible choices on their own can also be favorable for a companys bottom line. For example, transitioning from paper reporting to a fully digital system reduces a companys impact on the environment while cutting administrative costs over the long term. Other similar choices include switching to environmentally friendly lighting options, using solar power or operating in a green certified office building.
Sometimes a business corporate conscience and sustainability efforts can ensure its own future survival. For example, farming and fishing companies that rely on natural resources can adopt more sustainable practices that wont destroy the land or deplete marine life populations. This change is not only good for the environment but its a valuable investment that sets the groundwork for a company to successfully operate for years to come. Indeed companies can do well by doing good specifically by adopting the broader perspective of serving all stakeholders rather than merely the shareholders.
In the following section we have described the benefits of CSR and Sustainability to the business.
BRAND VALUE AND REPUTATION
Brand value and reputation refers to any benefit realised from responsible business that improve the value of the brand and/or the reputation of the brand or organisation.
Brand value is an oft-cited benefit, however over time this citation decreased in frequency as companies learned exactly what benefits were gained from improvements to brand reputation, such as the benefit of better employee attrition, and therefore reclassified the benefit. The research also shows that companies inter-link the value and the reputation of a brand closely. Reputation was cited as mostly being useful for improving the value of the brand. Conversely, the main way of improving the brand value was cited as being through improving reputation (for example, differentiation leading to customer attraction, retention and advocacy).
The Co-operative Group: report that its ethical policy has positively impacted customer attrition. 88% of The Co-operative Foods customers believe that its ethical policy made the business more appealing.
EMPLOYEES AND FUTURE WORKFORCE
Employees and future workforce refers to a variety of benefits from responsible business practice that affect the working life of current employees, and the ability to attract and hold on to talent. This includes employee motivation, productivity, recruitment, satisfaction, retention, engagement, and loyalty.
Employees are often considered an organisations most important stakeholder group because, as well as being a key resource, they represent the company in its actions. What motivates an employee to join, engage, and stay with an organisation is increasingly: the total reward package on offer (including pay); the unique opportunities that come from being a member of that organization; a level of synergy between individual and organisation in values; being a member of a respected and reputable team and the effect this has on self-identity; the existence of fairness and trust in the organisation and its leaders; and opportunities for employees to enact their jobs in a way that is consistent with their personal values and ethics (figure 1).
This benefit is the second most frequently cited benefit among all companies sampled, across a time period covering both a boom and bust economy.
As BITC CR Index participants progressed with the Index, so too did this benefit increase in importance. The number of Index companies citing this as a benefit doubled from 2003 to 2009. Again, this suggests that as companies become more sophisticated in their approach to being a responsible business, more benefit is realized from, and for, employees.
SMEs are more likely to refer to this as the key benefit realised than MNEs/LCs are.
MARKS & SPENCER: Through the Sustainability Framework and Ethical Model Factories, M&S worked in partnership with factories to improve process efficiency as a means to increase wages, reduce working hours and protect the quality of products. Productivity in the Bangladeshi Ethical Model Factories increased by 42%, while staff turnover reduced from 10% to 2.5%, and absenteeism reduced from 10% to 1.5%.
Operational effectiveness refers to improvements and innovation in an organisations practices and processes as a direct result of being more responsible and sustainable, creating more effective operations and higher levels of efficiency.
The research shows that a main cause of operational effectiveness is improving stakeholder relationships creating opportunities for understanding which, and how, practices and processes can be changed and improved. For example, when an organisation invests time and resources into understanding who their stakeholders are and what they expect, better two way dialogue and relationships/partnerships are created to provide insight into why a particular product or material use may or may not be supported. This results in insight for innovations.
Figure 2 demonstrates how a related CR approach can create the benefit of improved operational effectiveness.
ADNAMS: invested in new eco-efficient distribution centre to reduce energy use and improve environmental impact. As a result, the centre uses 58% less gas and 67% less electricity per square metre compared to the old warehouse, and takes 3.2 pints of water to make a pint of Adnams beer compared to the industry average of 8 pints of water. Energy efficiencies save Adnams 50,000 per annum.
RISK REDUCTION AND MANAGEMENT
Risk reduction and management refers to the benefits resulting from CR efforts that improve the organisations ability to identify and reduce exposure to risk, and prepare for and manage risks better. While an increasing number of companies are focusing on the risk management opportunities that responsible business delivers, social and environmental factors are increasingly implicit in materiality assessments.
Goodwill and enhanced reputations can reduce risk of boycotts and minimise negative press. The Internet has improved access to information and consequently facilitated public pressure on larger organisations especially. Thus, risk management is often linked to reputational management.
Being proactive with environmental legal compliance can reduce the impact of social concern and negative community impact. Businesses risk management concerns should include issues such as biodiversity, health, and climate change.
British Energy: has turned around its performance by successfully creating a true culture of learning and excellence. In doing so, between 2006 and 2010 power generation losses caused by human error were reduced (saving 100 million) and nuclear reportable events reduced from 77 in 2004 to just four in 2009.
DIRECT FINANCIAL IMPACT
Direct financial impact occurs when being responsible has a direct benefit to the financial performance of an organisation for example improving access to capital, reducing costs, and improving shareholder value.
Direct financial impact refers to cumulative financial impact, where there is better access to capital, lower penalty payments, direct cost savings due to proactive measures, improvements in investors relations and shareholder value, and also impact on returns and revenues directly attributable to responsible business practice. However, there are some limitations associated with building the business case from direct financial impact because of the uniqueness and complexity of being a responsible business. The most notable of these limitations is how to attribute cost savings when there may not be a direct link between them. This is why cost savings from avoiding penalties, environmental cost savings, and access to capital are cited more often it is easier to identify the link. Increasingly, executives and managers are accepting cost reduction as a significant CR benefit and, according to a PricewaterhouseCoopers 2003 survey, 73% of respondents indicated that cost savings were one of the top three reasons why companies are becoming more socially responsible (figure 3).
Interface FLOR: To date their Mission Zero initiatives (to tackle climate change) have achieved cumulative avoided costs of $405 million globally.
Organisational growth is a business benefit when opportunities for overall organisational growth is created from being a responsible business whether through new markets, new product development, lateral expansion, new customers, or new partnerships/alliances. This benefit is different from Business opportunity in that the result enables the organisation as a whole to grow in size, turnover, portfolio and/or presence.
Organisational growth can arise when improvements in stakeholder management occur, leading to better relationships and access to rare insights or opportunities for partnering and alliances. Alliances and working collaborations are increasing in frequency, especially partnerships that are formed to address a specific need. Industries linked to these initiatives are emerging. For example, sustainable foresting initiatives such as Programme for the Endorsement of Forest Certification (PEFC) or the Sustainable Forestry Initiative, from which new products are emerging with companies selling only certified timber products and subsequent agencies offering certification services.
EDF Energy: The EDF Energy Toolkit was developed to help its business customers measure and reduce their energy use. It has brought in over 30 million in new contracts. Over 1,000 businesses have implemented the toolkit, with an average saving of 10%.
Business opportunity refers to the new opportunities or innovation generation created for all stakeholders specifically because of their efforts in being a responsible business. This can result in new business development, but critically it is about win-win opportunities for a variety of stakeholders.
Being a responsible organisation can lead to business opportunities where for the first time stakeholders and organisation work together successfully on an issue to solve it and create win-win situations for all involved. The business may benefit via (for example) entry into a new market or a new product, but key is that a win-win opportunity is found. A win-win opportunity means connecting stakeholder interests, and creating pluralistic definitions of value for multiple stakeholders simultaneously. In other words, the opportunity satisfies stakeholders demands while allowing a company to engage in profitable operations. Business opportunity is critically distinctive because Stakeholder demands are seen as opportunities rather than constraints.
United Biscuits: To address stakeholder health and nutrition concerns, United Biscuits McVities reformulated their biscuits, resulting in significant reduction in salt and saturated fat. As a result they also realised 40% reduction in palm oil use, and 9% increase in sales of HobNobs and Digestives.
The following companies makes benefit in business through CSR and Sustainability
Unilever Company has a simple but clear purpose TO MAKE SUSTAINABLE LIVING COMMON PLACE. This purpose inspires Companys vision to accelerate growth in the business, while reducing its environmental footprint and increasing its positive social impact. Unilever Companys commitment to sustainable living is not only helping drive strong business growth but also helping enhance equity and preference for its brands among consumers. Company believes that in the long-term, this is the best way for business to grow. That is why Unilever Sustainable Living Plan (USLP) is at the heart of Companys business model. The USLP has three global goals, namely: (i) help more than a billion people take action to improve their health and well-being; (ii) halve the environmental footprint of the making and use of products; and (iii) enhance the livelihoods of millions of people while growing the business. These goals also contribute to and are covered by activities listed in the Schedule VII of Section 135 of the Companies Act, 2013. USLP commits to a value chain approach which is integrated across Companys brands and operations. The Company also helps in achieving United Nations Sustainable Development Goals through its initiatives. A brief overview of Companys projects is given below.
i. Water Conservation Project
India is a water scarce region and water supply is expected to be half of its demand over the next decade, therefore Hindustan Unilever Limited (HUL) has identified water as a key area of intervention and set-up Hindustan Unilever Foundation (HUF). Hindustan Unilever Foundation (HUF) is a not-for-profit Company that anchors water management related community development and sustainability initiatives of HUL. HUF operates the Water for Public Good programme, with specific focus on empowering local community institutions to govern water resources and enhancing farm-based livelihoods through adoption of judicious water practices. Through the Foundations water conservation and farm-based livelihoods initiatives, cumulatively, a capacity to conserve more than 450 billion litres of water has been created, over 6.5 lakhs tonnes of additional agriculture production has been generated and over 50 lakhs person days of employment has been generated. HUF has projects across nearly 2,400 villages in 57 districts with 20 partners in India.
ii. Handwashing Behaviour Change Programme
Handwashing with soap has been cited as one of the most cost-effective solutions to improve health and hygiene. A review of several studies shows that the simple act of handwashing with soap in institutions, such as primary schools and day care centres, reduces the incidence of diarrhoeal diseases by an average of 30 per cent. The Companys Lifebuoy handwashing behaviour change initiatives help in promoting the benefits of handwashing with soap at key times during the day and encouraging people to sustain good handwashing behaviour. Over 67 million people have been reached through Lifebuoy handwashing behaviour change initiatives. Lifebuoy has partnered with PSI, Plan International, World Association of Girl Guides & Girl Scouts (WAGGGS), Gavi, Project Hope and NGO Naman Seva Samiti for scaling up the handwashing behaviour change programme. In partnership with WAGGGS, Lifebuoy has launched an initiative to empower young girls. Through this partnership, girl guides and scouts become handwashing heroes and teach the potentially life saving habit of handwashing with soap within their local communities. Each handwashing hero is trained on the importance of using soap while washing hands before eating and after using the toilet. They are also equipped with the necessary skills to share these learnings with other people they know. In this way, the practice of using soap at critical occasions is spread across communities protecting people from infections.
iii. Domex Toilet Academy
Domex Toilet Academy (DTA) is a unique market-based entrepreneurial model launched by the Company in 2014. DTA programme trains entrepreneurs and masons to help build and maintain toilets; provides access to micro-financing and creates demand for toilets in low-income households. Since its inception, the DTA has trained more than 600 micro-entrepreneurs. To date, over 2 lakhs toilets have been built, benefitting over 11 lakhs people.
iv. Swachh Aadat Swachh Bharat
The Swachh Aadat, Swachh Bharat (SASB) programme is in line with the Government of Indias Swachh Bharat Abhiyan (Clean India Mission) to promote good health and hygiene practices. In 2017, the programme continued to promote good health and hygiene practices by stressing the need to adopt three clean habits (Swachh Aadat) of washing hands five times a day, using a toilet for defecation and adopting safe drinking water practices.
v. Asha Daan
Asha Daan is a home in Mumbai for abandoned and differently-abled children, HIV-positive and destitute people. Since the inception of Asha Daan in 1976, the Company has been looking after the maintenance of the premises. At any time, there are about 350-400 inmates at Asha Daan.
The Company runs a free mobile medical service camp Sanjeevani for the local community near Doom Dooma factory in Assam. There are two mobile vans dedicated to the project. Each vehicle has one male and one female doctor, two nurses, a medical attendant and a driver. The vans are equipped with basic kits such as diagnostic kit, blood pressure measuring unit, medicines and a mobile stretcher. More than 3.2 lakhs patients have been treated in these service camps since its inception in 2003. In 2017 alone, nearly 17,800 patients were treated through this programme.
Ankur was set up in 1993 as a centre for special education for differently-abled children at Doom Dooma in Assam. Ankur has provided educational and vocational training to 352 differently-abled children.
viii. Project Shakti
Project Shakti which aims to financially empower and provide livelihood opportunities to women in rural India. The Shakti Entrepreneurs are given training for familiarisation with Companys products and basic tenets of distribution management. The Company has a team of Rural Sales Promoters (RSPs) who coach and help Shakti Entrepreneurs in managing their business. This includes help in business basics and troubleshooting as well as coaching in softer skills of negotiation and communication, which enable them to run their business effectively. Project Shakti has nearly 80,000 Shakti Entrepreneurs across 18 States. The programme has helped Shakti Entrepreneurs gain confidence, self-esteem, negotiating skills, communication and engagement capabilities, with supporting the development of an entrepreneurial mind-set.
1. Preamble/ Philosophy
Siemens has always endeavored to be an integral part of the Indias society for more than 5 decades as an employer, customer, investor, vendor and corporate citizen. Siemens considers it as its economic, environmental and social responsibility to foster sustainable local development as well as add value to the local economy in which it operates. The initiatives in the social sphere, generally known as Corporate Social Responsibility (CSR), are referred to as Corporate Citizenship in Siemens. Corporate Citizenship is the Companys contribution to sustainable communities and is built on the Company Values of being Responsible, Excellent and Innovative.
2. Corporate Citizenship Strategy
One of Siemens goals is to sustainably improve living conditions for as many people as possible. They work towards this goal by addressing challenges such as demographic change, urbanization, climate change and globalization. They derive company-wide sustainability initiatives from these strategic directions. The Corporate Citizenship strategy is in line with the Companys goal to address the three dimensions of Sustainability i.e. Economic, Environment and Social. Hence, the strategy focuses on: Education & Science, Social, and Environment. The strategy aims to address the challenges and needs that communities face by leveraging the Companys competencies and solutions. It is oriented towards the Countrys development agenda, UN Millennium Goals and UN Global Compact principles. This strategy is applicable for Siemens Limited and all Siemens Group companies in India. To identify Siemens Indias focus areas with respect to Corporate Citizenship, an extensive stakeholder survey was conducted in 2011 across various locations. The stakeholders consisted of NGOs, Government Departments, Academic and Training Institutes, Media, Vendors and Employees. The survey results were analyzed and the inputs were considered in depth to identify areas of importance for Siemens and for the Society. The focus topics for Corporate Citizenship are:
2.1 Support to Universities and promotion of technical and science education.
Skills and knowledge are the driving forces of economic growth and development for any country. Currently, a huge gap exists between the need of the industry for an employable work force and the capacity of the skill development programs. Siemens employs its competencies to promote science and technical education so as to produce Industry ready engineers and technicians in India. The key initiatives that have rolled out to address the focus areas are:
- Siemens Scholarship Program
The scholarships are aimed at supporting deserving meritorious engineering students from economically-backward families to pursue their education and launch a sustainable career in engineering.
- Upgradation of Government Industrial Training Institutes (ITIs)
Siemens supports by providing know-how on various modern technologies so as to produce Industry ready technicians. This involves upgrading the training infrastructure of government ITIs, support training of the faculties and improvement in the skills of the students.
- Skills Development Centre
Siemens also promotes science and technical education to youth in and around our locations from economically-backward families by providing Sector skills approved by National Skill Development Corporation of India.
- Educational scholarship to Destitute Children
Support to The Welfare Society for Destitute Children, Mumbai (also known as St. Catherins Home) in addressing one of the most pressing issues facing urban India homeless, destitute children through educational scholarships, career guidance, mentoring and imparting life skills.
- Employee Volunteering
Siemens encourages employees engagement in the communities to address the needs of communities on education and holistic development.
- Ethics Education
Siemens as part of its Collective Action program aims to promote ethics education in the communities especially students to be ethical in all walks of life.
2.2 Enhancing living conditions through provision of water, healthcare, energy, livelihood, etc.
A majority of Indias rural population continue to live with inadequate physical and social infrastructure and poor access to basic services. Siemens aims to design and deploy scalable, replicable and sustainable models that would deliver social impact.
- Project Asha
It is an initiative to enhance living conditions through integrated rural development using sustainable and inclusive technology which can be replicated.
2.3 Primary Healthcare and Health Education
Siemens focuses on creating a model for accessible and affordable quality healthcare to the underserved population.
- Sanjeevan the mobile healthcare clinic
The project addresses primary healthcare to underserved communities by rendering primary healthcare services, improve health-seeking behavior, facilitating linkages and referral services to public health delivery system. The program covers maternal & child health, addressing seasonal diseases, promotion of health and hygiene, strengthening community health workers etc.
2.4 Disaster Relief
Siemens disaster relief activities span three areas: emergency aid on safe drinking water and healthcare following a disaster, assistance with rehabilitation and community-based disaster preparedness (CBDP).
- Drought mitigation project
Siemens aims at implementing sustainable initiatives at drought affected villages like water conservation, irrigation and ongoing capacity building of the community so as to drought proof the villages.
GOLDEN AGRI RESOURCES
Golden Agri-Resources (GAR) wants to ensure that their palm oil operations are deforestation-free, traceable and bring benefits to the communities where they operate. They were one of the first major agri-businesses in the world to publish a Forest Conservation Policy, now embedded in their GAR Social and Environmental Policy (GSEP). The Forest Conservation Policy was developed in 2011 in partnership with The Forest Trust (TFT) and since then GAR has focused on implementation of its many requirements, first on their own plantations and managed estates, and more recently throughout their supply chain. GAR committed to protecting forests that included High Carbon Stock (HCS) and High Conservation Value (HCV) areas in 2011. Since then they have assessed thier plantations and mapped 72,000 hectares which are now set aside for conservation. This helps deliver UN SDG 15 which aims to sustainably manage forests and halt biodiversity loss.
With no development on HCS forests and HCV areas and peatlands, it requires to engage with and respect the rights of indigenous peoples and local communities. This is underpinned by legal compliance, deforestation monitoring and a commitment to demonstrable industry best practice through the achievement of national and international standards and certifications.
Their commitment to forest conservation and no development on peat represents the biggest contribution they can make in avoiding GHG emissions which contribute to climate change. This is in line with UN SDG 13 on taking action to combat climate change.
Since 2016, starting with a pilot in the Semitau region they have been monitoring deforestation using the following methods:
- Satellite-based monitoring and radar technology. Change alerts are provided every 24 days for all conservation areas
- Baseline mapping update with two company-owned drones which take high-resolution imagery of all conservation areas once every semester
- Ground verification and reporting by plantation staff for areas where they receive change alerts from the radar monitoring
They are rolling out this monitoring to all estates from 2017. The monitoring will cover all HCS forests and 70 percent of HCV areas.
Investing in Communities
The palm oil industry has helped to advance socio-economic development in tropical developing countries like Indonesia and plays a key role in improving the lives of communities living in rural areas. The challenge is to ensure that this development is inclusive and sustainable.
Golden Agri-Resources (GAR) provides employment for over 173,000 people in Indonesia, including 69,000 smallholders, most of whom live and work in the rural communities where their palm oil plantations and production facilities are located.
In doing so they are helping to deliver UN SDGs such as tackling poverty by boosting incomes and standards of living. They also collaborate with a wide range of stakeholders to carry out their social and community programmes across all their plantations, which deliver SDGs such as providing education and ensuring health and well-being, infrastructure and reducing inequalities. They have set aside an area of more than 31,000 hectares for infrastructure.
Research & Development
Golden Agri-Resources (GAR) believes harnessing technology and R&D is a key component in achieving responsible palm oil production. They share the benefits of the latest agronomic developments with their plasma smallholders as well as with independent smallholders enrolled in the Innovative Financing Scheme. Using technology and R&D to improve yields and agricultural practices is one of the core tenets of their sustainability policy. They launched Yield Improvement Policy in 2012 which has now been integrated into the GAR Social and Environmental Policy (GSEP). By improving productivity and yields, GAR can produce more palm oil using less land, relieving pressure on forests while improving livelihoods.
Yield Improvement through R&D
In the palm oil industry, the quality of planting material is recognised as the most critical factor in maximising yields. GAR has been using its proprietary high-yielding Dami Mas seeds in new plantings and replantings since 2002. The Dami Mas seeds were developed through stringent and robust breeding experiments conducted by SMART Research Institute (SMARTRI). Producing their own seeds also provides seed security and genetic purity in their seed supply. Besides working on improving the yield potential of seeds, SMARTRI also conducts research into disease resistance.
In 2017, they announced a breakthrough in cultivating exceptionally high-yielding oil palm planting material, developed in their research facilities, SMARTRI and SMARTs Biotechnology Centre, through an advanced biotechnology programme. These planting materials Eka 1 and Eka 2 are registered in Indonesias Catalogue of Seeds and were approved for cultivation by the Directorate General of Plantation, Ministry of Agriculture. They will enable to increase yields to the highest levels in the industry, without increasing land under cultivation. The new planting materials were developed naturally through conventional selection programme and tissue culture from elite palms.
They are also collaborating internationally to increase productivity. GAR is an active participant in the Oil Palm Genome Project, a worldwide initiative by a consortium of 16 reputable research organisations from seven countries. The project uses molecular biology as a tool to support conventional breeding. The main objective is to map the entire genome spectrum of oil palm varieties, including identification of specific traits such as disease resistance, drought tolerance, superior quality oil and high yield. They have a dedicated team in their Biotechnology Division and their staff has been involved in related research activities in Spain and France.
As they are committed to environmental conservation, they work with the University of Cambridge through the BEFTA programme, to study biodiversity within oil palm plantations. Through BEFTA, researchers from SMARTRI and the University of Cambridge (Department of Zoology), conduct field studies in their plantations to understand how oil palm ecosystems work. Ultimately, their goal is to come up with habitat management practices that would benefit insect biodiversity and in turn, create better palm oil yield.
All their work in improving agricultural productivity helps deliver UN SDG 2 which aims to end hunger, achieve food security, improve nutrition, and promote sustainable agriculture.
The above case studies obviously makes a strong point about the possibilities for Indian companies for engaging in CSR to benefit from it while benefitting the society and environment by default. However it demands creative thinking and leadership competence among the corporate leaders which is the primary challenge. Hope to see more and more Indian corporate leaders to get passionately involved to CSR and Sustainability as an opportunity to benefit from it and be inspired by these global leaders.
(Source: CSR VISION Team, www.unilever.com, www.siemens.com, www.goldenagri.com.sg)