Firms Are Getting Serious About Their Social Role

Updated: Oct 27 2002, 05:30am hrs
Serious and committed approach to corporate responsibility practices is increasing its reach, but there is a vast ground yet to be covered. Corporate sector is slowly realising the positive aspects of corporate responsibility practices (good for business is good business). There is growing collaborative work between NGOs and companies. All stakeholders are increasingly becoming aware of the diverse facets of corporate responsibility practices. Due to various internal and external pressures, the climate is conducive for the growth of corporate responsibility practices in India.

These are the conclusions arrived at by a survey of 100 corporate houses and 104 NGOs in Chennai, Mumbai, Bangalore and Delhi. In addition, 13 trade unions and 11 NGOs in smaller industrial townships were also surveyed. The survey by conducted by Business Community Foundation for TERI-Europe during 2002-2002.

Its a follow up of an earlier opinion poll conducted by TERI-Europe in India in 2000-2001. The preliminary conclusions of the earlier poll had noted that high expectations from companies are not yet matched by judgements about corporate responsibility. More trust is placed in the media and NGOs than in business. MNCs are viewed with suspicion. Gender discrimination is a real issue in the workplace. Workers and management have sharply diverging perceptions of working conditions.

While the first poll sought to explore the perceptions of workers, company executives and the general public about social, economic and environmental responsibilities of companies in India, the second poll was structured to facilitate documentation of corporate responsibility practices from the perspective of the three stakeholder groups companies, NGOs and trade unions. Four key areas of corporate responsibility were examined: overall policy frameworks, labour practices, community relations and environmental practices.

Corporate responsibility not yet a core business strategy
Although many companies, NGOs and trade unions were aware of corporate responsibility practices, the study findings suggest that the concept has yet to become part of core business strategy in most companies in India. Almost all companies, irrespective of size and sector had some awareness of corporate responsibility and its potential benefits. While most companies also had policies in place related to labour issues, community relations and environmental practices, they were for the most part not backed up by comprehensive implementation and monitoring systems. Community programmes or social development initiatives, in most cases, were philanthropic and/or ad hoc in nature and not integrated into core business activities such as marketing and brand management.

Labour and environmental policies in place
Most companies have labour and environmental policy guidelines in place. This is not surprising given that Indian state laws require that companies meet minimum standards. Policies on working conditions include minimum wage requirements, health and safety, equal opportunities, non-employment of child labour, and employee welfare in general. In the area of environmental policy, most companies, especially those industries with a direct impact on the natural environmentextractive industries, chemical, manufacturing industries have policies and management systems in place. However there is a wide discrepancy between the perceptions of workers and management about company compliance with labour regulations.

Limited evidence of social and environmental auditing and reporting.
Monitoring and reporting on social and environmental issues is found to be limited. Whereas environmental assessments and audits are undertaken in some cases, there is almost no evidence of social audits taking place.

Differences by company sector and size
Bigger companies with numerous employees and a large turnover have more corporate responsibility practices and guidelines in place. However, these tend to be more philanthropic in nature than strategic. There are also some differences with respect to sectors, with the IT industry appearing to have an edge over others.

Differences of opinion between management and trade unions
Trade unions view companies as institutions that fail to implement labour laws adequately. Trade unions cite regulatory violations related to casual and contract labour, gender, health and safety, payment of minimum wages (especially in the unorganised sector) and challenge business commitment to corporate responsibility.

Differences of opinion within the NGO community
The NGO view of corporate responsibility is very divided. NGOs working with companies are satisfied with the practices being followed by business houses. NGOs that have no interaction with the corporate sector do not share this view. They feel that corporate community relations do not exist in the real sense and have only cosmetic value. Most of these NGOs feel that the business sector is responsible for urban problems like pollution, overcrowding shortage of basic necessities, etc.

NGOs working in smaller towns and cities also do not have a very high opinion of corporate responsibility practices. One reason for this could be that most of their interaction is with smaller companies that do not have formal corporate responsibility programmes.