Indian Institute of Management Sambalpur

Ethics, CSR and Sustainability

Submitted to:
Prof. Sumita Sindhi

Submitted by:

Group 2 - Section B

Amit Kesharwani 2018PGP064

Podili Sanatan 2018PGP083
Saurabh Pal 2018PGP087
Suryapally Bharadwaja 2018PGP097
Yerragolla Luckyvikshit 2018PGP100

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Introduction

CSR is a management concept whereby companies incorporate their social and environmental
responsibility in their business operations to benefit their stakeholders; benefits can be
monetary or non-monetary. CSR is the way through which a company achieves a balance of
environmental, economic and social obligations, at the same time taking care of the
expectations of stakeholders and shareholders. So it is essential to create a distinction between
CSR, which can be a strategic business management concept, and charity, philanthropy or
sponsorships. Even though the latter can also add a valuable impact on poverty reduction, will
directly enhance the status of a company and strengthen its brand, the concept of CSR goes
beyond that.

The concept of CSR has gained prominence from all avenues. Organizations have realized that
government alone will not be able to get success in its endeavor to uplift the downtrodden of
society. With the rapidly changing corporate environment, more functional autonomy,
operational freedom, etc., Organizations have adopted CSR as a strategic tool for sustainable
growth. For an organization in the present context, CSR means not only the investment of funds
for social activity but also the integration of business process with the social process.

An Organization enjoys all the rights as an individual identity and is protected by law, so it
becomes moral obligations for the corporates to give back to society. Moreover, organization
exploits the natural resource the most when compared to an individual entity, and thus gets the
benefit also; so it is their responsibility to share back the part of benefit as part of the
compensation to society and environment.

Promoting the uptake of CSR amongst different business, from small to large, requires
approaches that fit the respective capacities and needs of these businesses, and do not severely
affect their economic viability. There is a different approach used as a framework for measuring
and reporting corporate performance against social, environmental and economic performance.
It is an attempt to bring into line private enterprises to the goal of sustainable global
development by providing them with a more detail set of working goals than just profit alone.
The viewpoint taken is that for an organization to be sustainable, it must minimize (or ideally
eliminate) its negative environmental impacts, be financially secure, and act in conformity with
societal expectations.

Key areas are CSR Eco-efficiency, environmental management, stakeholder engagement,

responsible sourcing, labor standards, and working conditions, employee and community

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relations, gender balance, social equity, good governance, human rights, and anti-corruption
measures. There are six core characteristics of CSR.

 Voluntary
 Managing Externalities
 Multiple stakeholder orientation
 Social Economic Alignment
 Practices and Values
 Beyond Philanthropy

Importance of CSR

A properly implemented CSR by an organization can bring along a range of competitive

advantages, such as higher access to capital and markets, increased profits and sales,
operational cost savings, improved quality and productivity, efficient human resource base,
enhanced customer loyalty, improved brand image and reputation, better decision making and
risk management processes. Four prevailing justifications for CSR

 Moral obligation- Achieving commercial success in ways that honor ethical values.
 Sustainability- Meeting the needs of the present without compromising future needs
 License to operate- Building goodwill to secure the acquiescence of stakeholders
 Reputation- Enhancing reputation and brand with customers, investors, and employees

Importance of Common Scale for rating CSR of Different Organisation

Every organization practices strategic CSR to boost their operation which dilutes the core
reason for implementing the CSR. The CSR is implemented to benefit the society, but the
organization uses it in their favor. With increasing competition and no distinction or proper
categorization or activities as CSR, it becomes critical to develop a standard scale which can
justify the organization involvement and true intentions for CSR.

Parameters

10 major parameters for evaluating different organizations has been recognized based on the
current India socio-economic scenario. These parameters are chosen after in-depth analysis,
checking past company trends and current necessities of the society as well as the environment.

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These are as follows:

Environment Sustainability: Environment is directly affected by the day-to-day activities of

n organization. The organization generates waste, which pollutes the environment. Which in
turn is directly affect the living quality and future needs of the society.

Education and Skill Development: We believe that educating the future generation and
developing their skills to compete at a global level is the best way to elevate the society
standard. By educating, organizations are creating responsible successors who can take care of
the environment.

Poverty Alleviation and Rural Development: In developing countries, such as India, around
70% of the population is residing in rural areas which are deprived of many basic facilities like
medical and sanity/hygiene. Hence, it is vital to bridge the gap between the rural and urban
living standard, and this can be achieved only after improving the quality of living in rural
areas.

Healthcare, Water and Sanitation Hygiene: Almost 122 Indians per 100,000 die due to the
poor quality of care each year. Also, a third of patients (34%) in low- and middle-income
countries report poor user experience, citing lack of respect, long wait times and short
consultations, the report says. All these are because India lacks in providing proper health care
facility. We can also see the lack of proper sanitization in rural areas which causes various
diseases. So it is essential for organizations and government to collaborate and focus on these
areas.

Women Empowerment and Gender Equality: With Government taking initiatives on

creating equal opportunity for men and women by empowering women, it is required to
catalyze the effort done by organizations to get a better result. We believe that for the
development of a country as a whole, it is necessary that women and men move forward
together.

Labor and Human Rights: Labor and Human rights is a fundamental right by every citizen.
It is imperative to ensure that human resource should not be exploited in any manner.

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2 percent of PAT mandatory: As the government of India passes the law the company that
every company having the net worth of rupees five hundred crores or more, or turnover of
rupees one thousand crores or more or a net profit of rupees five crores or more during any
financial year should spend 2 % of their profit after tax (avg of 3 years). However, many
companies spent less than 2 % while a few spent more than 2 % so on the scale we have
different points by the amount they spent on CSR activities.

Urban Slum Development: In the fiscal year, 2017 (FY17) saw the top 10 companies by
corporate social responsibility (CSR) spending contribute almost half the money that went
towards CSR programmes; none devoted any funds to the slum development initiative. In FY17
only Rs9.78 crore was spent on slum development. While some private companies invested in
the activity, none of the leading PSU reported any spending under the head during the year. In
states like Delhi, Mumbai, Hyderabad massive number of peoples are living in slums, and they
are living in the terrible conditions where they do not have clean drinking water, no hygiene,
and no proper waste management system. In our study, we found that respondent gave 6.09%
weight to urban slum development as slum development is necessary for the upliftment of
society.
Disaster Relief & Other Company Initiatives: Disaster relief does not come under Schedule
7, Section 135 of the Companies Act that outlines CSR guidelines and the areas where
expenditure could be made. However, it is one of the critical criteria as in India many calamities
happen every year. In 2018 due to heavy rainfall, Kerala was mostly affected by floods and
companies like Ola, Uber hire the boat and operates the rescue operations. In addition to this
companies also donate some part of their CSR fund to PM relief funds. In our survey, we also
found that the respondent gave 5.09% weight to the disaster relief fund.

Protection of Heritage and Culture: Cultural heritage is the inheritance of physical items and
intangible attributes of a group or society that is inherited from the past. Cultural heritage
includes tangible things such as buildings, monuments, landscapes, books, works of art, and
artifacts, intangible culture such as folklore, traditions, language, and knowledge, and natural
heritage including culturally significant landscapes, and biodiversity. The importance of
engaging communities through CSR on art and culture is not being put forth systematically,
and corporates are not aware of the benefits of carrying out such programmes. However, in
developing of scale through the survey, we found that the company should give 5.09% weight
as by protecting culture tourism opportunities can be increased.

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Design Methodology

Objective: To develop a standard scale to analyse a company and provide a score on

the basis of its CSR activities

Procedure: A survey questionnaire was presented to the respondents with predefined

parameters, and they were asked to rank the parameters from one to ten to determine
the weightage based on their perception of the importance of parameters.

Data Analysis: After collecting the response from the questionnaire the data was
exported into MS excel, and for each parameter we calculated the weights. In addition
to this sub-category of each parameters were also asked to rank.

Conclusion

From the developed scorecard, it is found that Tata Consultancy Services and Maruti Suzuki
has scores of 40.26 and 41.59 respectively out of 100 for their CSR activities. It is found that
Maruti Suzuki has a higher score i.e. it is a better company in terms of its CSR initiatives than
Tata Consultancy Services.

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Exhibit: 1 – Parameters Weights

Parameters Weightage
Environment Sustainability 16.73
Education & Skill Development 14.18
Poverty Alleviation & Rural Development 13.45
Healthcare, Water And Sanitation Hygiene 12.73
Women Empowerment & Gender Equality 9.09
Labor & Human Rights 8.36
2% profit spent mandatory 8.36
Urban Slum Development 6.91
Disaster Relief & Other Company Initiatives 5.09
Protection of Heritage and Culture 5.09
Total 100

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 Exhibit: 2- Sub-Parameters Weights
Environment Sustainability Weightage Education & Skill Developnemt Weightage
Co2 Footprint 5 Setting up Schools, Colleges 4
Plantation 3 Vocational Training Programs 7
Waste water Disposal 3 Infrastructure support to Govt Schools 3
Solid Waste disposal 3 Total 14
Usage of Bio Degradable Products 2
Total 17
Healthcare, Water And Sanitation Women Empowerment & Gender
Hygiene Weightage Equality Weightage
Medical Campaigns 4 Women Skill Centre 5
Hospital Establishment 1 Self Help Groups 3
Medical Fund For critical Diseases 1 Women Employment 1
Water Treatment Plants 6 Women Safety 1
Total 13 Total 9

2% profit spent mandatory Weightage Urban Slum Development Weightage

No CSR expenditure -2 Housing 1
0-2% 0 RO plants 3
exactly 2% 1 Sanitation 2
2-5% 2 Total 6
5-10% 3 Poverty Allievation & Rural Development Weightage
Employment to economically weaker
10% and above 3 sections 4
Total 8 Education Scholarships to BPL students 3
Protection of Heritage and Culture Weightage Housing and Hostels 3
Promoting Tourism 2 Sanitation (Toilets) 1
Promoting Culture & Tradition of
Community 3 Road 3
Renovation of Tourist and Religious
Spots 1 Total 13
Total 5 Labor & Human Rights Weightage
Disaster Response & Other Company
Initiaves Weightage Employee Skill Developnemt 3
PM National Relief Fund 2 Working Conditions 2
Company Initiatives 4 Working Hours 1
Total 5 Indiscrimination 2
Employee Safety 1
Total 8

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Exhibit: 3- CSR Expenses
TCS CSR Expenditure for 2016-2018 2016-17 2017-18 Total
Environment Sustainability 1 1 2
Education & Skill Development 44 43 87
Poverty Alleviation & Rural Development 5 10 15
Healthcare, Water And Sanitation Hygiene 85 131 216
Women Empowerment & Gender Equality 44 43 87
Labor & Human Rights 0 0 0
2% profit spent mandatory 0 0 0
Urban Slum Development 0 0 0
Disaster Response & Other Company
Initiatives 200 172 372
Protection of Heritage and Culture 0 0 0
Amount Spent 379 400 779
Amount need to be spent 446 497 943

Maruti Suzuki CSR Expenditure for 2016-

2018 2016-17 2017-18 Total
Environment Sustainability 0 0 0
Education & Skill Development 57.91 84.02 141.93
Poverty Alleviation & Rural Development 13.73 9.56 23.29
Healthcare, Water And Sanitation Hygiene 14.98 24.93 39.91
Women Empowerment & Gender Equality 0 0 0
Labor & Human Rights 0 0 0
2% profit spent mandatory 0 0 0
Urban Slum Development 0 0 0
Disaster Response & Other Company
Initiatives 2.83 2.32 5.15
Protection of Heritage and Culture 0 0 0
Amount Spent 89.45 118.51 207.96
Amount need to be spent 89.24 120.83 210.07

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Exhibit: 4- Scorecard
Maruti
Parameters TCS Suzuki
Maximum
Environment Sustainability Points
Co2 Footprint 5 0.08 0.00
Plantation 3 0.05 0.00
Waste water Disposal 3 0.05 0.00
Solid Waste disposal 3 0.05 0.00
Usage of Bio Degradable Products 2 0.03 0.00
Education & Skill Developnemt
Setting up Schools, Colleges 4 3.35 4.25
Vocational Training Programs 7 5.58 7.09
Infrastructure support to Govt Schools 3 2.23 2.84
Poverty Allievation & Rural Development
Employment to economically weaker
sections 4 0.58 3.36
Education Scholarships to BPL students 3 0.39 2.24
Housing and Hostels 3 0.39 2.24
Sanitation (Toilets) 1 0.19 1.12
Road 3 0.39 2.24
Healthcare, Water And Sanitation Hygiene
Medical Campaigns 4 3.82 3.82
Hospital Establishment 1 1.27 1.27
Medical Fund For critical Diseases 1 1.27 1.27
Water Treatment Plants 6 6.36 6.36
Women Empowerment & Gender Equality
Women Skill Centre 5 4.55 0.00
Self Help Groups 3 2.73 0.00
Women Employment 1 0.91 0.00
Women Safety 1 0.91 0.00
Labor & Human Rights
Employee Skill Developnemt 3 0.00 0.00
Working Conditions 2 0.00 0.00
Working Hours 1 0.00 0.00
Indiscrimination 2 0.00 0.00
Employee Safety 1 0.00 0.00
2% profit spent mandatory
No CSR expenditure -2 0.00 0.00
0-2% 0 0.00 0.00
exactly 2% 1 0.00 1.00
2-5% 2 0.00 0.00
5-10% 3 0.00 0.00
10% and above 3 0.00 0.00
Urban Slum Development
Housing 1 0.00 0.00

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 RO plants 3 0.00 0.00
Sanitation 2 0.00 0.00
Disaster Response & Other Company
Initiatives
PM National Relief Fund 2 1.53 0.74
Company Initiatives 4 3.56 1.73
Protection of Heritage and Culture
Promoting Tourism 2 0.00 0.00
Promoting Culture & Tradition of
Community 3 0.00 0.00
Renovation of Tourist and Religious Spots 1 0.00 0.00

Total 100 40.26 41.59

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