Sustainability Investment News
April 13, 2009
Study Finds that Largest Indian Companies Need to Improve CSR Activities and
Reporting
by Robert Kropp
Report by Karmayog gives lowest score to nearly half of the 1,000 largest
companies in India, and recommends adoption of Global Reporting Initiative
guidelines for CSR reporting.
SocialFunds.com —
In its second annual report on the corporate social responsibility (CSR)
activities of the 1,000 largest Indian companies, Karmayog, a Mumbai-based
online organization, has found that on a scale of zero to five, 494
companies (49%) received the lowest score of zero. No companies received the
highest score of five.
Karmayog’s report gave ten companies- ACC, Ballarpur Industries, HDFC,
Infosys Technologies, Jubilant Organosys, Kansai Nerolac Paints, Moser Baer,
TCS, Tata Steel, and Titan Industries-a score of four.
The report, entitled Corporate Social Responsibility Study and Ratings of
Indian Companies, asserts that CSR ratings are important for a number of
reasons. Government bodies can use them to develop industry-wide CSR
guidelines. Industry and trade associations can set benchmarks of CSR for
companies to follow. Non-governmental organizations (NGOs) can use them to
study the most up-to-date CSR efforts undertaken by corporations. The
companies themselves can learn from the CSR activities of their peers.
Karmayog believes that corporate CSR activities consist of two predominant
aspects. The negative effects caused by a company’s processes and products
can be neutralized, minimized, or offset. Among the positive steps a company
can take include using its resources, core competence, skills, location, and
funds for the benefit of people and the environment.
The criteria used by Karmayog to determine its rankings include corporate
CSR activities and CSR reporting. Negative criteria that limit a company’s
possible score include the manufacturing of harmful products, violations of
laws and regulations, and high impact processes that that severely damage
the environment.
The report found that although 51% of the companies studied were found to
practice CSR in some form, only 2% publish a separate sustainability report,
and only 3% report the amount they spent on CSR. Many individual companies
under a group report the same CSR activities across the group, and several
companies repeat the exact same CSR information every year. The report also
found that many companies spread their CSR expenditures thinly across many
activities.
Karmayog offered several recommendations for Indian companies to follow to
improve their CSR efforts. Companies should spend at least 0.2% of its sales
on CSR activities. Companies should also follow Global Reporting Initiative
guidelines by publishing a separate CSR report annually, or at the very
least, include a CSR section in their annual reports. Finally, he
recommended that companies adopt a comprehensive set of industry guidelines
to improve their CSR processes.
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