CASE STUDY NO. 1 Corporate Social Responsibility: Tata Model

Transcription

1 Chapter: 7 Case Study CASE STUDY NO. 1 Corporate Social Responsibility: Tata Model R.N.Prasad (Registration No ) Page 88

2 Corporate Social Responsibility: Tata Model Brief History Founded by Jamsetji Nusserwanji Tata (JN Tata) in 1868, the Tata group has developed into one of India's largest business conglomerates. Tata Sons, which was established as a trading company by JN Tata in 1868, is the promoter of the Tata group. Tata Industries, initially established in 1945 as a managing agency for the businesses promoted by Tata Sons, propelled the group's entry into new and high-tech industries during the early 1980s. The group has 102 companies in diverse sectors and has been moving from product-driven businesses to brand-driven businesses. The group listed its materials, chemicals, energy and engineering products as product-driven while engineering services, automotive, communications and IT, services and consumer goods have been identified as branddriven businesses. TATA is a respected brand name throughout India and it cannot happen without delivering quality product and services. The group is famous for practicing Y-Theory of management. The management is not coercive in nature and believes in co-operative approach in management. People who join TATA, do stay with company which has a name for their good HRD practices. Employees in turn, too, feel proud of being part of TATA family. There are professionals who have no blood relations with TATAs but have occupied higher positions in TATA group of companies due to R.N.Prasad (Registration No ) Page 89

3 their capabilities. So, management style of TATA needs to be commended. The working class (mainly the workers working in various TATA companies and Factories such as TISCO) is organized. They have access to various facilities such as PF, Gratuity, leave including medical leaves, minimum working hours, over time facilities etc, as per the legal provisions. Apart from the above, they enjoy other facilities, too, such as housing, education for their children, medical, scholarship to their children etc.. Strike by TATA employees/lock out is hardly heard of. There appears to be good communication between management and workers. Matter/dispute if any is sorted out to the mutual satisfaction of the concerned parties and there is industrial peace within TATA group companies. So, there appears to be sense of belongingness among Employees and hence, TATA group has steady and upward business growth even during hard times. TATAs preferred to set up their Steel Plant in a undeveloped area (Sakchi) in Jamshedpur. It is a tribal area with poor tribal population but rich in mineral resources. TATA set up the factory there as there was availability of basic resources needed for manufacturing of steel in the area/nearby area but they did not ignore the local community. They took care of, for alleviating the misery of local poor population by providing various basic facilities such as road, schools (education), medical care, employment etc. The TATA salt factory at Mithapur, too, has taken care of the population in its surrounding area by carrying out various rural development activities. R.N.Prasad (Registration No ) Page 90

4 All TATA Groups companies are known for commencing development activities in the surrounding villages. TISCO is carrying out various welfare/development activities in Jharkhand. Similar is the case with other TATA group companies, too. The society has a lot of expectations from TATAs. TATAs have met the expectations of people/nation, too, by establishing world class educational institutions, hospitals and other institutions of repute the details of which will follow in the subsequent pages. Basic values/principles As a global benchmark for CSR and a pioneer of the concept in India, the Tata group has adopted social responsibility as one of its integral values and the group has made concerted efforts to link it with the group's overall strategy for achieving business excellence. Besides undertaking CSR initiatives through its various companies, the Tata group has been actively involved in facilitating the development of this R.N.Prasad (Registration No ) Page 91

5 concept in India by setting standards and benchmarks. Moreover, Tata Group has adopted participatory approach in the matter of CSR as depicted in the above diagram. Also, Tata s declarations on CSR are mentioned in the slide follow hereunder; Approach TATAs are the pioneer in the field of CSR in India. A unique feature of the group is that 65 percent of the equity capital of the parent firm - Tata Sons Limited - is held by Tata Trusts, which are philanthropic in nature. Over 75 per cent of Trust's funds come from dividends on the shares it owns in Tata Sons, the group's holding company. The remaining comes from their own statutory investments. The trusts don't handle corporate social responsibility; they are more of a funding agency, like the Ford Foundation. The Sir Dorabji Tata Trust was established in 1932 by Sir Dorab Tata, the elder son of group founder Jamsetji Tata, and is one of the oldest philanthropic organisations in India. The Trust's vision of constructive philanthropy has been sensitive to the fast-growing needs of a developing nation, and the projects and programmes it supports bear contemporary relevance. The grant-making pattern of the Trust involves three broad areas: endowment grants (grants to institutions), grants to non-governmental organisations (NGOs) and grants to individual (medical and educational grants). Reinforcing the implicit beliefs the group brings to its mission of sustainable development is an explicit set of structures, embodied most notably by the Tata Council for Community Initiatives (TCCI). The Council has, in collaboration with the United Nations Development R.N.Prasad (Registration No ) Page 92

6 Programme (India), crafted the Tata Index for Sustainable Human Development, which measures and improves the community work that Tata enterprises undertake. The Tata Index for sustainable human development is a pioneering effort aimed at directing, measuring and enhancing the community work that Tata group enterprises undertake. The index provides guidelines for Tata companies looking to fulfill their social responsibilities, and is built around the Tata Business Excellence Model, an open-ended framework that drives business excellence in Tata companies. Speaking about the Tata index, Anant G Nadkarni, VP, group corporate sustainability, says: "We have adopted a business model to drive social responsibility efforts within the group because that way you ensure a huge network. The index helps structure our efforts and quantify their effect on the communities and people they are aimed at." The index is actually a set of guidelines for Tata companies looking to fulfil their social responsibilities, and it is the third set of such guidelines fashioned by TCCI. Mr Nadkarni sees the index as a work in progress, not some edict set in stone. "What we have here is a framework; that's the spirit in which the Index was drafted." The Tata culture in this critical segment of the overall corporate sustainability matrix inclusive of working for the benefit of the communities in which they operate, of building India s capabilities in science and technology, of supporting art and sport springs from an ingrained sense of giving back to society. "This is a matter of principle for us, it is in our bloodstream," says Mr Irani, "and it isn't something we like to shout about. Some people consider social responsibility as an R.N.Prasad (Registration No ) Page 93

7 additional cost; we don't. We see it as part of an essential cost of business, as much as land, power, raw materials and employees." The Tata tradition in community development has, since the earliest days of the group's history, been defined by its core values. It never was charity for its own sake or, as group founder Jamsetji Tata put it, "patchwork philanthropy". Sustainability, says Kishor Chaukar, a member of the Tata Group Corporate Centre, is of fundamental importance. "I don't believe charity makes a substantial impact on society," he explains. "All you are doing, then, is satisfying the mendicant mentality. The real contribution comes when communities are enabled in a manner that has a sustained developmental impact. That way you empower people, educate them, give them instruments of income, a feeling of self-respect and dignity, a reason to live." The time was the early 1990s and the occasion was gathering of industrialists called by India s prime minister, PV Narasimha Rao. Representing the Tata group were Chairman Ratan Tata and JJ Irani, the managing director of Tata Steel at that point. The prime minister proposed that we business people set aside 1 per cent of our net profit for community development projects totally unconnected to the workers and industry any of us was involved with, recalls Mr Irani. Mr Tata and I looked at each other; we didn't make any comment. Later, we drew up a chart that quantified Tata Steel s contribution on Mr Rao s scale. We discovered that, over a 10-year period, the company had been dedicating between 3 and 20 per cent of R.N.Prasad (Registration No ) Page 94

8 its profits to social development causes. In the years since, depending on profit margins, the figure has continued to vacillate within this band. The Tata Steel example is not an anomaly for a Tata company. If there is one attribute common to every Tata enterprise, it has to be the time, effort and resources each of them devotes to the wide spectrum of initiatives that come under the canopy of community development. The money numbers are staggering: by a rough estimate the Tata group as a whole, through its Trusts and its companies, spends about 30 per cent of its profits after tax (PAT) on social-uplift programmes. In July 2004, B. Muthuraman, Managing Director, Tata Steel Limited (TISCO), announced that in future TISCO would not deal with companies, which do not confirm to the company's Corporate Social Responsibility (CSR) standards. Speaking at the annual general meeting of the Madras Chamber of Commerce and Industry, Muthuraman stated, "We will not either buy from or sell to companies that do not measure up to Tata Steel's social responsibility standards." Implementation of CSR TATA Trusts The Sir Dorabji Tata supports different kinds of NGOs some do social work, some research, while others are community based usually for a period of three to five years. It also works with international agencies such as the United Nations, mostly in times of natural disasters. From time to time the Sir Dorabji Tata Trust also initiates the process for establishing institutes of national importance. R.N.Prasad (Registration No ) Page 95

9 CSR activities taken by Sir Dorabji Tata trust can be categorized in various groups and described as under: Endowment grants : TATA Trust has promoted, and continued to support, several institutions of learning, research and culture in India. These include the Tata Institute of Social Sciences, Mumbai, the Tata Memorial Centre for Cancer Research and Treatment, Mumbai, the Tata Institute of Fundamental Research, Mumbai, the Tata Agricultural and Rural Training Centre for the Blind, Phansa, and the National Centre for the Performing Arts, Mumbai. The Trust has also helped in establishing the Sir Dorabji Tata Trust Centre for Research in Tropical Diseases at the Indian Institute of Science, Bangalore, the JRD Tata Ecotechnology Centre, Chennai, and the National Institute of Advanced Studies, Bangalore. NGO grants : The Trust makes grants to NGOs in five social development sectors: Management of natural resources: The Trust supports projects related to water and water resources, land degradation and better methods of cultivating and harvesting crops. Livelihoods: The Trust has backed several projects in this sector, covering unorganised labourers, capacity building of grassroots groups, and business development of a variety of people-based organisations. Education: The Trust has supported initiatives in the field of education, focusing on children, adolescents and adults (within and outside the formal education system). R.N.Prasad (Registration No ) Page 96

10 Health: The Trust has made contributions in creating and upgrading medical infrastructure and healthcare facilities across India, while focusing on training community health workers. The Trust also supports research studies in alternative systems of medicine such as ayurveda. Social development initiatives: These cover many areas, including community development, human rights, family welfare, civil society, art and culture, and relief work. Individual grants : The Trust gives merit and need-based educational and medical grants to individuals. Medical: Financial help is extended to individuals for the treatment of diseases and to solve other health problems. Education: The Trust offers scholarships for higher education and travel grants for studying abroad and for attending conferences, as well as for sports activities. The Allied Trusts under Sir Dorabji Tata trust are, primarily, smaller trusts; while some have a specific mandate, the rest are broad-based in their approach to grant-making. The Sir Dorabji Tata Trust administers the Allied Trusts. JN Tata Endowment: The first of the Tata trusts, it was established by group founder Jamsetji Tata, in 1892 to provide scholarship loans to individuals for the pursuit of higher studies abroad. Over 120 students are selected every year from across India as JN Tata scholars. Lady Tata Memorial Trust : Established by Sir Dorabji Tata in 1932 in memory of his wife, Lady Meherbai, who died of leukaemia in 1930, the Trust spends four-fifths of its income on international research in R.N.Prasad (Registration No ) Page 97

11 leukaemia. The Trust also supports institutional research carried out by recognised Indian institutions, with the emphasis on leukaemia research. Lady Meherbai Tata Education Trust : Set up in 1932, the Trust grants scholarships to young Indian women graduates of recognised Indian universities to pursue higher studies abroad in the fields of social work and public health. Additionally, and also coming under the umbrella of the Allied Trusts, are the Tata Social Welfare Trust, the RD Tata Trust, the Tata Education Trust, the JRD Tata Trust, and the JRD Tata and Thelma Tata Trust, all of which focus on women and children. The Jamsetji Tata Trust concentrates on overall developmental issues. Sir Ratan Tata Trust was established in 1919 in accordance with the will of Sir Ratan Tata, the younger son of group founder Jamsetji Tata, the trust is a grant-bestowing public foundation. The trust seeks to be a catalyst in development through giving grants to institutions in various areas. It focuses its grants towards organisations that it can partner to undertake innovative and sustained initiatives with the potential to make a visible difference. It also provides grants for endowments, has a separate programme for small grants and gives grants to individuals for education and medical relief. Institutional grants : The bulk of the trust s institutional grants are in the areas of rural livelihoods and communities, and education. Rural livelihoods and communities : The trust focuses on the following key initiatives within the broad areas of land and water development and microfinance: R.N.Prasad (Registration No ) Page 98

12 Central India Initiative (CInI): CInI involves a series of livelihood projects across the central India region, addressing core issues aimed at alleviating poverty among tribal communities in a sustainable manner. Himmothan Pariyojana: The initiative addresses some of the key rural development issues confronting the inhabitants of the Himalayas, on a systematic basis. Kharash Vistarotthan Yojana (KVY): This initiative tackles issues related to seawater ingress on the Gujarat coastline through field projects and coordination with the state government. Drought proofing in West Rajasthan: The objective is to develop replicable models for drought proofing in the desert regions of Rajasthan. Reviving the Green Revolution: The initiative involves a series of interventions encouraging crop diversification in Punjab and Tamil Nadu to tackle the negative impact of the rice-wheat cropping system. Sakh Se Vikas: The initiative consolidates and expands community-based micro-finance in Rajasthan by strengthening livelihoods and reducing vulnerabilities. While strengthening linkages between micro-finance and development, the trust is also supporting a large community-based microfinance programme in South India. Sukhi Baliraja Initiative: The initiative addresses the recurrent issue of farmers suicides in six distress districts located in Vidharbha region of Maharashtra through promoting sustainable, improved agricultural practices, microfinance, development of R.N.Prasad (Registration No ) Page 99

13 market linkages, soil and water conservation and alternative livelihood options. North East Initiative: The initiative addresses livelihood issues of the North-eastern states comprising Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. Education: The trust s grants in the field of education follow a focused approach in reforming elementary education, nurturing education as a discipline, alternative education and higher education Health: The trust focuses its efforts in the following areas: Rural health programmes Specialised healthcare services Health training and capacity building Clinical establishment Enhancing civil society and governance: The trust s grants are based on the three sub-themes of Citizenship and participation, Human rights and governance and Governance in civil society Arts and culture: Here, the trust s grants are focused around the Arts institutions and infrastructure, which revolves around regenerating institutions, theatre infrastructure and advanced learning in the arts; Arts and the public domain, revolving around urban spaces and new design pedagogy and Arts and the culture industries focusing on new media practices, researching culture industries, conservation and archiving and independent publishing in India on bringing arts practice into the classroom. The Ratan Tata Trust, too, depends on dividends from its Tata Sons shares and its investments. Trust s focus has changed over the years from R.N.Prasad (Registration No ) Page 100

14 charity to development funding, though the provisions of Sir Ratan's will are still the trust's principal guidelines. Both trusts (Dorabji and Ratan Tata) can and do come together sometimes to fund large projects with different components. The two have stringent appraisal, assessment, accounting and auditing requirements for the NGOs they fund. Projects must be aimed towards sustainability for the community, and money is always released in a phased manner that meets the requirements of recipients. Surprisingly, the trusts do not usually encourage or consider supporting projects run by Tata companies. The trustees' view is that if a company has started something then it should sustain itself through its own funds instead of asking the trusts for financial support. However, The Sir Ratan Tata Trust has funded initiatives by Tata Steel and Tata Chemicals. "To die rich is to die disgraced," said Andrew Carnegie, the American business legend who transformed himself from robber baron to philanthropic epitome. For Carnegie, "the surplus wealth of the few will become, in the best sense, the property of the many." The narratives in this subsection are a window to the breadth and depth of the philanthropic endeavours of the Tata trusts, their quiet contribution to the cause of the country's poor and needy, and a ringing affirmation of the values of the group's founders. Tata Company Initiatives Tata group companies have always displayed a keen interest in the welfare of the communities in which they operate. The work they do on this front is managed by, and channeled through, organisations established to further the cause of community development. R.N.Prasad (Registration No ) Page 101

15 Tata Chemicals Society for Rural Development Tata Chemicals set up the Tata Chemicals Society for Rural Development (TCSRD) in 1980 to promote its social uplift projects for communities in and around Mithapur (in the state of Gujarat in western India), Babrala (in the state of Madhya Pradesh in northern India) and Haldia (in the state of West Bengal in eastern India). The Society works to protect and nurture the rural populations in these areas and helps people achieve self-sufficiency in natural resource management, livelihood support and the building of health and education infrastructure. Through TCSRD, Tata Chemicals works to improve the quality of life of the people and communities around its operations, and to support sustainable development, a theme that is central to the company's corporate philosophy. Tata Chemicals employees endorse this philosophy by helping empower rural communities chart their own developmental course. The initiatives that TCSRD is involved in include: 1 Agricultural development & Animal husbandry 2 Education 3 Women's programmes 4 Rural energy 5 Watershed development 6 Relief work R.N.Prasad (Registration No ) Page 102

16 Tata Steel for Rural Development Society Established in 1979, the Tata Steel Rural Development Society (TSRDS) is involved in various social development programmes aimed at helping the rural communities living around Tata Steel's operational units. Prior to the setting up of TSRDS, Tata Steel's community initiatives were conducted through its rural and community services division. However, the fundamental differences between the imperatives of rural and urban development prompted the company to reclassify its community initiatives programmes under three units: Community Development and Social Welfare, TSRDS and Adivasi and Harijan Welfare Cell, now known as the Tribal Cultural Society. TSRDS covered 32 villages around Jamshedpur (in the state of Jharkhand in eastern India) in its first year of operation. Today, the Society has seven separate units, six in Tata Steel's operational areas, and covers 600 villages in the states of Jharkhand and Orissa (also in eastern India). TSRDS is actively involved in the spheres of livelihood generation, health and hygiene, and people empowerment. TSRDS has expanded its agenda and identified the advancement of education, sports and self-reliance as tools to ensure a better quality of life for the people it works with. Rallilove ACTS Rallilove ACTS (Assisting Communities Through Service), an organisation set up by Rallis, seeks to improve the quality of life of the R.N.Prasad (Registration No ) Page 103

17 poor, especially women and children, through sustainable community development programmes. Rallis has, through ACTS, been involved in a variety of community development initiatives in areas such as health and education, and especially in helping the girl child. Voltas for Women Voltas for Women (VOW) was founded in The organisation, whose membership is restricted to female employees of Voltas and the wives of male employees, helps the needy with assistance in health and education, and offers career and vocational guidance. Community Development Initiatives Considered as pioneers in the area of CSR, the Tata group has played an active role in nation building and socio-economic development since the early 1900s. A survey conducted by the website revealed that Tatas spent Rs. 1.5 billion on community development and social services during the fiscal the highest by any corporate house in India Even when economic conditions were adverse, as in the late 1990s, the financial commitment of the group towards social activities kept on increasing, from Rs 670 million in to Rs 1.36 billion in From its inception, the Tata group has taken up a number of initiatives for the development of society. Tata s steps towards Green future R.N.Prasad (Registration No ) Page 104

18 Nurturing Nature : The Tata group's kinship with the environmental cause has resulted in a slew of initiatives that place the good earth above bottom lines. A big chunk of the responsibility for containing the plague driving our polluted and populous planet towards peril rests with industry and business. Balancing the imperatives of creating jobs and selling products and services with the absolute necessity of protecting and regenerating what remains of the natural environment is an onerous challenge. That it can be done is beyond doubt, but this is a task requiring a commitment to ideals more than bottom lines, to the good earth rather than profiteering. The long history of the Tata group teems with examples of just such a commitment. The Tata ethos places a special emphasis on environmental and ecological issues. "Environment is a focus area within our overall corporate social responsibility matrix," says Kishor Chaukar, chairman, Tata Council for Community Initiatives, a centrally administered nodal agency that coordinates, among other activities, the environmental efforts of group companies. A host of Tata companies also adhere to environmental procedures drawn up by the Global Reporting Initiative (GRI), which operates under the aegis of the United Nations. Important as it is, following directives and guidelines from within and without is just one facet of the Tata approach to environmental issues. The greater portion of what the group does in this sphere is by choice and conviction. From this flows its support for endeavours to conserve plant and animal species, improve land and water use, and protect forest tracts and green sanctuaries. The central tenet of this earthy philosophy is people and communities, often in rural regions and frequently facing R.N.Prasad (Registration No ) Page 105

19 inequitable struggles to secure livelihoods. Understanding that no environment policy can operate in isolation means an enhanced ability to link processes and people in a manner that benefits both nature and those dependent on it. The group's contribution to conservation falls into two categories: the efforts of different Tata companies, big and small, to preserve and enrich the environment in and around their areas of operation, and the philanthropic thrust of the Tata trusts, which support a diverse cluster of non-governmental organisations working in areas such as the management of natural resources, community development and livelihoods. This dual canopy accommodates and nurtures a variety of initiatives in a range that extends from watershed programmes and land regeneration to forestry projects and the protection of endangered species. The flora and fauna stories and articles in this subsection attempt to encapsulate the Tata group's allegiance to the environmental cause. "Ours is a deliberate effort to do more than what is required by statute," says Mr Chaukar. "Our real contribution, on the environment front and on the entire corporate responsibility issue, is being socially responsible, and that means doing much more than staying on the right side of the law." Mr Chaukar articulates the group's environmental philosophy as an obligation to society. "Some people think that environmental matters are cause for concern. The Tatas, on the other hand, view them as an inherent duty that is part and parcel of being in business. The general mindset, the discourse of our times, tends to see the environment as something we have inherited from our ancestors. The reality, as I see it, is that we have borrowed it from our children and the generations after them. R.N.Prasad (Registration No ) Page 106

20 "Looked at from that perspective, it becomes obvious that I as an individual, I as a corporate entity, I as a factory, have no God-given right to do what I please with what can never truly belong to me. Polluting the environment in one place to supply a product to consumers in some other, far-removed place - how can that ever be justified? There used to be a time when rivers were sources of clean drinking water; today any child will tell you that rivers are giant garbage cans, carriers of filth and waste. There is no way out of this messy situation other than affording the environment the highest priority, and that's what the Tatas are doing." Only those living in denial can argue that environment and ecology are subjects too esoteric for a society bred on consumerism and the pleasures of the present. Humankind is currently engaged in the surprisingly easy job of driving into extinction more plant and animal species than at any time since the dinosaurs disappeared 65 million years ago. Our forests are fading; our oceans are rising; the snowcaps on our mountain peaks are shrinking; our climate is mutating. Meanwhile, our water, our air and our bodies are becoming the unwitting recipients of all manners of toxic intruders. Business can and do, as the Tatas have proved make a huge difference in turning this beastly tide. Addressing climate change : The Tata group is facing up to the challenge of climate change and making it integral to its processes. The broad idea is to develop a common approach to the critical questions confronting the group's businesses on the environmental front, and formulate policies that can deal effectively with issues that impact climate change. Coordinating and directing the climate change efforts of the group's companies is Tata Quality Management Services (TQMS), a centrally R.N.Prasad (Registration No ) Page 107

21 administered organisation that draws on the experience and expertise of senior Tata leaders. The Tata group considers climate change to be a serious issue and is taking the following steps to increase carbon consciousness and institute mitigation strategies: A steering committee and working group have been assigned to address the climate change issue and cascade it into a group-level movement. Tata companies from five business sectors steel, automotive, power, chemicals and IT will participate in the first phase through the following strategies: Intensive awareness and training programmes will be conducted for senior leadership. Climate change champions will be identified in each company. Policies on energy efficiencies, green buildings, green data centres and green protocols will be developed. Awareness will be created amongst all stakeholders. Individual Tata companies will measure their current carbon footprint to assess where the group stands. This will be extrapolated for future years. Cost abatement curves will be established and mitigation strategies identified for the major companies. Other Tata companies will follow in the second phase. The climate change initiative will be integrated with the Tata group's internal business excellence framework, the Tata Business Excellence Model, in order to further. R.N.Prasad (Registration No ) Page 108

22 Climate change policy for Tata companies :Tata companies will play a leadership role in climate change by being knowledgeable, responsive and trustworthy, and by adopting environment-friendly technologies, business practices and innovation, while pursuing their own growth aspirations and the enhancement of shareholder value. Tata companies will measure their carbon footprint and will strive to: Be the benchmark in their segment of industry on the carbon footprint, for their plants and operations. Engage actively in climate change advocacy and the shaping of regulations in different business sectors. Incorporate green perspective in all key organisational processes. Impact The JN Tata Endowment Scheme for higher education (established in 1896) helped bright Indian students of moderate means become administrators, scientists, doctors, lawyers and engineers, funding their education through loans and grants. The maiden grant was to Dr Freney Cama, who became one of the first women gynecologists in India and who would come to have a maternity hospital in Mumbai named after her. Of the 37 beneficiaries in the first batch, as many as 15 joined the Indian Civil Service, the colonial version of the Indian Administrative Service, realising Jamsetji Tata's objective that Indians should learn how to govern themselves. By 1924, over a third of Indian ICS officers were Tata scholars. Illustrious JN Tata Endowment scholars include former president KR Narayanan, renowned scientists Raja Ramanna, Jayant Narlikar and Raghunath Mashelkar, and Gyanpeeth award-winning writer R.N.Prasad (Registration No ) Page 109

23 and actor Girish Karnad. The Endowment has thus far supported more than 3,500 scholars. Philanthropy as a means of promoting higher education and research was a novel concept, even in the United States, at the end of the 19th century. Andrew Carnegie's path-breaking endowment of $1 million to set up a 'technical school' in Pittsburgh, now the Carnegie Mellon University, was made in But Jamsetji Tata preceded him. Two years earlier, in September 1898, he pledged half his personal wealth, an amount of Rs30 lakh (then 200,000), to make his dream of a "university or institute of research" a reality. That the Indian Institute of Science (IISc) in Bangalore would take another 13 years to be born, aided by a generous donation of 300 acres of land from the Maharajah of Mysore, is quite another matter. Jamsetji Tata died in 1904, unaware that his vision for science in India would indeed be fulfilled. Over the next 50 years it became a prime source of India's technological prowess. When various national laboratories were established in the late 1940s and 1950s, IISc alumni provided the intellectual manpower. Jamsetji Tata's idea of philanthropy was to be given true expression by his sons, Sir Dorab Tata and Sir Ratan Tata, both of whom donated the major chunk of their personal wealth for the public good. Sir Dorab was the quintessential entrepreneur, working tirelessly to make his father's visionary ideas a reality roaming the jungles of what is now Jharkhand in eastern India in a bullock cart to set up Tata Steel and pioneering the generation of hydroelectric power in the wilds of the Western Ghats while Sir Ratan was a connoisseur of the arts and a passionate votary of social development. R.N.Prasad (Registration No ) Page 110

24 Sir Ratan gave a grant to support Mahatma Gandhi's work in South Africa and another for Gopal Krishna Gokhale's nationalist activities in India. He also funded the first archaeological excavation at Pataliputra, which resulted in the discovery of the 100-pillar Mauryan throne room of Ashoka's palace. He donated resources that enabled the London School of Economics (LSE) to research the causes of poverty and how to alleviate it, leading to the establishment in 1912 of LSE's Sir Ratan Tata Department, subsequently called the Department of Social Sciences (the department's first lecturer was a bright young man named Clement Attlee, later to become the British prime minister who gave India its independence). Sir Ratan died in 1918 at the relatively young age of 47. Apart from donating his unparalleled art collection, especially of Chinese jade, to the Prince of Wales Museum in Mumbai, he left directives in his will for his personal wealth to be used for basic and advanced (postgraduate) education, primary and preventive health, rural livelihood and communities, art and culture and public initiatives, for all Indians at a time when almost all trusts were communal in nature. The Sir Ratan Tata Trust was set up that same year. A few months before his death in 1932, Sir Dorab bequeathed most of his personal wealth, then estimated at Rs1 crore and comprising substantial shareholdings in Tata Sons, Indian Hotels and allied companies, his landed property and his wife's jewellery including the famous Jubilee diamond, twice the size of the Kohinoor and even his pearl-studded tie pins and cuff links, to the newly registered Sir Dorabji Tata Trust. The Sir Dorabji Tata Trust is best known for promoting six pioneering institutions of national importance. Four of these were established in R.N.Prasad (Registration No ) Page 111

25 Mumbai: the Tata Institute of Social Sciences, in 1936; the Tata Memorial Centre for Cancer Research and Treatment, in 1941; the Tata Institute of Fundamental Research, in 1945; and the National Centre for the Performing Arts, in The National Institute of Advanced Studies (set up in 1988) and the Sir Dorabji Tata Centre for Research in Tropical Diseases (1999) are in Bangalore. The brief description of these six institutes may be referred to the Annexure 1. In 1931, at the age of 50, Sir Dorab's wife, Lady Meherbai, died of leukaemia. Sir Dorab started two trusts in his wife's memory. The Lady Meherbai D Tata Education Trust enables young women to go abroad and specialise in social work. So far it has supported over 225 women graduates. The Lady Tata Memorial Trust (LTMT) sponsors international research into leukaemia and the alleviation of human suffering. An international committee of experts in London carefully selects the researchers. In , the Trust spent 200,000 for research into the subject by nine scientists from four countries. Some of the research that qualified for the Nobel and other international prizes was initially conducted by LTMT scholars at early stages in their careers. The Sir Ratan Tata Trust and the Sir Dorabji Tata Trust and their allied institutions are at the heart of the enduring Tata commitment to community development, but there are several other trusts too. The JRD Tata Trust, established in 1944, gives institutional donations to promote the advancement of learning, supports research grants and scholarships, provides disaster relief and backs social welfare projects. The MK Tata Trust, set up in 1958 by Minocher K Tata with his personal resources, delivers research grants and scholarships for the advancement of learning in all its branches as well as donating medical and other relief during natural calamities. R.N.Prasad (Registration No ) Page 112

26 The Jamsetji Tata Trust, established in 1974 to mark the centenary of the first Tata enterprise, bestows grants for innovation. The RD Tata Trust, named after Jamsetji Tata's cousin and JRD Tata's father, and set up in 1990, gives institutional grants to advance learning and also backs social welfare projects. The Tata Social Welfare Trust and the Tata Education Trust were founded in 1990 and provides grants for institution maintenance and support of education institutes, hospitals and nongovernmental organisations (NGOs) working in the sectors of livelihoods and management of natural resources. The JRD and Thelma J Tata Trust, set up in 1991 by JRD Tata with his and his wife Thelma's personal wealth, works to uplift women and children. Tata's endeavour to strengthen the fabric of India has manifested itself in multiple ways. A crucial component of the Tata idea of nation building was, and remains, the creation and sustaining of exceptional institutions of learning, research, knowledge and intellectual capital. Tata's long-standing support for sports and the arts in India has spawned a wide variety of efforts in both spheres: from creating academies in different sporting disciplines and backing talented sportspeople to helping the cause of culture in the country in many ways. Tata's commitment to helping India find a place in the sporting sun has spawned academies for different sports and support for talented sportspeople from different disciplines. Arts overview: The rubric of Tata patronage has enriched the tapestry of Indian culture, and it has benefited artists as much as those who enjoy their creativity. R.N.Prasad (Registration No ) Page 113

27 National Centre for the Performing Arts: NCPA, gifted to the city of Mumbai by the Sir Dorabji Tata Trust, is an institution created to serve the cause of the performing and allied arts. Marg: Marg, a unique magazine of the arts and a publisher of books on the arts, was founded in It is an encyclopaedia of the art and culture of India and related civilisations. Analysis from the angle of broad principles of Trusteeship The Tata founders bequeathed most of their personal wealth to the many trusts they created for the greater good of India and its people. Today, the Tata trusts control 65.8 per cent of the shares of Tata Sons, the holding Tata company. The wealth that accrues from this asset supports an assortment of causes, institutions and individuals in a wide variety of areas. It is noteworthy point that Tatas among the country's biggest and most illustrious industrial families for well over a century never show up on any of those ritual listings of India's richest people. The reason is as simple as it is remarkable. Over generations, the Tatas have sustained a tradition of bequeathing much of their personal wealth to the many trusts they have created for the greater good of India and its people. That is how the Tata trusts have come to control 65.8 per cent of the shares of Tata Sons, the holding company of the group. The trusteeship principle governing the way the group functions casts the Tatas in a rather unique light: capitalistic by definition but socialistic by character. R.N.Prasad (Registration No ) Page 114

28 India has an old tradition of philanthropy, passed on down the ages by kings, noblemen and rich merchants. Jamsetji Tata, the founder of the Tata group, gave new meaning to this term. In his words: "There is one kind of charity common enough among us It is that patchwork philanthropy which clothes the ragged, feeds the poor, and heals the sick. I am far from decrying the noble spirit which seeks to help a poor or suffering fellow being. [However] what advances a nation or a community is not so much to prop up its weakest and most helpless members, but to lift up the best and the most gifted, so as to make them of the greatest service to the country." Conclusion The panoply of community development endeavours undertaken by Tata companies embracing everything from health and education to art, sport and more has touched, and changed, many lives. No matter how elaborate, systems and processes cannot really capture the magnitude and dispersion of all that the Tatas do in the field of community development. From health and education to livelihoods and women-children welfare, from tribal hamlets in Jharkhand and the rural outback of Gujarat to the high ranges of Kerala and disadvantaged villages in Andhra Pradesh the community work being undertaken by Tata companies touches a multitude of Indians across the land. Beyond purely social work, this support extends to individuals and institutions pursuing artistic, sporting and academic excellence. And now, as Tata enterprises spread their wings to reach global locations, the social uplift efforts of the group are reaching communities in different parts of the world. The big boys in the group, the likes of Tata Steel, Tata Tea and Tata Chemicals, have in-house organisations dedicated to the community R.N.Prasad (Registration No ) Page 115

29 development task, but that does not mean smaller companies lag behind. Each Tata company has its own priorities in social development. They take up whatever is relevant to the communities and constituencies in which they function. Somebody is working in water management, somebody is in education, someone is in Aids containment, someone in income generation; the range is huge. JRD Tata, Chairman ( ) - Tata group, strongly believed that the CSR initiatives of the Tata group should be institutionalized and it should not be left to individuals to carry them forward. Therefore, suitable amendments were made to the Articles of Association of the major Tata group companies in the 1970s. Newly included was an article stating that the "company shall be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community." In another bid to institutionalize the CSR charter, a clause on this was put into the group's 'Code of Conduct.' This clause stated that group companies had to actively assist in improving the quality of life in the communities in which they operated. All the group companies were signatories to this code. Since inception, the Tata group has placed equal importance on maximizing financial returns as on fulfilling its social and environmental responsibilities - popularly known as the triple bottom line. After decades of corporate philanthropy, the efforts of the group in recent years have been directed towards synchronization of the Triple Bottom Line (TBL Financial Return, Social Responsibility and Environment Responsibility). Through its TBL initiative, the Tata group aimed at harmonizing environmental factors by reducing the negative impact of its commercial activities and initiating drives encouraging environment-friendly practices. In order to build social capital in the community, the group has R.N.Prasad (Registration No ) Page 116

30 got its senior management involved in social programs, and has encouraged employees to share their skills with others and work with community-based organizations. TATA model for CSR can be seen as a model which is worth applying by other industries. R.N.Prasad (Registration No ) Page 117

31 Annexure-1 R.N.Prasad (Registration No ) Page 118

32 Brief description on Institutions of repute set up by TATA Trust Indian Institute of Science : IISc has produced Nobel laureates, trained many of India's greatest scientists and helped nurture some of the country's finest scientific institutions. Housed in a 375-acre campus in Bangalore, this trailblazing institution has 40 departments and centres pursuing R&D and teaching in all departments of science, engineering and technology. JRD Tata Ecotechnology Centre: The flag bearer of the ecotechnology movement in India, JRDTEC is part of the MS Swaminathan Research Foundation, Chennai. Established in 1996, it is devoted to seeding and encouraging sustainable development, one that protects the environment while also benefiting the people who depend on it. Tata Institute of Fundamental Research: The need to improve India's scientific temper and strengthen the nation's science infrastructure were the objectives that drove scientist Homi J Bhabha and JRD Tata, the late chairman of the Tata group, to pursue their vision of establishing TIFR in Bombay [now Mumbai] back in Tata Institute of Social Sciences : Set up in 1936, TISS is a pioneer in the field of social-work education in the Asia-Pacific region. The Institute, which offers postgraduate and doctoral programmes, has made significant contributions in the domains of social policy and planning, intervention strategies and human resource development. Tata Memorial Centre : The Tata Memorial Centre is a comprehensive centre for cancer research and treatment. It is a landmark on the global R.N.Prasad (Registration No ) Page 119

33 health map where about 60 per cent of patients seeking primary care are treated free of charge. Tata Medical Center : The Tata Medical Center coming up in Kolkata, India is a state-of-the-art centre for diagnosis, treatment and cancer research. R.N.Prasad (Registration No ) Page 120

34 CASE STUDY NO. 2 Corporate Social Responsibility: Excel Model R.N.Prasad (Registration No ) Page 121

35 Corporate Social Responsibility: Excel Model Brief History As per Shri Kantisen Shroff, Chairman Emeritus of Excel Group and fondly known as Kaka, the seeds of Excel were planted way back in 1945 as Kitchen Laboratory by Late Chaturbhai Shroff, and today the Group has eight manufacturing plants strategically spread over the country in Maharashtra, Gujarat, Andhra Pradesh and Silvassa. The operations of Excel Industries Limited are currently organized into two major divisions Agrochemical division and Industrial Chemical Division. Since 2002, these divisions are separate companies konown as Excel Crop Care and Excel Industries respectively. However, community development activities are undertaken jointly. Excel Crop Care covers the entire gamut of agri input products from soil enrichment to crop protective chemicals such as Insecticides, Herbicides, Fungicides and Fumigants. Excel Industries is leader in the phosphorus based chemicals industry and has developed many new products based on phosphorus for the pesticides, pharmaceuticals and polymer industries. Excel Industries has Environ-Biotech Division which shows Excel s commitment to integrate the pressing need to address the issues related to environmental protection and agriculture development. The major activity of the Division involves the process developed in-house to convert municipal solid waste into soil enricher. The Division has set up several plants for conversion of solid waste into soil enricher. R.N.Prasad (Registration No ) Page 122

36 The brief introduction of the various organizations working under Excel Group for carrying out CSR activities follows hereunder; R.N.Prasad (Registration No ) Page 123

37 Basic values/principles Shri Kantisen Shroff is the key propelling force behind Community development interventions by Excel. As per him, we all are inseparable part of the planet and ecological system and hence, we all are interconnected. We cannot behave as if we are detached from the rest of the universe. He does not believe in completion, too. When we all are connected to each other then completion with whom such is the spiritual vision of Kaka behind community intervention. He believes in the following philosophy: Let us own up the responsibility for the health of the planet Let us learn to be responsible and relevant Let us join hands with like-minded people, locally and globally Let us conserve and capitalize on nature s resources Let us make people productive where they are. The social norms for employees at Excel are defined as mentioned hereunder; R.N.Prasad (Registration No ) Page 124

38 Excel still believes in Kitchen Lab mentality of a company as it is innovative, socially conscious and committed. The founder of the company Shri Chaturbhai Shroff had stated way back in 1945 We have our dreams nut they are of different nature. Yes, we want to set up an industry ourselves but the aim is not to get rich quick but to create a new society. The social purpose of an organization s existence is equally important. We have to be enlightened and be responsive to the changing needs of the society. Over six decades later, Mr. Ashwin Shroff, Managing Director of Excel Industries restates the same thing while expanding on the theme: any company, business entity or industry is not an island by itself but is part of the society drawing a great deal from the community and environment. Hence one can not thrive at the cost of community, environment and neighbours. The philosophy that drives us is that we have to plough back something to the society when we draw resources from it. At Excel from the beginning, it was realized that nurturing the environment, local and rural communities is our R.N.Prasad (Registration No ) Page 125

39 responsibility. At times, there may be financial constraints, but the basic urge to fulfill one s obligations to society has always been there Implementation of CSR First Phase : Shroff family had a tradition to contribute to charitable work and to a large extent it was devoted to its own Kutchi Community. Assistance was rendered to religious organizations carrying out various activities in Kutch. Shri C.C. Shroff passed away in 1967 and Late Shri Govindbhai became the Head of Excel Group. He, too, maintained the family tradition of giving. Upto 1968, the involvement of Excel in community work was only to the extent of helping Ramkrishna Mission in organizing relief work in Kutch. However, Shri Kantisen soon realized that any help in the form of short term relief work helped only in temporarily mitigating the hardships of local people during difficult times but did not result in any worthwhile long term solutions to the problem of drought which Kutch used to face so frequently. If droughts continued, people would migrate to cities and this would add the problems to the overcrowded cities and hence, he as a visionary thought of developing Kutch as the solution to the problem. Shri Kantisen did some inward thinking about Excel s extent of involvement in this venture and consulted his family, his employees, friends and other business associates. Recollecting his memories he said, Let me tell you, though, at the core everyone concerned, with whom I discussed this matter, was bothered about the development of Kutch. The larger question was, from where would Excel get the financial and human resources headed for developing Kutch. He wanted a sustainable solution as regular donations in cash and kind made to relief victim would drain the companies resources and these exercises could be futile for the companies and communities if sustainable solutions are not found. Finally the solution R.N.Prasad (Registration No ) Page 126

40 emerged from the sustained discussion that took place. Excel decided to register an NGO and employ special staff to develop a sustainable model of intervention. Excel decided to provide initial funding to the NGO, give direction to its work, provide technical knowhow in matters of agriculture development and other relevant areas. Kantisenji formed Shri Vivekanand Research & Training Institute (VRTI) which was formally registered registered in 1978, though it working much earlier. Prior to VRTI, Shrujan, an NGO for women was registered in 1969 to help Kutch R.N.Prasad (Registration No ) Page 127

41 women to earn a dignified living through embroidery. Registration of NGO facilitated the flow of government funds and private donations to carry out developmental activities. This was the initial phase of institutionalizing Excel s responsibility towards community as stakeholder. Kantisenji believed that it was necessary to involve local people, NGO, community leaders and government for development of Kutch. This was a concept of cross-sector partnership for accelerating the pace of development and that, too, way back in Kantisenji got R.N.Prasad (Registration No ) Page 128

42 SWOT analysis carried out to carve out the development of Kutch as it was necessary for planning and carrying out the interventions systematically. The results of SWOT analysis are depicted in the table follow hereunder; Excel extended the spirit of employee voluntarism to rebuild Kutch. Specialized staff of Excel looked into the R.N.Prasad (Registration No ) Page 129

43 problems of agriculture and afforestation and decided the steps to be undertaken. The major areas identified were afforestation, employment generation, watershed management, water harvesting and cattle management. The impact of interventions on the communities in Kutch had been tremendously rewarding. It emerged through the discussions with the local self help groups that as early as 1990, inspired by VRTI s and Excel s efforts, the villagers built rainwater storage tanks, farm ponds and percolation tanks. They also built check dams and recharged hundreds of wells. This showed that people who once upon a time, were used to government charity, realized the importance of self -reliance. The agriculture production had increased substantially due to this. The impacts of the interventions are visible. The synergy between government, communities, individual donors and employees paid rich dividends. Excel encouraged employee voluntarism for development of Kutch and their social initiatives. Many employees felt that they could bring their lab knowledge to practical field and test it at ground level. In process, they learnt, too. So, it was two way process. Employees enriched their knowledge after application of techniques to the field. In fact, Excel s business was founded on a close relationship with the farmers who used its products and their derivatives. Since the employee volunteers were constantly interacting with the community understanding their issues, problems, empathizing with them, the individuals in the community were the ones who gave them the ideas of what products Excel should make. So, CSR got infused into the business policy of Excel. CSR helped Excel in their new product development. Also, CSR helped Excel in developing a wonderful internal environment. Excel R.N.Prasad (Registration No ) Page 130

44 believes that employees are their biggest strength. Excel has defined a set of Social Norms for their employees. Second Phase: In 1980, Shri Kantibhai Shroff became MD of Excel and he wanted to streamline and institutionalize the community development initiatives. It was not easy for him to balance corporate and social demands. People at Excel and those at NGOs looked upon him as an inspirational force. NGOs considered him panacea for all problems. They used to look at him for generous donations. It was a matter of concern as there was a lot of dependency for community development works on Excel. This was the phase when Excel was recruiting professional managers at all levels to manage their affairs. Many of them felt that more investment should be made for welfare of the employees as they were the ones who contributed to the development of company. This new team considered making profit to be pre-condition for taking up community development works. This was the time for change and respect the views of new team. Kantisenji acknowledged that commercial success was a necessary condition for a corporate organization. However, he felt that it must not be a mandatory condition for deciding community initiatives/social works by a corporate entity. He discussed the matters at various levels including board level meetings during which financial sustainability of NGOs of Excel, too, were discussed in details. The results were encouraging and it was decided that Excel should contribute in creating societal values as well as should also take care of creating shareholder value and in doing so it must professionally handle the concerns. Kantisenji did not want community development initiatives of Excel to be peripheral and hence, he appointed a committee consisting of its employees, shareholders, academicians and NGO staff members to decide what should be the sphere of influence of Excel. Based on the R.N.Prasad (Registration No ) Page 131

45 discussion, the committee decided six areas of influence 1) Developing communities near Excel s factories, 2) Development of Kutch and other rural communities, 3) Disaster Management, 4) Advocacy, policy dialogues and philanthropic activities, 5) Transferring technology to the grass root and 6) Educational Development. Discussions were held on types of structures and processes that Excel should adopt to ensure that above mentioned programmes were undertaken. It was felt that effective selection of projects and their quality management was an important area in managing corporate social responsibility. Hence, to begin with Excel recruited a trained staff member qualified in managing social activities. The community development portfolio was positioned under HR Department of Excel. They were assigned the responsibility of planning, implementing, monitoring and evaluating the community developmental activities. This was the step towards furthering the institutionalization of Excel s Social initiatives. In each of Excel s locations Mumbai, Bhavnagar and Loteparusharam, the company appointed socially sensitive executives to design, develop and manage social/community development activities. In these locations, employee volunteers conduct adult education classes, bhajan mandals, organize health camps, holiday camps, non-formal education classes and other activities. The communities with whom Excel NGOs worked, have been involved in consultative planning process. This has involved them right from the inception stage. The ownership of both the problem as well as becoming part of the solutions now rests with the people. Programmes of watershed management in partnership with the communities have been a great success. People have got socially uplifted and they have learnt to make best use of natural resources like land and water. The improvement in the R.N.Prasad (Registration No ) Page 132

46 quality and quantity of water has made it possible for the villagers to earn livelihood more easily. Hundreds of acres of land in Kutch, Bhavnagar and other places have been irrigated. This has created a positive impact on the lives of the people. The importance given to schooling, sanitation and community bonding has improved because of increased exposure to adult education operated by self-helf groups. Excel extended managerial support wherever necessary and gradually tried to make its NGOs independent. This finally resulted into professional management of its NGOs. Over the years, VRTI has taken up the task of improvement of agriculture in collaboration with the scientists of other organizations like International Crop Research Centre for Semi Arid Tropics, Hyderabad, and National Research Centre for Groundnut, Junagadh and similar other reputed organizations. Shrujan, too, has partnered with SIDBI, NABARD, Ministry of Textiles and others. It is matter of pride and prestige for VRTI to have received two awards (one from Federation of Gujarat Industry, Vadodara in Rural Development and other from National Sanitation and Environment Improvement Foundation, Ahmedabad in field in the field of rural development and water harvesting). The cross sector partnership at the grass root level have created values in the community (for example right to live with dignity and equality).for instance, in order to promote values of self reliance amongst women of Kutch and enable them to earn their living with dignity, Excel established Shrujan. Similarly, rural development interventions designed with VRTI in partnership with government have been towards creating a feeling of community bonding and creating community wealth. Partnerships with other NGOs have collaborated different skills and resources to tackle community problems. Excel and VRTI were instrumental in formulating R.N.Prasad (Registration No ) Page 133

47 a federation of NGOs in Kutch called Kutch Nav Nirman Abhiyan. Under the leadership of Late Tulsibhai Gajra, CEO of VRTI and Shri Kantibhai Shroff, Abhiyan commenced partnership with Public Systems, Corporate and Civil Society Organizations. Abhiyan a network of 29 civil society organizations, owned responsibility for providing materials, technology, supervision and rehabilitation services in Kutch. This federation played an important role in rehabilitating the earthquake victims and their families in the year All development works carried out by Excel has established its credibility with both state and National Government. The impact of its intervention in development of Kutch and other rural areas is patently visible. All interventions undertaken by Excel have caused them huge investment both in terms of finance, human and other resources. Kantisenji says that fixing of bottom line by a corporate entity make them greedy and Excel does not have any bottom line. Excel believes that profit is the byproduct of services given. Explaining the benefit of community development to Excel, Shri Dipesh Shroff said: Involvement with the community has its own benefits. It is the outcome of our sustained interventions which have assured us of our markets. We know our communities value our contribution and they would be loyal to us. Every check dam constructed in the villages brings more land into productive use. Increasing crop production requires manure, agrochemicals and other farm inputs. Though all our activities, started with social objectives we got business opportunities a plenty only after we developed sustainable solutions to their problems. Our years of work in developing communities have created societal value as well as shareholder value. Emphasizing this aspect further, Shri G. Narayan, Chairman, Excel Industries said, we have received a lot of inputs-tangible and intangible benefits from the R.N.Prasad (Registration No ) Page 134

48 communities with whom we work. The knowledge acquired in this process has made a difference to the way in which we have been managing our business. The conscious use of cross functional teams to resolve social issues has created an atmosphere of cross fertilization of ideas, which is conducive to develop responsible individuals, communities and business. Third Phase: In 1995, Shri Kantisen Shroff became the Chairman of Excel and Shri Ashwin Shroff became the Managing Director. Success did not slow down the pace of Excel in community development. Excel was fed on sound values and healthy practices and they helped Excel to grow a healthy business. The learnings that had taken place over the last four decades in the area of community development has been rich with experience. What began as an intervention with a social motive actually gave Excel excellent insights to look into their business and develop products accordingly. Today, Excel is engaged in areas like Integrated Crop Management, Solid Waste Management and Microbes Management. The areas of intervention worked out in second phase are still continuing. The top management of Excel in this phase proposed and experimented to consciously build corporate strategy and community engagement around customer needs and core competencies for creating shareholder value and societal value. Excel s experience in rural development had showed that farmers need many support services to improve their farm productivity. The main problem of our farmers is poverty and dependency on middlemen. Hence, on an experimental basis, Excel decided to initiate an innovative activity. For this Excel decided to work in collaboration with its other group companies for designing new initiatives. Excel along with Transpek Industry Ltd. Transmetal Limited, and Punjab Chemicals & R.N.Prasad (Registration No ) Page 135

49 Pharmaceuticals Ltd started a Not for profit Company AGROSEL. The project co-ordination of this unique activity is undertaken by the Traidcraft Exchange the leading UK charity in the area of fair trade for world development while the Shell Foundation has also provided part funding to the venture. Agrocel is a Social Enterprise started as a desire to serve the farming community to raise per acre production with profitability and maintaining the environment balance. Agrocel makes all agro inputs available under one single roof at right time, of right quality and at reasonable price with the latest technical guidance for the farmers and thus to contribute in increasing national production by sustainable trading. Agrocel works with the cotton farmers, supporting the re-introduction of organic farming practices, restoring soil fertility, crop pest resistance and pooling the farmers production in an organic cotton bank. Agrocel started with one service centre at Koday- Mandvi-Kutch. Later by 2003, eleven more centres were added in Gujarat, Andhra Pradesh, Maharastra and Punjab. In recent years, Agrocel has sought to provide market support to farmers by sourcing different agro products directly from them. Agrocel in 1999 sent first container of HPS peanuts to one of the Fair Trade Organizations of UK, which expressed satisfaction with the produce. Today, Agrocel service centre has emerged as Agricultural Education and Advancement centre. The paraprofessional training given by Agrocel has helped individuals in rural areas to gain employment. They are popularly known as FARM DOCTORS. The Group Companies of Excel and other companies market their products to Agrocel. This assures the company of reaching out to larger areas. The profits generated by Agrocel are pumped back to Agrocel, which are then invested to start more centres. Finally, R.N.Prasad (Registration No ) Page 136

50 the framework of intervention for CSR activities of Excel may be depicted as hereunder; Financial Contributions by Excel Excel on an average contributes 2 to 3 percent of its profits for carrying out developmental work (Please refer to the table hereunder). R.N.Prasad (Registration No ) Page 137

51 In the event of calamities like cyclones and earthquakes, the company extends additional financial aid to mitigate the suffering. Apart from the it, Excel contributes in terms of material, infrastructure support and managerial expertise from volunteers, too. From contributing cash donation, Excel has moved over the years to innovative funding mechanism like providing loans to its NGOs, providing rotating funds and providing venture capitals to SHGs. The ad hoc in kind support, which Excel provided in sixties, has now moved towards giving more support consistency in the form of employee volunteering, and material as well as infrastructure support to NGOs. NGOS like International Resources for Fair Trade, Bharat Scouts and few others had their offices in premise of Excel at Mumbai. The company has taken active part in beautification activities of areas around its factories. Also, the company is providing scholarship. Conclusion In spite of what is mentioned above, company management does not think it has done something extraordinary as Shri Ashwin Shroff puts it, Any responsible company will do what we are doing and what is so great about it. We have not given crores of rupees neither do we call ourselves philanthropic. It is our enlightened self -interest which has guided us. Yes, we have got personally involved in the process, because that is needed to a larger extent to create an impact. It was only because of our involvement we created an impact. The above approach shows the modesty of Excel in matter of CSR. Questions/check lists for discussion What do you mean by CSR? What are your approaches in matter pertaining to community development? Please describe your history in CSR. What are your enlightened interests and how do you connect them with community development work? R.N.Prasad (Registration No ) Page 138

52 What are your strengths for taking up CSR activities? Kantisenji says that social issues can be converted into opportunity. Please describe. Should family members of Excel should be on board members of NGOs promoted by you? Role of Kantisenji in CSR activities of Excel. Tell as about employee voluntarism for CSR initiatives. R.N.Prasad (Registration No ) Page 139

53 CASE STUDY NO. 3 Corporate Social Responsibility: Infosys Model R.N.Prasad (Registration No ) Page 140

54 Corporate Social Responsibility: Infosys Model Brief History Infosys Technologies Limited provides consulting and IT services to clients globally. Founded in 1981, Infosys uses a low risk Global delivery Model (GDM) to accelerate schedules with a high degree of time and cost predictability. It started its offshore activities in US during In 1992, Infosys became a public limited company in INDIA and in 1993, it became an ISO-9001 certified company and completed IPO. Shri Narayanmurthy, Chairman and Chief Mentor and Shri Nandan Nilekani, Managing Director, President and CEO, have been the pioneers of Infosys. More than 30 executives are responsible for the various processes of the company. The corporate headquarter is in Bangalore and the company also has a HQ at Fremont, USA and offices in Argentina, Australia, Belgium, Canada, France, Germany, Hong Kong, Japan, Netherlands, Sweden, Singapore, Switzerland, UK and UAE with over employees worldwide. The company has received various awards for its activities and excellent performances. With sustained infrastructure investment over the years, it has created an excellent knowledge networked work environment where the employees provide high quality solutions. Its multi dimensional approach supports growth and technology advancement and ensures that the solutions it designs for its clients are built in a most productive and effective manner. Different elements of Infosys infrastructure comprise of Development Centre Campuses in India, Global development centre, Client Connectivity Infrastructure and Information Infrastructure. R.N.Prasad (Registration No ) Page 141

55 The company vision is to be the best globally, commercially and ethically. As such, Infosys has developed a C- Life principle that it aims to honour in all aspects of its business conduct. The C-Life principle focuses on Customer Delight, Lead by Example, Integrity and Transparency, Fairness and Excellence. Infosys has also developed PSPD model (Predictability, Sustainability, Profitability and De-risking) that ensures high standards for all stakeholders. This has resulted into development into development of strong management system to guarantee accountability at all times with procedures in place for grievances and such things. Basic values/principles One of the core value of Infosys is a strong sense of social responsibility and is a commitment to help people and communities, a commitment to enhance the living conditions of rural population and a commitment to improve education. It has moved from charity and dependence to empowerment and partnership in their own interest. The middle class founders of the mega-successful Infosys believes that wealth must be equally distributed. Infosys assumes corporate social responsibility both at company level and foundation level. Implementation of CSR Company level: The way most corporate contribute are diffuse and unfocused that range from numerous small cash donations given to aid local civic causes or provide general operating support to universities and national charities in the hope of generating goodwill among employees, customers and the local community. Most of the time, these contributions are inspired by personal beliefs and may not have to with social or R.N.Prasad (Registration No ) Page 142

56 business objectives. One of the most popular approaches is EMPLOYEE MATCHING GRANT, which leaves the choice of charity to the individual worker which can be linked by equal increase in wages that employee could often choose to donate to charity on a tax deductible basis. The social inititives of the company have taken the form of projects, philanthropy and employment initiatives. Community Services is an example of project work specifically to IT education to rural children and teacher training. Some of the initiatives were CATCH THE YOUNG, RURAL REACH AND TRAIN THE TRAINER. Social Initiatives : At company level, it encourages its employees to participate in community development activities. The founders of the company and senior staff too, have donated to educational institutions. Its innovative ideas that have led the Government of India to bring three different plans aimed at eradicating poverty through IT. This includes the introduction of IT education in the local area. Infosys has also been instrumental in influencing the government at the national and state levels to allocate higher budgetary grants for primary education and healthcare facilities. Contributing towards social causes and calamities has been another important area for the company. As a part of its initiatives in collaborating with local administrations, Infosys has been giving monetary donations for civic amenities to cities such as Bangalore, Pune, Bhubaneshwar and Manglore. Employees have often served as volunteers in relief operations when natural calamities have struck the country. R.N.Prasad (Registration No ) Page 143

57 Infosys indirectly employs over 500 men and women from socially backward communities at its various campuses. Apart from decent wages, Infosys also helps these families with housing, children s education, health and welfare. Employees have the flexibility to return home during lunch hour a special plus for women, as they are usually required to prepare lunch for their families. These men and women, in turn contribute in no small measure towards keeping the campuses clean and in maintaining the landscape. Environmental Initiatives: Infosys seeks to be an environmentally friendly company and aims to be energy efficient and non-polluting. Waste water is recycled and waste paper shredded and donated for recycling. The main building at the Infosys HQ uses a minimum amount of air conditioning by including arriums and wind scoops to ensure natural airflow for cooling. The building s blocks are made of energy efficient cement blocks, and windows and doors are built with metal rather than wood. Also, there is a move towards paperless work. High energy, efficient boilers, efficient diesel generators and amorphous core transformers have been installed to save power. Infosys conducts regular check ups for emission level of all its vehicles. It provides company buses for employees, which reduces fuel consumption and pollution. Research Initiatives : Infosys has promoted research and educational initiatives. During these years, the number of fellowships instituted in the areas of IT, Management and Law crossed more than 50. Fellowship programems have been introduced at a variety of learning institutions IITs, IISc, IIMs and National Law school at Mysore. R.N.Prasad (Registration No ) Page 144

58 Stakeholders Values : The increased concern for stakeholders is represented in the initiatives described above because they reveal a concern for society and the environment. Stakeholder dialogue through interactive communication techniques, in turn, has helped in developing the company s corporate citizenship strategy. Efforts also made to better by incorporating employees into the stakeholder debate. Strategies have included the introduction of the Employee Stock Options Programme (ESOP), an investment of 8% of its revenue in staff training and intranet as a means of conducting feedback surveys. Since long working hours are common, Infosys has provided employees with health and fitness facilities. However, approximately 20% of the employees being women the company is yet to consider its recruitment procedures to address this imbalance. Furthermore, there are currently no facilities for mothers, such as creches. Foundation level: No company functions in a vacuum. In fact, their ability to compete depends on the circumstances of the location where they operate. Improving education level of local work forces and community sustainability affects a company s potential competitiveness. The more a social improvement relates to a company s business, the more it leads to economic benefits. Infosys Foundation was established with an objective to GIVING BACK TO SOCIETY. Putting Public good ahead of private good in every decision you make, will in fact result in enriching the private good, says Shri Narayanmurthy. Infosys created Infosys Foundation as a NOT FOR PROFIT Trust in 1997 with the objectives of supporting the underprivileged in our society. Infosys supports the Foundation from its inception. The Foundation primarily aims at improving health, education and basic facilities, benefititng a R.N.Prasad (Registration No ) Page 145

59 large number of individuals and institutions. Over a short span of time, the Foundation has successfully implemented projects in the areas of health care, social rehabilitation and rural upliftment, learning and education, and even in the field of arts and culture. The foundation began its activities in Karnataka and has gradually extended its activities to Tamil Nadu, Andhra Pradesh, Maharashtra, Orissa and Punjab. The Foundation is a Trust comprising 3 to 4 members on the board. Mrs. Murthy has been chairperson all along, involving herself in all the activities of foundation and giving it the continuity required. The dilemma raised in the process could be: Is Infosys focused in making donations to the Foundation to do philanthropical activities? Is it just a social objective of the company or does it involve both social and business objectives in promoting the development of the society in various ways? Prior to establishing the Foundation, Infosys Technologies had spent close to Rs. 2 crores in various social development activities. Since then, upto March, 2004, the Foundation has spent over Rs.22 crores in similar activities. In the fiscal year , Infosys Technologies donated Rs. 12 crores to the Foundation, which constitutes 845 of the funds received by the Foundation making it the single largest donor. The Foundation has adopted a policy of distributing funds based on Infosys Technologies employee strength in different states of India. Accordingly, Karnataka gets 70%, Maharashtra gets 15%, Orissa gets 5% and Tamil Nadu gets 10%. The Foundation is committed to giving 30% of its fund to senior citizens, the destitute and handicapped, 15% for rural development, 30% for the education of talented but poor children, 15% for cultural activities and 10% for health activities in villages and cities. R.N.Prasad (Registration No ) Page 146

60 However, such a policy of distribution of fund based on employees strength as well as the allocation with in a state for different activities is debatable. Social Rehabilitation and Rural Upliftment: India s potential lies in its society, and to achieve this potential and social challenges in the areas of environment, sanitation, health and education need to be urgently met. The Foundation has invested crores of rupees in social rehabilitation activities such as constructing orphanages, girls hostels and relief shelters; distribution of sewing machines to women, improving the lives of children with leprosy, devadasis and the mentally challenged. Health Care: The Foundation works mainly with institutions run by the State Governments by supporting select projects either through constructing a facility or donating equipment. It has constructed hospitals, annexes, wards, rehabilitation centres and dharamshalas. Equipment donates include ultrasound scanners and high tech surgical equipments. Foundation conducts health camps and distributes medicines to weaker sections of the society. Education : The Foundation has undertaken A Library for Every School, one of the largest rural education programs in the country. So far, thousands of libraries have been set up in government schools in rural Karnataka. A minimum of 200 books depending on the strength of the school is provided, the cost of each set ranging from Rs.2500 to Rs Books on varied topics such as science, history, mathematics, general knowledge, grammar, literature, geography, vocational training and fiction, are provided to cater to students of all age groups and interests. R.N.Prasad (Registration No ) Page 147

61 The Foundation gives away large sums under its scholarship program for prmising students from economically weaker sections and rural students in Karnataka, Orissa, Maharashtra, Andhra Pradesh and Tamil Nadu providing financial support for their higher education up to first degree level. The Foundation has constructed science centres and science labs in a few schools. Apart from these facilities, its activities also include Teachers Training Programs, construction of government schools in slum areas, reconstruction of old school buildings, construction of additional class rooms, school fund/corpus fund, school furniture and so on, especially in backward areas. Promoting Indian Arts and Culture: Foundation also dedicates time and effort to the promotion of neglected art and cultural forms of rural areas that are in danger of dying out. It promotes lesserknown arts of the rural areas to bring back life into the fast-dying art forms. It organizes puppet shows to enliven the dying art of puppetry, fast vanishing, in an age of movies and television that are the main sources of entertainment. The Foundation encourages rural stage artists to perform and also supports them financially. Future Outlook The Foundation has won various awards at state, National and International levels like Computer World Award-2001 International Level, The Economic Times Corporate Citizenship Award National level, Karnataka Rajyotsva State Award 2000 State level, etc. The list goes on but the question remains for how long? This also raises the issue of person centric versus organization centric activities /programs. Is the Foundation gearing itself to be an organization in its R.N.Prasad (Registration No ) Page 148

62 own rights? Can the Foundation create a model that is blend of philanthropy and the business? Conclusion Infosys Technologies advocates and participates in a wide array of activities aimed at enhancing business-community relations. The creation of Foundation has been instrumental in conducting much of this work., although the company itself has contributed inmore than just monetary terms. Employment practices, environment concerns and research partnerships serve to illustrate that business-community relations in India are, to a certain extent, beyond philanthropy. Furthermore, these initiatives have not been to the detriment of the company s profits as the many awards for Best Company reveal. CSR flows logically from the very scale and influence of modern corporations, and has become inevitable given the range of issues like ethics, governance practices etc. that have a bearing on the overall performances of corporates. Apart from these, notion of professionalism (employee retention criteria) plays a major role in bringing CSR into sharp focus. Executives find themselves in the dual roles of critics demanding higher levels of CSRs and investors applying retention pressure to maximize short term profits and find it hard to justify the charitable expenditures in terms of bottom line benefits. Corporate leaders are seeking ways to express their role in present business situation where there is pressure for community responsibility. India has a long history of business involvement in social welfare and national development. This traditional philanthropy of business in India has changed over time, keeping pace with first national and then with global trends, finally evolving to one of social responsibility of business R.N.Prasad (Registration No ) Page 149

63 and corporate citizenship. It is still discretionary but has overtones of rational, enlightened self-interest. Business houses prefer to have a clear strategy, leading to long term benefits, when they make commitments and invest in such causes. Older international agencies such as Ford Foundation, Rockefeller Foundation etc. have shown what corporate philanthropy can do to the society. Modern corporate giants such as Microsoft, Intel have moved on to corporate social innovation. We have cases where companies that sponsor major sports events like the Olympics, or national or international events, leading examples of cause related philanthropic activities. By doing this apart from having wider exposure, they also get to associate themselves with the pursuit of excellence. In India, the Tatas and the Birlas have long been contributing substantial sums to social development. Modern corporate houses of India such as Infosys and Wipro have been gearing up to do their share and many others are becoming truly involved in these activities. Wipro, being focused in primary education sector works with the prinviple of Applying Thoughts in schools is an example of how a business can involve itself in knowledge development and the enhancement of skills, which are important to both the students and teachers. The development of any nation rests on the quality of its human resources, which form the cornerstone of a progressive and knowledgeable society. Quality education and training to encourage creativity and innovation is vital to achieving this aim. Wipro s educational project does not guarantee them any direct benefits in return. This suggests that the company sees the benefits in the long rather than short term- rather than clients today, as potential employees tomorrow. Further, that there is considerable value in developing and harnessing the R.N.Prasad (Registration No ) Page 150

64 abilities of children, in a life-long learning process, to benefit society as a whole. The fact that the training is not free for schools suggest that the training is in demand. Schools need to add value into their lessons, and thus enhance the skills and capabilities of their students. The programme therefore works as a partnership, serving the objectives of all stakeholders- the company, schools, teachers, students, parents and society at large. The fact is that mere contribution to the community building does not make a corporate socially responsible. As Amartya Sen puts it, Market forces alone are not sufficient for equitable distribution. Some sort of intervention is required, be it political or from business houses, towards society and hence is a concern among the policy makers, too. Discharging social responsibility is about hands-on involvement, extending the entrepreneurial expertise and ensuring that the objectives of these initiatives are met. Many corporate houses have winning strategies to discharge their social responsibilities, with their chosen horizon in the realm of the long term. They do these activities not as part of the normal calculations of shareholders value but to ensure that they would, in another ten years time, be positioned for the future they anticipate. There are others who believe that the health of the corporation depends on the health of economy and the society in which it operates, adopting the market socialism concept. It is also believed that there are hidden social costs in running the company, and thus the company has an obligation to the society. The Infosys Foundation has carried out significant work to improve business-community development. Initiatives promoting healthcare and education for the poor, and specific measures targeting the rural poor, rely heavily on philanthropy. While the construction of schools and donations of equipments are appreciable, philanthropy does R.N.Prasad (Registration No ) Page 151

65 hold limitations. Sustainability of such projects is restricted as resources are finite and can flow unpredictably. As a public limited company, donations made and spent are accountable. The Foundation, though independent in its activities, is dependent on Infosys Technologies. Corporate bodies and senior executives are caught between the demands of stakeholders and the community and are increasingly under pressure to fulfill their obligations as responsible corporate citizens. There is a close bond between the parent and the child, notionally and people related. There is a partnership that links the employee and the management of both. R.N.Prasad (Registration No ) Page 152

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68 Source: Website of Infosys Technologies/Infosys Foundation R.N.Prasad (Registration No ) Page 155