GUIDELINES ON Corporate Social Responsibility CSR for CPSEs Department of Public Enterprises MoHIPE,

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GUIDELINES ONCorporate Social
Responsibility(CSR) for CPSEs   Department
of Public Enterprises( MoHIPE, GoI, New Delhi)
PRESENTATION BY  Prof. Ranjan
Mohapatraat GLOBAL COMPACT NETWORKNew
DelhiIFFCO AUDITORIUM, New Delhi30th
October,09 
 
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1. Introduction 1.1 Objectives Why
Guideline on CSR ? 1.2     International
Trend 1.3     National Trend2.  Conceptual
Framework and Definition 3.  Planning
Implementation 3.1  Planning for CSR
3.2 Implementation of CSR 4. Monitoring
Reporting 4.1 Monitoring CSR 4.2 Assessing
Reporting CSR 5. Challenges Possible
Solutions
PRESENTATION PLAN
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Extract of Honble Prime Ministers address on,
Inclusive Growth Challenges for Corporate
India at CII annual general meeting 2007 on
May 24, 2007  

• In a modern, democratic society, business must
  realize its wider social responsibility. The time
  has come for the better off sections of our
  society - not just in organized industry but in
  all walks of life
• to understand the need to make our growth
  process more inclusive
• to eschew conspicuous consumption
• to save more and waste less
• to care for those who are less privileged and
  less well off
• to be role models of probity, moderation and
  charity.

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Indian industry must rise to the challenge of
making our growth processes both efficient and
inclusive. This is our endeavor in Government. It
will have to be yours too and I seek your
partnership in making a success of this giant
national enterprise. If those who are better
off do not act in a more socially responsible
manner, our growth process may be at risk, our
polity may become anarchic and our society may
get further divided. I invite corporate India
to be a partner in making ours a more humane and
just society.
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1. INTRODUCTION
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1.1 OBJECTIVE WHY CSR GUIDELINE ?
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FIRST Guideline Social Responsibility by DPE
1992- PSUs to discharge social obligation
subject to FINANCIAL HEALTH- To be sensitive to
LOCAL NEEDS- The Govt to specify MACRO
objectives and PSUs to focus on MICRO level -
SICK PSUs ( consecutively loss for 3 yrs )
exempted from CSR- Separate division under
overall supervision of Senior most officer,
Administration- Govt. to lay down GUIDELINES for
Rehab projects, for financial institutions.-
Inclusion of CSR targets in MOUs to facilitate an
evaluation of CSR performance and preparation of
SOCIAL BALANCE SHEETS

GOVT. CONTROL
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2.SECOND Guideline on CSR by DPE 1994- Focus
on generating SURPLUS for self-sustaining
growth.- FULL FREEDOM to identify and implement
CSR activity within their financial capabilities
FULL FREEDOM
CSR VISION ?
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3. National Common Minimum Programme -
Social Objectives met by commercial functioning
- More devolution of power to Miniratna,
Navaratna CPSEs lead to more profits and
expected to invest more in social sector.-
Thus, the need for formal guideline for CSR in
the line of CORPORATE GOVERNANCE.
CHANGES in CSR DOMAIN DURING 1994 to 2007
PRO-ACTIVE DPE
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1.2 INTERNATIONAL TREND

• People living in poverty increased by almost 100
  million
• Earths natural capital is rapidly deteriorating
• CSR on the Global Agenda and International
  Sustainability
• A) Global Warming
• B) Global Terrorism
• Environmental deterioration and social inequity
• CSR Movement got recognition - 1990
• Millennium Development Goals (MDGs) UN Global
  Compact -2000
• Triple Bottom Line

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• Approaches to CSR
• CSR limited to LEGAL OBLIGATION PROFIT
  MAXIMISATION
• CSR for wellbeing of society environment
• CSR for VALUE CREATION with a holistic long
  term approach.
• ( Thus linked to Corporate Governance )

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Corporate Governance is defined as the structure
and process of a)    Monitoring executive
performance.b)    Ensuring accountability of
management to shareholders and stake
holders,c)    Motivating management towards
creating value for shareholders and
stake holders,d)    Protecting interests of
other stakeholders including the local
community and overall society and the
environment. (CSR)
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1.3 NATIONAL
TRENDPurpose behind creation of Public Sector
Enterprises ( Industrial Policy Resolution
-1956)

• To help in the rapid economic growth and
  industrialization of the country and create the
  necessary infrastructure for economic
  development
• To earn return on investment and thus generate
  resources for development
• To promote redistribution of income and wealth
• To create employment opportunities
• To promote balanced regional development
• To assist the development of small-scale and
  ancillary industries and
• To promote import substitutions, save and earn
  foreign exchange for the economy.

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STATUS OF CSR IN CPSEs IN INDIA a)       
adhoc and short term in nature and
b)       CSR used as a response / reaction
to the external demands.  
Drivers of CSR Historically, the Drivers of CSR
in India have been from following
sources.   a) Founders / Leaders passion and
vision, b) Reaction to external pressure, and
c) Desire to establish a competitive advantage
over industry peers. d) Desire to build
corporate image e) Desire for establishing
harmonious relationship with the community at
large especially , the people at the bottom of
the pyramid.  
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2. CONCEPTUAL FRAMEWORK DEFINITION OF CSR
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CONCEPTUAL FRAMEWORK
BALANCE Economic-Social-Environmental
NEED vs GREED
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TRIPPLE BOTTOM LINE
ECONOMIC SOCIAL - ENVIRONMENTAL
Peace / Global Terror
Env. Harmony/ Global Warming
Profit / Loss
THE SUSTAINABILITY REVOLUTION Long Term
Sustainability ( Short term loss )
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CORPORATE SOCIAL RESPONSIBILITY
                                 
Environment
Economy
Society
Public Accountability, Human Rights, Health
Safety, Community welfare
Pollution Control, Reduction of Resource Use,
Waste minimization
contribution to economic prosperity
SUSTAINABLE QUALITY OF LIFE
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Capacity of Government vs Capacity of Corporate
Sector
Management Strength vs Financial Strength (
Statement of Finance Minister, Mr.Chidambaram, at
ET Award Ceremony Oct 07 )
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PARADIGM SHIFT CSR
ADHOC CHARITY - PHILANTHROPY
STRATEGIC INTEGRATION
FACTOR COST IN COST OF PRODUCTION (PAYING FOR
SOCIAL ENVORONMENTAL COST )
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Strategic Integration ? TATA PROJECT at
NANDIGRAM JHARKHAND
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• Strategic Integration
• Business Process , Social Process , Environmental
  Process
• Status in CPSEs
• The Lack of Effective Integration
• Limited or no Linkage
• Lack of / limited understanding vision
• Inadequate Professional Capacity

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STRATEGY FOR CORRECTION AND IMPROVEMENT   integrat
ion between Corporate Processes and Social
Processes led by Corporate Functionaries.
SOCIAL ENVIRONMENT
CORPORATE
   
Paradigm shift from ADHOC CHARITY to PAYING FOR
THE COST OF FACTOR OF PRODUCTION like
environmental and social cost  
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DEFINITION OF CSR

• a corporations continuing commitment to
  operate in an economically, socially and
  environmentally sustainable manner, while
  recognizing the interests of its stake holders ,
  including investors, , customers, employees,
  business partners, local communities, the
  environment and society at large and contributing
  to the Quality of Life of the Society.
•  ( beyond legal / statutory obligation )

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Examples of Integration of Business Social
Processes INPUT-PROCESS-OUTPUTINPUTS like,
Bulk Raw Materials , Labour, Consumables like
Stationeries, ( Community vs Middle Men )
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1. Need for Linkage with Community2. Need for
improved understanding vision3. Need for
improved professional capacity( unique )
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Can emerging Global Leadership position of
India be reflected through CPSEs pioneering for
FACTORING Environmental Social Factor Cost in
to Total Product Cost ?
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3. PLANNING and IMPLEMENTATION ( GUIDELINES
ON CSR )
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Broad Objective of the Guideline  

• The broad objective of the guideline is, to guide
  the CPSEs in initiating CSR activities with a
  professional management approach and a long-term
  vision,
• - integrating it, with their corporate vision ,
• - in an era of globalised and integrated
  economic, environmental and social systems.

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3.1 PLANNING FOR CSR ? Planning
CPSE may approach CSR as a Professional
Management Process with a long term strategy
integrating it with Corporate strategy. ?
The Role of Corporate Leaders for CSR in
managing the CHANGE ( as a Change Leader, in
vision building, team building and relationship
building with stake holders ) from
, - Economic ( Financial ) Bottom Line to Triple
Bottom Line - Charity ( Adhoc ) approach to
Factor Cost approach? Inclusion of CSR in
corporate vision mission
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  3.2 IMPLEMENTATION OF CSR? Awareness and
Capacity Building among top, senior
middle management level ? CSR OrganisationTask
Detailed in next slide ? Funding of CSR -
Budget for CSR 2 to 5 - Non-Lapsability of
CSR - Delegation of Financial Powers -
Categories of CPSES to be involved in CSR  
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• Creating awareness and environment for CSR
  through provision
• of awareness and training to stake holders
  within the CPSE
• and outside CPSE, including community,
  community leaders etc.
• Creation of base line data for planning,
  assessment and reporting
• Looking for opportunities for integration of
  business
• processes with environment and social
  processes,
• Motivating and training of the personnel
  involved in such
• business processes,
• Developing linkages with appropriate
  communities, NGOs / CBOs,
• Developing action plan for integration,
• Planning Managing the implementation of the
  plan,
• Collecting information on progress,
• Reporting progress to all stake holders.
• Coordinating with all internal Departments
  and external
• stake holders like NGOs, CBOs, Media,
  Government and
• Statutory Agencies.
• Acting as a PIVOTAL DEPARTMENT among the
• Business Processes, Social and
  Environmental processes

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Types of CSR Activity - Mandatory CSR Activity
Directives by the Govt. SC/ST/OBC/
Handicapped etc , Employees Health Insurance,
Pension PF etc. - Optional CSR activity ?
Prohibited CSR activities under CSR Religious
Social Harmony ? Location of CSR
activities ? Location of CSR activities ?
Identification selection of Projects
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4. MONITORING REPORTING CSR ? Monitoring
CSR Impact on Internal business process, HR
Processes through CSR Audit and External
environment and social processes ? Assessing
Reporting CSR 
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• Annexure-III
• Nature of Business Activity of CPSE Mandatory
  CSR Activity List
• Mining Companies Control of Air water
  Pollution, hazardous gas emission, carbon
  emission control, Provision of safe drinking
  water, water harvesting systems, Plantation
• Oil and Gas Companies Control of Air water
  Pollution ,hazardous gas emission, effluent
  treatment, Provision of safe drinking water,
  water harvesting systems, soil quality management
  inputs, Plantation
• Chemical Pharmaceutical Companies Control of
  Air water Pollution ,hazardous gas emission
  control, effluent treatment, soil quality
  management, Provision of safe drinking water,
  water harvesting systems, soil quality management
  inputs, public health, Plantation
• Thermal Power Companies Control of Air water
  Pollution, hazardous gas emission control,
  effluent, water table, soil quality, carbon
  emission, Provision of public health, water,
  sanitation, primary health care, supplementary
  nutrition for women, adolescent, children below 6
  yrs, TB control programme, Plantation

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• Annexure-IV
• A list of Optional CSR   
• Promotion of sports and games
• Promotion of art and culture
•    Providing facilities for entertainment.
•    Environment (if not mandatory)
• a.  Control of pollution control - air water),
  hazardous gas emission control, effluent
  treatment, water harvesting, soil quality, carbon
  emission control
• b.  Provision of Water Harvesting structures,
  Suez treatment plants, Drainage facilities,
  Bio-Gas plants, Plantation
• Health (if not mandatory)
• Provision of public health facilities
  infrastructure, drinking water, sanitation
  facilities, primary health care, supplementary
  nutrition for women, adolescent, children below
  6, eradication/prevention/management of disease
  like HIV AIDS, POLIO, TB, Chicken Pox, Malaria
  etc.
• Education Provision of facilities for primary
  education, vocational education, skill
  development, entrepreneurship promotion,
  community reading room, knowledge kiosks
• Shelter and habitat development, local area
  infrastructure development.
• Disaster preparedness, prevention, mitigation,
  response, management.
• Promotion of livelihood through forward and
  backward linkages
• Natural calamities like Earth quake, cyclone,
  extra-ordinary drought flood situation, in any
  part of country
• Supplementing Development programme of the
  Government.

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• 5. Challenges Possible Solutions
• Challenges
• VISION ORIENTATION of Top Management ?
• MANAGERIAL COMPETENCE to MANAGING CHANGE to
  integrate Triple Bottom line orientation in
  Strategy , Structure and Systems
• Measuring Rating CSR ?
• How to create LINKAGES between Corporate Social
  Environmental systems ?
• Structure of CSR division
• Systems Procedure for managing CSR Function

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• 5. Challenges Possible Solutions
• Possible Solutions
• More CEOs with attitude and orientation for
  Triple bottom line
• More professionals exposed to Corporate Sector
  Social Sector and ability to COMPREHEND CSR and
  integrate both systems and processes
• Innovation
• CSR Head to report to CMD / CEO, as a Director
  in Board , equal to other Directors
• Networking of Corporates (Public Private ) on
  CSR to improve social Environmental Impact ,
  through Collaboration , avoiding duplication.

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MILES TO GO -----------------
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