the corporate social responsibility of tata group

8/20/2019 The Corporate Social Responsibility Of TATA Group

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1. INTRODUCTION ABOUT THE CORPORATE SOCIAL RESPONSIBILITY

While there may be no single universally accepted definition of CSR, each definition that

currently exists underpins the impact that businesses have on society at large and the

societal expectations of them. Although the roots of CSR lie in philanthropic activities

(such as donations, charity, relief wor, etc.! of corporations, globally, the concept of

CSR has evolved and now encompasses all related concepts such as triple bottom line,

corporate citi"enship, philanthropy, strategic philanthropy, shared value, corporate

sustainability and business responsibility. #his is evident in some of the definitions

presented below$

#he %C defines CSR as, “the responsibilit o! enterprises !or their i"p#$ts on

so$iet%. To $o"pletel "eet their so$i#l responsibilit& enterprises “sho'l( h#)e

in pl#$e # pro$ess to inte*r#te so$i#l& en)iron"ent#l& ethi$#l h'"#n ri*hts #n(

$ons'"er $on$erns into their b'siness oper#tions #n( $ore str#te* in $lose

$oll#bor#tion +ith their st#,ehol(ers%

#he W&CS' defines CSR as “the $ontin'in* $o""it"ent b b'siness to

$ontrib'te to e$ono"i$ (e)elop"ent +hile i"pro)in* the -'#lit o! li!e o! the

+or,!or$e #n( their !#"ilies #s +ell #s o! the $o""'nit #n( so$iet #t l#r*e.% According to the )*'+ “Corpor#te so$i#l responsibilit is # "#n#*e"ent

$on$ept +hereb $o"p#nies inte*r#te so$i#l #n( en)iron"ent#l $on$erns in their

b'siness oper#tions #n( inter#$tions +ith their st#,ehol(ers. CSR is *ener#ll

'n(erstoo( #s bein* the +# thro'*h +hi$h # $o"p#n #$hie)es # b#l#n$e o!

e$ono"i$& en)iron"ent#l #n( so$i#l i"per#ti)es Triple/Botto"/Line Appro#$h0&

+hile #t the s#"e ti"e #((ressin* the epe$t#tions o! sh#rehol(ers #n(

st#,ehol(ers. In this sense it is i"port#nt to (r#+ # (istin$tion bet+een CSR&

+hi$h $#n be # str#te*i$ b'siness "#n#*e"ent $on$ept& #n( $h#rit&

sponsorships or phil#nthrop. E)en tho'*h the l#tter $#n #lso "#,e # )#l'#ble

$ontrib'tion to po)ert re('$tion& +ill (ire$tl enh#n$e the rep't#tion o! #

$o"p#n #n( stren*then its br#n(& the $on$ept o! CSR $le#rl *oes beon(

th#t.%

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-rom the above definitions, it is clear that$

• #he CSR approach is holistic and integrated with the core business strategy for

addressing social and environmental impacts of businesses.

• CSR needs to address the wellbeing of all staeholders and not /ust the company0s

shareholders.

• 1hilanthropic activities are only a part of CSR, which otherwise constitutes a much

larger set of activities entailing strategic business benefits.

CSR in In(i#

CSR in *ndia has traditionally been seen as a philanthropic activity. And in eeping with

the *ndian tradition, it was an activity that was performed but not deliberated. As a result,

there is limited documentation on specific activities related to this concept. 2owever,

what was clearly evident that much of this had a national character encapsulated within it,

whether it was endowing institutions to actively participating in *ndia0s freedom

movement, and embedded in the idea of trusteeship. As some observers have pointed out,

the practice of CSR in *ndia still remains within the philanthropic space, but has moved

from institutional building (educational, research and cultural! to community

development through various pro/ects. Also, with global influences and with communities becoming more active and demanding, there appears to be a discernible trend, that while

CSR remains largely restricted to community development, it is getting more strategic in

nature (that is, getting lined with business! than philanthropic, and a large number of

companies are reporting the activities they are undertaing in this space in their official

websites, annual reports, sustainability reports and even publishing CSR reports. #he

Companies Act, 345 has introduced the idea of CSR to the forefront and through its

discloseorexplain mandate, is promoting greater transparency and disclosure. Schedule

6** of the Act, which lists out the CSR activities, suggests communities to be the focal

point. +n the other hand, by discussing a company0s relationship to its staeholders and

integrating CSR into its core operations, the draft rules suggest that CSR needs to go

beyond communities and beyond the concept of philanthropy. *t will be interesting to

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observe the ways in which this will translate into action at the ground level, and how the

understanding of CSR is set to undergo a change.

CSR #n( s'st#in#bilit

Sustainability (corporate sustainability! is derived from the concept of sustainable

development which is defined by the &rundtland Commission as 7development that

meets the needs of the present without compromising the ability of future generations to

meet their own needs.8 Corporate sustainability essentially refers to the role that

companies can play in meeting the agenda of sustainable development and entails a

balanced approach to economic progress, social progress and environmental stewardship.

CSR in *ndia tends to focus on what is done with profits after they are made. +n the other

hand, sustainability is about factoring the social and environmental impacts of conducting business, that is, how profits are made. 2ence, much of the *ndian practice of CSR is an

important component of sustainability or responsible business, which is a larger idea, a

fact that is evident from various sustainability framewors. An interesting case in point is

the )69s for social, environmental and economic responsibilities of business issued by

the :inistry of Corporate Affairs in ;une 3455.

1rinciple eight relating to inclusive development encompasses most of the aspects

covered by the CSR clause of the Companies Act, 345. 2owever, the remaining eight principles relate to other aspects of the business. #he ) 9lobal Compact, a widely used

sustainability framewor has 54 principles covering social, environmental, human rights

and governance issues, and what is described as CSR is implicit rather than explicit in

these principles.

9lobally, the notion of CSR and sustainability seems to be converging, as is evident from

the various definitions of CSR put forth by global organisations. #he genesis of this

convergence can be observed from the preamble to the recently released draft rulesrelating to the CSR clause within the Companies Act, 345 which tals about

staeholders and integrating it with the social, environmental and economic ob/ectives,

all of which constitute the idea of a triple bottom line approach.

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2. CLAUSE 134& CO5PANIES ACT& 2613

*n *ndia, the concept of CSR is governed by clause 5< of the Companies Act, 345,

which was passed by both 2ouses of the 1arliament, and had received the assent of the

1resident of *ndia on 3= August 345. #he CSR provisions within the Act is applicable to

companies with an annual turnover of 5,444 crore *)R and more, or a net worth of 5< onwards, also re?uire companies to setup

a CSR committee consisting of their board members, including at least one independent

director.

#he Act encourages companies to spend at least 3@ of their average net profit in

the previous three years on CSR activities. #he ministry0s draft rules that have

been put up for public comment define net profit as the profit before tax as per

the boos of accounts, excluding profits arising from branches outside *ndia #he

Act lists out a set of activities eligible under CSR. Companies may implement

these activities taing into account the local conditions after seeing board

approval.

4

Pro"otion o!

e('$#tion

E"plo"ent

enh#n$in*)o$#tion#l s,illsAn( s'$h other

"#tters #s "#

be pres$ribe(

En)iron"ent#l

s'st#in#bilit

Social

business

pro/ects

Contribution to

1rime :inister0s

relief fund and

other such state

and central funds

Combating

2*6A*'S,

malaria and

other

Re('$in* $hil(

"ort#lit #n(

i"pro)in*

"#tern#l he#lth

7en(er e-'it

#n( +o"en

e"po+er"ent

Er#(i$#tion

o! etre"e

h'n*er #n(

po)ert


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#he indicative activities which can be

undertaen by a company under CSR

have been specified under Schedule

6** of the Act.

#he draft rules (as of September

345! provide a number of

clarifications and while these are

awaiting public comment before

notification, some the highlights are

as follows$

5. Surplus arising out of CSR

activities will have to be

reinvested into CSR initiatives,

and this will be over and above

the 3@ figure

3. #he company can implement its

CSR activities through the

following methods$

'irectly on its own

#hrough its own nonprofit foundation set up so as to facilitate this initiative

#hrough independently registered nonprofit organisations that have a record of at

least three years in similar such related activities

Collaborating or pooling their resources with other companies

. +nly CSR activities undertaen in *ndia will be taen into consideration

>. Activities meant exclusively for employees and their families will not ?ualify


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letter and in spirit. #his has to be signed by either the C%+, or the :' or a director of

the company

Clause 5< of the Act lays down the guidelines to be followed by companies while

developing their CSR programme. #he CSR committee will be responsible for preparing

a detailed plan on CSR activities, including the expenditure, the type of activities, roles

and responsibilities of various staeholders and a monitoring mechanism for such

activities. #he CSR committee can also ensure that all the inds of income accrued to the

company by way of CSR activities should be credited bac to the community or CSR

corpus.

#he new Act re?uires that the board of the company shall, after taing into

account the recommendations made by the CSR committee, approve the CSR policy for

the company and disclose its contents in their report and also publish the details on the

company0s official website, if any, in such manner as may be prescribed. *f the company

fails to spend the prescribed amount, the board, in its report, shall specify the reasons.

3. BENE8ITS O8 A ROBUST CSR PRO7RA55E

As the business environment gets increasingly complex and staeholders become vocal

about their expectations, good CSR practices can only bring in greater benefits, some of

which are as follows$

• Co""'nities pro)i(e the li$en$e to oper#te9 Apart from internal drivers such as

values and ethos, some of the ey staeholders that influence corporate behaviour

include governments (through laws and regulations!, investors and customers. *n

*ndia, a fourth and increasingly important staeholder is the community, and many

companies have started realising that the licence to operate0 is no longer given by

governments alone, but communities that are impacted by a company0s business

operations. #hus, a robust CSR programme that meets the aspirations of these

communities not only provides them with the licence to operate, but also to maintain

the licence, thereby precluding the trust deficit0.

• Attr#$tin* #n( ret#inin* e"ploees9 Several human resource studies have lined a

company0s ability to attract, retain and motivate employees with their CSR

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commitments. *nterventions that encourage and enable employees to participate are

shown to increase employee morale and a sense of belonging to the company.

• Co""'nities #s s'ppliers9 #here are certain innovative CSR initiatives emerging,

wherein companies have invested in enhancing community livelihood by

incorporating them into their supply chain. #his has benefitted communities and

increased their income levels, while providing these companies with an additional and

secure supply chain.

• Enh#n$in* $orpor#te rep't#tion9 #he traditional benefit of generating goodwill,

creating a positive image and branding benefits continue to exist for companies that

operate effective CSR programmes. #his allows companies to position themselves as

responsible corporate citi"ens.

• 5ore b'siness opport'nities9 A CSR program re?uires an open, outside oriented

approach. #he business must be in a constant dialogue with customers, suppliers and

other parties that affect the organi"ation. &ecause of continuous interaction with other

parties, your business will be the first to now about new business opportunities.

: Steps to E!!e$ti)e Corpor#te So$i#l Responsibilit

1. Thin, #bo't o'r st#,ehol(ers.

*f achieving happiness is not tantali"ing enough for you to become more socially

responsible, consider instead the staeholders of your company$ your investors, channel

partners, customers, employees and surrounding community. 2ow you operate affects the

lives of each of these groups. So, the goals you set should tae all of them into account.

2. De!ine o'r "ission.

:ost companies have a mission statement that provides the framewor to build the

business. Corporate responsibility is no different. Some companies choose to integrate

their social goals into their business agenda, but your business might be wise to have a

separate 7corporate social responsibility8 missionBvision statement.

3. 8in( o't +h#t is i"port#nt to o'.

1rofits are important that0s a given. &ut, what else is important to youD 1erhaps even

more crucial is, what is important to your customersD -or 9eneral :ills, the future

of education is what drives the company a great mission choice, since many cereal and

snac food decisionmaers happen to be parents. Whatever your mission, it needs to be

something you are honestly passionate about, or it will never stic.

;. Loo, !or opport'nities.

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+nce you0ve decided what important, figure out how to help is. Writing a chec is

often not the answer. #ae your stocholders into account they expect that profit we

spoe of. Eearn about the issue and as current influencers what will mae a real

difference. %ven a small startup with no available cash flow can get positively involved in

community service. Some products are inherently socially responsible. -or

example, Suncrest 'iamonds taes imperfect, perhaps unwanted stones and processes

them to create highgrade colored diamonds for /ewelry. Considering the ethical

controversies over Fblood diamondsF (also called Fconflict diamondsF! from certain

African nations, SuncrestGs actions are both responsible and good for the bottom line.

4. Consi(er # p#rtnership.Sometimes there is no need to start a CSR strategy from scratch. *f your company and

your passion match up with another organi"ation0s goals, don0t hesitate to cooperate with

them to forward your mission. *f you can integrate your efforts with an established

program, your time, money and social capital will go that much further. #he

recent merger of the %li"abeth Smart -oundation with +peration nderground Railroad

to battle human trafficing illustrates a perfect such matchup. ;ust mae sure you vet

collaborative opportunities. Hou don0t want to be involved with a group that isn0t

transparent, or someone whoGs hypocritical about what he or she supports.


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responsibility, you gain bac what you put in. *f you are carefully considering your

company0s impact on the world and evaluating your decisions accordingly, you0re already

doing something right.

;. CRITICIS5S AND CONCERNS

CSR concerns include its relationship to the purpose of business and the motives for

engaging in it.

N#t're o! b'siness:ilton -riedman and others argued that a corporationGs purpose is to maximi"e returns to

its shareholders and that obeying the laws of the /urisdictions within which it operates

constitutes socially responsible behavior. While some CSR supporters claim that

companies practicing CSR, especially in developing countries, are less liely to exploit

worers and communities, critics claim that CSR itself imposes outside values on local

communities with unpredictable outcomes.

&etter governmental regulation and enforcement, rather than voluntary measures, are an

alternative to CSR that moves decisionmaing and resource allocation from public to private bodies. 2owever, critic0s claim that effective CSR must be voluntary as

mandatory social responsibility programs regulated by the government interferes with

people0s own plans and preferences, distorts the allocation of resources, and increases the

lielihood of irresponsible decisions.

5oti)es

Some critics believe that CSR programs are undertaen by companies to distract the

public from ethical ?uestions posed by their core operations. #hey argue that the

reputational benefits that CSR companies receive (cited above as a benefit to thecorporation! demonstrate the hypocrisy of the approach.

5is(ire$tion

Another concern is that sometimes companies use CSR to direct public attention away

from other, harmful business practices. -or example, :c'onaldGs Corporation positioned

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its association with Ronald :c'onald 2ouse as CSR while its meals have been accused

of promoting poor eating habits.

Contro)ersi#l in('stries

*ndustries such as tobacco, alcohol or munitions firms mae products that damage their

consumers andBor the environment. Such firms may engage in the same philanthropicactivities as those in other industries. #his duality complicates assessments of such firms

with respect to CSR.

The =i>h#,,#"b#l#" t#,eo)er

A textile company called Iitex has taen over the administration of an entire *ndian

village called Ii"haambalam near Cochin by winning the local body elections.

%nvironmentalists and mainstream politicians of *ndia point out that this can lead to a

dangerous precedent because the company got actively involved in CSR only after they

were caught redhanded in polluting the village.

SOCIAL RESPONSIBILITY 5ODELS

#here are some models which describe the evolution and scope of social orientation of

companies. )otable ones include Carrolls model, 2alals model and Acermans model.

#0 C#rroll?s 5o(el

Archie &. Carroll has defined CSR as the complete range of duties business has towards

the society. 2e has proposed a d conceptual model of corporate performance.

According to Carroll, a firm has the following four categories of obligations of corporate

performance.

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Dis$retioner

Ethi$#l

Le*#l

E$ono"i$

• E$ono"i$9 #he firm being an economic entity, its primary responsibility is to satisfy

economic needs of the society and generation of surplus for rewarding the investors

and further expansion and diversification.

• Le*#l9 #he laws of the land and international laws of trade and commerce has to be

followed and complied with.

• Ethi$#l9 %thical responsibilities are norms which the society expects the business to

observe lie not resorting to hoarding and other malpractices.• Dis$retion#r9 'iscretionary responsibilities refer to the voluntary contribution of

the business to the social cause lie involvement in community development or other

social pro/ects pertaining to health and awareness of the masses.

b0 H#l#l?s "o(el

2alals return on resource model of corporate performance recogni"es the fact that the

corporate social responsiveness is a ?uite difficult tas as no corporate posture is value

free. A firm can only attempt to form a worable coaliation among groups having diverse

interests, engaged in creating value for distribution among members of coalition. #he

social issues may become conflicting beyond a certain level of economic activity. #he

coordination between economic and ethical decisions is necessary so that the future of the

firm and shareholders may be safeguarded.

$0 A$,er"#n?s "o(el

#his model defines CSR in three different phases

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8irst ph#se #op management recogni"es social problem.

Se$on( ph#se #he Company appoints staff specialists to loo into the issue and find

measures to tacle it.

Thir( ph#se *mplementation of the strategy derived by the specialists.

4. CORPORATE SOCIAL RESPONSIBILITY9 TATA 5ODEL

Brie! Histor

-ounded by ;amset/i )usserwan/i #ata (;) #ata! in 5JKJ, the #ata group has developed

into one of *ndiaGs largest business conglomerates. #ata Sons, which was established as a

trading company by ;) #ata in 5JKJ, is the promoter of the #ata group. #ata *ndustries,

initially established in 5=>< as a managing agency for the businesses promoted by #ata

Sons, propelled the groupGs entry into new and hightech industries during the early

5=J4s.#he group has 543 companies in diverse sectors and has been moving from product

driven businesses to branddriven businesses. #he group listed its materials, chemicals,

energy and engineering products as productdriven while engineering services,

automotive, communications and *#, services and consumer goods have been identified

as brand driven businesses.#A#A is a respected brand name throughout *ndia and it cannot happen without

delivering ?uality product and services. #he group is famous for practicing H#heory of

management. #he management is not coercive in nature and believes in cooperative

approach in management. 1eople who /oin #A#A, do stay with company which has a

name for their good 2R' practices. %mployees in turn, too, feel proud of being part of

#A#A family. #here are professionals who have no blood relations with #A#As but have

occupied higher positions in #A#A group of companies due to their capabilities. So,

management style of #A#A needs to be commended.

#he woring class (mainly the worers woring in various #A#A companies and

-actories such as #*SC+! is organi"ed. #hey have access to various facilities such as 1-,

9ratuity, leave including medical leaves, minimum woring hours, over time facilities

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etc, as per the legal provisions. Apart from the above, they en/oy other facilities, too, such

as housing, education for their children, medical, scholarship to their children etc. Strie

by #A#A employeesBloc out is hardly heard of.

#here appears to be good communication between management and worers.:atterBdispute if any is sorted out to the mutual satisfaction of the concerned parties and

there is industrial peace within #A#A group companies. So, there appears to be sense of

belongingness among %mployees and hence, #A#A group has steady and upward

business growth even during hard times.

#A#As preferred to set up their Steel 1lant in an undeveloped area (Sachi! in

;amshedpur. *t is a tribal area with poor tribal population but rich in mineral resources.

#A#A set up the factory there as there was availability of basic resources needed for manufacturing of steel in the areaBnearby area but they did not ignore the local

community. #hey too care of, for alleviating the misery of local poor population by

providing various basic facilities such as road, schools (education!, medical care,

employment etc.

#he #A#A salt factory at :ithapur, too, has taen care of the population in its

surrounding area by carrying out various rural development activities.

All #A#A 9roups companies are nown for commencing development activities in the

surrounding villages. #*SC+ is carrying out various welfareBdevelopment activities in

;harhand. Similar is the case with other #A#A group companies, too.

#he society has a lot of expectations from #A#As. #A#As have met the expectations of

peopleBnation, too, by establishing world class educational institutions, hospitals and

other institutions of repute the details of which will follow in the subse?uent pages

B#si$ )#l'es@prin$iples

As a global benchmar for CSR and a pioneer of the concept in *ndia, the #ata group has

adopted social responsibility as one of its integral values and the group has made

concerted efforts to lin it with the groupGs overall strategy for achieving business

excellence. &esides undertaing CSR initiatives through its various companies, the #ata

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group has been actively involved in facilitating the development of this concept in *ndia

by setting standards and benchmars.

:oreover, #ata 9roup has adopted participatory approach in the matter of CSR as

depicted in the above diagram. Also, #ata0s declarations on CSR are followed hereunder,

Appro#$h

#A#As are the pioneer in the field of CSR in *ndia. A uni?ue feature of the group is that

K< percent of the e?uity capital of the parent firm L #ata Sons Eimited is held by #ata

#rusts, which are philanthropic in nature. +ver M< per cent of #rustGs funds come from

dividends on the shares it owns in #ata Sons, the groupGs holding company. #he

remaining comes from their own statutory investments. #he trusts donGt handle corporate

social responsibility they are more of a funding agency, lie the -ord -oundation.

#he Sir 'orab/i #ata #rust was established in 5=3 by Sir 'orab #ata, the elder son of

group founder ;amset/i #ata, and is one of the oldest philanthropic organisations in *ndia.

#he #rustGs vision of constructive philanthropy has been sensitive to the fastgrowing

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needs of a developing nation, and the pro/ects and programmes it supports bear

contemporary relevance.

#he grantmaing pattern of the #rust involves three broad areas$ endowment grants

(grants to institutions!, grants to nongovernmental organisations ()9+s! and grants toindividual (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 #ata Council

for Community *nitiatives (#CC*!. #he Council has, in collaboration with the nited

)ations 'evelopment 1rogramme (*ndia!, crafted the #ata *ndex for Sustainable 2uman

'evelopment, which measures and improves the community wor that #ata enterprises

undertae.

#he #ata *ndex for sustainable human development is a pioneering effort aimed at

directing, measuring and enhancing the community wor that #ata group enterprises

undertae. #he index provides guidelines for #ata companies looing to fulfill their social

responsibilities, and is built around the #ata &usiness %xcellence :odel, an openended

framewor that drives business excellence in #ata companies.

Speaing about the #ata index, Anant 9 )adarni, 61, group corporate sustainability,

says$ FWe have adopted a business model to drive social responsibility efforts within the

group because that way you ensure a huge networ. #he index helps structure our efforts

and ?uantify their effect on the communities and people they are aimed at.F

#he index is actually a set of guidelines for #ata companies looing to fulfil their social

responsibilities, and it is the third set of such guidelines fashioned by #CC*. :r )adarni

sees the index as a wor in progress, not some edict set in stone. FWhat we have here is a

framewor thatGs the spirit in which the *ndex was drafted.F

#he #ata culture in this critical segment of the overall corporate sustainability matrix N

inclusive of woring for the benefit of the communities in which they operate, of building

*ndia0s capabilities in science and technology, of supporting art and sport N springs from

an ingrained sense of giving bac to society. F#his is a matter of principle for us, it is in

our bloodstream,F says :r *rani, Fand it isnGt something we lie to shout about. Some

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people consider social responsibility as an additional cost we donGt. We see it as part of

an essential cost of business, as much as land, power, raw materials and employees.F

#he #ata tradition in community development has, since the earliest days of the groupGs

history, been defined by its core values. *t never was charity for its own sae or, as groupfounder ;amset/i #ata put it, Fpatchwor philanthropyF. Sustainability, says Iishor

Chauar, a member of the #ata 9roup Corporate Centre, is of fundamental importance. F*

donGt believe charity maes a substantial impact on society,F he explains. FAll you are

doing, then, is satisfying the mendicant mentality. #he real contribution comes when

communities are enabled in a manner that has a sustained developmental impact. #hat

way you empower people, educate them, give them instruments of income, a feeling of

selfrespect and dignity, a reason to live.F

#he time was the early 5==4s and the occasion was gathering of industrialists

called by *ndia0s 1rime :inister, 16 )arasimha Rao. Representing the #ata group were

Chairman Ratan #ata and ;; *rani, the managing director of #ata Steel at that point. 7#he

prime minister proposed that we business people set aside 5 per cent of our net profit for

community development pro/ects totally unconnected to the worers and industry any of

us was involved with,8 recalls :r *rani. 7:r #ata and * looed at each other we didnGt

mae any comment. Eater, we drew up a chart that ?uantified #ata Steel0s contribution on

:r Rao0s scale. We discovered that, over a 54year period, the company had been

dedicating between and 34 per cent of its profits to social development causes. *n the

years since, depending on profit margins, the figure has continued to vacillate within this

band.8 #he #ata Steel example is not an anomaly for a #ata company. *f there is one

attribute common to every #ata 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. #he money numbers are staggering$ by a rough estimate the

#ata group as a whole, through its #rusts and its companies, spends about 4 per cent of

its profits after tax (1A#! on socialuplift programmes. *n ;uly 344>, &. :uthuraman,

:anaging 'irector, #ata Steel Eimited (#*SC+!, announced that in future #*SC+ would

not deal with companies, which do not confirm to the companyGs Corporate Social

Responsibility (CSR! standards.Speaing at the annual general meeting of the :adras

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Chamber of Commerce and *ndustry, :uthuraman stated, e +ill not either b' !ro"

or sell to $o"p#nies th#t (o not "e#s're 'p to T#t# Steels so$i#l responsibilit

st#n(#r(s.

I"ple"ent#tion o! CSR

TATA Tr'sts

#he Sir 'orab/i #ata supports different inds of )9+s N some do social wor, some

research, while others are community based N usually for a period of three to five years.

*t also wors with international agencies such as the nited )ations, mostly in times of

natural disasters. -rom time to time the Sir 'orab/i #ata #rust also initiates the process

for establishing institutes of national importance.

CSR activities taen by Sir Dor#bi T#t# tr'st can be categori"ed in various groups and

described as under$

En(o+"ent *r#nts9 #A#A #rust has promoted, and continued to support, several

institutions of learning, research and culture in *ndia. #hese include the #ata *nstitute of

Social Sciences, :umbai, the #ata :emorial Centre for Cancer Research and #reatment,

:umbai, the #ata *nstitute of -undamental Research, :umbai, the #ata Agricultural and

Rural #raining Centre for the &lind, 1hansa, and the )ational Centre for the 1erformingArts, :umbai.

#he #rust has also helped in establishing the Sir 'orab/i #ata #rust Centre for Research in

#ropical 'iseases at the *ndian *nstitute of Science, &angalore, the ;R' #ata

%cotechnology Centre, Chennai, and the )ational *nstitute of Advanced Studies,

&angalore.

N7O *r#nts9 #he #rust maes grants to )9+s in five social development sectors$

1. 5#n#*e"ent o! n#t'r#l reso'r$es9 #he #rust supports pro/ects related to water and

water resources, land degradation and better methods of cultivating and harvesting

crops.

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2. Li)elihoo(s$ #he #rust has baced several pro/ects in this sector, covering

unorganised labourers, capacity building of grassroots groups, and business

development of a variety of peoplebased organisations.

3. E('$#tion$ #he #rust has supported initiatives in the field of education, focusing on

children, adolescents and adults (within and outside the formal education system!.;. He#lth9 #he #rust has made contributions in creating and upgrading medical

infrastructure and healthcare facilities across *ndia, while focusing on training

community health worers. #he #rust also supports research studies in alternative

systems of medicine such as ayurveda.

4. So$i#l (e)elop"ent initi#ti)es9 #hese cover many areas, including community

development, human rights, family welfare, civil society, art and culture, and relief

wor.

In(i)i('#l *r#nts9 #he #rust gives merit and needbased educational and medical grants

to individuals.

1. 5e(i$#l9 -inancial help is extended to individuals for the treatment of diseases and to

solve other health problems.

2. E('$#tion9 #he #rust offers scholarships for higher education and travel grants for

studying abroad and for attending conferences, as well as for sports activities.

3. The Allie( Tr'sts 'n(er Sir Dor#bi T#t# tr'st are, primarily, smaller trusts while

some have a specific mandate, the rest are broadbased in their approach to grantmaing. #he Sir 'orab/i #ata #rust administers the Allied #rusts.

N T#t# En(o+"ent9 #he first of the #ata trusts, it was established by group founder

;amset/i #ata, in 5J=3 to provide scholarship loans to individuals for the pursuit of higher

studies abroad. +ver 534 students are selected every year from across *ndia as ;) #ata

scholars.

L#( T#t# 5e"ori#l Tr'st9 %stablished by Sir 'orab/i #ata in 5=3 in memory of his

wife, Eady :eherbai, who died of leuaemia in 5=4, the #rust spends fourfifths of its

income on international research in leuaemia. #he #rust also supports institutional

research carried out by recognised *ndian institutions, with the emphasis on leuaemia

research.

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L#( 5eherb#i T#t# E('$#tion Tr'st9 Set up in 5=3, the #rust grants scholarships to

young *ndian women graduates of recogni"ed *ndian universities to pursue higher studies

abroad in the fields of social wor and public health.

Additionally, and also coming under the umbrella of the Allied #rusts, are the #ata SocialWelfare #rust, the R' #ata #rust, the #ata %ducation #rust, the ;R' #ata #rust, and the

;R' #ata and #helma #ata #rust, all of which focus on women and children. #he ;amset/i

#ata #rust concentrates on overall developmental issues.

Sir R#t#n T#t# Tr'st +#s established in 5=5= in accordance with the will of Sir Ratan

#ata, the younger son of group founder ;amset/i #ata, the trust is a grantbestowing public

foundation. #he trust sees to be a catalyst in development through giving grants to

institutions in various areas. *t focuses its grants towards organisations that it can partner to undertae innovative and sustained initiatives with the potential to mae a visible

difference. *t also provides grants for endowments, has a separate programme for small

grants and gives grants to individuals for education and medical relief.

R'r#l li)elihoo(s #n( $o""'nities9 #he trust focuses on the following ey initiatives

within the broad areas of land and water development and microfinance$

1. Centr#l In(i# Initi#ti)e CInI09 C*n* involves a series of livelihood pro/ects across

the central *ndia region, addressing core issues aimed at alleviating poverty among

tribal communities in a sustainable manner.

2. Hi""oth#n P#rio#n#9 #he initiative addresses some of the ey rural development

issues confronting the inhabitants of the 2imalayas, on a systematic basis.

3. =h#r#sh Fist#rotth#n Yo#n# =FY09 #his initiative tacles issues related to

seawater ingress on the 9u/arat coastline through field pro/ects and coordination with

the state government.

;. Dro'*ht proo!in* in est R##sth#n9 #he ob/ective is to develop replicable models

for drought proofing in the desert regions of Ra/asthan.4. Re)i)in* the 7reen Re)ol'tion9 #he initiative involves a series of interventions

encouraging crop diversification in 1un/ab and #amil )adu to tacle the negative

impact of the ricewheat cropping system.


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strengthening linages between microfinance and development, the trust is also

supporting a large communitybased microfinance programme in South *ndia.

:. S',hi B#lir## Initi#ti)e9 #he initiative addresses the recurrent issue of farmers0

suicides in six distress districts located in 6idharbha region of :aharashtra through

promoting sustainable, improved agricultural practices, microfinance, development of

maret linages, soil and water conservation and alternative livelihood options.

G. North E#st Initi#ti)e9 #he initiative addresses livelihood issues of the )ortheastern

states comprising Arunachal 1radesh, Assam, :anipur, :eghalaya, :i"oram,

)agaland, Siim and #ripura.

So"e o! the Initi#ti)es t#,en b the TATA 7ro'p

T#t# Che"i$#ls So$iet !or R'r#l De)elop"ent

#ata Chemicals set up the #ata Chemicals Society for Rural 'evelopment (#CSR'! in

5=J4 to promote its social uplift pro/ects for communities in and around :ithapur (in the

state of 9u/arat in western *ndia!, &abrala (in the state of :adhya 1radesh in northern

*ndia! and 2aldia (in the state of West &engal in eastern *ndia!.

#he Society wors to protect and nurture the rural populations in these areas and helps

people achieve selfsufficiency in natural resource management, livelihood support and

the building of health and education infrastructure. #hrough #CSR', #ata Chemicals

wors to improve the ?uality of life of the people and communities around its operations,

and to support sustainable development, a theme that is central to the companyGs

corporate philosophy. #ata Chemicals employees endorse this philosophy by helping

empower rural communities chart their own developmental course.

#he initiatives that #CSR' is involved in include$

5. Agricultural development O Animal husbandry3. %ducation

. WomenGs programmes

>. Rural energy


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%stablished in 5=M=, the #ata Steel Rural 'evelopment Society (#SR'S! is involved in

various social development programmes aimed at helping the rural communities living

around #ata SteelGs operational units.

1rior to the setting up of #SR'S, #ata SteelGs community initiatives were conductedthrough its rural and community services division. 2owever, the fundamental differences

between the imperatives of rural and urban development prompted the company to

reclassify its community initiatives programmes under three units$ Community

'evelopment and Social Welfare, #SR'S and Adivasi and 2ari/an Welfare Cell, now

nown as the #ribal Cultural Society. #SR'S covered 3 villages around ;amshedpur (in

the state of ;harhand in eastern *ndia! in its first year of operation. #oday, the Society

has seven separate units, six in #ata SteelGs operational areas, and covers K44 villages in

the states of ;harhand and +rissa (also in eastern *ndia!.

#SR'S is actively involved in the spheres of livelihood generation, health and hygiene,

and people empowerment. #SR'S has expanded its agenda and identified the

advancement of education, sports and selfreliance as tools to ensure a better ?uality of

life for the people it wors with.

T#t#?s steps to+#r(s 7reen !'t're

N'rt'rin* N#t're9 #he #ata groupGs inship with the environmental cause has resulted

in a slew of initiatives that place the good earth above bottom lines.

A big chun of the responsibility for containing the plague driving our polluted and

populous planet towards peril rests with industry and business. &alancing the imperatives

of creating /obs and selling products and services with the absolute necessity of

protecting and regenerating what remains of the natural environment is an onerous

challenge. #hat it can be done is beyond doubt, but this is a tas re?uiring a commitment

to ideals more than bottom lines, to the good earth rather than profiteering. #he long

history of the #ata group teems with examples of /ust such a commitment.

#he #ata ethos places a special emphasis on environmental and ecological issues.

F%nvironment is a focus area within our overall corporate social responsibility matrix,F

says Iishor Chauar, chairman, #ata Council for Community *nitiatives, a centrally

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administered nodal agency that coordinates, among other activities, the environmental

efforts of group companies. A host of #ata companies also adhere to environmental

procedures drawn up by the 9lobal Reporting *nitiative (9R*!, which operates under the

aegis of the nited )ations.

*mportant as it is, following directives and guidelines from within and without is /ust one

facet of the #ata approach to environmental issues. #he greater portion of what the group

does in this sphere is by choice and conviction. -rom this flows its support for

endeavours to conserve plant and animal species, improve land and water use, and protect

forest tracts and green sanctuaries. #he central tenet of this earthy philosophy is people

and communities, often in rural regions and fre?uently facing ine?uitable struggles to

secure livelihoods. nderstanding that no environment policy can operate in isolation

means an enhanced ability to lin processes and people in a manner that benefits both

nature and those dependent on it.

#he groupGs contribution to conservation falls into two categories$ the efforts of different

#ata companies, big and small, to preserve and enrich the environment in and around

their areas of operation, and the philanthropic thrust of the #ata trusts, which support a

diverse cluster of nongovernmental organisations woring in areas such as the

management of natural resources, community development and livelihoods. #his dual

canopy accommodates and nurtures a variety of initiatives in a range that extends from

watershed programmes and land regeneration to forestry pro/ects and the protection of

endangered species.

#he flora and fauna stories and articles in this subsection attempt to encapsulate the #ata

groupGs allegiance to the environmental cause. F+urs is a deliberate effort to do more than

what is re?uired by statute,F says :r Chauar. F+ur 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.F

:r Chauar articulates the groupGs environmental philosophy as an obligation to society.

FSome people thin that environmental matters are cause for concern. #he #atas, on the

other hand, view them as an inherent duty that is part and parcel of being in business. #he

general mindset, the discourse of our times, tends to see the environment as something

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we have inherited from our ancestors. #he reality, as * see it, is that we have borrowed it

from our children and the generations after them.

FEooed at from that perspective, it becomes obvious that * as an individual, * as a

corporate entity, * as a factory, have no 9odgiven right to do what * please with what cannever truly belong to me. 1olluting the environment in one place to supply a product to

consumers in some other, farremoved place how can that ever be /ustifiedD #here used

to be a time when rivers were sources of clean drining water today any child will tell

you that rivers are giant garbage cans, carriers of filth and waste. #here is no way out of

this messy situation other than affording the environment the highest priority, and thatGs

what the #atas are doing.F +nly those living in denial can argue that environment and

ecology are sub/ects too esoteric for a society bred on consumerism and the pleasures of

the present. 2umanind is currently engaged in the surprisingly easy /ob of driving into

extinction more plant and animal species than at any time since the dinosaurs disappeared

K< million years ago. +ur forests are fading our oceans are rising the snowcaps on our

mountain peas are shrining our climate is mutating. :eanwhile, our water, our air and

our bodies are becoming the unwitting recipients of all manners of toxic intruders.

&usiness can N and do, as the #atas have proved N mae a huge difference in turning

this beastly tide.

A((ressin* $li"#te $h#n*e9 #he #ata group is facing up to the challenge of climate

change and maing it integral to its processes. #he broad idea is to develop a common

approach to the critical ?uestions confronting the groupGs 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 groupGs companies is #ata

Puality :anagement Services (#P:S!, a centrally administered organisation that draws

on the experience and expertise of senior #ata leaders.

#he #ata group considers climate change to be a serious issue and is taing the following

steps to increase carbon consciousness and institute mitigation strategies$

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A steering committee and woring group have been assigned to address the climate

change issue and cascade it into a grouplevel movement. #ata companies from five business sectors N steel, automotive, power, chemicals and

*# N will participate in the first phase through the following strategies$

o *ntensive awareness and training programmes will be conducted for senior

leadership. Climate change champions will be identified in each company.

o 1olicies on energy efficiencies, green buildings, green data centres and green

protocols will be developed. Awareness will be created amongst all

staeholders.

o *ndividual #ata companies will measure their current carbon footprint to

assess where the group stands. #his will be extrapolated for future years.

o Cost abatement curves will be established and mitigation strategies identified

for the ma/or companies. +ther #ata companies will follow in the second phase.

o #he climate change initiative will be integrated with the #ata groupGs internal

business excellence framewor, the #ata &usiness %xcellence :odel, in order

to further.

Cli"#te $h#n*e poli$ !or T#t# $o"p#nies9 #ata companies will play a leadership role

in climate change by being nowledgeable, responsive and trustworthy, and by adopting

environmentfriendly technologies, business practices and innovation, while pursuing

their own growth aspirations and the enhancement of shareholder value.

#ata companies will measure their carbon footprint and will strive to$

• &e the benchmar in their segment of industry on the carbon footprint, for their plants

and operations.

• %ngage actively in climate change advocacy and the shaping or regulations in

different business sectors.

• *ncorporate green0 perspective in all ey organisational processes.


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and changed, many lives. )o matter how elaborate, systems and processes cannot really

capture the magnitude and dispersion of all that the #atas do in the field of community

development. -rom health and education to livelihoods and womenchildren welfare,

from tribal hamlets in ;harhand and the rural outbac of 9u/arat to the high ranges of

Ierala and disadvantaged villages in Andhra 1radesh N the community wor being

undertaen by #ata companies touches a multitude of *ndians across the land. &eyond

purely social wor, this support extends to individuals and institutions pursuing artistic,

sporting and academic excellence. And now, as #ata enterprises spread their wings to

reach global locations, the social uplift efforts of the group are reaching communities in

different parts of the world.

#he big boys in the group, the lies of #ata Steel, #ata #ea and #ata Chemicals, have in

house organisations dedicated to the community development tas, but that does not

mean smaller companies lag behind. %ach #ata company has its own priorities in social

development. #hey tae up whatever is relevant to the communities and constituencies in

which they function. Somebody is woring in water management, somebody is in

education, someone is in Aids containment, someone in income generation the range is

huge.

;R' #ata, Chairman (5=J5==5! #ata group, strongly believed that the CSR initiatives

of the #ata group should be institutionali"ed and it should not be left to individuals to

carry them forward. #herefore, suitable amendments were made to the Articles of

Association of the ma/or #ata group companies in the 5=M4s. )ewly included was an

article stating that the Fcompany shall be mindful of its social and moral responsibilities

to consumers, employees, shareholders, society and the local community.F *n another bid

to institutionali"e the CSR charter, a clause on this was put into the groupGs GCode of

Conduct.G #his clause stated that group companies had to actively assist in improving the

?uality of life in the communities in which they operated. All the group companies were

signatories to this code.

Since inception, the #ata group has placed e?ual importance on maximi"ing financial

returns as on fulfilling its social and environmental responsibilities popularly nown as

the triple bottom line. After decades of corporate philanthropy, the efforts of the group in

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recent years have been directed towards synchroni"ation of the #riple &ottom Eine (#&E

L -inancial Return, Social Responsibility and %nvironment Responsibility!.

#hrough its #&E initiative, the #ata group aimed at harmoni"ing environmental factors by

reducing the negative impact of its commercial activities and initiating drivesencouraging environmentfriendly practices. *n order to build social capital in the

community, the group has got its senior management involved in social programs, and

has encouraged employees to share their sills with others and wor with community

based organi"ations.

#A#A model for CSR can be seen as a model which is worth applying by other industries.

:. BIBLIO7RAPHY

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• -reeman, R.%. Strategic :anagement$ A Staeholder Approach ( 1itman

1ublishing$ :arshfield, :A ,5=J>!

• &owen, 2. R, Social responsibilities of the businessman ( )ew Hor $

2arper O Row, 5=

the corporate social responsibility of tata group

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