Corporate Social Responsiblity of Indian FMCG Companies

Corporate Social Performance
of Indian FMCG Companies

Introduction of CSR, framework and Karmayog CSR Ratings
with three top Indian FMCG companies CSR initiatives
Name of the author:

Saeed Khan
([email protected])
Information Systems Entrepreneur, Mumbai, India
Affiliated Institution:
The Jamnalal Bajaj Institute of Management Studies, Mumbai
164, Backbay Reclamation, HT Parekh Marg, Mumbai 200 020, India
Telephone: +91 2204 6444
Email: [email protected]
Website: http://www.jbims.edu
November 2009
Electronic copy available at: http://ssrn.com/abstract=1594507

Contents
Abstract3
Corporate Social Responsibility an introduction.5
Implementing CSR: The Framework for Action15
Corporate Social Performance of Indian FMCG18
Appendices..27
References..48
Corporate Social Performance of Indian FMCG Companies by Saeed Khan, JBIMS, India November 2009 - Page No. 2
Electronic copy available at: http://ssrn.com/abstract=1594507

Abstract
Effective Corporate Social Responsibilities (CSR) initiatives are those which
are taken keeping all the stakeholders issues in mind including the legal,
ethical, commercial and other expectations society has for business. There
are many definitions of CSRs available.
Many factors have led to companies paying attention to the CSR activities.
These include:
Sustainable development
Globalization
Governance
Corporate sector impact
Communications
Finance
Ethics
Consistency and Community
Leadership
Business Tool
Potential benefits of implementing a CSR approach by them are better
anticipation and management, improved reputation management, enhanced
ability to recruit, develop an

d retain staff, improved innov
ation,
competitiveness and market positioning, enhanced operational efficiencies
and cost savings, improved ability to attract and build effective and efficient
supply chain relationships, enhanced ability to address change, more robust
social licence to operate in the community, access to capital, improved
relations with regulators, a catalyst for responsible consumption.
The CSR Framework given by the World Economic Forum Global Corporate
Citizenship points out below:
1. Provide leadership
2. Define what it means for your company
3. Make it happen
4. Be transparent about it
CSR initiatives in India are now taken by many companies. Especially for the
FMCG companies, where the major challenge is reduction of packaging
materials, these companies are doing work in the field of Environment, Health
care, Education, Community welfare, Women's empowerment and Girl Child
care. Companies like Hindustan Unilever started CO2 reduction also.
The websites of these companies are providing information about their CSR
initiatives but are found not updated regularly. For checking their CSR
performance, Karmayog Rating is taken. The rating gives good insight. The
method of calculating the rating is also discussed.
In appendices, Indias top three major FMCGs companies overall CSR
initiatives are discussed.
Corporate Social Responsibility
An Introduction
What is CSR?
Corporate Social Responsibility (CSR) is viewed as a comprehensive set of
policies, practices and programs that are integrated into business operations,
supply chains, and decision-making processes throughout the organization
wherever the organization does business and includes responsibility for
current and past actions as well as future impacts. CSR involves addressing
the legal, ethical, commercial and other expectations society has for business,
and making decisions that fairly balance the claims of all key stakeholders.
Effective CSR aims at achieving commercial success in ways that honour
ethical values and respect peo

ple, communities, and the natu
ral
environment. Simply put, it means what you do, how you do it, and when
and what you say. Several terms have been used interchangeably with CSR.
They include business ethics, corporate citizenship, corporate accountability,
sustainability and corporate responsibility. The issues that represent an
organizations CSR focus vary by size (small, medium and large), sector (for
example, financial institutions, infrastructure providers, textile manufacturers,
agri-producers, supermarket retailers, etc.) and even by geographic region. In
its broadest categories, CSR typically includes issues related to business
ethics, community investment, environment, governance, human rights, the
marketplace and the workplace. [1]
Defining the CSR
Corporate Social Responsibility is a concept whereby companies integrate
social and environmental concerns in their business operations and in their
interaction with their stakeholders on a voluntary basis. Eu

ropean
Commission the commitment of business to contribute to sustainable
economic development, working with employees, their families, the local
community and society at large to improve their quality of life.' World Business
Council on Sustainable Development. [2]
Social responsibility (is the) responsibility of an organisation for the impacts
of its decisions and activities on society and the environment through
transparent and ethical behaviour that is consistent with su

stainable
development and the welfare of society; takes into account the expectations
of stakeholders; is in compliance with applicable law and consistent with
international norms of behaviour; and is integrated throughout the
organisation. [3]
As CSR issues become increasingly integrated into modern business
practices, there is a trend to

wards referring to it as resp
onsible
competitiveness or corporate sustainability. A key point to note is that CSR
is an evolving concept that currently does not have a universally accepted
definition. Generally, CSR is understood to be the way companies integrate
social, environmental and economic concerns into their values, culture,
decision making, strategy and operations in a transparent and accountable
manner and thereby establish better practices within the company, create
wealth and improve society. As issues of sustainable development become
more important, the question of how the business sector addresses them is
also becoming an element of CSR.
Above all, CSR is about sensit

ivity to contextboth societal and
environmentaland related performance. It is about moving beyond declared
intentions to effective and observable actions and measurable societal
impacts. Performance reporting is all part of transparent, accountableand,
hence, crediblecorporate behaviour. There is considerable potential for
problems if stakeholders perceive that a company is engaging in a public
relations exercise and cannot demonstrate concrete actions that lead to real
social and environmental benefits.
CSR can involve a wide range of stakeholders
A corporations stakeholders can include: shareholders, non-governmental
organisations, business partners, lenders, insurers, communities, regulators,
intergovernmental bodies, consumers, employees and investors.
Importance of CSR for the companies
Many factors and influences have led to increasing attention being devoted to
the role of companies and CSR.
These include:
Sustainable development
Globalization
Governance
Corporate sector impact
Communications
Finance
Ethics
Consistency and Community
Leadership
Business Tool
A 2004 GlobeScan CSR survey of more than 23,000 individuals in 21
countries suggests that the public expects more from the corporate sector:
In industrialized countries, trust in domestic (49%) and global companies
(38%) was lower than that of non-governmental organizations (68%), the
United Nations (65%), national governments (52%) and labour unions (50%).
While more recent surveys, including the 2007 Edelman Trust Barometer
show a rise in public trust in business, trust in CEOs remains low. For their
part, CEOs see the importance of sustainability and CSR.
According to the 10th PricewaterhouseCoopers Annual Global CEO Survey,
81 per cent of CEOs surveyed (between September and December 2006)
agreed or agreed strongly with the statement: My company s development
programme focuses increasingly on equipping leaders to take a role in
creating a sustainable business environment. A similar percentage of
respondents in a U.S. Chamber of Commerce survey conducted in late 2005
agreed that companies need to make corporate citizenship a priority.
Potential benefits of implementing a CSR approach
The key potential benefits for companies implementing CSR include:
Better anticipation and management of an ever-expanding spectrum of risk.
Effectively managing governance, legal, social, environmental, economic and
other risks in an increasingly complex market environment, with greater
oversight and stakeholder scrutiny of corporate activities, can improve the
security of supply and overall market stability. Considering the interests of
parties concerned about a companys impact is one way of better anticipating
and managing risk.
Improved reputation management. Organizations that perform well with
regard to CSR can build their reputation, while those that perform poorly can
damage brand and company value when exposed. Reputation, or brand
equity, is founded on values such as trust, credibility, reliability, quality and
consistency. Even for companies that do not have direct retail exposure
through brands, their reputation for addressing CSR issues as a supply chain
partner both good and badcan be crucial commercially.
Enhanced ability to recruit, develop and retain staff. This can be the direct
result of pride in the companys products and practices, or of introducing
improved human resources practices, such as family-friendly policies. It can
also be the indirect result of programs and activities that improve employee
morale and loyalty. Employees are not only front-line sources of ideas for
improved performance, but are champions of a company for which they are
proud to work.
Improved innovation, competitiveness and market positioning. CSR is as
much about seizing opportunity as avoiding risk. Drawing feedback from
diverse stakeholders can be a rich source of ideas for new products,
processes and markets, resulting in competitive advantages. For example, a
company may become certified to environmental and social standards so it
can become a supplier to particular retailers. The history of good business
has always been one of being alert to trends, innovation, and responding to
markets. Increasingly, mainstream advertising features the environmental or
social benefits of products (e.g., hybrid cars, unleaded petrol, 14 ethically
produced coffee, wind turbines, etc.).
Enhanced operational efficiencies and cost savings. These flow in particular
from improved efficiencies identified through a systematic approach to
management that includes continuous improvement. For example, assessing
the environmental and energy aspects of an operation can rev

eal
opportunities for turning waste streams into revenue streams (wood chips into
particle board, for example) and for system-wide reductions in energy use,
and costs.
Improved ability to attract and build effective and efficient supply chain
relationships. A company is vulnerable to the weakest link in its supply chain.
Like-minded companies can form profitable long-term business relationships
by improving standards, and thereby reducing risks. Larger companies can
stimulate smaller companies with whom they do business to implement a
CSR approach. For example, some large apparel retailers require their
suppliers to comply with worker codes and standards.
Enhanced ability to address change. A company with its ear to the ground
through regular stakeholder dialogue is in a better position to anticipate and
respond to regulatory, economic, social and environmental changes that may
occur. Increasingly, companies use CSR as a radar to detect evolving trends
in the market.
More robust social licence to operate in the community. Improved citizen
and stakeholder understanding of the company and its objectives and
activities translate into improved stakeholder relations. This, in turn, may
evolve into more robust and enduring public, private and civil society alliances
(all of which relate closely to CSR reputation, discussed above). CSR can
help build social capital.
Access to capital. Financial institutions are increasingly incorporating social
and environmental criteria into their assessment of projects. When making
decisions about where to place their money, investors are looking for
indicators of effective CSR management. A business plan incorporating a
good CSR approach is often seen as a proxy for good management.
Improved relations with regulators. In a number of jurisdictions, governments
have expedited approval processes for companies that have undertaken
social and environmental activities beyond those required by regulation. In
some countries, governments use (or are considering using) CSR indicators
in deciding on procurement or export assistance contracts. This is being done
because governments recognize that without an increase in business sector
engagement, government sustainability goals cannot be reached.
A catalyst for responsible consumption. Changing unsustainable patterns of
consumption is widely seen as an important driver to achieving sustainable
development. Companies have a key role to play in facilitating sustainable
consumption patterns and lifestyles through the goods and services they
provide and the way they provide them. Responsible consumerism is not
exclusively about changing consumer preferences. It is also about what goods
are supplied in the marketplace, their relationship to consumer rights and
sustainability issues, and how regulatory authorities mediate the relationship
between producers and consumers.
According to the 10th PricewaterhouseCoopers Annual Global CEO Survey,
81 per cent of CEOs surveyed (between September and December 2006)
agreed or agreed strongly with the following statement:
My companys development programme focuses increasingly on equipping
leaders to take a role in creating a sustainable business environment. A
similar percentage of respondents in a U.S. Chamber of Commerce survey
conducted in late 2005 agreed that companies need to make corporate
citizenship a priority.
There is general evidence that companies are beginning to benefit from their
CSR activities. This can be seen from such things as positive media profile
(e.g., winning awards, receiving attention), surveys of employee, community
and customer satisfaction, and from the success of CSR-driven business lines.
Here are some examples.
The Indian TATA group is engaged in a wide variety of activities directed at
helping community development. The company Web site lists examples of the
positive media this has generated.
http://tata.com/0_our_commitment/community_initiatives/index.html.
There are now high-profile lists of the most responsible companies. The
Innovest firm 100 Most Sustainable Companies in the World list, for example,
has been released annually at the World Economic Forum since 2005.
http://www.innovestgroup.com/
Study shows benefits of CSR
Based on a two-year study, the World Business Council for Sustainable
Development has drawn several conclusions about the benefits of CSR to
companies
A coherent CSR strategy, based on integrity, sound values and a long-term
approach, offers clear business benefits to companies and helps a them make
a positive contribution to society;
A CSR strategy provides businesses with the opportunity to show their
human face;
Such a strategy requires engagement in open dialogue and constructive
partnerships with governments at various levels, intergovernmental
organizations, non-governmental organizations, other elements of civil society
and, in particular, local communities;
When implementing a CSR strategy, companies should recognize and
respect local and cultural differences, while maintaining high and consistent
global standards and policies; and
Being responsive to local differences means taking specific initiatives.
[4]
Implementing CSR:
The framework for action
There is no fix format of the CSR framework or method for implementing CSR
in any organisation. However, we will study below simple framework
described by World Economic Forum Global Corporate Citizenship.
Leadership Challenge and the Framework for Action
The opportunity to leverage business activity to create sustainable economic
growth has never been so good. Today, the business community recognizes,
the essential imperative to deliver economic growth that gather together the
natural resources, spreads the fruits of the global economy and contributes to
fair and equitable social development. Over the past several years, the
business community has devoted considerable attention to corporate
responsibility, bringing a spirit of innovation and partnership. In many cases,
however, these programmes have focused on symptoms rather th

an
addressing root causes.
The CSR initiative should be taken in such way to have more universal impact.
The business has to play an important role when Leadership is concerned.
The framework discussed here has the potential to create the conditions in
which businesses can flourish, governments can more effectively deliver
public goods and social protection and, most importantly, societies can enjoy
the fruits of sustainable economic growth.
1. Provide leadership
Include public governance approaches in corporate responsibility and
corporate global citizenship strategies.
Use opportunities for dialogue with public sector leaders to raise this topic
and communicate with civil society.
Communicate the business case for strengthening public governance,
including global governance.
Support public-private-civil society collaboration as an essential tool for
addressing core questions.
2. Define what it means for your company
Identify the opportunities for impact that are most relevant to your company.
Implement strategies based on your companys areas of grea

test
competence.
3. Make it happen
Make public governance an element of all corporate global citizenship
activities.
Align government affairs and corporate global citizenship activities in support
of essential business strategy.
Set goals, measure performance and review progress.
Build industry coalitions/collaborations to address universal issues.
4. Be transparent about it
Report publicly on progress and challenges.
Engage in dialogue with the public sector and civil society on how to address
barriers and increase positive impacts.
[5]
Corporate Social Performance of
Indian FMCG Cos.
Indian FMCG companies include domestic as well multinational companies.
These companies are doing business of selling FMCG products ranging from
Personal Care like shampoos, hair oil, body lotions, soaps, Home & Fabric
Care like detergents, laundry soaps, to Foods products like biscuits, jams, fruit
juices, etc. The main CSR challenges for these companies are reduction in
the use of packaging material, environment protection and health care of
direct stakeholders at the manufacturing areas, recycling of the waste material,
etc.
With the help of Karmayog ratings and information made available on their
websites by these companies, we try to analyse how Indian FMCG companies
are doing in the field of Corporate Social Responsibility or CSR.
Karmayog CSR Rating for 2007-8
The problems and issues that confront society today are too large and
complex to be solved by government and NGOs alone. Sustainable solutions
to societys problems can only be found through the collaboration and
involvement of all who are part of it.
Companies have tremendous strengths; they have extremely capable people,
technology, access to money, the ability of geographical reach, etc. Many
companies worldwide and now even in India are more powerful than
governments and even countries, and thus cor
porates are important
stakeholders in society. CSR Ratings are important to various stakeholders
for different reasons: - government bodies can use CSR Ratings to develop
industry-wise CSR guidelines, industry associations can use them to set
benchmarks of CSR for companies to follow, NGOs get to know about the
CSR undertaken by companies, thus enabling partnerships with them, and
companies themselves learn about and from the CSR initiatives of other
companies.
The Karmayog Corporate Social Responsibility Study and Ratings of Indian
Companies provides to explore and understand the role that corporates are
playing and can play in finding meaningful solutions to the problems facing
India today. Usually corporates are invited to enter or nominate themselves
for CSR awards, and hence only the good companies are highlighted,
whereas a rating enables a comparative study across all companies.
Karmayog undertook a CSR study and rating to understand the CSR activities
of all companies on an equal level, thus showing up companies doing no CSR,
as well as showcasing companies doing good work.
The Karmayog CSR Ratings also help to identify areas where corporates,
government and civil society organizations can work together.
Karmayog CSR Ratings criteria
List of 1000 largest Indian companies is taken as per Sales figures from the
BSE Sensex as in June 2008
Information on the 1000 companies was collated from the companys
website and Annual Report of 2007-2008
Impact of the products and processes of the company is taken into account
CSR initiatives of the company for the current period are studied, including a
comparison with previously listed CSR initiatives.
Companies are rated from Level 0 to Level 5 (Level 5 being the highest)
Rating is based on Sufficient, Necessary and Negative Criteria for different
levels
All companies were informed of the assigned rating and requested to
respond with further information, if necessary
The Karmayog CSR Rating of any company is open to review whenever new
information is provided by the company
A) Minimum Necessary Criteria
Necessary parameters that make a company eligible for a particular

rating level:
Necessary Criteria Explanation Rating

Level
If undertaking any CSR Activity Where any kind of social, developmental or Level 1
community work is done
If CSR is linked to reducing the negative CSR activities that aim to improve processes and Level 2
impacts of companys own products or products of the company.
processes
If CSR initiatives are for the local CSR activities that are focused on those who are Level 3
community affected directly by the company
If CSR is embedded in the business CSR activities form a part of the daily business Level 4
operations activities of the company.
If innovative ideas and practices are CSR activities enable sustainable and replicable Level 5
developed for CSR solutions to problems faced by society.
B) Sufficient Criteria for Minimum Rating
If the company is doing this, they automatically get this rating at least
Sufficient Criteria What this means Rating

Level
Company fulfilling the basic needs of The products and services of the company are useful Level 1
society and benefits society
e.g. manufacture of food
Unique CSR activity which would not The CSR activity being undertaken by the company is Level 1
otherwise happen not being done by government, NGOs, etc.
e.g. Developing a mapping and tracking
software for adoption in India
Company reducing negative impact of The companys products or services provide solutions Level 1
others to mitigate harm caused by actions of companies,
e.g. A company that makes water their products, etc.
purification & waste recycling systems
Company adopting the GRI Framework for The company is committed to measuring and Level 2
CSR reporting reporting its CSR initiatives as per a voluntary
globally accepted framework.
Companys annual expenditure on CSR = The company is committed to a minimum expenditure Level 3
0.2% of sales on CSR annually, and thus considers CSR as an
integral part of its business
C) Negative Criteria that usually determine the maximum possible
Rating
Companies in this category will not normally get a higher rating than the one
shown
Negative Criteria Reason Rating

Level
Companies that make liquor, tobacco, These products are not needed by society, and Level 0
genetically modified crops cause harm to people and the environment.
The CSR to do is to stop making these
products.
Companies that violate CSR is not limited just to how a company Level 1
laws/rules/regulations spends its money, but also to how it makes
that money in the first place
Companies engaged in high impact Processes that severely damage the Level 1
processes environment require extraordinary efforts by
the company to reduce and repair the damage,
and require greater contributions to benefit
society
Mandatory Recommendations
There are 3 mandatory recommendations flowing from the premise that every
company must do CSR, and these are:
1. Minimum annual CSR expenditure
Every company must spend a minimum of 0.2% of its sales on CSR activities (i.e. Rs.
20 lakhs per Rs. 100 crores). The scale of operations of a company and its impact is
connected with its turnover and not with its profit. The larger the company the greater
is the damage it is doing to the environment. Conversely the greater is the companys
ability to do well.
2) CSR Reporting
A Corporate Sustainability section should be included in the Annual Report and
preferably a separate Corporate Sustainability Report (as per the Global Reporting
Initiative framework) should be published by the company.
CSR reporting should also include details of CSR expenditure by the company.
CSR is linked to the companys processes. It is recommended that the section on
CSR reporting should come after the EHS (Environment Health and Safety) section
in the Annual Report.
3) Other recommended steps for CSR
a) Adoption of industry guidelines for improving processes
The first step is to identify and adopt methods to minimize the environmental damage
caused by the products and processes. A comprehensive set of guidelines, both
general as well as sector-specific, have been drawn up by the World Bank. These
are known as the Environment, Health and Safety Guidelines (EHS) of the
International Finance Corporation (IFC). The EHS Guidelines are technical reference
documents with general and industry-specific examples of good international industry
practice.
b) CSR linked to the skills of a company
Companies must use their core competence, skills and strengths while undertaking
CSR activities, as CSR is not an un-related activity
c) CSR linked to the location of a company
Companies must first undertake CSR activities in the areas they are located in.
(factories, plants, offices, etc.) The greatest impact (in terms of land, pollution,
livelihoods, etc.) is on the local environment and community, and hence companies
must focus on improving conditions in the communities in which they operate.
Non Mandatory Recommendations
Karmayog has also made 8 non-mandatory recommendations on CSR to
enable companies to make their CSR programmes more meaningful and
effective.
1. CSR philosophy to be defined
2. Ensure responsibility of suppliers
3. Create inclusive employment
4. Link CSR initiatives to governments development plans
5. Involve employees in CSR
6. CSR activity to improve the industry sector
7. Expand Reach to benefit society
8. Support areas and issues that are neglected
Analysis of CSR Performance of Indian FMCG Cos. Based on Karmayog
ratings and information made available on their websites by these
companies.
1). Only three companies got the rating of 3 and three companies got the
rating of 1. No company out of 16 got more than 3 rating.
2). No companies have mentioned their CSR spending.
3). There are indications that CSR initiatives are for the local communities,
however few companies are moving towards business embedded CSR
initiatives.
4). Almost all 16 companies are doing CSR activities.
5). Analysing these companies websites, its found that Indian FMCG
companies are energy conscious and working reducing energy consumption
and also earning the carbon credits.
6). Companies like Hindustan Unilever, Tata Tea, and Dabur are more CSR
active.
7). CSR challenge to these companies is reduce use of packaging material,
recycle and use waste material, be energy conscious.
8). Companies like Tata Tea are more CSR conscious and publishes
Sustainability Report every year.
9). The websites are not updated about the latest CSR initiatives they had
taken.
10). Many FMCG companies are involved in environment protection CSR
initiatives.
Recommended
CSR
Sales ('07-'08) (0.2% of sales) CSR
in crores. in Rating
Sr No. Company (Rs.) crores (Rs.) ('07-'08) CSR areas
Community welfare,
1 Dabur India Ltd. 2120 4.2 3 Environment
Community welfare,
Health care,
Women, Education,
2 Hindustan Unilever Ltd 14000 28.0 3 Environment
Environment, Health
care, Education,
Community welfare,
Women's
empowerment, Girl
3 Tata Tea Ltd. 1150 2.3 3 Child
4 Britannia Industries Ltd 4600 9.2 2 Community welfare

Health care,
5 Colgate-Palmolive (India) Ltd 1500 3.0 2 Education
Community welfare,
6 Emami Ltd 580 1.2 2 Health care
7 Gillette India Ltd 600 1.2 2 Water

GlaxoSmithkline Consumer Environment,
8 Healthcare Ltd 1300 2.6 2 community welfare
9 Henkel India Ltd 390 0.8 2 Environment

Environment,
Education, Health
10 Mcleod Russel India Ltd. 655 1.3 2 care
Community welfare,
11 Nestle India Ltd. 1000 2.0 2 Environment
Procter & Gamble Hygiene &
12 Health Care Ltd. 645 1.3 2 Education
Community welfare,
Health care,
13 Tata Coffee Ltd. 360 0.7 2 Education
14 Godrej Consumer Products Ltd 880 1.8 1 Environment

Community welfare,
15 Marico Ltd. 1500 3.0 1 Disaster relief
Community welfare,
16 Nirma Ltd. 2300 4.6 1 Education
[6]
Appendices
Dabur India Ltd:
Dabur's major initiatives in the Social sector include:
Establishment of the Sustainable Development Society, or Sundesh, in 1993
- a non-profit organisation to promote research and welfare activities in rural
areas; Promoting health and hygiene amongst the underprivileged through the
Chunni Lal Medical Trust; and Organising the Plant for Life programme for
schoolchildren - to create environmental awareness amongst young minds.
Dabur's commitment to Environment
Dabur values natures bounty and committed to ecological conservation and
regeneration. Dabur follows the principles of ancient texts, which say:
"Dehi me dadami te" - "you give me, and I give you".
Plants for Life
Dabur has set up the Plants for Life project in the mountainous regions of the
Himalayas. Under the project, a high-tech greenhouse facility has been set up
for developing saplings of rare and endangered medicinal plants. Fully
computer-controlled and monitored, this greenhouse maintains the highly
critical environmental parameters required for their survival. They are also
developing quality saplings of more than 20 herbs, 8 of them endangered,
through micro propagation.
In addition, satellite nurseries spread across mountain villages and contract
cultivation of medicinal herbs helps in maintaining the ecological balance.
These measures have also helped provide local cultivators the scientific
knowledge for harvesting herbs and a steady source of income. So that they
are not forced to exploit the environment to earn a livelihood.
Conservation of Energy
Dabur has been undertaking a host of energy conservation measures.
Successful implementation of various energy conservation projects have
resulted in a 13.8% reduction in the Companys energy bill in the 2008-09
fiscal alone. What was noteworthy was the fact that this reduction has come
despite an 8-9% volume increase in manufacturing, and an average 11.7%
increase in cost of key input fuels.
The host of measures key among them being use of bio-fuels in boilers,
generation of biogas and installation of energy efficient equipment helped
lower the cost of production, besides reduce effluent and improve hygiene
conditions & productivity.
Technology Absorption
Dabur has also made continuous efforts towards technology absorption and
innovation, which have contributed towards preserving natural resources.
These efforts include:
Minimum use of water in process by pre-concentration of herbal extract and
reduction in concentration time.
Uniform heating in VTDs by hot water as against steam earlier, resulting in
30% reduction in bulk wastage by using non-stick coating and formulation
change.
Improvement in water treatment plant through introduction of RO (Reverse
Osmosis) system for DM water, reutilization of waste water from pump seal
cooling and RO reject waste-water management.
Introduction of water efficient CIP system with recycling of water in fruit juice
manufacturing. Development of in-house technology to convert fruit waste into
organic manure by using the culture Lactobacilus burchi.
The Company has achieved a host of significant benefits in terms of product
improvement, cost reduction, product development, import substitution,
cleaner environment and waste disposal, amongst others.
Health Safety & Environmental Review
Renewing the commitment to Health Safety and Environment, Dabur has
formulated a policy focusing on People, Technology and Facilities. A
dedicated Safety Management Team has also been put in place to work
towards the prevention of untoward incidents at the corporate and unit level,
besides educate & motivate employees on various aspects of Health, Safety
and Environment.
The Company is also continuously monitoring its waste in adherence with the
pollution control norms. In pursuance of its commitment towards the society,
efforts have also been initiated to conserve and maintain the ground water
level. The efforts include implementation of rainwater harvesting, which has
delivered encouraging results and has put the company on the path to
becoming a Water-Positive Corporation.
Dabur also initiated a Carbon Foot Print Study at the unit level with an aim to
become a carbon positive Company in years to come.
[7]
Hindustan Unilever Ltd:
Hindustan Unilever Ltd. (HUL) is engaged different CSR programs. These
include:
Water Conservation and Harvesting;
Project Shakti;
Lifebuoy Swasthya Chetna;
Fair & Lovely Foundation for he

t economic empowerment of women
(scholarships);
Happy Homes: Asha Daan, Ankur, Kappagam, Anbagam;
Sanjivani - Medical Care to Rural India;
Water Conservation and Harvesting
Water scarcity is one of the biggest crises facing India. Water management
has been a focus area for HUL, and has been made one of the key
performance indicators of all HUL factories. HUL is also committed to
extending its efforts on water management to the larger community, and has
engaged in community projects in water adjacent to manufacturing sites.
In association with an NGO, Vanarai, HUL's Silvassa manufacturing hub (in
the Union Territory of Dadra & Nagar Haveli) embarked on a long-term project
of water harvesting, which aimed to dramatically change water availability,
taking it up to year-round availability from 4 months.
One of the first steps taken n
i the community was the awareness building
process, which was accomplished with Vanarais help, reaching out to every
corner of the village and involving every member of the village. Although it
was a slow, difficult process, getting buy in of the village and the Union
Territory government was the key to sustained success of the programme.
Once HUL had their commitment, the villagers were trained by Vanarai at
Pune in areas including building of watershed structures. The partners and
teachers also visited the agriculture centres around Gujarat.
From their learning, the community built 14 Vanarai bunds (structures made of
sacks filled with sand) in 2003, 33 Vanarai bunds in 2004, 31 Vanarai bunds
in 2005 ,18 Vanarai bunds in 2006, 19 Vanrai bunds in 2007 and 6 Vanarai
bunds in 2008 (some of Vanrai Bunds were made by villagers themselves).
Approximately 5 % of total run off was harvested in 2007. This enabled the
community to sow a second crop, thereby significantly increasing their
incomes
The bunds increased the availability of water in a year itself from 4 monsoon
months to 8 months. The region for the first time in its history saw the second
crop, rabbi being planted. It consisted of wheat, pulses, and seasonal
vegetables. Bund plantations in the village helps generate timber, firewood
and also demonstrates the benefits of green cover. Continuous Water
Trenches reduced the speed of water and soil erosion. They also reduced
wind erosion, increasing moisture holding capacity of soil, increasing its
fertility as well as supporting water percolation and ground water recharge.
From 2004 to 2008, 133 Bunds were created as a part of the water harvesting
initiative. Under community welfare initiatives, credit cards were distributed to
farmers. As a part of the aforestation activity, 58000 trees were planted
covering 43 hectare land and over 8000 Mango plants were distributed to
farmers as a part of the Horticulture development programme.
In 2008, HUL in partnership with NGO Vanarai and Aide et Action started a
project called project 'Samruddhi' (meaning prosperity). Under this project the
watershed development activities have been extended to other villages like
Dapada & Patti village in Silvassa, Dadra and Nagar Haveli. As a part of the
project so far 18 Vanarai bunds have been created in Dapada, Patti and
Karchond villages.
HULs Khamgaon factory is located in a dry and arid region of Maharashtra.
Around 12 years ago the factory started a pilot on Watershed Management
on a 5-hectare plot to prevent soil degradation and conserve water. The
efforts have resulted in the creation of a green belt, which is now a veritable
forest of about 6300 trees.
Encouraged by the results, HUL extended the model to a neighboring village,
Parkhed, in association with the TERI and the Bharatiya Agro Industries
Foundation.
The community at Parkhed has constructed 47 percolation bunds, 1600
trenches, 6000 running metres of continuous contour trenching over 100
hectares and 5 permanent check dam. About 7000 saplings have been
planted in 2006 in addition to 10000 planted in 2004 and 20,000 saplings
were planted during the 2003 monsoon.
Total 5 check dams have been built since the inception. This has increased
the area for second crop to over 400 acres, but the cluster of check dams will
lead to general increase in ground water level in the village. The check dams
ensure water availability throughout the year and now over 40% of the village
wells will be benefited through the check dams.
350 families benefited by taking second crop. The annual income of the
farmers in the vicinity of 5 check dams was approximately Rs. 36000/- on an
average before the construction of the check dam. After the construction of
the check dams, the annual income has risen to approx. Rs. 85000/- per
annum per farmer. This has been attributed to the availability of water in the
wells during the Rabbi season and also increase in level of water in the wells
during the Kharif season.
The initiative received appreciation at the Johannesburg World Summit on
Sustainable Development.
Project Shakti: Changing lives in rural India
HUL's Project Shakti is a rural initiative that targets small villages populated
by less than 2000 individuals. It is a unique win-win initiative that catalyses
rural affluence even as it benefits business.
Project Shakti impacts society in two ways the Shakti Entrepreneur program
creates livelihood opportunities for underprivileged rural women and the
Shakti Vani program improves quality of life by spreading health and hygiene
awareness. Project Shakti benefits business by significantly enhancing HULs
direct rural reach, and by enabling HULs brands to communicate effectively in
media-dark regions.
The Shakti Entrepreneur program recognises that while micro-credit plays a
key role in alleviating poverty, its ability to do so depend on the availability of
investment opportunities. Shakti contributes by creating profitable micro-
enterprise opportunities for rural women. Armed with micro-credit, rural
women become Shakti entrepreneurs: direct-to-home distributors in rural
markets. This micro-enterprise offers low risks and high returns. The products
distributed are some of the countrys most trusted brands of consumer goods,
and include a range of mass-market products especially relevant to rural
consumers. Moreover, HUL invests its resources in training the entrepreneurs,
helping them become confident, business-savvy professionals capable of
running their own enterprise.
Shakti entrepreneurs typically earn between Rs. 600 to Rs. 800 per month. As
most of these women are from below the poverty line and live in extremely
small villages (population between 2000-5000), this earning is very significant,
and often doubles their household income.
Poor hygiene practices are the single largest cause of common diseases such
as diarrhoea. Lack of awareness of basic health and hygiene practices kills
over 500,000 children every year in rural India. The Shakti Vani Program
educates rural community about basic health practices. Rural women are
appointed as Vanis (communicators) and trained to communicate in social
fora such as schools and village get-togethers. The Vani program covers
areas including pre and post-natal care, infant nutrition, sanitation, good
hygiene practices, and the prevention of common diseases. By end 2007, the
Vani programme had covered over 50,000 villages, reaching out to over 50
million people.
Various central and state government agencies, including the governments of
Andhra Pradesh, Karnataka, Madhya Pradesh, Chhatisgarh, Uttar Pradesh,
and Orissa have extended support to Shakti. Over 300 NGO's are actively
involved in the project. A national MOU has been signed with CARE India,
covering the fields of health and hygiene awareness and functional adult
literacy.
Shaktis impact on society is far-reaching. The Shakti entrepreneur program
creates livelihood opportunities for underprivileged rural women. It has
already improved the lives of over 45,000 families of Shakti entrepreneurs.
The Shakti Vani program works to improve the quality of life in rural India, by
spreading awareness of best practices in health and hygiene.
Shakti operates in fifteen states: Andhra Pradesh, Karnataka, Tamil Nadu,
Gujarat, Madhya Pradesh, Chattisgarh, Maharashtra, Uttar Pradesh, Punjab,
Haryana, Rajasthan, West Bengal, Bihar, Jharkhand and Orissa. There are
over 45,000 Shakti entrepreneurs covering over 100,000 villages across 15
states. The Vani program has covered over 50,000 villages.
Lifebuoy Swasthya Chetna, Health & Hygiene Education
Lifebuoy Swasthya Chetna (LBSC) is a rural health and hygiene initiative
which was started in 2002. LBSC was initiated in media dark villages (in UP,
MP, Bihar, West Bengal, Maharashtra, Orissa) with the objective of spreading
awareness about the importance of washing hands with soap.
According to a study done by the London School of Hygiene and Tropical
Medicine, the simple practice of washing hands with soap and water can
reduce diarrhoea by as much as 47%. However, ignorance of such basic
hygiene practices leads to high mortality rates in rural India.
Being Indias leading personal wash health brand, Lifebuoy saw a role for
itself in propagating the message of hygiene and health in villages. HUL
launched Lifebuoy Swasthya Chetna initiative keeping this rationale in mind.
LBSC is a multi-phased activity which works towards effecting behaviour
change amongst the rural population it touches. It demonstrates that visible
clean is not really clean thereby proving the importance of washing hands. It
targets children as they are the harbingers of change in society and mothers
since they are the custodians of health.
The Indian postal department released a special postal cover on Lifebuoy
Swasthya Chetna on the occasion of World Health Day (April 7) in 2006.
The programme has touched 50676 villages and 12 crore people since 2002.
In 2008 alone LBSC contacted 15,000 villages in UP, MP, Maharashtra, Bihar,
Karnataka.
Fair & Lovely Foundation for the economic empowerment of women
(scholarships)
The Fair & Lovely (FAL) Foundation aims at economic empowerment of
women across India by providing information, resources and support in the
areas of education, career and enterprise. It specifically targets women from
low-income groups. The Foundation has renowned Indian women, from
various walks of life, as its advisors. Among them are educationists, NGO
activists, physicians. The Foundation is implementing its activities in
association with state governments. The series of projects that have been
drawn up to achieve the vision include the following:
Fair & Lovely Scholarships
Fair & Lovely Foundation has awarded over 600 deserving girls since 2003.
Fair & Lovely Scholarships awards scholarships to women with aptitude, drive
and the ambition to carve a place of pride for themselves in society, but do not
have the financial strength to realize their dreams. In its third year these
scholarships was extended to graduate studies owing to requests from HULs
consumers. Scholarships of up to Rs 1 lakh each (approximately 1818 euros)
are awarded to deserving young girls from across the country, for any
graduate, post- graduate and doctorate courses within India.
Fair & Lovely Career Fairs
Over 6,00,000 students have benefited from Career Fairs conducted in all
over cities in India. Fair & Lovely Career Fairs are designed to address the
needs of girl students passing out of Class X and XII. The project aims to
answer the various career related questions that students face at the
crossroads of their life. Fair & Lovely Career Fair influences career decisions
through proper guidance and relevant information, transmitted through mass
media, and by direct contact with students.
Fair & Lovely Shikhar
Fair & Lovely Shikhar, an initiative by Fair & Lovely, aimed to explore the
inspiring stories of women achievers who have overcome all obstacles with
their strong will and positive attitude and changed their destinies. Fair &
Lovely Shikhar is a unique concept based on a real life scenario of women
from various walks of life. The thirteen episode series were aired on Sony
Entertainment Television, between August 28th to November 20th, 2005.
Fair & Lovely Project Suvarna
Project Suvarna is an identification and training activity aimed at harnessing
available talent in selected events in Women Athletics in the age groups of
under 12, 14, under 16 and under 18. This activity was conducted in 2 states
in India - Maharashtra and Tamil Nadu - in the year 2005.
Participants in this programme were selected strictly based on relative
superiority of athletic abilities among the competing girls at the selection trial
as judged by PT Usha, the renowned Indian international athlete. Out of the
5000 girls who participated, 173 were selected. These 173 underwent training
under the guidance of Ms. P. T. Usha at her Academy.
Fair & Lovely Project Swayam
Project Swayam is an initiative in the area of education and enterprise for
women by Fair & Lovely Foundation in association with VRDC (Vanasthali
Rural Development Centre). Under this project women were trained to
become Pre-school teachers. Post their training, these women, with help from
VRDC could start their own schools, providing them with an earning
opportunity. This project was replicated in Bihar in association with local NGO
Jan Jagran Sansthan, in the year 2005.
Happy Homes, Special Education & Rehabilitation
Under the Happy Homes initiative, HUL supports special education and
rehabilitation of children with challenges.
Asha Daan
The initiative began in 1976, when HUL supported Mother Teresa and the
Missonaries of Charity to set up Asha Daan, a home in Mumbai for
abandoned, challenged children, the HIV-positive and the destitute. HUL
bears the capital and revenue expenses for maintenance, upkeep and
security of the premises.
At any point of time, about 370 inmates comprising of boys, girls, men and
women are housed at the Home. Food, clothing and medicines required by
inmates are taken care of by ht e donations received from the locals of
Mumbai city.
Till November 2008, 15933 numbers of individuals have benefited from
Ashadaan.
Ankur
In 1993, HUL's Doom Dooma Tea Plantation Division set up Ankur, a centre
for special education of challenged children. Since 2006, HUL Personal
Products Factory, Doom Dooma took over the reign from the Tea Divisions.
The centre takes care of children with challenges, aged between 5 and 15
years. Ankur provides educational, vocational and recreational activities to
over 50 children with a range of challenges, including sight or hearing
impairment, polio related disabilities, cerebral palsy and severe learning
difficulties. These children are taught skills, such as cookery, painting,
embroidery, bamboo crafts, weaving, candle making, stitching, etc. depending
on their aptitudes. The centre has rehabilitated 10 children, including self-
employment for 6 children by providing them with shops, and 3 girls have
been provided employment as crche attendants. It has also helped 18
children in moving them to normal schools.
Since inception it has covered more than 80 children. Ankur received the
Lawrie Groups Worldaware Award for Social Progress in 1999 from Her
Royal Highness in London.
Other shelter houses started by HUL are Kappagam, South India in 1998 and
Anbagam in 2003.
Sanjivani - Medical Care to Rural India
HUL started Sanjivani a free mobile medical service camp in the year 2003
near its Doom Dooma factory in Assam. The aim was to provide free mobile
medical facility to the interior villagers in Assam. This was done keeping in
mind the lack of quality medical facilities available in the villages in and
around Doom Dooma.
In a year, approximately 400 medical camps are conducted under the
Sanjivani project. Along with the regular consultancy and treatment given at
the medical camps, Sanjivani also undertakes activities like awareness
campaigns on hygiene, child immunization camps, iron supplement therapy,
free eye check ups, family planning awareness camps, anti-tobacco education
and anti-alcoholism camps, based on the requirement of the villagers.
Moreover, Sanjivani team has also helped in supporting Government
agencies and held camps in collaboration with Indian Medical Association
also, in Tinsukia district.
Villages falling within the radius of 30 kms have been identified for the project
and they are centrally located with many bordering villages. Although
government primary health centers are available in and around the areas
identified but the necessary medical facilities are not available. Sanjivani is a
big relief to villagers in this region.
The Sanjivani project has provided medical assistance to more than 1, 54,500
patients since its inception and in 2007 alone in 344 camps more than 22,395
patients were treated. In 2008 through 438 camps, 32,000 patients have been
treated.
[8]
CO2 Reduction Program
HUL harnesses agro waste in a move to turn green, earn more greenbacks.
HUL hopes to piggyback on nondescript agricultural waste as it sets out to
achieve multiple objectives of strengthening its bottomline and reducing
harmful emissions. The company has an ambitious target to reduce carbon-
dioxide emission (CO2) in its manufacturing operations by 25 per cent in the
next four years by using agri-waste to fuel its boilers in factories.
The company also has set out a 10-year plan to earn lucrative carbon credits
through emission reduction technologies. Our energy costs have come down
by 30 per cent in those factories where we are using agri waste to run
boilers," HUL executive director Dhaval Buch told Hindustan Times.
Agricultural waste such as groundnut shells, bagasse (from sugarcane), saw-
dust, coconut shells, cashew kernels etc. do not have any primary use. What
these waste products do have, is a fair amount of calorific value -- the ability
to burn and impart heat -- which comes in handy if one o

l oks at them as
potential fuels.
HUL first used agri-waste in its factory in Chiplu

n, Ratnagiri district,
Maharashtra, and followed it up with another plant in Pondicherry. Buch said
the exercise would be extended to plants located across the country.
The company has also developed a process of manufacturing soap based on
'Plough Share Mixer' technology, which eliminates the need for steam in
soap-making. That cuts carbon emissions by 15,000 tonnes a year.
HUL is also expecting additional revenue by trading carbon credits regulated
by the United Nations Framework of Climate Change (UNFCC). The UNFCC
has put in place all the rules and the required apparatus. Authorised agencies
certify the reduction in carbon emissions through a particular technology or
project in terms of "units." The price of carbon is fixed on a per tonne basis
and determined by market forces. Buch said the projects would help the
company earn carbon emission reduction (CER) of approximately 27,000 a
year for the next 10 years. Under UNFCC norms one CER is equivalent to
reduction in emission of one tonne of carbon dioxide.
[6]
Tata Tea Ltd.:
The welfare and the well being of Tata Tea's large workforce - about 34,000
employees and their families drawn largely from the weaker sections of the
society is of paramount importance to the company. The company has put in
dedicated effort and large expenditure, entirely voluntary, that has gone into
upgrading the quality of life of the workforce. Significant contribution to the
country's social, cultural and environmental development.
Comprehensive labour welfare programmes that offers free housing,
healthcare and community development facilities.
Manages estate hospitals and 2 large referral hospitals. Manages adult
literacy centres, and childcare centres.
Has established schools to educate children of estate employees, and has
instituted scholarships for these children.
Manages a programme for physically disadvantaged children in its estate
[6]
Tata Tea have won several CSR awards and have well structured process for
identifying key communities and implementing social welfare plans.
Tata Tea continues to support and take responsibility for the General Hospital,
Shrishti welfare centre, and High Range school at Munnar.
Shrishti welfare centre setup for differently abled children of the tea
community runs a DARE school for special children, Strawberry Preserve Unit,
Athulya Hand-made Paper Unit, and Aranya a dying unit specialising in
shibori dying, a Japanese tie and dye art form.
Tata Tea Supporting and strengthening communities in below areas:
Health Care
Reproductive health
Child care education
Education
AIDS awareness/Adult literacy
Employment of women and physically challenged
Community participation
Environmental preservation
Natural calamities
[9]
References
[1] Research Capsule: The Status of Corporate Social Responsibility in India
A Note by Environmental Management Centre May2005
[2] Whats wrong with Corporate Social Responsibility? Corporate Watch
Report 2006
[3] Working definition, ISO 26000 Working Group on Social Responsibility,
Sydney, February 2007
[4] Corporate Social Responsibility, An Implementation Guide for Business, by
Paul Hohnen and Jason Potts, nternational

I Institute of Sustainable
Development (IISD)
[5] Partnering to Strengthen Public Governance, The Leadership Challenge
for CEOs and Boards, World Economic Forum Global Corporate Citizenship
Initiative in partnership with Business for Social Responsibility, John F
Kennedy School of Management - Harvard University, International Business
Leaders Forum and AccountAbility - January2008
[6] Karmayog website http://www.karmayog.com
[7] Dabur corporate website http://www.dabur.com
[8] Hindustan Unilever corporate website http://hul.co.in
[9] Tata Tea corporate website http://www.tatatea.com

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Corporate Social Performance

of Indian FMCG Companies

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Information Systems Entrepreneur, Mumbai, India

Electronic copy available at: http://ssrn.com/abstract=1594507

Corporate Social Responsibility an introduction.5

Implementing CSR: The Framework for Action15

Corporate Social Performance of Indian FMCG18

Electronic copy available at: http://ssrn.com/abstract=1594507

are many definitions of CSRs available.

Corporate sector impact

Consistency and Community

Potential benefits of implementing a CSR approach by them are better

anticipation and management, improved reputation management, enhanced

ability to recruit, develop an

competitiveness and market positioning, enhanced operational efficiencies

supply chain relationships, enhanced ability to address change, more robust

relations with regulators, a catalyst for responsible consumption.

Citizenship points out below:

2. Define what it means for your company

FMCG companies, where the major challenge is reduction of packaging

care, Education, Community welfare, Women's empowerment and Girl Child

care. Companies like Hindustan Unilever started CO2 reduction also.

method of calculating the rating is also discussed.

In appendices, Indias top three major FMCGs companies overall CSR

initiatives are discussed.

Corporate Social Responsibility (CSR) is viewed as a comprehensive set of

supply chains, and decision-making processes throughout the organization

wherever the organization does business and includes responsibility for

Effective CSR aims at achieving commercial success in ways that honour

ethical values and respect peo

They include business ethics, corporate citizenship, corporate accountability,

sustainability and corporate responsibility. The issues that represent an

example, financial institutions, infrastructure providers, textile manufacturers,

agri-producers, supermarket retailers, etc.) and even by geographic region. In

its broadest categories, CSR typically includes issues related to business

ethics, community investment, environment, governance, human rights, the

marketplace and the workplace. [1]

Corporate Social Responsibility is a concept whereby companies integrate

social and environmental concerns in their business operations and in their

interaction with their stakeholders on a voluntary basis. Eu

Commission the commitment of business to contribute to sustainable

economic development, working with employees, their families, the local

Council on Sustainable Development. [2]

Social responsibility (is the) responsibility of an organisation for the impacts

of its decisions and activities on society and the environment through

transparent and ethical behaviour that is consistent with su

of stakeholders; is in compliance with applicable law and consistent with

international norms of behaviour; and is integrated throughout the

As CSR issues become increasingly integrated into modern business

practices, there is a trend to

competitiveness or corporate sustainability. A key point to note is that CSR

is an evolving concept that currently does not have a universally accepted

definition. Generally, CSR is understood to be the way companies integrate

social, environmental and economic concerns into their values, culture,

decision making, strategy and operations in a transparent and accountable

wealth and improve society. As issues of sustainable development become

also becoming an element of CSR.