Ethical Performance
inside intelligence for responsible business


Indian firms urged to take official CSR advice

February 2010

The Indian government has published corporate responsibility guidelines that it wants companies to adopt as soon as possible.

The official advice, contained in a 16-page document produced by the corporate affairs ministry, is offered only for voluntary take-up – but the government expects companies to respond to it ‘with keen interest’. If they do not, it suggests they ought to explain their reluctance publicly.

The guidelines, which are likely to be reviewed after a year, emphasize that CSR in India should no longer focus on philanthropy.

Companies of all sizes are urged to develop an overarching corporate responsibility policy and then to produce implementation strategies, including the use of ‘measurable physical targets with a timeframe’, the allocation of the corporate responsibility brief to a named individual, the regular monitoring of progress, and some kind of public reporting.

More generally, the government says companies should:
‘be responsive towards all stakeholders and create value for all of them’
  avoid business practices that are ‘abusive, unfair, corrupt or anti-competitive’
  provide a workplace environment that is safe, hygienic and humane ‘and which upholds the dignity of employees’
  avoid complicity with human rights abuses either directly or through a third party
  manage natural resources in a ‘sustainable manner’
  undertake activities for the ‘economic and social development of communities’, particularly in the vicinity of their operations.

The guidelines say many of these objectives can be achieved through partnerships with civil society organizations, local government, and non-governmental organizations – and they encourage businesses to form such alliances.

They also advise companies to join corporate responsibility networks to share ideas with other businesses – and say they should set up CSR budgets.

The corporate affairs ministry is continuing to consult industry associations about measures it might introduce to boost the take-up of CSR programmes across the country, and has already indicated that it may require companies to earmark a percentage of their turnover or profits for corporate responsibility projects (EP11, issue 8, p3).

A 2009 report from Karmayog, a Mumbai-based NGO umbrella group, found only three per cent of Indian companies report what they spend on CSR.

The guidelines have been published in tandem with separate but complementary advice on corporate governance which, among other things, recommends independent boards of directors, separating the positions of chief executive and chairman, and a ‘significant proportion’ of executive remuneration to be performance-related.

Karmayog | Asia | Government role

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