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Corporate Social Responsibility

• Introduction
• Definitions of Corporate Social Responsibility (CSR)
• Justification of CSR
• The Scope of Social Responsibility
• Social Responsibility and Indian Corporations

Introduction

Good corporate governance and corporate responsibility towards society are so inextricably interlinked that we cannot separate one from the other. If providing good governance to its stakeholders and the society at large is what is expected of a corporate, it is because it receives so much from the society that it is only appropriate that the corporate gives back to it at least something in return in the form of good governance. It is thus understood that good corporate governance itself is part and parcel of corporate responsibility to society.

Conflicting Perspectives on the Issue

The issue of social responsibility of business evokes varying—and often extreme—responses from both the intelligentsia and businessmen. Economists like Adam Smith and Milton Friedman were of the opinion that the only responsibility of business was to perform its economic functions efficiently and provide goods and services to society and earn for itself maximum profit and it was better to leave social functions to other institutions of the society like the government.

 

To Adam Smith, “It is the profit-driven market system, also called price mechanism that drives business firms to promote social welfare, though they work for private gain”. He observed further: “Every individual endeavours to employ his capital so that its produce may be of greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his own gain. And he in this is led by an invisible hand to promote an end, which was no part of his intention. By pursuing his own interest, he frequently promotes that of society more effectively than when he really intends to promote it.”¹ Likewise, Prof. Milton Friedman does not give much credit to the concept of social responsibility. To Friedman, the advocacy of social responsibility of business is the green signal to pure socialism.² He argued: “Business has one and only one social responsibility, to make profits (as long as it stays within legal and moral rules of the game established by society). Few trends could so thoroughly undermine the very foundations of our free society as acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”³

However, those holding the opposite view have criticised this highly materialistic viewpoint on several grounds. In their perception, governments cannot and need not be the sole repository for promoting the welfare of masses. It is an area where the corporate sector can play a significant role. They assert that it is imperative for business to be socially responsible. Prof. Paul Samuelson, for instance, advocates a spirit of social responsibility as an inherent feature of a modern business firm. This view is based on the argument that business organisations, corporate or otherwise, are part of the society and have to serve primarily its interests rather than work for the narrow economic gains such as making of profit.

According to T. F. Bradsha, a past president of the Atlantic Richfield Company in the United States, business could not ignore social expectations of the community of which it is a part. He joined issue with Friedman thus: “Milton Friedman is right but, of course, he does not go far enough. Friedman overlooks two things. First, the businessman does not exist solely in a world of cold grey economics; he also exists in a real world where people’s needs go far beyond their economic needs. He is a man before he is a businessman. He feels pressures from within to become a part of the whole social pattern and to accomplish more than making a profit. Second, Friedman overlooks the fact that the rules have been changing and are going to change at an explosive rate in the future. We may yet reach that state where a businessman is judged by the social goals he accomplishes as well as the profits he makes.”

Further, Dr. Clark C. Abt, the president of the Abt Associates Inc., Cambridge, in the United States, felt that business organisations while determining socially responsible behaviour should first analyse its impact on short term and long term profitability of the organisation. He wrote: “Why cannot profitability and other socially responsible behaviours co-exist? Perhaps intolerance of the concept is based on too narrow a conception of profitability or socially responsible behaviour, or both. If profitability seeks profit maximisation within a very short period of time and constrained only by the law, then any additional operational or financial cost conflicts with that maximisation. Short-term costs of both social and financial investments conflict with short-term profit maximisation. Most businessmen would reject profit maximisation by elimination of investment in future capacity as shortsighted and doomed to mid-term failure, as resources become exhausted without replacements becoming available from previous investments. If they decide to maximise profits by eliminating social investments, it is because they either do not know the relationship between social investments and financial returns or believe that some other agency such as the government will make necessary social investments.”

According to Prof. Robert Dahl, it is obligatory on part of business organisations to be socially responsible as they primarily exist to benefit society. He expressed his view thus: “Today, it is absurd to regard the corporation simply as an enterprise established for the sole purpose of allowing profit making. We, the citizens, give them special rights, powers and privileges, protection and benefits on the understanding that their activities will fulfill our purposes. Corporations exist because we allow them to do so. And we allow them to exist only as they continue to benefit us. Every corporation should be thought of as a special enterprise whose existence and decisions can be justified only in so far they serve public or social purposes.”

Definitions of Corporate Social Responsibility (CSR)

What is Corporate Social Responsibility? It is not as simple as it sounds. The definitions differ vastly according to the perception and sensitivity of the analyst. The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts used the following definition: “Corporate social responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions vary from being defined as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and funds the business opportunities in building the skills of employees, the community and the government” from Ghana, through to “CSR is about business giving back to society” from the Philippines.

In the United States, CSR has been defined traditionally much more in terms of a philanthropic model. Companies make profits unhindered except by fulfilling their duty to pay taxes. Then they donate a certain share of the profits to charitable causes. It is seen as tainting the act for the company to receive any benefit from the giving.

The European model is much more focussed on operating the core business in a socially responsible way, complemented by investment in communities for solid business case reasons. It is believed that this model is more sustainable because of the following reasons:

1. Social responsibility becomes an integral part of the wealth creation process—which, if managed properly, should enhance the competitiveness of business and maximise the value of wealth creation to society.
2. When times get hard, there is the incentive to practise CSR more and better—if it is a philanthropic exercise which is peripheral to the main business, it will always be the first thing to go when push comes to shove.

But as with any process based on the collective activities of communities of human beings (as companies are) there is no “one size fits all”. In different countries, there will be different priorities and values that will shape how business acts towards its social goals.

Corporate Social Responsibility and the Stakeholder

Corporate social responsibility is essentially a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. This means not only fulfilling legal expectations, but also going beyond compliance and investing in human capital, the environment and relations with stakeholders.

 

To put it in simpler terms, stakeholders are those organisations and individuals who have an interest or “stake” in the business or corporation and its success. That includes clients, the population of small business people, other business assistance organisations, economic development organisations, legislators of the country, federal, and state levels, executive branches of government, executive departments and agencies, the staff and contracted consultants and trainers, vendors, and taxpayers. The list is very long and inclusive.

The development of CSR reflects the growing expectations of the community and stakeholders about the evolving role of companies in society and the response of companies to growing environmental, social and economic pressures. Through voluntary commitment to CSR, companies are hoping to send a positive signal of their behaviour to their various stakeholders and in so doing make an investment in their future and help to increase profitability.

Many driving forces are fostering the evolution of corporate social responsibility such as:

• New concerns and expectations from citizens, consumers, public authorities and investors in the context of globalisation and large scale industrial change
• Social criteria are increasingly influencing the investment decisions of individuals and institutions, both as consumers and as investors
• Increased concern about the damage caused by economic activity to the environment
• Transparency of business activities brought about by the media and modern information and communication technologies

CSR at present is mainly driven by large or multinational companies that rely extensively on their public reputation for continued viability.

The systematic implementation of CSR involves the use of the following features:

1. Adoption of strong organisational values and norms justifying as to which behaviours are appropriate toward a variety of stakeholders.
2. Continuous generation of intelligence about stakeholder issues, along with positive responses to these issues.

A Growing Global Role

It is obvious that the pressure on business to play a role in social issues will continue to grow. Over the last 10 years, those institutions which have grown in power and influence have been those which can operate effectively within a global sphere of operations. These are effectively the corporates and the NGOs. Those institutions which are predominantly tied to the nation state have been finding themselves increasingly frustrated at their lack of ability to shape and manage events. These include national governments, police, judiciary and others.

There is a growing interest, therefore, in business taking a lead in addressing those issues in which they have an interest where national governments have failed to come up with a solution. That is not to say businesses will necessarily provide the answers—but awareness is growing that they are occasionally better placed to do so than any other actors taking an interest.

Justification of CSR

Social scientists have formulated several theories that justify the importance of corporates engaged in promoting social welfare of the society in which they operate. These theories are given below.

Trusteeship Model

The Trusteeship Model adopts a realistic and descriptive perspective in viewing the current governing situation of a publicly held corporation, drawing from the continental European concept of the corporation as a social institution with a corporate personality.

Kay and Silberston (1995) argue that a public corporation is not the creation of a private contract and thus not owned by any individual. Ownership is by definition where the owner has exclusive rights of possession, use, gain and legal disposition of a material object. Though shareholders own their shares in a company and trade their shares with others in the stock market, they do not have rights to possess and use the assets of the company to make decision about the direction of the company and to transfer the assets of the company to others. The residual claims of the shareholders are determined by the company and if the company’s performance does not satisfy the shareholders’ requirements, the shareholders are left with a single option of “exit” rather than “voice” as shareholders in general are in no way able to monitor the management effectively and neither are they interested in running corporate business. In this sense, the assumption that the corporation is owned by the shareholders is in fact meaningless. For Kay and Silberston, ownership rights are not important to business. Many public institutions such as museums, universities, and libraries perform well without clear owners.

 

Indeed, Company Law does not explicitly grant shareholders ownership rights because the corporation is regarded as an independent legal person separate from its members, and shareholders are merely the “residual claimants” of the corporation. The company has its own assets, rights and duties, and has its own will and capacity to act and is responsible for its own actions. Therefore, Kay and Silberston reject the idea that managers are the agents of shareholders. Instead, they suggest that managers are trustees of the corporation. The trusteeship model differs from the agency model in two ways: First, the fiduciary duty of the trustees is to sustain the corporation’s assets, including not only the shareholders’ wealth, but also broader stakeholders’ value such as the skills of employees, the expectations of customers and suppliers, and the company’s reputation in the community. Managers as trustees are to promote the broader interests of the corporation as a whole, not solely the financial interest of its shareholders. Second, managers have to balance the conflicting interests of current and future stakeholders and to develop the company’s capacities in a long-term perspective rather than focus on short-term shareholder gains. To establish a trusteeship model, they ask for statutory changes in corporate governance, such as changing the current statutory duties of the directors, ensuring the power of independent directors to nominate directors and select senior managers and appoint CEOs for a fixed 4-year term and so on.

The Social Entity Theory

The social entity theory has, in recent years, been promoted by three major social thinkers—the democratic political theorist, Robert Dahl (1985) using economic democracy, Paul Hirst (1994) using associationalism, and Jonathan Boswell (1990) using communication notion of property. The social entity conception of the corporation regards the company not as a private association united by individual property rights, but as a public association constituted through political and legal processes and as a social entity for pursuing collective goals with public objections. “The social entity theory views the corporation as a social institution in society based on the grounds of fundamental value and moral order of the community. With the fundamental value of human rights and standard of a corporation’s usefulness is not whether it creates individual wealth, but sense of the meaning of the community by honouring individual dignity and promoting over all welfare.” (Sullivan argues that corporations are granted charter entity for a commercial purpose, but more importantly, as a social entity for general community needs). The corporation identity and executives are representatives and guardians of all corporate stakeholder’s interests (Hall, 1989).

 

The recent resurgence of the moral aspect of stakeholder perspectives has been in general associated with the social entity conception of the corporation.

The Pluralistic Model

The pluralistic model supports the idea of multiple interests of stakeholders, rather than shareholder interest alone. It argues that the corporation should serve and accommodate wider stakeholder interests in order to make the corporation more efficient and legitimate.

It suggests that corporate governance should not move away from ownership rights, but that such rights should not be solely claimed by, and thus concentrated in, shareholders; ownership rights can also be claimed by other stakeholders, particularly employees. Stakeholders who make firm specific investments and contributions and bear risks in the corporation should have residual claims and should participate in the corporate decision making to enhance corporate efficiency.

It is asserted that if corporations practise stakeholder management, their performance such as profitability, stability and growth will be more successful.

What Are Corporates Expected To Do?

In support of the view that corporates have a moral and social obligation towards society, some economists argue that corporates depend on society for a number of facilities they enjoy such as developed infrastructure, peace and tranquility in the work place and a trained workforce. They also depend on society for the maintenance of law and order, without which they cannot carry on their productive or distributive activities, and also for reaching to their customers through mass media. Consumers of products, without whom they have no raison d’etre, are all drawn from society. If a business body draws so much from society, it has to make its own contribution to the welfare of the latter. It has a debt to pay in the first place. It has to behave as a good citizen inasmuch as it has to pay its taxes in full and on time, observe the laws of the land and, going beyond it, ensure a clean and healthy environment, standards of operational and product safety and help in energy and resource conservation.

The corporations among the business community also have a moral responsibility to take a long and hard look at their values, practices and assumptions. They have to ensure that the country’s fair name is not compromised abroad during their deals, either as exporters or importers. They have to ensure maintenance of the quality of their products, keeping up to the delivery schedule, etc. In the Indian context, socially responsible corporates are expected to create employment opportunities directly and set up ancillaries for the disadvantaged persons; provide financial resources in several ways such as financing customer related marketing; by sharing skills in marketing, technical and management areas in many ways; make available marketing support both by purchasing products and services from disadvantaged communities; and by sharing, company facilities of donating company’s products and services.⁴

Private Sector Needs Goodwill of the Society

For historical and other reasons, private enterprise is not favoured much in countries like ours because its owners accumulate wealth for their own exclusive benefit at the expense of the public and are not generally seen to contribute to the common good. Corporates should, for their own good, come forward to erase such perception in the minds of the common public. In an era of intense competition, accentuated by the advent of MNCs, it is necessary for them to generate and sustain “goodwill” among their clients and the general public. Active participation in social welfare projects will definitely improve their visibility and place them on a pedestal of public esteem. They should understand the fact that economic goals and social responsibility objectives need not be contradictory to each other and that these could be achieved simultaneously. They should donate generously towards public causes and must get themselves directly involved in social welfare programmes, if they have to create goodwill among the public and to avoid being branded as profiteers and self-seekers.

The Scope of Social Responsibility

The scope of social responsibility is wide and could be considered in terms of different viewpoints, some of which are given below:

1.  Protecting and promoting stakeholders’ interests: Some consider social responsibility in terms of services rendered to claimants or stakeholders, who could be both insiders and outsiders. The insiders are employees and shareholders while outsiders include consumers, suppliers, creditors, competitors, government and the general public. Consumers expect quality goods and services at fair prices, workers expect fair wages without being exploited, shareholders expect reasonable dividends and fair return on investments and managers expect challenging jobs with attractive salary. Government and the general public expect them to add to the wealth and welfare of the country without polluting the environment. In short, business organisations have to consider themselves the “custodians of public welfare”, by rendering such services to the various sections of the society.

2.  Social concern and promotion of common welfare programmes: Another way in which the scope of social responsibility could be viewed is in terms of social concern and promotion of common welfare programmes for the benefit of the poor and the indigent public. Companies have highlighted social issues and brought them to the notice of the public through hoarding and other means of drawing the attention of people to the issue in question and generate public awareness. There had been occasions, though limited in number, where corporates have joined hands to sponsor advertisements promoting public causes or issues of social concern such as pointing out the dangers of drug addiction and smoking. Business organisations could also consider social responsibility in terms of relatedness to their own activities. Producers of dental or eye care products organise mass clinics in villages and semi-urban areas where surgeons attend to the medical needs of the poor and indigent. Such attempts greatly relieve the burden on the finance-strapped state in a developing country like India where people, due to poverty and for historical reasons, depend solely on the government to render every type of service.

3.  As an act of philanthropy: There are others who view social responsibility as philonthropy. J. R. D. Tata in his keynote address at the inauguration of the Tata Foundation for Business Ethics some 10 years ago outlined this equation thus: “The Tata industrialist ethos inherited from the great Jamsetji himself, tried to combine high standards and quality production with sincere concern for ethical values such as fair and honest management, product quality, human relations in industry and industrial philanthropy.”⁵ However, in a strict sense, the concept is restricted to the observance of rules and regulations that govern business transactions, and in a way facilitates a smooth running of business. “In a wider sense, it demands conformity with accepted norms and interpretations of the laws dealing with business activity.” Moreover, in a business world, where cut-throat competition and survival of the fittest dictate the law and have the upper hand over humanity, philanthropy also means a display of humanity which will manifest itself in some form of benevolent activity among the larger public. It undoubtedly benefits some individuals or communities in need”.⁶

 

Take the instance of how industrialists came to the rescue of the quake-devastated people in Gujarat. When Gujarat was shattered by the fury of the worst earthquake in recorded history over the past 50 years, a free phone facility set up by Care India, Bharti-BT and CISCO provided the most immediate emotional relief for people anxious for news of their families as well as access to medical assistance and advice. Industrialists through the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) have committed large funds that have enabled several NGOs adopt villages that were most severely hit and provided several others a great deal of relief measures.⁷ When the killer waves of Tsunami caused death and destruction on 26 December 2004 in Tamil Nadu, Andamans, Kerala and Andhra Pradesh, corporates came to the immediate succour of the affected with food packets, medicines and clothes. Corporates also poured in hundreds of crores to the prime minister’s and chief ministers’ relief funds to enable government to undertake permanent measures to rehabilitate the displaced fisherfolks with permanent homes, fishing nets and boats. Likewise, elsewhere when disaster struck New York and Washington in the aftermath of terrorist attacks on 11 September 2001, American MNCs played their part as good corporate citizens. Most have donated substantial amounts towards the disaster relief funds and made generous gestures towards their social responsibility. While the US food giant McDonalds had offered food for the rescue workers at different locations across the country in addition to a donation of $2 million, General Motors, General Electric, Ford Motor and Unocal also had done their best to be of help and alleviate the sufferings of those affected by the tremendous human tragedy.

4.  Good corporate governance itself is a social responsibility: Some social thinkers even view, in the Indian context, that good corporate governance itself is an ingredient of corporate social responsibility. For too long, Indian corporates have insulated themselves from wholesome developments evolving elsewhere. Corporate democracy, professional management and maximisation of long-term share-holder value which are attributes of good corporate governance, were lacking in the country. A closed economy, a sheltered market, limited need and access to global business/trade, lack of competitive spirit, a regulatory framework that enjoined mere observance of rules and regulations rather than realisation of broader corporate objectives, marked the contours of corporate governance for well over 50 years.

Corporate governance has acquired a new urgency in India due to the changing profile of corporate ownership, increasing flow of foreign investment, preferential allotment of shares to promoters, gradual unwinding of the control mechanism by the state that had hitherto provided protective cover to even poorly managed corporates and the increasing role of mutual funds since 1991.⁸

5.  Corporates in the vanguard of rendering social service: Some industrial houses have been promoting activities that supplement the efforts of public authorities in certain areas that are important for all-round human development. The Tatas have contributed to the growth of fundamental and social sciences by building and nurturing institutions of higher learning in these areas. The Birlas have been building and maintaining beautiful and monumental places of worship in several cities in addition to popularising science through planetoriums. Some corporates have been sponsoring sports events and helping sportspersons attain international standards. TISCO has made several contributions in such diverse areas as community, especially tribal area development, rural industrialisation. etc., SAIL has done its mite in agriculture, health care, drinking water supply, dairy and poultry farming. ITC Ltd. is socially active in agriculture, sports and pollution control, while Brooke Bond has interests in animal welfare, providing veterinary services and improvements in animal breeding. Down south, several corporates have done yeoman service in the field of education and related areas such as sports, building of institutions that train personnel as well as render social service.

 

The Loyola Institute of Business Administration (LIBA) has instituted The Mother Teresa Award for Corporate Citizen to showcase as a role model a corporate that has rendered social services far beyond the call of its duty and responsibility for others to emulate. It has identified Titan Industries, Tamil Nadu Newsprints and Papers Ltd., Indian Oil, Polaris, TVS Motors, and Orchid Chemicals for the award so far in recognition of several socio-economic projects they have been running for the welfare of the disadvantaged sections of the society in and around the places where their factories are located. Some studies have shown that there are several others too who have done yeoman service to the people at large. Some of these are: TVS Group, Bajaj Auto, Balmer Lawrie, Bank of America, Business Standard, Coca Cola India, Dr. Reddy’s Laboratories, Forbes Marshall, Nicholas Piramal, Excel Industries, Hindustan Machine Tools, Amar Jyothi Industries, Hindustan Lever and International Business Machines, to mention a few major corporate players. While some of them work for the welfare of the poor, handicapped and the marginalised sections of the society in and around where their plants, facilities and offices are located, others go beyond their locations and reach out to those who are in dire need of their services.

6.  Sponsoring social and charitable causes: Some entrepreneurs had not only built industrial empires, but also contributed individually to certain social and charitable causes. J. R. D. Tata’s contribution to the growth of the Indian airlines industry, population-related research, education of the underprivileged, etc. had been exemplary. Late D. C. Kothari, the chairman and managing director of Chennai-based Kothari Industrial Corporation Ltd., with his wide-ranging interests, had been the moving spirit behind several charitable trusts and institutions of higher learning, apart from being the prime-mover of the Standards movement in the country and earned the rare distinction of becoming the President of the International Organisation for Standardisation (ISO) from a third world country.

7.  Corporations should supplement state efforts: There are several areas where corporates can supplement effectively the ever growing welfare activities the state is expected to undertake, but does not have the resources to carry on. Corporates can run schools, either in their own areas or in any other adopted village of their choice, providing good quality primary education. If each of the more than two lakh corporates the country has adopts three villages each, we will be able to cover the entire country and provide better primary and elementary education to our children. It will go a long way in promoting literacy and over-all development of the country. In this context, it should be borne in mind that the Asian Tigers like Thailand, Phillippines, South Korea, Indonesia, Malaysia and Singapore have achieved much higher growth rates before the currency crises overshadowed their achievements because of universalisation of primary education which they carried out since 1950s whereas we have failed to do so.

 

Corporate resources can also be allocated to run family planning clinics, medium-sized hospitals in villages, literacy campaigns and adult education programmes, campaigns against smoking, pollution, AIDS, casteism and communalism and to provide housing, sports and recreational amenities for slum-dwellers, etc. Corporates can also contribute effectively towards urban management as has been done in places like Jamshedpur by Tata Steel.

Another area where corporate concern for social welfare can be shown is in the maintenance of public health system. Corporates cannot be mute spectators to the deterioration in public health. Besides the moral and social aspects involved, they have to appreciate the fact that all their activities, business or otherwise, will come to a stand-still, if any disease of epidemic proportions breaks out. In 1999, The Hindu reported a unique government—industry partnership to improve public health in Tamil Nadu. In the first phase of the programme, 57 Primary Health Centres (PHCs) and 6 Government Hospitals were adopted by 19 industrial groups based in the state. According to official sources, 40 more PHCs were adopted in the second phase with more industries joining in due course. The then Chief Minister, while inaugurating the programme, commended the whole-hearted and voluntary participation of industrial houses that would go a long way in enhancing the welfare of the people.

8.  Social responsibility of corporates also lies in abiding by rules and regulations: This view is widely accepted since it facilitates a smooth functioning of business. This demands conformity with accepted norms, and interpretations of the laws dealing with business activity.

9.  Ensuring ecological balance: Several corporations such as Tata Steel, ITC, Srinivasan Services Trust of the TVS Group have been helping people to harmonise with nature by reducing pollution.

10.  By focussing on human elements: Social responsiblity also lies in improving quality of worklife; reducing hazard in the workplace; ensuring equality in employment opportunities and wages; ensuring settlements of disputes with workers within the legal framework; assisting employees to adjust themselves with ease to new environments while relocating plants; and to ensure job and retirement security of a reasonable nature.

Social Responsibility and Indian Corporations

Philanthropy is no longer limited to signing cheques for social causes and welfare programmes. The corporate world is now reaching out to the community. The commitment is getting much deeper as a large section of employees, including members of the top management, are now doing their bit for the causes close to their heart.⁹

According to Sunil Rajshekhar of Times Foundation, “Corporate contribution earlier was limited to financial donations. This is giving way to more holistic approach as employees are now getting involved and companies like GE, Tatas, Infosys, Hughes Software and Agilent encourage their employees to give back to communities who sustain their business”.

And the initiative does not end with an odd blood donation. More companies are joining hands with NGOs to set up labs, adopt schools and even villages, educate kids and women in slums, and start welfare programmes for cancer and AIDS patients.

At GE, for instance, the initiative runs right from the top as Scott Bayman, president and CEO, GE (India) finds satisfaction in his endeavour to develop confidence among young school drop-outs and help restart their education and help them gain skills for employment. “About 60 of our employees are involved in voluntary programmes and at least 30 of these are very very active”, says Bayman and added, “GE has implemented many such initiatives globally but I had some apprehension about how popular it would be in India. Thankfully, our people embraced it very fast”.

Indian industry is also equally aggressive in its drive to being socially responsible. North Delhi Power Ltd. (NDPL), a joint-venture of Tata Group and the Delhi government, has joined hands to help out AIDS patients and improve awareness in industrial areas of Naraina. Badri Naryan, NDPL says, “The migrant population in the 1,500 industries is here, living away from their families for over eight months every year and hence AIDS awareness is very important”.

The attempt to pay back the communities who sustain one’s businesses are proving to be an effective HR measure too. Hewlett Packard’s subsidiary, Agilent, boasts of an attrition level of about 8 compared to over 30 seen by competitors and attributes it to their employees’ satisfaction level achieved from social causes. Venkatesh Valluri, Managing Director, Agilent India asserts: “People really feel good about it. It’s easy for people to donate money and clothes, but actually working for society shows how we can make a difference. It might sound tough initially but soon becomes more like a habit and slowly takes the shape of a movement.”

For others like HSS, adopting villages, helping physically and mentally challenged kids comes as naturally as forming a cricket club. The company has created an NGO called Jagriti within the company. Social responsibility is among corporates’ top priorities today. “Being socially responsible is a part of being successful, being a great company and being a respected company”, sums up Scot Bayman.

A large number of Indian companies discharge their social responsibilities quite satisfactorily. There are many companies which have excelled in such activities but when seen in the light of the country’s vast needs, the achievements fall short of requirements. The money spent for social causes by companies is generally an insignificant proportion of their turnover.

Here are a few illustrations of the different social responsibility functions that Indian companies typically perform:

• Asian Paints funded a large-scale community development project to enable farmers to use local resources effectively.
• BHEL has contributed to the development of the quality of life in rural areas, health care and family welfare, adult education, etc.
• Brooke Bond has been interested in animal welfare, providing veterinary services, and improvements in animal breeding.
• Colgate Palmolive did pioneering work in the promotion of sports, dental health, and small industry development.
• Escorts Ltd. has worked for farm mechanisation, agricultural development, health care, etc.
• Infosys Technologies has helped through its Infosys Foundation schools in rural areas acquire classrooms, libraries and buildings. It has also helped higher education and research. It has promoted several public health programmes too.
• ITC Ltd. is socially active in the areas of agriculture, culture, sports and pollution control.
• SAIL contributes to the sectors of agriculture, industry, education, health care, dairy, poultry, fisheries, and drinking water supply.
• Tata Steel has been a pioneer in discharging social responsibility and has made several contributions in areas such as community development, social welfare, tribal area development, agriculture and related activities, rural industrialisation, etc.

• Act of philanthropy
• Charitable causes
• Common welfare programmes
• Conflicting perspectives
• CSR, Global role
• Goodwill
• Justification
• Pluralistic model
• Private sector
• Social concern
• Social Entity Theory
• Stakeholders’ interests
• Supplementing state efforts
• Systematic implementation
• The stakeholder
• Trusteeship model
• Vanguard of rendering social service

1. What is corporate social responsibility? Explain why there are conflicting perspectives on the subject.
2. If CSR is an essential feature of modern businesses, why do economists like Milton Friedman think otherwise?
3. Explain the Trusteeship Model of CSR. What was Gandhiji’s contribution to this line of thinking on CSR?
4. For long, CSR was equated with the concept of corporate philanthropy. How and why do modern thinkers differ from this view?
5. Discuss the scope of CSR with suitable illustrations.
6. To what extent is CSR being practised in India? Give examples. Do you think Indian corporates adequately give back to society compared to what they have received from it.

 

 

Case Study

TVS Group of Companies: Commitment Far Beyond a Sense of Corporate Social Responsibility

(This case is based on reports in the print and electronic media. The case is meant for academic purpose only).

Introduction

TV Sundaram Iyengar & Sons, popularly known as TVS, is a household name in South India, especially in Tamil Nadu. Hailing from a small hamlet, Thirukkurungudi in Tirunelveli District, one of the southernmost regions of Tamil Nadu, TV Sundaram Iyengar became a doyen of the automobile industry. Prior to the nationalisation of the transport sector, TVS & Sons used to run buses connecting major metropolitan cities of Tamil Nadu and the neighbouring states. Honesty, integrity and commitment to public welfare were the hallmarks of TVS & Sons, which was the hub from which several closely held public limited companies emerged. The buses they ran in the first-half of the Twentieth Century set benchmarks in punctuality. It used to be said that if a TVS bus were to enter a depot at 10 a.m., one could adjust his watch to that time. Such was the company’s adherence to values including punctuality in a region where such values were followed mostly in breach and not in observance.

The TVS group of companies which are now diversified, and closely held, are professionally managed profit-earning enterprises. They have been recipients of many awards for quality including the famous Deming Prize, instituted by the union of Japanese scientists and engineers, and is the ultimate confirmation of commitment to quality control. The TVS group is also known for its social consciousness and commitment to the promotion of the welfare of the poor and the underprivileged.

Profile of TVS Group of Companies

TVS & Sons was founded in 1911 by the late Shri T. V. Sundram Iyengar at Madurai, Tamil Nadu. The proprietary concern was set up to engage in the dealership of automotives and their components. In 1929, TVS & Sons was converted into a private limited company. Two of its subsidiaries, viz. Sundaram Motors (P) Limited and Madras Auto Service, were amalgamated with TVS & Sons in 1970 and currently operate as its divisions. TVS & Sons became a public limited company in 1979. Its shares are closely held by the descendants of Iyengar in their individual capacities and through family trusts.

T.V. Sundaram Iyengar & Sons Ltd (TVSL) has played a pivotal role in the growth of the TVS Group by providing seed capital to a multitude of ventures. The TVS Group’s core competence is mostly in two wheelers, automotive spares, components, automobile-related activities such as tyres, bus body building, precision products relating to the industry, auto electrical components and related products. They have a textile unit and a sewing needle unit. There is one unit that manufactures computer peripherals while another produces switches for computers and telephones. The group owns a couple of non-banking finance companies that provide finance chiefly to the transport sector. They are also into freight service and logistics. The group owns three software units. While most of their facilities and production units are in India, especially Tamil Nadu, they have their presence in the USA, the UK, China, Malaysia, and Sri Lanka. The TVS group is a well-diversified, professionally managed, though closely-held, industrial conglomerate. Some of the prominent companies within the Group include Sundram Fasteners Limited, Lucas-TVS Limited, Sundaram Clayton Limited, TVS Motor Company Limited and Sundaram Finance Limited, Brakes India and Wheels India.

TVSL is the holding company for some of the companies in the group, and its investments are therefore strategic in nature. TVSL also has substantial real estate in major cities whose market value is much higher than book value. Building on its experience in the automotive and automotive components business, TVSL is currently the largest automotive and automotive component dealer in India. Its presence is especially strong in South India. The company is the main dealer for Ashok Leyland (ALL) and one of the prime dealers in the South for Mahindra and Mahindra (M&M), Fiat, Ford, Honda, GM and Daimler-Chrysler. TVSL also provides comprehensive service facilities for vehicles. TVSL has a presence in Madhya Pradesh, Chattisgarh, Maharashtra, Goa, Uttar Pradesh and Gujarat, although it is currently a marginal player in these States. During 2003–04, the company achieved a turnover and profit after tax of Rs. 26.08 billion and Rs. 428 million, respectively.

Srinivasan Services Trust (SST)

The TVS Group of Companies, especially TVS Motor Company Ltd and Sundaram Clayton Ltd have together formed a Trust to carry out their social commitments. Srinivasan Services Trust (SST), an NGO, is the organisation that carries out social service activities of TVS group Companies. Both Sundaram Clayton and TVS Motor Company contribute 1% of their annual profits to the SST, which no “shareholder should grudge” seeing the excellent work the NGO is doing. The SST employs 45 people to carry out the welfare activities, 35 of whom are on the rolls of TVS Motor and salaries paid by the company. “We don’t have to pay for the employees out of the NGOs grant” says Joshi, Chairman of the Trust. The SST spends about Rs. 3 crore a year on CSR activities in various regions but “the total value of work could, be five times that,” according to Joshi. However, as Joshi points out, it’s not the men and the money which matter as much to the movement as the involvement of companies like the TVS group which has brought in TQM practices into monitoring projects run by the NGO. Both TVS Motor and Sundaram Clayton have won the Deming award for quality and the managerial inputs they bring to their role as a good corporate citizen is what makes the difference.

The Srinivasan Services Trust (SST), provides a classic example of an Indian corporate which moved from philanthropy-welfare mode to a broader agenda in congruence with current development approaches worldwide. Deeply concerned with the widespread deforestation and degradation in Tamil Nadu, the Trust nurtures a vision of re-greening the State in years to come. This has led to the integration of SST’s decade old community development activities with the ongoing regeneration and conservation efforts of the Tamil Nadu Forest Department (TNFD). The Tata Energy Research Institute (TERI), New Delhi is providing advisory and technical guidance to SST in undertaking Joint Forest Management (JFM).

SST’s Commitment to Broad Spectrum Community Welfare

Since its inception, SST, has been actively engaging itself in community development work. The rural development project attempts to achieve its aim by improving the socio-economic status of the people through a multi-sector approach of strengthening the education system, providing access to better economic improvement, water and irrigation facilities, improving health services and sanitation facilities, developing community infrastructure, and creating a clean and green environment. The organisation is presently engaged in several activities for the development of the rural communities in several districts. The main aim of the Trust is self-sustainable development of countries with a holistic perspective to make the communities self-reliant.

The focus areas of the Trust are as vast as they are crucial for the rejuvenation of the rural economy and include the following:

• Healthcare
• Education, literacy promotion
• Improving rural infrastructure
• Rural/community development: welfare programmes, economic empowerment of women, income generating programmes, child welfare
• Community relations: involving employees in community development, providing social amenities, assisting community groups in micro financing and credit assistance
• Environment
• Tribal development

The Mission statement of the Community Development Programme of the Trust reads as follows: “We strive to facilitate the process of sustainable community development through active involvement of local communities, leading towards the goal of self-reliant rural communities, and a disease-free society, by providing primary health care and quality education, opportunities for the development of women and providing eco friendly environment.”

Administration of the Trust

The Community Development Programme of the Trust is headed by the chairman, Mr. Ashoke Joshi I.A.S (Retd.) and director, Mr. R. Seshadri. Implementing a professional approach to create a sustainable development model, professional social workers facilitate and coordinate the activities both at managerial and ground level in all locations. Interested and dedicated individuals from the local community are appointed as animators to work at the grass-root level. In the project areas, Civil Engineers also form part of the team. The Personnel and Civil departments are entrusted with the responsibility to co-ordinate community development at the factory areas.

Providing Training for Employment

The Trust runs a number of welfare activities alone by itself or in collaboration with other like-minded NGOs. For instance, at a hamlet, Santhavasal in Tamil Nadu, SST offers a training programme in collaboration with the Hyderabad-based Dr. Reddy’s Labs. The Livelihood Advancement Business School (ABS) a programme undertaken by LABS offers training in different vocational streams. At this village, students of both sexes are being trained in two streams—customer and sales relations and hospitality. While the trainers are offered by the LABS, the rest of the facilities is provided by the SST. All the students come from families with agricultural backgrounds or children of daily wage earners seeking a better deal in life. The LABS training programme in Padavedu is just one of the multifarious activities carried out by the SST since it began its work in this region in 1996.

While in Padavedu itself TVS group companies do not have any business activities, the SST has taken up development activities in regions around where its factories are located. Today it does work across five districts of Tamil Nadu; in Mysore where it has a factory, at Bhuj in Gujarat and at Dok Sangivi in Pune district of Maharasthra. The Padavedu region, where the SST has been operating for at least 7 years, has been the touchstone for the NGO’s activities in other areas, where it has taken up development work.

Rural Development Activities

The major thrust areas for rural development work undertaken by SST are:

• Economic development
• Health
• Education
• Infrastructure facilities
• Eco-friendly environment

The rural development activities are integrated with spiritual development. Temple, Trees and Tanks are the hub of the whole rural development programmes. Another notable feature is the holistic approach aimed at making people self-reliant through active involvement of local communities. The Namakku Naame Thittam/Village Self Sufficiency Scheme in partnership with the local community, Rural Development Department and the Trust is a maiden initiative leading towards sustainable community development.

The community development programmes of the SST are executed in the following locations:

 

∗ Padavedu	-	Tiruvannamalai
∗ Tirukurungudi	-	Tirunelveli
∗ Nava Tirupathi	-	Thuthukudi
∗ Hosur	-	Dharmapuri
∗ Padi, Vanagaram, Mappedu	-	Tiruvallur
∗ Sindhuvalli Panchayat & Kembal	-	Mysore, Karnataka
∗ Dok Sangivi	-	Pune, Maharashtra
∗ Goyersama	-	Kutch, Gujarat

Major projects executed so far:

Economic Development

SST has helped the formation of Self-help groups (SHG) in the following locations:

131 SHGs in Padavedu

93 SHGs in Tirukurungudi

24 SHGs in Nava Tirupathi

49 SHGs in Mysore

41 SHGs in Hosur

(a) Income Generation Programmes using locally available raw materials from agriculture, viz., Banana fibre extraction and value-added products, Agarbathi and Chapathi making, Mushroom cultivation, Apiculture (Honey bee), Dairying, Sheep rearing, Appalam’s and Masala powder have been started. There are 231 Self Help Groups that are coordinated and involved in income generating activities.

(b) Vocational Training for Educated Unemployed youth in collaboration with Dr. Reddy’s Foundation under LABS programme has been initiated in Padavedu and Hosur.

(c) Appropriate Technology such as drip irrigation and quality seeds are being provided for enhancing the agricultural output of the farmers. This is done through the Farmers Association that has been formed at the community level.

(d) University-Industry Partnership for Rural Development has been forged with Tamil Nadu Agriculture University, Coimbatore, towards preparing techno-economic feasibility study utilising agro-based materials to start income generation programmes. These are some of the activities planned for income generation programmes. Academic-Industry partnership has been created with the Indian Institute of Technology (IIT) in the areas of Rainwater harvesting, environmental sanitation, etc. SST also proposes to establish partnership with Tamil Nadu University for Veterinary and Animal Sciences.

Health Services

(a) Major Eye Camps conducted in all locations in co-ordination with Aravind Eye Hospital. So far 12,000 cataract surgeries were performed in collaboration with Indian Oil Ltd. (IOL) since 1996 in all locations.

(b) Dental Check-up including extraction and filling, and paediatric health programmes for school children was conducted in all government schools, as for example, in Nava Tirupathi (Thuthukudi) where 10,000 children in 33 schools in Padavedu (Tiruvannamalai) were covered.

(c) Alcoholism Treatment Residential Camp was conducted at Padavedu through T.T.K Hospital, Chennai. Remarkable improvements have been notified in the quality of life of 100 families.

(d) Support Services for ‘Varumun Kappom Programme’, Pulse polio, etc. has been extended to Public Health department in all locations.

(e) Veterinary Camps have also been conducted.

(f) 9 PHC’s are run by SST and 5 Government PHC’s have been adopted by SST in sequel to the appeal from the Government of Tamil Nadu. Also one Government Taluk Hospital in Hosur has been adopted.

(g) Individual and collective toilets have been constructed to stop open defecation and maintain health and hygiene standards in the village.

(h) School toilets have been constructed to improve the personal hygiene standards of the children.

Education—General and Vocational

(a) Schools Improvement Facilities include construction of toilets with running water, balwadi construction, fencing, drinking water, partition to of class rooms, additional buildings, sports and cultural programmes, upgradation of the High School at Tirukurungudi, supply of science and audio-visual equipment, scholarship to poor students, etc.

(b) SST also runs Schools at Hosur and Tumkur, based on child-focussed and project-oriented education, with an integrated approach to ‘learning by doing’ and hands on experience. The same methodology is also followed at T. S. Srinivasan Centre for Advanced Vocational Training, situated at Vanagaram, near Chennai. The National Apprentice Board - approved courses offered are industrial machinist, mechanical and electronics for a period of 3 years. Annually 60 students (boys and girls), are selected and imparted theoretical training at the centre and sent to various industries for practical training at the shop floor.

(c) Adult Education in collaboration with Tata Consultancy Services has been initiated in all the operational sites.

(d) TVS Academy and SST have been creating an interface between Government School Teachers for activity-based learning techniques.

Infrastructure Facilities

Infrastructure Facilities such as roads and drains, drinking water, street lights, public library, health sub-centre, desilting of village water ponds, public toilets, community hall, etc. have been provided by the Trust directly, as well as in partnership under “Namakku Naame Thittam I Village Self Sufficiency Scheme” during the year 1999–2002 for the total value of Rs. 400 lakhs at Padavedu (Tiruvannamalai), Tirukurungudi (Tirunelveli), Nava Tirupathi (Thuthukudi), Hosur (Dharmapuri) and Padi, Vanagaram, Mappedu (Tiruvallur).

Eco-Friendly Environment

(a) With a view to increasing green coverage and protecting forests, Joint Forest Management (JFM) programme has been undertaken at Padavedu and Tirukkurungudi in co-ordination with the Tamil Nadu Forest Department, The Energy Research Institute (TERI), New Delhi, and TVS group companies. Nearly 2400 hectares have been covered under this programme for which buffer zone activities comprising alternate sources of livelihood for forest dependants and other community development activities have been executed by the Trust. Due to this strong social fencing the result has been growth of rootstocks and absence of forest fire, and grazing inside the forest. There has also been increase in the water table by 10 feet in the surrounding wells in JFM villages due to various water conservation measures such as construction of checkdams, percolation ponds by the Forest Department.

(b) Social forestry, Horticultural and Wasteland development programmes are being executed in all locations.

(c) A Comprehensive Plan has been prepared for sustainable water sources by adopting rainwater harvesting and artificial recharge, which is planned to carry out over a period of 5 years.

(d) A Comprehensive Watershed Development Plan in coordination with various line departments are being prepared towards increasing the agriculture producitivy by adopting various water management techniques viz., drip irrigation, traditional waterbodies viz., lakes, tanks and ponds are being identified and rejunevated in all locations in a phased manner. This watershed development plan is envisaged to be a sustainable, replicable and cost effective model.

Eco-Tourism

Eco-tourism is being encouraged by SST in Reserved Forests of Javadi Hills along with Tamil Nadu Forest Department and Care Earth. A trail of 4 kms has been identified that has seven distinct ecological zones. A number of species of animals, birds and insects are spotted in along the trail that runs through southern Indian mixed dry deciduous forests. This initiative will also help the local youth to be employed as forest guides.

Tribal Development

(a) SST has also initiated various tribal development activities in Kanamalai Panchayat comprising 32 hamlets and intensive work has been carried out in Elanthampattu Senbagathoppu, Erulamparai, Thanjan Parai, Neerthumbai and Kanamalai and the remaining hamlets will be covered in the next 5 years. This has been done in partnership with the Department of Anthropology, University of Madras.

(b) Another unique project of Environment Management Plan, Community-based model on rejunevation of river Nambi at Thirukurungudi has been planned, for which a pilot project viz., individual toilets, oxidation pond, solid liquid waste management has been completed in Levenjipuram ward. It is also proposed to continue this initiative in all other wards with support from National River Conservation Directorate, under the Ministry of Environment and Forest.

(c) Organic farming and low economic input and sustainable agriculture (L E I SA technique), has been initiated in all locations. The T. S. Srinivasan Centre for Rural Training at Hosur offers a 10-month course on the above subject.

This first phase of rural development activities wa s initiated in 1996 and so far approximately Rs. 535 lakhs has been incurred for the above projects.

Forest Management

Before we analyse the contribution of SST in forest management, it is appropriate to know how this activity is important in terms of the national perspective.

Forest management in India underwent a dramatic change in 1990 when the Union Ministry of Environment and Forests issued policy guidelines for the Joint Forest Management (JFM) to combat deforestation and degradation in the country. The JFM is a system of governance that devolves the responsibility of forest protection and management on ecosystem people¹ in partnership with the concerned State Forest Department for regeneration, efficient use and sustainable conservation. People are organised into Village Forest Cornmittees (VFCs) at the village(s) level with the Executive Committee (EC) elected by the VFC members. The EC takes the role of the regulator in monitoring the access to forests and also in regulating utilisation of forest products such as grasses, NTFPS, and a portion of the proceeds from the sale of trees when they mature.

In the Joint Forest Management project in Renukondapuram village, for instance, the SST works closely with the TN Forest Department. The hills in the region fall under the Vallimalai reserved forest area and it was found that the denudation of the hills led to soil erosion and depletion of water sources. The area was brought under the Tamil Nadu Afforestation Project while the SST acted as a bridge between the local community and the forest department in creating awareness about what needed to be done. There were four objectives: reforestation of denuded lands soil and moisture conservation measures, increasing incomes for those dependent on the forests for a living, and better infrastructure in the village. The village has 652 households and a population of nearly 3,000. In the year 2000, a Village Forest Committee (VFC) was formed with 24 members.

Intensive plantation was carried out across hillocks around the village that year. Nelli, neem and bamboo were among the 1.27 lakh seedlings that were planted as part of the first phase of the afforestation programme. Earlier, villagers used to cut the tall grass on these hillocks and then burn the entire grass cover so that there would be a fresh yield immediately after the rains.

Afforestation and Conservation Efforts

The Tamil Nadu Forest Department (TNFD) has been implementing JFM programme, known as Tamil Nadu Afforestation Programme (TAP), since 1997 with the financial assistance from Japan Bank of International Cooperation to re-green the Eastern Ghats. The eco-development programme supported by the World Bank is the other programme going on in the Kalakad-Mundanthurai Tiger Reserve (KMTR) in Western Ghats for biodiversity conservation. SSTs pilot effort is concentrated in two locations at Pedavedu-Renugondapuram (under TAP) in Triruvannamalai district and at Tirukurungudi (under EcoDevelopment project) in Tirunelveli district.

Plethora of Other Services Rendered by SST in Forest Management

The innovative interventions by the SST in forest regeneration has been supplementing and facilitating the initiatives taken by the TNFD in the following ways:

(a) Providing Professional Expertise : Providing professional expertise in developmental interventions to strengthen the initiatives of the Forest Department for JFM has been one of SST’s major contributions in rural development. The SST has appointed professional social workers for the Rural Training Centre (RTC) and Field Officers at Thirukkunmgudi and Padavedu-Renugondapuram to coordinate ongoing JFM activities. They, along with FD staff, organise people into VFC, conduct training programmes and capacity building workshops for the villagers on various operational activities. The women volunteers appointed at the RTC are responsible for the formation of self help groups, and capacity building of the women on micro-bank management etc.

(b) Creating Partnerships: Another contribution of SST is creating partnerships with various ongoing government rural development schemes/projects on poverty reduction and environmental conservation for mobilising resources. The SST has created partnership with ongoing rural development schemes such as Namakku Naamme Thittam (NNT) to source funds to successfully execute entry point development programmes such as repairing of roads, ponds or creation of community assets such as building of schools etc. Under NNT, the state government provides three-fourths of the financial support, one-fourth is contributed by the community either in the form of cash or kind or labour. The SST has been tying up with NNT since 1999 and undertook various infrastructure developments such as rebuilding village roads, constructing, new concrete room for creche (at Vattakulam) etc. The local village community, volunteered their labour for construction and supervision.

(c) Liaising with Local Administration to Execute Development Work: The constant liaisoning of SST staff with district administration brings myriad benefits to the local community. In Padavedu, a 32-km stretch of metalled road has repaired under the National Bank for Agricultural and Rural Development scheme as a result of constant communication by SST staff. In another instance, SST’s persuasion with District Collector enabled 29 families of Vattakulam to get patta from the administration.

(d) Adoption, Reconstruction and Maintenance of Existing Infrastructure: The SST has identified the existing non-functional resources (silted pond for irrigation or non-functional tubewell) and undertook restoration and reconstruction, as for example, providing better health facilities to the people. SST adopted the local Primary Health Centre (PHC) at Thirukkurungudi in 1999 and rendered better facilitates. The Outdoor Patient Department (OPD) building of the PHC has been completely renovated and a generator set has been installed at the Centre for uninterrupted power supply. Besides these, SST is providing the salary of the newly appointed lady Doctor at the PHC. Similarly, desilting and by construction of two new sluice gates on existing ponds at Thirukkurungudi has brought 750 acres of lands under increased irrigation which has boosted agricultural productivity.

(e) Providing Livelihood Through Imparting Training to Local Youth: Around 50 educated unemployed youth of the project areas have received training on two- wheeler servicing. The training programme includes a practical training conducted at the service stations of TVS Motor Company. Besides arranging instructors for imparting training, the SST also bears all costs including that of transportation for trainees travelling between their villages and service stations. Some of them have already started the repairing work on a small scale.

(f) Empowerment of Women Through Self-Help Groups (SHGs): Formation of women’s self-help groups (SHGS) is one of the most significant interventions in the area for poverty reduction and economic empowerment of women. Each SHG consists of 20 women contribute Rs. 50 per month who each to the common fund. More than 100 SHGs have been formed under the SST’s initiative. Numbers of training programmes have been organised for the women to develop technical skills (such as pickle making or banana-fibre craft or tailoring). The common fund accumulated through regular savings is loaned to members. The SHGs at Thirukkurungudi charge only two percent interest compared to 10% charged by the local money lenders.

(g) Income Generation Projects: Under the guidance of SST workers, villagers also get loans to buy cattle and materials for pot making, basket weaving, floriculture, to set up an apiary, and pursuing other professions. The forest department has disbursed over Rs. 7 lakh under this and the loan amount keeps rotating. Over 250 villagers have availed themselves of this opportunity.

The SST has helped form six self-help groups. Its role is weighty: it assesses the causes for groups, then joins together and form a federation. The strength of scale present in the federation helps them get loans, which are then disbursed according to the needs of the members. SST also helps the groups find markets. Baskets made from banana fibre, for, instance, are exported to Bangalore; meanwhile SST wants to find alternative markets.

Earlier, the agricultural economy lay in shambles with little rain fall. There are alternatives now; 100–250 people are engaged either part-time or full-time with the banana fibre business and the full-timers manage to make Rs 50. a day. SST initially provided the equipment, which costs Rs. 1500 per unit. The fibre itself fetches 20 paise per metre.

Another example is vermiculture. SST urged villagers to take it up, and helped provide training too. A group started off with a loan of Rs 25,000. They chose the fatter African hybrid earthworms. Till now, the output of the unit has been three tonnes, of which two tonnes have been sold. To get a steady supply of manure, another group has bought five cows. Though the output now is good enough for the local market, the group is now scouting for outside markets. For every one tonne of sale, the expenditure is Rs.1000 while the revenue is Rs. 4000.

The involvement of SST has also helped raise loans. The local bankers say a total of Rs. 7 lakh has been disbursed, including for sanitation projects, which have no direct monetary benefit. For up to Rs. 50,000, the bankers charge an interest rate of 8.5% for self-help groups. SST acts as a link between the beneficiaries and the source of help.

Accent on Health and Education

The accent is also on health and education. The villagers had to go to the nearest town even for a medical emergency. Now, SST has created a health sub-centre, which government doctors visit 3 days a week. During those days, 150–200 patients checked in daily. SST is working with government schools in the area too to improve the infrastructure there, as also in improving the quality of education. It has helped build toilets, compound wall, a classroom, enable supply of water and install computers. It also organises health camps. SST has helped the teachers of the Padavedu school get trained in computers in Chennai.

Ten years ago, there were 185 students and four teachers. Now, it is 563 students and 16 teachers. As TVS’ Srinivasan points out, often, there are enough schemes to assist rural development, but the money doesnot find its way to the beneficiaries and funds could lie unused in government coffers. NGOs like the SST play the role of a facilitator or catalyst in utilising the funds.

For example, the tribal village of Irulamparai near Padavedu had a problem with its roads. Their demand was for an all-weather road which would connect their hamlet to the main village. While the government put in 75% of the fund for the roads, the SST chipped in with the remaining to complete the road. SST’s volunteers have also started a literacy movement in this remote hamlet. Using a TCS software, 67 women have become literate in 3 months. As each letter in the monitor flashes, the women shout it out and then the entire word. Seeing the women folk progress, men in that area have also started seeking literacy classes while parents’ have now have started sending their kids to schools.

Funding Is No Constraint

Meanwhile, given its track record, the SST had applied for a grant from the Ford Foundation, and the latter sent a team to assess the opportunity of a micro-watershed project at Padavedu. What resulted was a $2,00,00 grant. The project aims to generate economic activity from water conservation. Afforestation and soil conservation are also on the agenda of the project to be completed in 3 years. This, along which is an expected aid of Rs. 60 lakh from Nabard for the Irumbilli watershed project in the region is extremely important for the local, in the water-starved region, many of whom still depend on agriculture for their livelihood, Since 1999, SST, along with the department of rural development, has spent around Rs. 2 crore to develop infrastructure such as roads, bridges, drainage systems, drinking water and school buildings.

Padavedu has been the model for the SST’s activities, Says Joshi: “When the local community empowers itself, we can withdraw to a certain extent though we will still need to intervene, to give them suitable managerial inputs.” He sees this happening in the next 3 years when the village would have acquired a certain level of development. SST’s work has also gained momentum in other parts of Tamil Nadu. In Thirukkurungudi in Tirunelveli, where the TVS family hails from, the NGO revived self-help groups among the local community and re-started traditional occupations’ like appalam making. Now, through the efforts of the SST, SHGs from there have bagged an order to supply one tonne of appalams to SEWA.

Further north in Hosur, around TVS Motor’s factory, SST has helped local women’s groups to invest and grow a business in supplying chapathis to factories around Hosur. The NGO helped set up three SHGs of 15–18 people each and together they produce 14,000 chapathis a day to supply to various factories in the area; the plan is to scale it up to 1 lakh a week. The business has become self-sustaining now and each person is able to earn roughly Rs. 1400 a month. Earlier, they were all agricultural labourers.

Rehabilitation of Earthquake Affected Village

With a view to responding during crisis and disaster situations, the Trust has always taken a lead. The Gujarat rehabilitation project at Goyersama village has been completed with a holistic approach. It is not only building bricks and mortar, but also putting people on the rails of livelihood has been the focus of the Trust.

Relief Land Rehabilitation Works to the Tsunami Affected Areas

SST was one of the earliest NGOs to provide succour and support to fisherfolk when the killer waves of Tsunami hit ferociously the unsuspecting people who lived by the sea, on December 26, 2004.

1. 48,000 food packets were supplied in Chennai, Colachel and Radhapuram from December 26 to December 30, 2004.
2. A population of 15,000 have benefited in Cuddalore, Nagapattinam, Colachel and Radhapuram by receiving clothing, utensils, stoves, blankets etc. These were donated by the employees of Sundaram-Clayton Limited and TVS Motor Company Limited.
3. A team of 74 persons led by 4 doctors were deployed to the 4 districts. Medical attention and medicines were provided to over 18,000 people. Prevention against cholera and tetanus had been administered.
4. Around 655 temporary shelters were completed and handed over in Chennai (200), Keelmoovarkarai (155) and in Poompuhar (300) villages of Nagapattinam district.
5. About 50 Community toilets were constructed in Keelmoovarkarai and Poompuhar.
6. An expenditure of Rs. 60 lakhs has been incurred in the relief work.
7. The SST has a plan to adopt a cluster of villages around Keelmoovarkarai village in Sirkazhi block of Nagapattinam district for holistic development. The total population expected to be covered is around 26,000.

1. Discuss the growth and the current profile of the TVS group of companies.
2. Explain the formation of the Srinivasan Services Trust. What are the multifarious CSR activities the trust is engaged in with what kind of outcome?
3. What are the different and diverse kinds of CSR activities the Srinivasan Services Trust is engaged in? Have they all contributed to the rural rejuvenation of the areas they are serving?
4. What are the various kinds of rural development activities the Srinivasan Services Trust is engaged in and with what outcome? Give suitable examples.
5. Evaluate critically the overall CSR activities of the TVS Group of Companies. To what extent are they relevant in establishing the reputation of the group?

• Datta, Sumana Research Associate TERI, “Steeping Towards Green State with Corporate Partnership: Initiatives by SST-TVS Motor Company in Tamil Nadu in India.”
• Kamath, Vinay Sriram & Srinivasan, “Srinivasan Trust-In Trust it Keeps,” Praxis Business Line’s Journal of Management, (December 2004).
• Web sites of TVS Group Companies.
• Web sites of Srinivasan Services Trust.