14 August,2011 08:15 AM IST | | Shailesh Bhatia
Of 500 companies studied by independent think tank, only 10 were found to perform rigorous corporate social responsibility activities for the community
A research carried out by a not-for-profit organisation to measure Corporate Social Responsibility (CSR) activities of 500 of India's largest companies since Independence, has found entrepreneurs seriously lacking in national spirit.
The study, conducted by Karmayog, gauged the response of 500 public, private and multi-national companies from different industry sectors, including consumer durables, automobiles, infrastructure and financial institutions, to global and local conditions.
According to the study, called Karmyog CSR Study and Ratings, not a single company achieved a grade fiveu00a0-- the highest level that implies they not only put back 0.2 per cent of their net sales into CSR activities, but also displayed extraordinary commitment towards social causes.
The companies were also graded on the basis of the eco friendliness of their products and processing techniques, along with their relationships with the community residing close to their plants.
Barely two per cent, or 10 companies, managed a grade four. Thirty per cent of the companies, or 150 companies received the lowest grade, implying that they had just initiated the process of CRS. Thirteen per cent achieved a grade three in the study, indicating that showed seriousness about CSR.
Vinay Somani, founder, Karmayog and an IIT, Bombay alumnus said that most change in the CSR scenario has only occurred in the past four years, after the Central Government framed voluntary CSR recommendations a few months ago. "Greater awareness has led to more companies report their social activities. But there is more to be achieved," said the Harvard Business School graduate, who set up Karmayog in 2004.
Based on the balance sheets of the companies studied, Karmayog recommends that each company spend a minimum of 0.2 per cent of its sales on CSR activities. In the last financial year, all the companies showed a total sale of Rs 37 lakh crore. The report suggests that Rs 7,400 crore be spent on CSR activities. According to the study, barely 10 per cent of that amount, or Rs 740 crore was used in CSR activities last year.
"Investors and suppliers today want to be associated with companies that they can be proud of. Companies that pollute the environment or are responsible for deforestation, are not held in high esteem and their brand image is affected," said Somani.
Rajashree Birla, chairperson of the Aditya Birla Centre for Community Initiatives and Rural Development, the body responsible for development projects of Aditya Birla group said that the combined efforts of corporate India would go a long way in the socio-economic development of the country.
"At the end of the day, all agencies including corporations, government, NGOs and the academia have to synergise efforts. It is important for Corporate India to actively partner with the government for inclusive growth. On Independence Day, freedom from a foreign rule, should also transform to freedom from illiteracy and poverty," she said.
