R Venugopal, Professor at the Institute for Financial Management & Research, writing for the Economic Times, discusses how CSR is understood and addressed by Indian companies and suggests a collaborative approach between the public, private and civil society sectors to make a positive impact on society.

Creating value for society while creating value for shareholders is Nestlé’s approach to CSR. As women are a major workforce at Nestlé – in farms, factories and offices – Nestlé has implemented a worldwide initiative to accelerate gender balance. This initiative includes giving our leadership teams the necessary background and best practice guidance necessary to increase gender balance,  Some reviewing human resources processes, and deploying locally adapted action plans in all markets. Nestle Japan, for example has run gender balance awareness workshops with more than 250 participants, including its entire management team, while 3 task forces (one each for sales, factories, and women and leadership) have been set up. Nestlé also has specific programmes targeted at women in the farming communities where the company sources its raw materials. The Village Women Dairy Development Programme in the Moga milk district of Punjab, India, focuses on advising female dairy workers on efficient water usage and other agricultural practices. Nestlé is also promoting cottage industries for women in South Africa and conducting nutrition education programmes for women in Nigeria. We would like to thank you for your continued support as we celebrate Women’s day today!

An article by Arvind Singhal a columnist of Business Standard, a financial news daily on India’s CSR track record as the country celebrates 60 years as a Republic. As the Indian republic celebrates its 60th anniversary with pride and hope, this milestone should be a reason for all Indians to take a pause to reflect not only on the achievements of the past 60 years but also on what more needs to be done in the coming years to ensure that every Indian has a smile on her face each day of their lives. With the Indian economy showing extraordinary resilience, poised to grow on a strong, sustained basis for years to come, and creating in the process unprecedented wealth for corporate India, it is time that “corporate social responsibility (CSR)” be reinterpreted in the context of current and future challenges faced or likely to be faced by the Indian society. Unfortunately, the track record of corporate India has been less than exemplary when it comes to CSR of any sort. Barring a few notable, enlightened business houses, including Tata, Birla and Godrej, the efforts have largely been limited to setting up of a hospital or two, a school or a college, a few scholarships, adoption of a few villages to provide some basic amenities, or launching a few public communication campaigns. While all of these efforts are welcome and laudable, they are not enough to make a visible impact on India. Further, a potentially disturbing development may also be in the making. With global warming and environmental degradation occupying (rightfully) much international and national attention, many large businesses have (again, rightfully) also focused their attention on “sustainability”. The risk is that environmentally responsible business practices are now actually a business imperative, and should not be seen as CSR per se. With many Indian (and international) companies now reaching billion or multi-billion dollar revenue scale in India, they should consider deploying some of their formidable innovation, product development, manufacturing, distributing, marketing, and managerial skills towards coming out with truly revolutionary, paradigm-altering products and services providing appropriate, cost-effective solutions to those hundreds of millions of Indians at the bottom of the pyramid. Merely allocating a few crores of rupees or a couple of million dollars for product R&D — either in-house or through third parties and NGOs — will, sadly, not be enough. Stripped down versions of existing products and services in an attempt to make them more affordable to the masses may also not really be enough. India’s challenges, while humungous, are easy to identify and understand. Hundreds of millions are deprived of basic physical and social infrastructure, which includes potable water, basic sanitation and hand-wash solutions, clean energy for lighting and cooking, basic housing, dietary supplements to make good deficiency in critical minerals and vitamins, primary health care, affordable personal transportation and elementary education that includes imparting of a basic understanding of their political and civic rights and obligations. In this backdrop, truly laudable and potentially very high impact CSR effort could be when giants such as Reliance, Tata, Birla, HUL, P&G, Nirma, Bharti, Essar, Mittal Arcelor, Godrej, Apollo, Max, Fortis, GE, Philips, LG, Samsung, Videocon, Maruti, Hyundai, Mahindra, Manipal, Amity, Raymond, Arvind, DLF, GMR, GVK, Infosys, Wipro, Bennett Coleman, Dainik Bhaskar, IBM, HP, HCL and others take up the challenge of finding revolutionary out-of-the-box solutions to these challenges. Each of these giants do have the capability to line up intellectual and financial resources from across the planet to come up with out-of-the-box approaches and path-breaking technologies that can help India (and indeed, the poor across the world) provide some succour and hope to its deprived and needy. As in the case of developing products and solutions for the well-off, the starting point has to be the end “customer”. The approach has to be “customer” and “context” centric. If at all a fortune has to be sought from serving those at the bottom of the pyramid, it must be measured in their smiles and happiness, and return on capital to be monitored through the success achieved in tackling of the challenge. Would the shareholders of such large public and private enterprises allow such investments? There is enough reason to believe that they would give their assent provided these are reasonable in the context of the size of such enterprises and have a well-articulated vision and action plan championed by owner-promoters or the CEOs themselves. Hopefully, sometime in the coming years, the Republic Day will also see recognition and bestowing of awards to exemplary innovators and practitioners of such CSR.

The new Companies Bill 2009 in India has proposed laying guidelines for corporate social responsibility (CSR). Minister of Corporate Affairs Salman Khurshid has said the objective of incorporating CSR in the Companies Bill is to guide India Inc on the way of making money that helps inclusive growth.

 

Corporate Affairs Secretary R. Bandopadhyay said that CSR is one area in which Indian President Pratibha Patil takes a huge interest and that the Bill seeks to make CSR an integral part of corporate governance. The guidelines would allow India Inc to take voluntary initiatives, as well. However, principles would be laid so that it becomes mandatory for India Inc to mitigate with the climate change issues.

In the past decade, there has been a significant shift in the way the private sector has addressed corporate social responsibility (CSR) – from inserting an environmental section to their annual financial report and only reacting to issues when it hit the media to being pro-active and embedding CSR as part of their day-to-day business operations. Bill Greenhalgh, in his recent article on CSR in the Financial Post, mentioned Nestlé’s work in the milk districts in India as “the ultimate example of altruistic self-interest” by continuously implemented initiatives that have improved the quality of life of the communities around its factories. Over the past 50 years, Nestlé has developed artificial insemination programmes for cattle, subsidised farmers’ purchase of milking machines and helped procure loans for the community. In addition, company veterinarians and agronomists supervise the milk routes and advise farmers on the most appropriate feed for the herds and milk storage facilities have been set up in close location to the farmers.  Corporations need to change the way they manage “people, planet, and profit” and embrace CSR as the way they do business.

Check out how mango farmers in India are working with companies directly, instead of through agricultural traders. Many of these farmers were dependant on such traders to sell their produce – and they are meant to shield them against rock-bottom prices – but some contend the traders increase their own margins at the farmer’s expense. One agricultural development manager says, "We are trying to [ensure we receive] good materials. Instead of giving 6 percent to the traders, I'd rather spend 5 percent on agricultural extension work and keep 1 percent for myself. This is basically about creating value for both the farmers and the company.” By using corporate agricultural improvement techniques, these mango farmers are seeing 20 – 30 percent increases in their yields and they’re preserving declining water tables. This is a great example of what we mean by creating shared value – something Nestlé has been doing around the world for years.

Farmer’s all over the world lack irrigation channels for crops and rely on unpredictable rains for their livelihood.  Read how the Bill & Melinda Gates Foundation is supporting efforts to share technologies with farmers that lift water from the ground, distribute it across the farm, and store it for future use. Getting the most out of local water supplies using scalable, sustainable technology is an agricultural extension progress that has long been an important part of creating shared value.  Check out our work with farmers in the coffee supply chain – these communities face some of the most demanding water requirements of all.

The BBC’s Environment correspondent, Richard Black, has a really fascinating post on water use in India.  According to Black, the U.S.’s NASA Grace Mission has discovered that the country’s water-table is falling by about 4cm (1.6 inches) per year in its north-west region, which includes Delhi. The finding, published in the journal Nature, indicates that “rainfall has not changed, and water use is too high, mainly for farming.”  According to the BBC, the finding came out just two days after the Indian government issued a warning about the potential of a water crisis. According to Sukhminder Singh, a farmer from Bhoondri in the State of Punjab: “Now our children come home and explain to us how to make proper use of water, for example while brushing teeth one should use a cup of water rather than letting water taps flow freely. This will lead to proper water management in the village community.” For our efforts, we were awarded the Punjab Government’s Award for Environmental Excellence in 2005. Dairy farming and milk processing are also important areas where Nestlé is making a positive impact in India.  Nestlé works with farmers in the Moga and Samlakha Milksheds through our Farmer Water Management Awareness Program to create awareness about the need to conserve water and optimize use in agriculture.  By providing technical support on new irrigation techniques in agriculture, rain water harvesting, ground water recharge, optimum and use of water for irrigation, and water management on dairy farms, Nestlé has helped to keep dairy waste water management at the farmer level as well as set up biogas and Vermi-compost production units. The proper management of water is something that Nestlé takes very seriously as our business depends on it.  Please see our Water Management Report for more information about how Nestlé creates shared value in the communities where we operate.