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Social inclusion is not priority for Indian businesses: survey

Unlike ITC, not many companies consider community an important and participatory stakeholder while designing corporate social responsibility policies.Premium
Unlike ITC, not many companies consider community an important and participatory stakeholder while designing corporate social responsibility policies.

Improving the ease of doing business for Indian companies does not necessarily translate into doing good for employees on all parameters, indicate findings of the third edition of the India Responsible Business Index 2017

India improved its rankings in the ease of doing business last year. The World Bank Group’s Doing Business 2018: Reforming to Create Jobs report ranked India at 100, a move up by 30 places from the previous year. The report also applauded the efforts and stated that India had implemented reforms in eight out of 10 Doing Business indicators.

“Now that companies are finding it easier to operate in India, we had hoped that this would be all the more reason for them to make their business practices more responsible. But not much has changed in three years," said Tom Thomas, chief executive of Praxis, a development support organization, and convener, Corporate Responsibility Watch.

However, the findings of the third edition of the India Responsible Business Index (IRBI) 2017, to be released on Tuesday, 27 February, indicate not much has changed on the ground. If anything, there are indications that responsible business practices have become less robust.

The IRBI 2017 index, a collaborative effort by a group of not-for-profits—Oxfam India, Corporate Responsibility Watch, Praxis Institute For Participatory Practices and Partners in Change—measures the performance of the top 100 firms on BSE by market value under various heads, including non-discrimination at work, respect for employee dignity and human rights, community development, community as stakeholder, and economic and social inclusion of supply chains. IRBI uses publicly available polices and disclosures of these firms against National Voluntary Guidelines (NVG) principles related to social inclusion.

“Companies comply with the law where they have to but when it comes to taking on a broader role in society to battle with inequality, expectations are not being met. The message is clear from this index. Industry bodies, not necessarily regulators, must step in, else not much will happen voluntarily," says Nisha Agrawal, CEO, Oxfam India.

Among the areas where transparency in disclosures in public domain by companies has gone down is the commitment to non-discrimination as part of their recruitment processes.

Of the 99 companies reviewed, only 75 companies in IRBI 2017 had this information available as opposed to 77 in IRBI 2016. The presence of anti-sexual harassment policy in public domain is up to 95 companies, but when it comes to provisions for a disabled-friendly workplace, only 19 companies have disclosed policies in the public domain.

“Women’s groups have played a stronger role to have a policy against sexual harassment. In comparison, having a strong advocacy to have policies on inclusion have not been very strong, which is why firms do not display their policies on inclusion," says Niraj Seth, executive director (advisory services) at EY India.

In fact, while disclosing information on specific groups vulnerable to discrimination during recruitment, many companies have identified women and persons with disabilities (PWD), but only 18 identified scheduled tribes (ST) while 32 companies recognized sexual minorities as vulnerable. Thomas says this is because there is so much conversation around women and harassment, that companies are reacting. “Until disability or the (other) marginalized communities get as much focus, their issues will lag behind," says Thomas.

When it comes to safety and health of employees, 91 companies have disclosed polices but when the question arises about the fate of contract staff, only six companies explicitly state in their policies that the social benefits extend to contract employees. “It is common to hear that the contractual staff faces harassment in terms of working hours, sexual harassment. The companies need to have some guidelines and non-negotiables for the agency they contract," says Seth.

Like women’s issues, one parameter in community development that companies have robust disclosure is corporate social responsibility (CSR). Here 86 companies—five more than last year —recognize identification of vulnerable communities such as women, SC/ST, children, persons with disabilities and religious and sexual minorities as target stakeholders while planning their CSR activities but only 18 identify backward regions while designing their programmes. “There is a problem with the CSR law. Companies have not imbibed the true spirit or understood the law in totality. There has to be a shift from shareholder interest to stakeholder interest," says Thomas. But Seth has a different view. “We find that many companies are willing to work in backward areas but are yet to overcome barriers related to finding partners," she explains.

One reason companies are not really showing much improvement, according to the Index, is lack of scrutiny: “There is really no pressure on companies to perform better on these parameters. Sebi (Securities and Exchange Board of India), the ministry of corporate affairs (MCA) and other industry bodies are not looking closely enough and hence there is no pressure on companies to improve," adds Thomas. Seth believes that studies like IRBI help companies to see where they stand vis-à-vis different companies on select parameters and that could act as a catalyst to do better.

Thomas believes to make positive change, data should be available in such a way that it reaches a far wider audience so that this puts pressure on companies to become more responsible.

At a time when Oxfam International is mired in controversy, the credibility of the index could be questioned by some. Thomas makes a spirited defence of IRBI 2017. “Oxfam India is just one of the partners in the study and them being a part of this index should not impact the findings. This is what the data says. Of course there are many ways to discredit a study. When people can’t challenge the data, they tend to rake up other issues to discredit the study."

Methodology and disclosures

The India Responsible Business Index 2017 is based on self-reported and publicly available disclosures of the top 100 BSE-listed firms by market cap as on 31 March 2016. Of these 100 firms, two had merged during the year, bringing the total number of firms analysed to 99. The information provided has not been externally validated. Data from annual, business responsibility and CSR reports, and any other company policies, published until 30 November 2017, has been used to answer 116 questions. The answers were sent to the firms for verification by 15 December 2017. Of the 99 firms, 33 responded.

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