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A waste-collection CSR initiative by Maruti Suzuki India.
A waste-collection CSR initiative by Maruti Suzuki India.

The power of inclusion

Firms need to take a more active role and be responsible about environment, communities and the ethics they use in their policies and practices

In the past 10 months or so, one of the top priorities for India has been to figure out ways to make it easy for people and firms who want to do business in the nation to conduct their transactions and go about their work.

It is believed that the growth of the Indian economy (expected to be at 7.5% in 2015) will also usher in a better quality of life for its citizens. However, we have seen that economic growth does not always mean a better life for all citizens—India’s development status is a case in point. On the Human Development Index released by the United Nations Development Programme, India ranks 135 out 187 nations. Among BRICS nations, it has the lowest rank (Brazil ranks 79, China 91, Russia 57 and South Africa 118).

Keeping in mind the inequality between sections of society and the persistent poverty that plagues this country, it is not possible for ease of business and economic growth to be totally divorced. Firms need to take a more active role and be responsible about the environment, the communities and the ethics that they use in their policies and practices. “Participation of people as stakeholders can make businesses responsible," said Tom Thomas, chief executive of Praxis, a development support organization, and convener, Corporate Responsibility Watch.

In association with Oxfam India, a non-profit that works to empower the underprivileged, Corporate Responsibility Watch, Praxis and Partners in Change will on Tuesday release the India Responsible Business Forum (IRBF) Index 2015, which looks at corporate accountability and business responsibility.

“Oxfam believes in an inclusive society, one in which everyone has the opportunity to live a life of dignity. All this is not possible without the involvement of the private sector. They have a role beyond making profit and providing jobs," said Oxfam India chief executive Nisha Agrawal. “We are all living in a world which has huge problems—like climate change and growing extreme inequality—which can no longer be solved by just governments and civil society alone. We need to partner with the private sector to solve these."

The IRBF Index 2015 (see methodology and disclosures) keeps inclusion as its basic premise and examines publicly disclosed information on five parameters: community development; community as stakeholders; inclusive supply chain; non-discrimination at the workplace; and respecting employee dignity and human rights.

“We have three objectives with this index—namely it will help strengthen the reporting in the annual business responsibility report, put out more disclosures and information in the public domain, and will help to formulate policies to align with the National Voluntary Guidelines. Eventually, moving from CSR to responsible business even in their workspace and supply chain," said Thomas.

Agrawal sees the IRBF index as a tool of engagement, while Thomas hopes it will help point out the difference on being “high on talk and not on the walk. We want companies to self-examine and see how they can do better, to understand that just allocating 2% of profit to corporate social responsibility (CSR) is not enough and work towards making the current beneficiaries of CSR funds partners and even stakeholders."

Methodology and disclosures

The IRBF Index 2015 is an initiative by not-for-profit Oxfam India in partnership with Corporate Responsibility Watch, Praxis and Partners in Change, non-profits which look at corporate accountability and business responsibility.

The index is based on self-reported information of the top 100 Bombay Stock Exchange (BSE) companies according to market capitalization as on 1 April 2012. Since then, Sesa Goa and Sterlite Industries have merged into one company, called Vedanta Ltd; hence, the data is of 99 companies now.

Every company’s policy commitments have been measured against the 2011 National Voluntary Guidelines (NVGs) drafted by the ministry of corporate affairs. The Securities and Exchange Board of India (Sebi) in 2012 issued a directive that required the top 100 companies to publish a business responsibility report (BRR) based on the principles listed in the NVGs.

The IRBF lists 116 questions—drafted on the basis of NVGs—that were answered by the research team from the publicly available documents of companies till 20 August. Documents like the annual reports, directors’ reports, BRRs and corporate social responsibility (CSR) reports, company policies published in public domain and sustainability reports were used to answer these questions. These answers were then sent to the companies for verification by 9 October. Twenty-seven companies responded. Responses from the rest are awaited and will be uploaded on the index website in December.

The companies have been graded on five parameters: a) non-discrimination at the workplace, b) employee well-being and human rights, c) community development, d) inclusive supply chain, and e) community as business stakeholders.

For each parameter, a firm’s scores in the subsections of that parameter are totalled and converted to a percentage. Each sub-score is arrived at by dividing the firm’s score in the subsection by the maximum possible score and the number of questions in the subsection.

The information provided by the companies has been taken at face value and not externally validated, nor does the index measure the practice of or compliance with the policies.

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