Fiinovation Dnote Xpress, Issue #10, Jan - 2015

Issue: #10 | January 2015

CSR : Not Mandate BUT CULTURAL CHANGE

IN THE ISSUE Fiino deliberates on Sustainability @ IOD CSR in India: – Incorporating a Cultural Change CEO Speaks Wipro's View Of Good Citizen Not Reel, But Real Action : CSR of the Indian Film Industries Fiinobservation of International Days

www.fiinova on.co.in

01

Fiinovation Deliberates on Sustainability @ IOD New Delhi, January 20, 2015: Sustainability formed the core of One-day National Convention on Corporate Governance and Sustainability & IOD Annual Meet, organised by Institute of Directors on December 20, 2014 at The Ashoka Hotel, New Delhi.

Fiinovation participated in the event which brought together leading national and business leaders, policy makers, investment bankers, multilateral institutions and thought leaders from across the world.

Providing an insight during the panel discussion on 'Effective Corporate Governance for Growth & Sustainability', Mr. Soumitro Chakraborty, Chief Executive Officer, Innovative Financial Advisors Pvt. Ltd. said, "Sustainability is still not a core strategy for corporations in India. It fails to be a core issue for corporations who are not addressing it adequately."

The issue of credibility of data was discussed which the panellists said eventually lies in the principle of the organisation that ensures how the organisation understands and evaluates data. Speaking of a delusion which exists between economy and growth, Mr. Chakraborty said, "We need to understand these two imperatives especially if we talk of economy. Sustainability tends to take a backseat, since talks around economy are representative of primary profits and primary inferences." He further explained how the problem arises when we do not align economy with growth.

Drawing an analogy of an economy to a monster which we need to keep feeding into and end up forgetting growth, which is more human inclusive, he said that the economy delusion factor exists across the industry.

Ensuring corporate governance and sustainability requires suitable corporate governance structures that address sustainability as a core issue in the board, since we cannot expect sustainability to be addressed down under. Elaborating on how sustainability needs to be implemented at the policy level, Mr Chakraborty said if the top management is serious about sustainability, they need to start at a policy level and not at an execution stage. Speaking of the two percent mandate, he explained that ad hoc contribution to social projects does not feed into the sustainability discourse. Since sustainability and social responsibility need to start when we start making policies and should not be a part of the last page of the annual report of corporations.

His session created a stir and ensured an active participation from the panellists who spoke of interesting developments and activities in the field of sustainability in their organisations

Food for Thought...

Hear the Inuencers Speak...

 The Tata Group spent Rs 1,000 crore on corporate social

"The CSR activities being performed by Coal India, NTPC and enterprises run by Tatas in Jharkhand are so visible and pronounced that their impact is felt at the very first sight because of the developmental work that these have been undertaking to build connectivity and linkages."

-Jayant Sinha

responsibility (CSR) in 2013-14.

 Aditya Birla Group spent Rs 200 crore on CSR in fiscal 2014, which is a little over 2% of the net profit from India.

Minister of State for Finance

 38.6

million people benefit by SAIL's healthcare initiatives, which include 57 primary health centers and 21 hospitals.

"Top leadership is responsible for looking at the big picture for the company — CSR is a vital part of that."

-K Venkataramanan CEO & MD, L&T

 As per recent report by Mercer, Education emerged as the most favoured area, followed by community-based development and environment sustainability for CSR spend by companies.

 Only 11 of the top hundred companies implement CSR programmes through their own foundations.

 Ikea foundation will invest another Rs 190 crore in India in the year 2015.

“Our Target Is To train a Million People In 10 Years.”

-Adi Godrej “When it comes to fulfilling my duties, I want to be known as an honest man.”

-Bharat Ratna JRD Tata “Corporates can offer mobile connectivity to 50,000 villages through CSR.” -FICCI

02

CSR in India Incorporating a Cultural Change It has been a year after the amendments to the Companies Act have come into play, especially Section 135. Corporate Social Responsibility has been the buzz word among the business community over the last few years. The amendment has ensured for the first time in history that voluntary and informal activities are included under the legal mandate.

Even though the essence of CSR has been growing since the last two decades, the new law is more inclined towards bringing about a cultural change in the operations of the business fraternity. Currently, the aura created ensures that not only those companies who fall in the CSR ambit, but even those who don't fall are feeling obliged to initiate social development programmes.

This amendment has created a stir and has been criticized for the challenges involved in setting up credible CSR programmes that go beyond the letter of the law. Many industrialists and organizations have been vocal that the 2% ruling could lead to forced philanthropy, check box behaviour, corruption, and manipulation of data for avoidance to comply. As Ratan Tata says, “we have a phenomenon which is meant to be good but is going to be somewhat chaotic ... we don't as yet know what kind of monitoring there'll be in terms of how well this money is used.” As per Azim Premji, 2% on CSR is a lot, especially for companies that are trying to scale up in these difficult times. It must not be imposed. Many companies are still grappling with new rules and trying to understand how to avoid the loose connotations associated with CSR. There are suggestions on how an organization shouldn't just be a cheque writing one and how it should design their CSR strategy aligned to the organizational goal, and how working with civil society organizations is important. The looming concern is, can a government-mandated CSR be a social development course for a nation in which over 900 million have a mobile connection but only 600 million (36% of the population) has access to a clean toilet? I reckon being optimistic about the amendment and furthered by the words of George Bernard Shaw who said that progress is impossible without change and those who cannot change their minds cannot change anything.

A recent survey by Mercer suggests that CSR is becoming increasingly important with 81% of the corporations accepting it to be an important component of the overall business strategy. These are good signs as more companies are planning to establish CSR and Sustainability departments within their organization in the next two years.

A review of the current landscape makes me believe that companies need to diversify the CSR activities for an overall holistic development of society. The development in India which continues to increase the ambit of the operations has been a positive sign. The main focus areas for CSR investment have been on Education, Community Development and Environment Sustainability within the organization. The inclusion of sanitation after the Prime Minister's call of 'Swach Bharat' has allowed many corporations to come into the foray. However, I believe crucial areas such as Climate Change, Women Empowerment, Rural Infrastructure Development, Water Purity, Clean Energy, Sports, Wildlife, and Human Rights among others need to be included.

Overall I believe the CSR journey has started off well and in the long run it is bound to create a positive impact. However there is a need to address the challenges and strong monitoring and evaluation mechanism should be brought in place.

Penal provisions for non-compliance are still a debatable topic but to bring about a cultural change, a law must be stringent. Lastly, I would like to conclude by saying our actions change our minds, our minds can change our behaviour and our behaviour can change the outcomes.

‐ Rahul Choudhury

We are Successful Because We Contribute to Society...

03

CSR: The thin line between Commitment and Mandate India is shifting its gears of development from an emerging market towards a developed economy, the pressure of limiting the ever expanding disparity between the industrial profit and overall human development index is slowly becoming a challenge.

With the policy on our side it is not a matter of mandate anymore but a question of commitment that the industry beholds towards the society at large.

This social responsibility is not limited to the social arena only but to all the stakeholders of any specific objective or corporation which includes the employees, customers, promoters, suppliers, vendors among others. The onus of limiting this disparity cannot be justified by an idea running through times immemorial that the responsibility of overall human development in a society lies only with the government negating the responsibility of action taken by the industry to derive their corporate profit.

Its time to realize that addressing such issues of social imbalance is no longer a matter of discussion but its a requirement of survival.

The concept of social responsibility has been long in practice in the West with an understanding that Corporate Social Responsibility is not a part of contribution towards the society through the medium of currency on a percentile of profit derived.

It is now being termed in the West as Corporate Responsibility wherein the corporations have understood that CSR merely cannot be a percentile of profit but has to be embedded in a responsible behavioral mechanism enabled to derive the profit throughout the process chain. This concept of social responsibility has to soon be imbibed by the Indian diaspora as well.

The Indian market are governed with the help of a consumer base, aged 18-40 years, which is socially aware, connected , enlightened with the developments in the social and financial arena around them. It would be a wrong assumption if we think that businesses will sustain without generating a good feeling factor behind the products they manufacture and the services they render.

Corporate responsibility is a part of a behavioral mechanism wherein every system and the sub- system within a process has to adhere to certain ethical and social mannerism. Every penny that is profited has to be responsibly sourced, a neglect on these aspects and a myopic vision to derive profits will not only have destructive results over a long term but will also have catastrophic results in the business sustainability of the corporation at large.

This kind of an adherence has to be brought in the policy documents and have to be monitored and audited appropriately. One of the responsibility mechanism is to carry out a Social Impact Assessment and Environment Impact Assessment before the launch of the product or the services. It has to be then ensured by the leaders that advisory from such assessments merely should not remain letters in the policy document but should be transformed into a mechanism of operation as well. The basic fundamental on which Corporate Social Responsibility performs is simple, topdown and not bottomsup. The leadership of an organization herein has to decide to adhere to certain responsibility standards and ensure such a policy is followed.

Being truly justified years ago by the 'Father of the Nation: Shri Mahatma Gandhi' , addressing a business conference quoted " The leaders of tomorrow will not be known by muscles they fletch but will be known by their capacity to take community along with themselves and their development at large.”

This also goes on to establish the fact that Corporate Social Responsibility is not a very young phenomenon but in fact has been debated and has been a relevant topic since years. It is therefore now an imperative to understand that the corporations and businesses cannot any longer afford to differentiate between their direct beneficiaries, i.e. consumers, suppliers, employees and the indirect beneficiaries which includes society and environment in which they operate. Businesses will now have to understand that a sustainable and a profit oriented business can only sustain, survive and grow in a stable environment and with social harmony.

Corporate Social Responsibility is not merely policy document but a mechanism of action to ensure that harmony. ‐Mr. Soumitro Chakraborty CEO, Innova ve Financial Advisors Pvt. Ltd.(Fiinova on)

04

VIEW OF GOOD CITIZEN With Ecological Sustainability as the corner stone of the charter, for the last 15 years WIPRO has been deftly following an integrative approach towards bringing together Environment, Business and People.

“Over the years we have realized and learnt that a corporation's survival and progress is a function of three key vectors- the corporation itself, the society in which it operates and the environment that envelops all of these. By design, these are also the vectors that form the crux of our corporate citizenship philosophy and the base of our all sustainability initiatives, both internal and external." ‐ Anurag Behar

Chief Sustainability Officer Wipro Limited

Wipro s Iniatives  Ecological: Minimize internal footprint on energy, water and waste  Education and Community: Work jointly with education & civil society networks on sustainability programs  Workplace: Promote employee diversity, empowerment & continuous learning  Customer Stewardship: Provide products and solutions that enable customers to become greener  Public Relation & Policies: Shape policies by engaging with government, NGOs & industry networks

CASE Study: Pedagogy of Wipro WIPRO goes back to school with WATIS (WIPRO APPLYING THOUGHT IN SCHOOLS) WATIS is an initiative to help in societal change and development. This initiative is long-term, deliberate and focused. The intent of this initiative is to improve the Quality of education – so that life opportunities and possibilities are expanded for everyone, including the most under privileged.

Objective : Coalesce civil society and build capacity on the ground for systemic reform in education

Advocacy Radical stimulus to influence macro system Create good literature Articles in popular media Large advocacy project

Wipro WATIS

Build Eco-system

Strategy

Build Civil Society eco- System Support new entrants strengthen network Build capabilities in network

Over the years: Partner network of 30 of India’s foremost educational organizations  Worked with 500 schools and 10,500 educators across 17 states reaching around 500,000 students  Helped rebuild and on occasion build social organizations (supported 6 partners in organization development)  Supported 6 people on Wipro Education Fellowship so far 

Experiment & learn Deep Engagement with schools Support diverse experiments Create shareable learning

Currently:  Deep partnership-projects on the ground with 19 partner organizations across the country.  20 projects in school reform reaching out to over 750 schools  Supporting 10 organizations in building capacity for working in school reform  4 people currently on senior fellowship Direction: Take the work of our network of organizations to reach every district in the country

‐ Rahul Jain

05

Not REEL, But REAL

ACTION

CSR of the Indian Film Industry

The Indian film Industry has seen unprecedented growth in terms of volume of films being made and the revenue associated with it. In the past decade the film industry has reached new heights from ranking first globally in terms of annual film output to reaching overall revenue of Rs.93 billion in 2011. Yes, all of this is not shared by the producers and promoters but gives employment to thousands of people directly or indirectly associated with the film production or promotion or final screening. It is a joy to watch actors becoming heroes and fighting the evils pertaining in the society.

There is another potential side to the success of the Indian Film Industry as many social issues can be resolved by just putting a small percentage of its revenue in the social sector. Social Action requires collective action from all sectors covering horizontal and vertical spectrum bringing the required change.

There are many ways production houses are helping the underprivileged sections of the society through their social initiatives, though there is no collective action taken up by the film industry. A small percentage of the billions of revenue that is generated annually can change many lives. It needs proactive action from the Film Fraternity. The solution can be to promote a Social Impact Fund where different production houses can have a stake depending upon their revenue generated in the past year and this fund can then be distributed to various NGOs, Social Incubators, Prime Minister Relief Fund, or directly through impact initiatives carried out by the Trust itself. For this a collective action is required by everyone in the film industry, who can contribute to their share of social responsibility.

This could be under the purview of CSR as many production houses and media partners come under the CSR ambit, and their share of contribution should not be clubbed with the social responsibility associated with all those who have the capacity to bring about a positive change in the lives of underprivileged sections of the society. Innovative Financial Advisors Pvt. Ltd. continues to work to improve the livelihood, education, health and environment aspects of the society which can be used as a medium to create a sustainable India in association with a Socially Responsible Indian Film Industry.

‐ Manish Narula

Forthcoming Events  India Sanitation Summit – 6th Feb, 2015, New Delhi  CII CSR Workshop: Implementation, Impact and reporting – 10th Feb, 2015, New Delhi  Conference on Health, Safety, Security and Environment (HSSE)- 12th Feb, 2015, Vadodara  3rd National Conference on Waste to Wealth: The Action Agenda – 3rd Feb, 2015, New Delhi  India Corporate Governance and Sustainability Vision Summit - 3rd March 2015, New Delhi

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Fiinobservation of National Days National Youth Day

Republic Day

12 January

26 January

National Youth Day is observed every year across India on 12th January. The day is celebrated with great enthusiasm and joy to commemorate the birth anniversary of Swami Vivekananda. His ideals, philosophies, writings and lectures have been a great source of inspiration for the youth of the country. This day motivates the youth by encouraging them to work towards making India better. Across the country the National Youth Day is commemorated in schools, colleges and other institutions through activities that aim to enlighten the youth about the ideals of Swami Vivekananda.

India celebrates 26th January as Gantantra Divas (Republic Day). It is on this day that the Indian constitution was adopted and the foundation for the largest democracy was laid. We owe it to the makers of independent India who strived to give its citizens the right to justice, liberty, equality and fraternity, keeping the spirit of India intact.

Indian youth today need to have an ability and vision to think globally and act locally. India has the world's largest youth population with 356 million people between the age of 10-24.

Fiinovation believes that Indians should learn and adapt global best practices if they aim for development. This day inspires us to work together to unite and motivate the youth who are future torch bearers.

On this day, the political fraternity, from the Indian President to the Prime Minister, descend on Rajpath to witness the highlight of the day-Republic Day Parade. India's cultural landscape includes hues of all religions, castes, and creed which gets translated in the form of a tableaux for the parade.

Besides this, India showcases its military might to the world.

The three-day festivities come to an end on 29th January with the Beating Retreat, which is performed by the bands of the three wings of the military - Indian Army, Indian Navy and Indian Air Force.

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Who We Are Fiinovation, a research based organization, is an integrated solution enabler in the CSR and sustainability domain. It is focused towards enhancing quality across organizational value chain through meaningful innovation thereby ensuring sustainability. It is Asia's first proposal research laboratory wherein research is focused primarily on four sectors, which include health, education, livelihood and environment. The practices: CSR-CSO Partnership, CSR Policy Design & Development, Programme Management, Impact Assessment and Sustainability Reporting help provide simple solutions to their partners.

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