India's Corporate Social Responsibility Policy and National Voluntary Guidelines on Social, Environmental & Economic responsibilities (NVGs ,2011)

1. India’s CSR Policy & the NVGs
Indian Institute of Corporate Affairs
Ministry of Corporate affairs
India
Vikram Dahiya

2. CONTENTS
• SETTING THE CONTEXT
• GOVERNMENT INITIATIVES
• NVGs
• WAY FORWARD
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3. CHANAKYA, Vridda-Chanakya
• As water collected in a tank gets pure by
filtration, so accumulated wealth is preserved
by being employed in charity.
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4. CSR as Strategic Philanthropy: Historical
Background
• The beginning of industrialization (1800-1914) marks the
transition from merchant charity to industrial philanthropy in
India;
• Between 1914 and 1960, business philanthropy was rich and
varied;
• Many of India’s leading businessmen came under the spell of
Mahatma Gandhi and his Theory of Trusteeship of Wealth;
• In 1965 and 1966 two consecutive seminars were held on the
subject of Corporate Social Responsibility in New Delhi and
Kolkata respectively;
• Another landmark event in the field of CSR in India occurred
when a leading business house undertook the first ever social
audit in 1979.
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5. Why CSR--Poverty in India
• Despite the growth and development of the Indian
Economy during the last couple of decades, poverty is,
increasing in absolute terms.
• The bare fact is that nearly 27.5% of India’s population
still lives below poverty line, and 75% of this, lives in
rural areas.
• 77% of Indian live on a daily income of Rs. 20/- only.
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6. Core Questions on Development Effectiveness and
Poverty Reduction
I. How effectively has economic growth translated into
poverty reduction? What factors have affected these
results?
II. What factorscan lead to high-quality results in sectors
that deliver services to the poor?
III. What measurescan help raise the accountability
ofinstitutions responsible for delivering and sustaining
results?
IV. What is happening to Aid Flows and Aid Coordination?
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7. Context setting
• Business as engine of growth – challenges of sustainable
& inclusive development
• Corporate Social Responsibility (CSR): One word –
Many meanings (Strategic philanthropy – Risk
Management – Responsible Business/Competitiveness)
• Simultaneity of approaches (companies – countries –
regions)
• Multiple driverswithdifferent levels of engagement
• Cross-cutting topic – multiple entry points (financial
sector, consumers, communities)
• From “buzzword” to “core business” – scaling up and
impact remains a challenge
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8. Role of the Government
• Government is playing the role of facilitator for Public and
private sector enterprises to undertake CSR as an integrated
endeavor
• Few landmarks:
 PM’s Ten Point Social Charter
 Voluntary Guidelines on CSR, 2009
 From the year 2010-11, the Department of Public Enterprises,
India has substantially incentivised Sustainable Development
& CSR for Public Sector Enterprises (PSEs);
 National Voluntary Guidelines on Social, Environmental and
Economic Responsibilities 2011 (NVGs: the revised,
elaborated version of 2009 CSR Guidelines )
 Planning Commission and Task Force on Business Regulation
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9. Companies Bill 2009
• Proposal by the Parliamentary Standing Committee on
Finance (August 2010)
• Every company having a net worth of € 70 million or
more, turnover of € 140 million or more, or a net profit
of € 0,7 million or more, during a year, shall be
required to spend every year at least 2% of the
company’s average net profit during the three
immediately preceding financial years, on CSR
activities of the company’s choosing
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10. Companies Bill No. 121 of 2011
• Clause 135—This new clause seeks to provide that every
company having specified net worth or turnover or net
profit during any financial year shall constitute the
Corporate Social Responsibility Committee of the Board.
• The composition of the committee shall be included in
the Board’s Report.
• The clause further provides that the Board shall
endeavour to ensure that at least two per cent of average
net profits of the company made during three
immediately preceding financial years shall be spent on
such policy every year.
• If the company fails to spend such amount the Board
shall give in its report the reasons for not spending.
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11. National Voluntary Guidelines (NVGs) on Social,
Environmental and Economic Responsibilities of Business
• In July 2011 the Indian Ministry of Corporate Affairs released
the National Voluntary Guidelines on Social, Environmental &
Economic responsibilities (NVGs) for India;
• NVGs look at Business Responsibility as a holistic concept
integrated with core business and inherit in themselves the
concept of CSR also
• NVGs are aligned with international frameworks and
instruments, and respond to the unique Indian context at the
same time
• Applicable to big and small businesses, also to Indian
companies operating abroad , product of multi stakeholder
consensus building process over two years
• Both OECD and NVGs guidelines support enterprises, how to
contribute to society and environment in a responsible manner;
• Many aspects of the Indian Guidelines are similar to the
OECD Guidelines.
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12. Structure of the Guidelines
• 9 Principles, covering the Triad and Ethics
• Brief Description
• Core Elements
• Implementation Guidance on the 9 Principles
• Indicators (metrics) to enable self-monitoring by businesses
• Specific inputs for MSMEs
• Case lets to aid comprehension of best practices in each
Principle
• Business Case Matrix
• Mapping of principles against prevailing acts and policies
• Glossary of Terms used
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13. Principles of Business Responsibility
• Principle 1: Ethics, Transparency and Accountability
• Principle 2: Providing Goods and Services that are
Sustainable over entire Life Cycle
• Principle 3: Well-being of Employees
• Principle 4: Being Responsive towards Stakeholders,
especially the disadvantaged
• Principle 5:Respecting and Promoting Human Rights
• Principle 6:Protecting and Restoring the Environment
• Principle 7: Responsible Policy Advocacy that enhances
Public Good
• Principle 8:Supporting Inclusive Growth and Development
• Principle 9: Providing Value to Customers responsibly
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14. Six Steps for Building A Strategy for
Responsible Business (RB)
Step 1 - Analyse Your Business
 Key Business Drivers
 Opportunities and Threats
 Strengths and Weakness
 Articulate the RB Policy
Step 1 - Analyse Your Business
 Key Business Drivers
 Opportunities and Threats
 Strengths and Weakness
 Articulate the RB Policy
Step 2 - Identify Risks and
Opportunities
 Identify Issue
 Network
 Prioritise
Step 2 - Identify Risks and
Opportunities
 Identify Issue
 Network
 Prioritise
Step 3 - Develop a Strategy
 Operational Vs Strategic
 Compliance Vs Beyond
Compliance
Step 3 - Develop a Strategy
 Operational Vs Strategic
 Compliance Vs Beyond
Compliance
Step 4 - Plan and Implement
Strategy
 Roadmap
 Clear Objective
 Adoption of Indicators for each
Principle
Step 4 - Plan and Implement
Strategy
 Roadmap
 Clear Objective
 Adoption of Indicators for each
Principle
Step 5 - Monitor and Review
Progress
 Monitor
 Measure
 Learn and Refine Processes
Step 5 - Monitor and Review
Progress
 Monitor
 Measure
 Learn and Refine Processes
Step 6 –
Communicate
 Convey
Rationale
 Listen
 Embed In
Communications
 Report
Step 6 –
Communicate
 Convey
Rationale
 Listen
 Embed In
Communications
 Report
 Training
 ‘Low-hanging
Fruit’
Step 1 - Analyse Your Business
 Key Business Drivers
 Opportunities and Threats
 Strengths and Weakness
 Articulate the RB Policy
Step 1 - Analyse Your Business
 Key Business Drivers
 Opportunities and Threats
 Strengths and Weakness
 Articulate the RB Policy
Step 2 - Identify Risks and
Opportunities
 Identify Issue
 Network
 Prioritise
Step 2 - Identify Risks and
Opportunities
 Identify Issue
 Network
 Prioritise
Step 3 - Develop a Strategy
 Operational Vs Strategic
 Compliance Vs Beyond
Compliance
Step 3 - Develop a Strategy
 Operational Vs Strategic
 Compliance Vs Beyond
Compliance
Step 4 - Plan and Implement
Strategy
 Roadmap
 Clear Objective
 Adoption of Indicators for each
Principle
Step 4 - Plan and Implement
Strategy
 Roadmap
 Clear Objective
 Adoption of Indicators for each
Principle
Step 5 - Monitor and Review
Progress
 Monitor
 Measure
 Learn and Refine Processes
Step 5 - Monitor and Review
Progress
 Monitor
 Measure
 Learn and Refine Processes
Step 6 –
Communicate
 Convey
Rationale
 Listen
 Embed In
Communications
 Report
Step 6 –
Communicate
 Convey
Rationale
 Listen
 Embed In
Communications
 Report
 Training
 ‘Low-hanging
Fruit’
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15. NVGs: Next Steps
• Advocacy and capacity building of multipliers
(various ministries/government agencies,
financial sector, business associations, consumers
etc)
• Sector specific guidelines/guidance
• Disclosure Framework
• Audit/Assurance
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16. Disclosure Framework : Guidelines
for drafting
• Should be conforming to the NVGs
• Should suit the requirements of the Companies Bill 2011
• Should be designed in the form of an electronic form to
be filed under MCA 21
• Should take into account the frameworks already being
used
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17. Disclosure Framework: Objectives
• Help companies to understand the ethos of NVG in
context of implementation
• Help companies establish internal processes as well as
identify deficiencies
• Assist in providing aggregated data on corporate social
responsibility performance to aid policy
formulation/research
• Assist the stakeholders to review/assess CSR
performance
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18. Disclosure Framework: Basic
Structure
• Section A: General Information about the Company
• Section B: Financial Details of the Company
• Section C: Other Details
• Section D: Business Responsibility Information
• Section E: NVG Principle-wise performance
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19. Key Developments
• Securities and Exchange Board of India (SEBI) mandates
top 100 companies by market capitalization to submit
Annual Business Responsibility Reports based on the
NVGs as part of Annual Reports
• Ministry of Environment and Forests (MoEF) draft on
Corporate Environmental Responsibility takes into
account the NVGs
• The Planning Commission of India includes NVGs as the
common framework for Business Responsibility in its
manufacturing Plan for the next Plan Period
• GRI to draw complementariness between the NVGs and
GRI Reporting Framework
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20. Way forward
• National Foundation for Corporate Social Responsibility
(NFCSR)
• IICA-GIZ partnership focused on adoption and capacity
development of multipliers for NVGs
• Building synergies among diverse stakeholders and instruments
to mainstream responsible business practices through an
integrated approach
• The CSR agenda has five elements:
 Create a new narrative for corporate philanthropy as an
investment in society
 Develop an inclusive “operating system” for philanthropic
investment
 Professionalize the field
 Improve collaboration, communication, and knowledge sharing
 Mobilize “field level” leadership behind this agenda
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21. •THANK YOU
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