The Hindu Business Line : Bravo, Tata!

IT HAS long been taken as axiomatic that corporates should not be obsessed only with maximising their profits, but give back to society a part of all that they take from it by way of natural and material resources, oftentimes with a harmful impact on the environment. This could take various forms, such as factoring into the balance sheet the provision for dual (social and monetary) dividend, earmarking a declared percentage of earnings for charitable purposes, and participating in activities to promote education, health care, literacy drives, social forestry and social welfare.

Many corporates run their own trust funds, made up of a proportion of their profits, from which they give grants for projects falling within the purview of corporate social responsibility (CSR). All computations of the exact quantum of earnings to be set apart by companies for CSR are bound to have an element of subjectivity, but there should be no objection to accepting a figure of 10 per cent as reasonable.

A more satisfactory method is to link the percentage to achieve a given level of CSR, measured by a CSR index, calculated with the aid of objective parameters. The Tata group of companies has shown the way by establishing a Tata Council for Community Initiatives to provide benchmarks for the enterprises of the group, with the help of which their efforts towards discharging their CSR are quantified.

Briefly, the index is based on a detailed matrix assigning precise values to the performance of each company of the group in putting systems in place to instil commitment and involvement at the highest levels of corporate leadership, taking steps to spread the awareness of CSR to all employees, and undertaking programmes meshing corporate goals with the larger good of society and the nation.

Most importantly, the group builds on the contribution of the "volunteer manager" on the lines advocated in this column (Business Line, May 5, 2004). The anchoring of the exercise on self-assessment nurtures honesty and transparency.

Chambers of industry and commerce in India and abroad will find it rewarding to go through the elaborate and comprehensive manuals that the Council has prepared for making the CSR Index as realistic as possible.

B. S. Raghavan

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