A Report On Corporate Social Responsibility : The Tata Group
- 1. A REPORT ON CORPORATE SOCIAL RESPONSIBILITY: THE TATA GROUP By Navitha Pereira
- 2. CONTENTS Particulars Page No. 1. Introduction 1 2. What is Corporate Social Responsibility? 2 3. Changes in the Company’s Articles of Association 3 4. Tata Corporate Sustainability Policy 4 5. CSR Activities of Tata Companies 5 5.1. Tata Steel 5 5.2. Tata Motors 6 5.3. Tata Chemicals Ltd. (TCL) 8 5.4. Titan 8 5.5. TISCO 9 5.6. TELCO 9 5.7. Tata Consultancy Services (TCS) 9 6. Conclusion 11 References 12
- 3. 1 1. Introduction Ranging from steel, automobiles and software to consumer goods and telecommunications the Tata Group operates more than 80 companies. It has around 200,000 employees across India and thus has the pride to be nation‘s largest private employer. Mr. Ratan N. Tata has led the eminent Tata Group successfully. He was trained as an architect at New York's Cornell University but he chose to enter the family business. He assumed the Chairmanship of the Group in 1991. Named Business Man of the Year for Asia by Forbes in 2004, Mr. Ratan Tata serves on the board of the Ford Foundation and the program board of the Bill & Melinda Gates Foundation's India AIDS initiative. Tata Group chairman Ratan Naval Tata has stepped down to pass on the entire responsibility to Cyrus Mistry. Under Tata, the group went through major organisational phases — rationalisation, globalisation, and now innovation, as it attempts to reach a reported $500 billion in revenues by 2020-21, roughly the size of what Walmart is today. Approximately two third of the equity of the parent firm, Tata Sons Ltd., is held by philanthropic trusts endowed by Sir Dorabji Tata and Sir Ratan Tata, sons of Jamsetji Tata, the founder of today’s Tata empire in the 1860s. Through these trusts, Tata Sons Ltd. utilizes on average between 8 to 14 percent of its net profit every year for various social causes. Even when economic conditions were adverse, as in the late 1990s, the financial commitment of the group towards social activities kept on increasing, from Rs. 670 million in 1997-98 to Rs. 1.36 billion in 1999-2000. In the fiscal year 2004 Tata Steel alone spent Rs. 45 crore on social services. Tata is accredited to initiate various labour welfare laws. For example- the establishment of Welfare Department was introduced in 1917 and enforced by law in 1948; Maternity Benefit was introduced in 1928 and enforced by law in 1946. A pioneer in several areas, the Tata group has got the credit of pioneering India's steel industry, civil aviation and starting the country's first power plant. It had the world's largest integrated tea operation. It is world's sixth largest manufacturer of watches (Titan).
- 4. 2 2. What is Corporate Social Responsibility? The concept of CSR originated in the 1950‘s in the USA but it became prevalent in early 1970s. At that time US had lots of social problems like poverty, unemployment and pollution. Consequently a huge fall in the prices of Dollar was witnessed. Corporate Social Responsibility became a matter of utmost importance for diverse groups demanding change in the business. During the 1980‘s to 2000, corporations recognized and started accepting a responsibility towards society. Corporate social responsibility (CSR) focuses on the wealth creation for the optimal benefit of all stakeholders – including shareholders, employees, customers, environment and society. The term stakeholder, means all those on whom an organization's performance and activities have some impact either directly or indirectly. This term was used to describe corporate owners beyond shareholders. CSR refers to the obligations of businessmen to pursue those policies to make those decisions or to follow those lines of relations which are desirable in terms of the objectives and values of our society. Also Social responsibility means that businessmen should oversee the operation of an economic system that fulfills the expectations of the people. An ideal CSR has both ethical and philosophical dimensions, particularly in India where there exists a wide gap between sections of people in terms of income and standards as well as socio-economic status. It is argued that industry in the 20th century can no longer be regarded as a private arrangement for enriching shareholders. It has become a joint enterprise in which workers, management, consumers, the locality, govt. and trade union officials all play a part. If the system which we know by the name private enterprise is to continue, some way must be found to embrace many interests whom we go to make up industry in a common purpose. CSR implies some sort of commitment, through corporate policies and action. This operational view of CSR is reflected in a firm‘s social performance, which can be assessed by how a firm manages its societal relationships, its social impact and the outcomes of its CSR policies and actions.
- 5. 3 3. Changes in the Company’s Articles of Association “A Tata Company shall be committed to be a good corporate citizen not only in compliance with all relevant laws and regulations but also by actively assisting in the improvement of the quality of life of the people in the communities in which it operates with the objective of making them self-reliant. Such social responsibility would comprise, to initiate and support community initiatives in the field of community health and family welfare, water management, vocational training, education and literacy and encourage application of modern scientific and managerial techniques and expertise. This will be reviewed periodically in consonance with national and regional priorities. The company would also not treat these activities as optional ones but would strive to incorporate them as integral part of its business plan. The company would also encourage volunteering amongst its employees and help them to work in the communities. Tata companies are encouraged to develop social accounting systems and to carry out social audit of their operations.” Amendments were made to the Articles of Association of the major Tata group companies in the 1970s. Newly included was an article stating that the “company shall be mindful of its social and moral responsibilities to consumers, employees, shareholders, society and the local community”. To institutionalize the CSR charter, a clause on this was put into the group's 'Code of Conduct.' This clause states that group companies had to actively assist in improving quality of life in the communities in which they operated. All the group companies were signatories to this code. CSR was included as one of the key business processes in TISCO. It was one of the eight key business processes identified by TISCO's management and considered critical to the success of the company.
- 6. 4 4. Tata Corporate Sustainability Policy The corporate policy of the group encompasses the sustainable development of all the stakeholders. The major points included in the corporate policy are following: Demonstrate responsibility and sensitivity to biodiversity and the environment. Comply with rules and regulations relating to environment. Constantly upgrade technology and apply state-of-the-art processes and practices with institutional arrangements that will combat larger issues like climate change and global warming. Create sustainable livelihoods and build community through social program pertaining to health, education, empowerment of women and youth and employee volunteering. Find ways to enhance economic human, social and natural capital for bringing and maintaining a balance among business, society and environment.
- 7. 5 5. CSR Activities of Tata Companies Through the following companies Tata group keeps on heading towards the fulfillment of corporate social responsibility – 5.1. Tata Steel Tata Steel has adopted the Corporate Citizenship Index, Tata Business Excellence Model and the Tata Index for Sustainable Development. Tata Steel spends 5-7 per cent of its profit after tax on several CSR initiatives. (a) Self-Help Groups (SHG’s) Over 500 self-help groups are currently operating under various poverty alleviation programs; out of which over 200 are engaged in activities of income generation thorough micro enterprises. Women empowerment programs through Self-Help Groups have been extended to 700 villages. From the year 2003 to 2006, the maternal and infant survival project had a coverage area of 42 villages in Gamharia block in Seraikela Kharsawa and a replication project was taken up in Rajnagar block. For providing portable water to rural communities 2,600 tube wells have been installed for the benefit of over four Lakh people. (b) Supports Social Welfare Organizations Tata Steel supports various social welfare organizations. They include: Tata Steel Rural Development Society Tribal Cultural Society Tata Steel Foundation for Family Initiatives National Association for the Blind Shishu Niketan School of Hope Centre for Hearing Impaired Children Indian Red Cross Society, East Singhbhum
- 8. 6 (c) Healthcare Projects In its 100th year, the Tata Steel Centenary Project has just been announced. The healthcare projects of Tata Steel include facilitation of child education, immunization and childcare, plantation activities, creation of awareness of AIDS and other healthcare projects. (d) Economic Empowerment A program aiming at economic empowerment through improvised agriculture has been taken up in three backward tribal blocks in Jharkhand, Orissa and Chhattisgarh. An expenditure of Rs. 100 crore has been estimated for the purpose and this program is expected to benefit 40,000 tribal living in over 400 villages in these three States. (e)Assistance to government Tata Steel has hosted 12 Lifeline Expresses in association with the Ministry of Railways, Impact India Foundation and the Government of Jharkhand. It has served over 50,000 people. Five thousand people have got surgical facilities and over 1,000 people received aids and appliances. Over seven lac rural and another seven Lac urban population have been benefited by the CSR activities of Tata Steel. The National Horticulture Mission program that has been taken up in collaboration with the Government of Jharkhand has benefited more than a thousand households. In collaboration with the Ministry of Non-Conventional Energy and the Confederation of Indian Industry, focus is laid on renewable energy aiming at enhancing rural livelihood. 5.2. Tata Motors (a) Pollution Control Tata Motors is the first Indian Company to introduce vehicles with Euro norms. Tata Motors' joint venture with Cummins Engine Company, USA, in 1992, was a major effort to introduce emission control technology in India. To make environment friendly engines it has taken the help of world-renowned engine consultants like Ricardo and AVL. It has manufactured CNG version of buses and also launched a CNG version of its passenger car, the Indica. Over the years, Tata
- 9. 7 Motors has also made investments in the establishment of an advanced emission-testing laboratory. (b) Restoring Ecological Balance Tata Motors has planted 80,000 trees in the works and the township and more than 2.4 million trees have been planted in Jamshedpur region. Over half a million trees have been planted in the Poona region. The company has directed all its suppliers to package their products in alternate material instead of wood. In Pune, the treated water is conserved in lakes attracting various species of birds from around the world. (c) Employment Generation Relatives the employees at Pune have been encouraged to make various industrial co-operatives engaged in productive activities like re-cycling of scrap wood into furniture, welding, steel scrap baling, battery cable assembly etc. The Tata Motors Grihini Social Welfare Society assists employees' women dependents; they make a variety of products, ranging from pickles to electrical cable harnesses etc; thereby making them financially secure. (d) Economic Capital In Lucknow, two Societies - Samaj Vikas Kendra & Jan Parivar Kalyan Santhan have been formed for rural development & for providing healthcare to the rural areas. These societies have made great efforts for health, education and women empowerment in rural areas. (e) Human Capital Tata motors has introduced many scholarship programs for the higher education of the children. Through a scholarship program Vidyadhanam, the company supports 211 students. Out of these students 132 students are from the marginalized sections of the society. These students get books, copies and other study materials. They also undergo different kinds of workshops, creative & outdoor sessions and residential camps as well. The company has entered into Public- Private Partnership (PPP) for upgrading 10 Industrial Technical Institutes (ITI) across the country.
- 10. 8 (f) Natural Capital On the World Environment Day, Tata Motors has launched a tree plantation drive across India and countries in the SAARC region, Middle East Russia and Africa. As many as 25,000 trees were planted on the day. Apart from this more than 100,000 saplings were planted throughout the monsoon. 5.3. Tata Chemicals Ltd (TCL) Tata Chemicals is making an effort for sustainability. Sustainability for the group means honesty and transparency towards stakeholders, environmental protection, generating economic value, promoting human rights and creating social capital. Tata Chemicals supports the UN Global Compact and is committed to reporting its sustainability performance in accordance with GRI (Global Reporting Initiatives) guidelines. Its main operations for environment protection include optimal use of resource, finding and/or generating alternative sources of fuel and raw materials, and maximizing reuse and recycling. All in all they have the policy of avoid, reduce and reuse. The company runs a rural development program at Okhamandal and Babrala. Tata Chemicals Limited was one of the first organizations to hold an Impact camp, which was held at Mithapur in the year 1982, providing eye care to hundreds of patients at the Mithapur Hospital. Tata Chemicals Limited was also the first organization to run world's first hospital on wheels - the Life Line Express, through Jamnagar district for the first time between November 21, 2004 and December 21, 2004. 5.4. Titan Corporate social responsibility is a basic element of TITAN Group‘s governing objective and one of its corporate values. In its corporate philosophy CSR is defined as doing less harm and more good by adopting the following practices: Respecting and supporting local communities Caring for the employees Being an active member of society Committed to sustainable development
- 11. 9 Putting safety (at work) first Titan has employed 169 disabled people in blue collar workforce at Hosur. 5.5. TISCO TISCO was awarded The Energy Research Institute (TERI) award for Corporate Social Responsibility (CSR) for the fiscal year 2002-03 in recognition of its corporate citizenship and sustainability initiatives. As the only Indian company trying to put into practice the Global Compact principles on human rights, labor and environment, TISCO was also conferred the Global Business Coalition Award in 2003 for its efforts in spreading awareness about HIV/AIDS. 5.6. TELCO TELCO, Puna has started community development activities for the benefit of TELCO families and local residents in 1973 with the following objectives: 1. To create social awareness in all the employees and their families, to promote congenial mutual relations amongst them, to improve personal and environmental hygiene and health 2. To help the families of employees develop better living standards by organizing extension education programs, training in various trades/skills and providing opportunities to earn additional income. TELCO is fighting against Leprosy at Jamshedpur. 5.7. Tata Consultancy Services (TCS) TCS aims at the Tata group‘s philosophy of building strong sustainable businesses community. The elements that make for strong corporate sustainability at TCS include the following: A fair, transparent corporate governance, a strong strategy for long-term growth, Best-in-class HR processes, initiatives for community betterment and welfare. In 2010-11, TCS supported its local communities in the United States: supported the victims of the 2010 Chilean earthquake, conducted IT educational programs for high school students in
- 12. 10 Cincinnati, raised support and awareness for diabetes prevention through a series of marathon sponsorships. Tata Consultancy Services runs an adult literacy program. Indian government launched Saakshar Bharat, an adult education program in 2009 and the program will now go online via TCS’ partnership. The scheme, aimed at female literacy aims to make literate 70 million people, of which at least 85 percent are women literate and the program has already been rolled out in 167 districts across 19 states.
- 13. 11 6. Conclusion For bringing back and maintaining the general balance in the economic and social arena it is evident to think deeply and act wisely about CSR. Every business house owe some responsibility towards the society, nation and world in general which provide it with all human , material and natural resources. Considering the long run growth and sustainable development following the norms of CSR, devising new policies and effective implementation is inevitable to bring and sustain a balance between corporate world and society, present generation and upcoming generation, man and nature . As far as the Tata group is concerned, it has gone a long way in fulfilling its duty and responsibility towards the society and the nation. It has reached the masses to elevate their lives, to nurture their dreams and to hone their skills justifying the statement of the founder, “We do not claim to be more unselfish, more generous and more philanthropic than other people. But we think we started on sound and straightforward business principles, considering the interests of the shareholder, our own, and the health and welfare of the employees, the sure foundation of our prosperity”.