(Published in The Financial Times of 24 May 2004). A report on the practice of corporate social responsibility (CSR) by Dutch companies in India has come down heavily on these companies for not living up to their responsibility.
The report commissioned by India Committee of the Netherlands (ICN) and jointly carried out by Consultancy and Research For Environmental Management (CREM) and Partners In Change (PIC), a non-governmental organisation, among others, says, “Most (Dutch) multinationals do have an official corporate policy or code of conduct on the issue but hardly involve their Indian daughter company in their development. Neither do they monitor if the policy is implemented or not.”
The report has been filed on the basis of direct interviews of nine companies (both the parent and daughter organisations) and 12 others via phone and e-mail (out of a total of 40 approached) and a dozen of stakeholders (from suppliers to NGOs and unions). It further adds, “Hardly any company check if the production in its sub-contracting chain is being carried out in line with internationally agreed labour and other human rights as well as environmental standards.”
It, however, did not name any companies as “to get the company responses it was agreed that their names would not be mentioned”. The basis of the report was the CSR Frame of Reference for International Business Developed by Dutch CSR Platform in 2003.
Although the report came to conclusions which could have far reaching impacts, its conclusions are not supported by any statistical data and one cannot find out how many companies were not living up to expectations of corporate social responsibility. Only generalised terms such as “a few” and “most” supported the claims.
Hardly any company check if the production in its sub-contracting chain is being carried out in line with internationally agreed labour and other human rights, says the report.
Defending the report, Gerard Oonk, co-ordinator, ICN says, “The number respondents was quite limited (9 interviewed, 12 replied in some way) so a break up (and statistical data) would not say much.”
The main purpose of the research was more qualitative and in-depth (looking for both problematic issues as well as best practices) than quantitative, he explains. Mr Oonk, although admits that “it is true that ‘a few’ or ‘most’ looks a bit imprecise”. Explaining the problems faced in preparing the report, Mr Oonk says, “Forty companies were approached. It was, despite the anonymity and support from ministries, etc. difficult to get companies to answer questions. The companies that did participate are most probably more pro-active than the ones who did not.”
When reached out for their opinion on the report, amongst the Dutch companies in India contacted Shell India Pvt Ltd and Philips India Limited agreed to comment on the findings of the report. Reacting to the report’s finding that the mother company formulates CSR policy but hardly involve the daughter company, Shailaja D Sharma, manager External Affairs and Corporate Identity, Shell India, agreed that Shell Group of companies in India are bound by the group’s policy on sustainable development and take their own measures to ensure compliance with this policy in terms of economic, social and environmental performance.
However, Ms Sharma, adds, “Whereas the group has a specially designated resource that upon request assists operating companies to formulate, run and review social performance programmes, it is the individual operating companies that develop and execute their local programmes.” Individual companies naturally undertake such programmes as are relevant to their local environment and stakeholders.
To disregard local stakeholders would be in contravention of the basic tenets of sustainable development that we subscribe to, she says. “Our largest social performance plan, which we are implementing in Hazira, is testimony to our ability to develop locally relevant, locally designed programmes while availing the benefit of international experience,” asserts Ms Sharma. Similarly, Philips India also follow the group’s global standards of sustainable development.
“However, specific to the field of social investment, lots of activities in the areas of social and community development are being carried out at our different locations keeping in mind the local requirements,” says Vineet Kaul, vice-president, HR, Philips India Limited. “We have on-going initiatives like income generation schemes for women in slums run by our software centre in Bangalore, support for ‘Jaipur Foot’ project, donation of wheel chairs to Red Cross, blood donation camps etc,” he says.
On the issue of companies not checking if the production in its sub-contracting chains is being carried out in line with internationally agreed labour and other human rights as well as environmental standards, Ms Sharma says, “Shell companies in India require contractual acceptance by suppliers of goods and services that they will abide by Shell general business principles and environment standards.”
Philips India on the other hand, according to Mr Kaul, in 2003 rolled out its supplier declaration on sustainability that outlines minimum expectations of behavior in the areas of environment, health and safety, and labor conditions. “This document has been rolled out to our key suppliers. This was followed by a social audit of our suppliers to reinforce our commitment to Sustainability. This was carried out by a reputable social responsibility agency and a report submitted to our parent company,” he says.
Another contentious issue, which the report points out, regarding the lack of clarity amongst Dutch mother companies and the Indian daughter company as to who bears the final responsibility to solve a certain CSR problem, Ms Sharma clarifies, “Sustainable development, including social performance (CSR) is the direct responsibility of the CEO and the country chair for Shell companies in India.”
Likewise, Mr Kaul also says, “In India, Philips India Limited is solely responsible and accountable for all CSR issues. In every quarter we have to report to our parent company on health and sustainability issues. This data is subject to external audits.”