Comment: Corporate Responsibility in India Needs to Wake up to Quality Reporting
Sachin Joshi
Centre for Social Markets
January 6, 2005

Companies in India enjoy touting their socially responsible credentials, but are failing to demonstrate accountability in real, meaningful reporting, says Sachin Joshi. Corporate responsibility in India has come out of its infancy and has become a business in itself. If one goes by the number of companies touting their achievements, civil society groups and consultants offering ethical corporate services, and government framing policies to involve business in development issues, then corporate responsibility has evolved to be acceptable to all, at least in concept.

However, despite all this frenzied activity, there is hardly any structured reporting by all these commercial and non-commercial organisations about their actions.

There are only three companies ­ Tata group, Ford India, and Jubilant Organosys, that follow the Global Reporting Initiative guidelines.

To their credit, about 18 Tata group companies have produced or are in the process of developing their sustainability reports.

The other companies prefer to report their corporate responsibility practices through company websites and other public relations publications.

While some rudimentary measurement takes place, deriving economic and financial benefits from these existing reports is virtually impossible.

More glaring is the extensive talk by companies in India about their community initiatives rather than internal practices such as corporate governance, transparency and disclosure issues.

Also missing are consumer benefits, employee welfare and benefits, political engagement, supply chain issues, and real emerging market policies, among others.

In a way, most reports are there simply to mask what’s going on within the opaque walls of the organisation.

Talk to business and NGO representatives about their corporate responsibility activities, and they begin and end with community initiatives. Delve more into their internal corporate responsibility policies and they go dumb! And for their part, NGOs are mostly happy to continue with their development work as businesses emerge as an alternate funding source to individual and government donations.

There is a huge performance and ethics gap between how companies treat their stakeholders, and their claims. For instance, recently Pepsi and Coca-Cola in India were directed by a state High Court to label their bottles with all ingredients; they moved the court to the Indian Supreme Court, only to face a defeat.

Coca-Cola continues to face agitation from local communities around its plant in the southern state of Kerala; the agitation is now a thousand days old. Ironically, Pepsi and Coca-Cola claim to be socially responsible in India, and have HIV/AIDS and water harvesting projects respectively. Are they socially responsible in the true sense?

Ford India may claim to be the first multinational company in India to produce a sustainability report, but it has a long way to go on improving its environmental performance going by the ‘green leaf’ ratings of the famous Indian NGO The Centre for Science and Environment.

Isn’t corporate responsibility meant to be viewed as a comprehensive agenda to address all issues? Not at the moment.

It is startling that the support businesses receive from NGOs and corporate responsibility awards instituted by business chambers helps further this green wash. Are companies to be recognised and rewarded on their piece-meal community initiatives when their own house is in disorder and no one is allowed to look into it at will?

Reliance Energy continues to pollute the soil around its plant in Maharashtra, even after being held responsible for it. Rather than correcting its own operations, it is busy influencing policymakers and authorities to revise the local law in its favour.

This at a time when its chief Anil Ambani was given the ‘CEO of the Year’ award at the Platts Global Energy Awards for 2004 in New York.

These illustrations are not meant to disfigure all the genuine good happenings in India, but to pause and reflect on the state of affairs.

Furthermore, businesses do not want any corporate responsibility reporting to be mandated, and they resist any mandatory disclosures before sometimes giving in to the civil society pressures or judicial system as seen above.

At two different corporate responsibility conferences held recently in Delhi, the writer asked representatives of the companies that have produced sustainability reports on their views of the idea of mandatory reporting. Unsurprisingly, the answer was ‘No’.

These companies have employed resources to develop the few reports so far in response to international pressures. They wouldn’t, however, support the idea of the Indian government or the stock exchange regulator mandating reporting.

They also fear misreporting and mis-auditing by third parties, adding to already widely prevalent corrupt and unethical practices in Indian business. It is strange that companies on one hand complain about corruption in the Indian system, while on the other hand they are often integral partners and sponsors of the same. The Indian system will never be free of corruption if businesses don’t behave themselves.

In conclusion, but a beginning of a useful thought, corporate responsibility reports about India need to be absorbed with caution. It is important to look beyond the obvious and question every statement made by both businesses and NGOs about the improvements on the Indian environmental and social responsibility scene.

Sachin Joshi is a Researcher with the UK- and India-based Centre for Social Markets. The views expressed are strictly of the author and not of the organisation.

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