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On anvil, fresh rating for corporate bodies’ social welfare measures........Tanita Abraham
Mumbai: With Corporate Social Responsibility or CSR catching up in corporate India, Mumbai-based Karmayog is readying to launch its updated CSR ratings, to look into how much corporates are actually achieving in their social responsibilities.
The initiative was launched by Karmayog two years ago Karmayog’s founder Vinay Somani says, “We started CSR ratings in 2007 with 500 companies and expanded it to 1,000 companies for the year 2008.”
“CSR ratings help companies and industries in understanding the manifold benefits possible if an entire sector spends the least recommended minimum amount on CSR and set a benchmark to follow. It helps NGOs in identifying companies not doing CSR and approach them to initiate meaningful projects and also assist the companies in their areas of CSR and enable a partnership with them,” says Somani.
The list of the companies is taken as per sales figure from the BSE Sensex and information is then collated from the company’s website and Annual Report. Criteria such as impact of products and processes of the company, CSR initiatives undertaken for the current period and previous listed initiatives as well as rating assigned by Karmayog previously are looked into. The companies are then rated from Level 0 to Level 5 (Level 5 being the highest).
“The companies are informed of the rating and requested to respond with further information, if necessary”, adds Somani.It takes around four months to collate all information and assign the ratings, all by a team of four.
With government agencies stepping in to encourage CSR activities, the rating becomes all the more useful, Somani adds.
“In September 2008, the Gujarat government mandated CSR for all industry associations and corporate houses in the state and directed 6 PSUs to set aside a part of its profit to carry out welfare activities. In February this year, the Petroleum Ministry made it mandatory for public sector oil companies to spend a minimum of 2% of their net profits on CSR activities,” explains Somani.
However, a comparative study of the ratings in 2007 and 2008 reveal that corporate social responsibility is on the decline and isn’t quite improving. While the percentage of companies in the top category (1% at Level 4) has remained the same, there has been an increase in companies getting a Level 0 (44% in 2007 and 49% in 2008) and Level 1 (19% in 2007 and 23% in 2008).
The CSR study led Karmayog to release a set of recommendations, like a minimum spending of 0.2% of a company’s sales on CSR activities and also to include in the Annual
Report a separate Corporate Sustainability Report.
The recommended steps calls upon the industry to draw guidelines for improving the processes, and use their core competence, skills and strengths while undertaking CSR activities and also start the activities in the areas they are located.
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