Description
this is the project report made by me on the csr activity of hero corp
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NEW DELHI INSTITUTE OF MANAGEMENT NEW DELHI
A REPORT ON
"AN EMPIRICAL STUDY OF CORPORATE SOCIAL RESPONSIBILITY OF HERO MOTOCORP LTD,"
SUBMITTED TO: PROF: MEENA SINHA
SUBMITTED BY: NIKUNJ SHARMA
GAMMA-143
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ABSTRACT In this thesis, i have undertook a comprehensive review of the CSR Practices presently prevailing at the three target companies, HERO MOTOCORP,. For the purpose of investigation, I have chosen both primary as well as secondary source of information to get the results. I consulted many books on the related topic like books on CSR and also visited number of libraries for the research purpose. I have mentioned related texts in the literature review section of the report. After all the research work and collection of facts, the i have came to know about different practices which are prevelant in the target companies. The study has revealed that Corporate Social Responsibility (CSR), for the corporate sector is more about corporate community involvement than anything else. The participation of the corporates in the community betterment programmes, going beyond their economic arguments is what they call it CSR. the company that have been studied Hero Motocorpfound to be involved in CSR activities.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to the New Delhi Institute Of Manegment for providing me an opportunity to Write report on “ corporate social responsibility” where I got an learning about no. of csr activities done by Indian companiey.and I also like to thank to all manger of HERO MOTOCORP. Who have helped me during my project.
I would like to thank my external guide Prof. Meena Sinha for giving his valuable suggestion and guidance through out the work in the absence of which the accomplishment of this project work would not have been possible. I would also like to thanks Ms.Sudeep Chatterjee who is area manager of Hero Motocorp.
{NIKUNJ SHARMA(GAMMA143)}
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TABLE OF CONTENTS
INTRODUCTION CSR DEFINITION CSR REPORTING CSR-INDIAN PERSPECTIVE CSR-GLOBAL PERSPECTIVE LITERATURE REVIEW
HERO MOTO CORP LTD BRIEF HISTORY MISSION/VISION STATEMENT CSR ACTIVITIES
CONCLUSIONS & IMPLICATIONS
5 INTRODUCTION
THE World Business Council for Sustainable Development has defined corporate social responsibility (CSR) as the "ethical behavior of a company towards society". Corporate Social Responsibility (CSR) is a concept which defines that organization, especially (but not only) corporations, have an obligation to consider the interests of, customers employees, communities, and ecological considerations in all aspects of their operations. This obligation is seen to extend beyond their statutory obligation to comply with legislation. Corporate social responsibility is more a business question than a legal question. The social and environmental problems that our world faces are intractable, complex, and multi-faceted and there is evidence claiming that business has been a contributor to these problems. Most of this evidence indicates business is poised to be one of the more powerful and effective agents in the solutions. A clear 'best practice' for corporations hoping to engage in strategic corporate responsibility is to engage with multiple stakeholders and to strategically partner across sectors. It stands to logical reason that one effective partnership to highlight is between business and academia: a not so typical forprofit and not-for-profit partnership. Little focus and attention has been given to the opportunity and potential of academic partnerships with business to advance the Corporate Social Responsibility (CSR) agenda. If we are to truly change the global management paradigm to one of sustainability and integrated strategic CSR, one critical and rudimentary step in this process is to build this management mentality into our core management training: we must educate future management leaders in the critical theory, frameworks, and practice of integrated strategic CSR, just as we educate them in traditional areas of finance, marketing, and accounting (Kellie A. McElhaney, Unpublished Thesis). It is important to distinguish CSR from charitable donations and "good works". CSR goes beyond charity and requires that a responsible company take into full account its impact on all stakeholders and on the environment when making decisions. This requires the company to balance the needs of all stakeholders with its
6 need to make a profit and reward shareholders adequately. The scale and nature of the benefits of CSR for an organisation can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. Corporate social responsibility (CSR) is an extended model of corporate governance and then accounts for a voluntary approach to CSR, meant as voluntary compliance with CSR strategic management standards, in terms of an economic theory of self-regulation based on the concepts of social contract, reputation and reciprocal conformism. CSR is closely linked with the principles of sustainable development, which argues that enterprises should make decisions based not only on financial factors such as profits or dividends, but also based on the immediate and long-term social and environmental consequences of their activities. Today’s heightened interest in the role of businesses in society has been promoted by increased sensitivity to and awareness of environmental and ethical issues. Issues like environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media. In some countries government regulation regarding environmental and social issues has increased. Critics of CSR attribute other business motives, which the companies more often dispute. For example, some believe that CSR programmes are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. It has been suggested that CSR activity is most effective in achieving social or environmental outcomes when there is a direct link to profits: hence the CSR slogan "Doing Well by Doing Good". This requires that the resources applied to CSR activities must have at least as good a return as that that these resources could generate if applied anywhere else, e.g. capital or productivity investment, lobbying for tax relief, outsourcing, off shoring, fighting against unionization, taking regulatory risks, or taking market risks—all of which are frequently-pursued strategies. Whatever altruistic values the company once had becomes socially responsible only to the extent that it enhances the corporate brand and makes sense for long-term profits. Which is not necessarily the wrong way to do corporate social responsibility? Profit-seeking corporations, constrained
7 and buttressed by moderate government regulation and spending, did far more to increase the welfare of the world than a proliferation of ‘socially responsible’ governments. Firms may be able to reduce their cost of capital by appealing to socially responsible investors.
The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance. Companies are beginning to realize the fact that in order to gain strategic initiative and to ensure continued existence, business practices may have to be molded from the normal practice of solely focusing on profits to factor in public goodwill and responsible business etiquettes. An examination of some of the factors which have led to the development of the concept of corporate social responsibility (CSR) would be ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets.
It has been observed that consumers consider switching to another company's products and services, speak out against the company to family/friends, refuse to invest in that company's stock, refuse to work at the company and boycott the company's products and services in case of negative corporate citizenship behaviors . Last but not the least, firms all over the world is beginning to grasp the importance of intangible assets, be it brand name or employee morale. Only firms that have gained the goodwill of the general public and are ideal corporate citizens will be to develop these intangible assets into strategic advantages. The cumulative contribution of all the above mentioned factors can be summarized by figure below.
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Social responsibility theorists assume that profit-maximization is incompatible with broader social interests, so that managers should be free to serve society generally rather than exclusively shareholders. In fact, markets powerfully constrain anti-social corporate conduct. It follows that managers would serve society’s interests best by focusing on long-term profit-maximization. However, the corporate form inherently gives managers significant slack to diverge from profit-maximization. The solution is to fundamentally change the governance structure of publicly held firms toward a partnership-type model that reduces managers’ control over the firm’s cash. This move is facilitated by the shift toward thicker markets, which decreases firms’ need to lock assets up in a strong and durable corporate entity. The main impediment to such a change is the corporate tax, which gives managers incentives to retain earnings.
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Methods of CSR reporting Moon (2002) distinguishes three types of CSR reporting ‘community involvement’, ‘socially responsible production processes’ and ‘socially responsible employee relations’. During the initial stages of development of CSR in emerging economies, the community involvement is more along the lines of a philanthropic involvement with company involvement limited to developing minimal or rather the absolutely necessary amount of communal goodwill necessary to operate in the business environment. As compared with the developed countries like US, CSR in developing countries is seen as part of corporate philanthropy where corporations augment the social development to support the initiatives of the government. However in the US it is seen as a strategic tool which helps the organizations to have a legitimate existence in the society. CSR is considered inbuilt in the business existence of the traditional firms in the emerging markets like India. However, trends in this regard are heartening with companies trying to establish strategic alliances with the state and the civil society thus establishing the presence of CSR as an institution in these markets. The remaining parameters are internal to the firm involving the molding of their business activities while incorporating CSR practices. As companies start to embrace CSR practices to a greater extent, it leads to changes in production processes so that all environmental and societal norms are also satisfied even thought they may not contribute to the profit maximizing objective of the firm. This will mean that human rights agreements are also upheld taking into account the rights of the local communities. CSR also leads to evolution of employee relations in the company in such a way that employees become major stakeholders with definite decision making powers especially in the area of formulation of CSR policy.
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CSR and development With the retreat of the state in economic activity in India, the imperative for business to take up wider social responsibilities is growing. The situation is complex and India is facing a compounded set of corporate responsibility challenges. The ‘first generation’ corporate responsibility agenda concerning conflicts between companies and communities over the control of natural resources is widespread. Examples include struggles between rice growers and shrimp farms, land disputes between plantation owners and indigenous communities, and resistance from communities to mining projects. Yet India also faces a range of ‘second generation’ issues relating to hazards of industrial production, exemplified by the 1984 Bhopal tragedy, but now encompassing a growing number of incidents across the subcontinent where industrial air and water pollution, and the dumping of waste is going beyond the limits of social and environmental tolerance. And, finally, as the pace of urbanization continues and liberalization opens up India to global consumption patterns, many of its cities are simultaneously confronting the ‘third generation’ responsibility issues related to products and services, whether they are auto pollution norms or pesticide residues in mineral water. Whereas business cannot be expected to take on the role of governments, in a situation where a majority of the population lives below the poverty line and has little or no access to basic public services such as health, education, water, and electricity, and where there are a multitude of complex sustainability challenges, CSR certainly has a potential for becoming a real tool for development—human, social, and economic. The public’s expectations of business are also growing. A TERI opinion poll in India found that Indians feel that the business sector must play a wider and more expansive societal role. In addition to providing good quality products at reasonable prices, companies should strive to make their operations environmentally sound, adhere to high
11 labour standards, reduce human rights abuses and mitigate poverty. But the poll also revealed that people are not yet judging companies in the marketplace according to these
criteria. Developing such market-oriented pressures could become a powerful lever for change. One example of an initiative that emphasizes the development role of business is the Sustainable Livelihoods Project of the WBCSD (World Business Council on Sustainable Development)3, which aims at doing business with the poor in ways that benefit them and the company. The success of this business model will be instrumental in shaping the future of CSR as a development strategy.
Corporate social responsibility – current scenario Today business managers live under continuous pressure “to excel” or “to achieve”. Competitive environment builds more and more pressure on them to adopt all such methods that might ensure achievement of business goals. Values and ethics at this juncture become irrelevant. Hazardous work conditions of mining corporations, cement industries, exploiting child labour in glass and cracker industry, greedy pricing by pharmaceuticals companies on monopoly products are a few examples. However, all companies are not alike and many have come forward for the cause of society. .In 2002, the top ranking companies included Johnson & Johnson, Apria Healthcare, Colgate Palmolive and General Electric. Some other companies namely ABB, Aracruz Celulose, General Motors, Dow Chemical, Mitsubishi Group, Novartis and Rio Tinto are also involved into the CSR programme while moving ahead in their business. Asea Brown Boveri, the Swiss engineering corporation, is a sponsor of the Global Sustainable Development Facility (GSDF) and an active member of the World Business Council for Sustainable Development (WBCSD). It is a world leader in developing eco-efficient
12 technologies in a wide range of industry areas from electric transmission to transportation and is building a global network to install these technologies in many developing and transition economies. Aracruz Celulose, the world's largest exporter of bleached eucalyptus pulp, is often cited for its efforts to promote sustainable development through tree plantation, harvesting and pulp production, processed in Brazil. General Motors, the world's largest automobile manufacturer is involved in various environmental protection initiatives and partnerships. Similarly, Dow Chemical, a US corporation was selected to participate in the GSDF for, inter alia, “abiding by the highest standards of human rights, environment and labour standard norms, as defined by UN agencies. Mitsubishi Group has been actively cultivating an image of environmental responsibility through advertising and specific environmental projects. Novartis, the Swiss life science corporation, is another participant in the GSDF and member of the WBCSD. It is often cited for its efforts in the fields of poverty alleviation and environmental protection. Rio Tinto, the British company, is often cited for its standards of environmental reporting and for promoting continuous social development and sustainable livelihood. CSR provides a number of advantages to business like lowering and limiting litigation, reduction in taxes, protecting brand image, improving customer satisfaction and reducing absenteeism, employee turnover and increasing the ability to retain talented employees etc. In India, Tata Group strongly favors and follows the concept of CSR, while the Reliance Group argues strongly against it. India's largest and internationally best-known Tata group of Companies, founded by Jamsetji Tata, believes in pioneering concept of trusteeship in management. Benefits of the profits of many of the companies in the group are channelled back to the people through the major philanthropic trusts, as exhibited in . It may be observed that during recent years profits of the company exhibit a fluctuating trend but their expenditure on society is consistent. Nearly 80 per cent of the capital of the holding company, Tata Sons Limited, is held by these Trusts. As a result, great national institutions have come into being in the areas of science, medicine, atomic energy and performing arts. J.R.D. Tata, who has been instrumental in conducting the first social audit in India and perhaps in the world, remarks, “While profit motive no doubt provides main spark for
13 any economic activity, any enterprise which is not motivated by consideration of urgent services to the community becomes outmoded soon and cannot fulfil its real role in modern society”. Besides Tata Group, the other companies which have adopted and followed the CSR in India are: BHEL, Wipro, Bajaj Auto Ltd., Larsen & Toubro, Sriram Investments, Otis Elevator Co. India, ACC, Asian Paints, Brook Bond, Colgate Palmolive, Escorts, SAIL, ITC etc. The contribution of these companies towards CSR encompasses various initiatives like starting social trusts, anti pollution measures, adopting villages, family planning clinics, training unemployed youth, and community development activities etc. Further, they conduct social audits on a voluntary basis, provide medical, recreational facilities, develop sports, undertake consumer education campaigns, avoiding unethical and deceptive advertising and so on. Azim Premji, Chairman of Wipro, has created enormous trust for facilitating primary and elementary education in India. Reliance group, founded by Dhirubhai Ambani, propounds the other school of thought, which is opposed to CSR as such. “As an industrialist my job is”, declared Dhirubhai, “to produce goods to satisfy the demand. Let us be clear about it. Everyone has to do his job. My commitment is to produce at the cheapest price and the best quality. If you dabble in every thing then you make a mess of things. If we cannot take care of our shareholders and employees and start worrying about the world, then that is hypocrisy”. Thus, one can evidently find arguments and counter arguments in favour and against the issue of CSR. However in Indian context, acceptance of social responsibility is no more than rededicating ourselves to cherished values of our ancestors in the field of business. In older times, whenever people of the country were under the social or natural problems, leading businessmen have literally thrown open their treasure chests to provide the required assistance and help to the needy. Gandhiji reminded us of these values, when he propounded the theory of trusteeship. As a sequel to that, more and more companies are now realizing that they can no more function or to be judged solely on the basis of their thick bottom-lines and fulfilling their economic objectives only. A positive impact on employees, customers and community at large has assumed an equal or greater significance in the overall success of the companies and building their brand image. This
14 realization has made them undertake socially responsive actions, which are also strongly proponed by Vedic philosophy.
CSR-INDIAN PERSPECTIVE India is among the few countries where more than four out of five organizations are practicing Corporate Social Responsibility (CSR), ranging from donating to local charities to undertaking global fair labor standards, an international survey conducted by the Society for Human Resources Management (SHRM) has revealed. According to SHRM, human resources personnel in India, Brazil, Mexico and Australia are more likely than those in the United States to report that their organization has formal CSR policies. Brazil reported highest participation rate at 95 percent with the United States at 91 percent. The employees in India and Brazil, the survey found, are encouraged to spearhead volunteer programs. In the United States, HR professionals cited contributions to society, public relations strategies and employee activism as top drivers. CSR practices are also seen as important to employee loyalty, morale, retention, recruitment and productivity, all of which are key responsibilities of HR professionals. China has the lowest percentage for encouraging employees to spearhead CSR programs and Chinese respondents reported the lowest rate of participation in CSR practices, SHRM reported. Over half of the organizations surveyed recognize employee participation in volunteer programs, with the United States leading at 72 percent. The study, titled '2007 Corporate Social Responsibility: A Pilot Study,' surveyed human resource (HR) professionals in India, the United States, China, Mexico, Brazil, Australia and Canada. "Organizations are increasingly assessing the social and environmental impact of their business decisions," according to Susan Meisinger, president and chief executive officer of SHRM. "As a result of globalization, I believe more organizations
15 will incorporate CSR practices in their business strategies. As these practices increase, HR professionals will play a larger role in CSR programs, from strategy to implementation," she said. In the United States, Brazil, Australia and Canada, the main obstacles to CSR programs were reported to be cost, unproven benefits and lack of support from senior management. "While some organizations consider cost to be an obstacle to CSR practices, others point to improved image, competitive advantage and greater market share as clear benefits,"
stated Meisinger. While the types of CSR practices varied among countries, they did not vary by organizational sector. For-profit public and private companies, nonprofit organizations and government agencies reported participating in the same types and range of practices. According to SHRM, this study has revealed that the majority of organizations across these seven countries have policies pertaining to corporate social responsibility. The report presents a global view of corporate social responsibility practices and the integration of corporate social responsibility in organizations' business decisions. Intra-organizational responsibility for creating and implementing corporate social responsibility strategies is also explored in the report. Floods, droughts, cyclones, earthquakes, landslides and avalanches are some of the major natural disasters that repeatedly and increasingly affect (World Disasters Report 1999, International Federation of Red Cross and Red Crescent Societies, Report of High Powered Committee on Disaster Management, Government of India, 2001). In the 1970s and the 80s. Earthquakes, droughts and famines were the biggest killers in India. The situation stands altered today, it is probable that a combination of factors altered today, it is probable that a combination of factors like better reservoir management and food security measures have greatly reduced the deaths caused by droughts and famines. Floods, high winds and earthquakes dominate the reported injuries, with ever increasing numbers in the last ten years. The last three decades have been associated with a large number of earthquakes in Asia that have a relatively high injury to death ratio.
16 In India, the role of CSR has been gaining momentum for a decade now. The realisation that the participation of the private sector can foster the public-private partnership is vital in terms of sharing resources, bringing in expertise and appropriate technologies. This can enhance visibility of campaigns, and bringing about civil society response. Stressing the need for management stewardship for giving a thrust to nation's economic development, President APJ Abdul Kalam on 7 May 2007 while distributing the corporate social responsibility awards urged the corporate India to contribute to the upliftment of society besides creating wealth. "For a prosperous and developed India, the important thrust will be on the growth in the number of such creative leaders who can
create wealth to their institutions and also contribute to the upliftment of the environment and the people in their neighbourhood," . NTPC was also one of the industrial houses that have been on this occasion. Kalam said the industry houses should be concerned about their corporate social responsibility and give "more to the society than what they have drawn." Kalam said education should be an important part of the corporate social responsibility and industry can do a lot in rural areas by providing infrastructure for the schools in the form of drinking water, sanitation, transport, sports complexes and computer facilities. In addition, he said, corporate houses can arrange special lectures for imbibing value-based education to improve quality of learning by children. He said schools in India can have at least one hour of moral science classes every week to help students acquire "enlightened feelings and enlightened powers" to understand daily events and the gospels of permanent truth linking man to his environment. Referring to the issue of energy independence, the President said business houses can take up urgent action for conservation of energy, promoting use of renewable energy to the maximum extent in their plants and facilities. The business houses, Kalam said, can also work on development of solar energy and wind energy either on stand- alone mode or in partnership with Indian and European
17 firms for providing a cost effective energy sources to the community. The strategy to achieve energy independence, he said, should focus on increasing use of renewable energy (solar, wind and hydro power), electrical power from nuclear energy and biofuels. He said the industry should consider participating in world knowledge platform missions -- water, health, agriculture and food process, knowledge products, transport, habitat, disaster management and capacity building -- as business opportunities, while simultaneously fulfilling corporate social responsibility. The society makes a corporation guilty for engaging in profits. Business is stuck with labels of being exploitative. In course, the corporation loses self-esteem. This mindset has to change. He felt that an individual's contribution to social good has greater impact than a corporate's per se (Business Daily from THE HINDU group of publications Tuesday, Nov 14, 2006).
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CSR-GLOBAL PERSPECTIVE Today's globalization raises new challenges regarding how to develop trading relationships that support the UN's Millennium goals of reducing poverty and ensuring greater environmental security.Companies are aware that they can contribute to sustainable development by managing their operations in such a way as to enhance economic growth, increase competitiveness and ensuring at the same time environmental protection and promoting social rights. Thus, Corporate social responsibility (CSR) is a concept whereby companies integrate social end environmental concerns in their business activities and in interaction with their stakeholders on a voluntary basis. Corporate social responsibility is one of the responses to the imbalances resulting from the acceleration of the globalization process: ? imbalance between the rapid process of liberalization and the time necessary to elaborate the international regulatory framework for these exchanges; ? imbalance between the advanced governance systems in industrialized countries, and the lack of such governance in developing countries as well as at international level; ? imbalance between the highly developed economic pillars of global governance (IMF, World Bank, WTO) and the embryonic state of the social and environmental pillars of such a system. In this global context, voluntary social and environmental practices of business, going beyond companies' existing legal obligations, can play a major role in filling the governance gap in an innovative way. CSR is not a substitute, but a complement to hard law. As such it must not be detrimental to public authorities' task to establish binding rules, at domestic and/or at international level, for the respect of certain minimum social and environmental standards. The focus of the debate in this respect has now moved on from a simple dichotomy between voluntary and binding instruments, towards the overarching challenge of devising
19 reporting tools and verification mechanisms to ensure proper compliance with CSR commitments.
HERO MOTO CORP LTD
BRIEF HISTORY When Hero Cycles and Honda Motor Company of Japan inked their joint venture in India in April 1984, few could have imagined that the two would go on to create history and become the subject of a case study at business schools, internationally. But that's the Hero Motocorpsaga for you. In a little over two decades, the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide. The company has sold over 15 million motorcycles and has consistently grown at double digits since its inception and today, every second motorcycle sold in the country is a Hero Honda. In two decades, Hero Motocorphas built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes per year. In this period, Hero Motocorphas set up over 2400 customer touch points, comprising a mix of dealers, service centres and stockists across rural and urban India. Today, Hero Motocorpis an amalgam of winning networks and relationships with internal and external stakeholders, including Investors, Dealers, Vendors and Employees. These relationships have helped the company hold on to the mantle of World No.1 for years in succession. What makes Hero Motocorpwell, Hero Honda, is synergy. The two partners, leaders in their respective domains, have been able to consistently draw on each other's strengths. The Hero Group's deep domain knowledge of the Indian market and its supplier network has meshed with Honda's mastery over four-stroke engine technology to create modern and fuel-efficient machines at affordable prices for India 's 250-300 million strong
20 middle class. Progressively through the 1980s, the 1990s and now in the 2000s, Hero Motocorphas relied on 3 R's-- Reach, Research and Reliability as its basic building blocks. Using feedback from the market, a fully-equipped R&D center has consistently created best practices in designing, testing and harmonization, besides placing strong emphasis on road safety and ride quality. This emphasis has helped Hero Motocorpbuild products that are ahead of their time. In the 1980s, for example, Hero Motocorpbecame the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India , and Hero Motocorpsold millions of bikes purely on the commitment of increased mileage. Hero Motocorpwas also one of India 's first automotive companies to get close to the customer. Over the years, feedback has flowed back and forth seamlessly through a unique CRM program - the Hero MotocorpPassport Program which now has over 2.5 million members on its roster. The program has not only helped Hero Motocorpunderstand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. The best is yet to come. Hero Motocorpis powering its way through a market that is still to unleash its true potential, as barely two per cent of the population has been penetrated so far! It isn't surprising that the company is in no mood to take its hand off the throttle. As Brijmohan Lall Munjal, the Chairman, Hero MotocorpMotors succinctly puts it, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.'' MISSION/VISION STATEMENT HERO MOTO CORP LTD MISSION
21 Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities. This mission is what drives Hero Motocorpto new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders. HERO MOTO CORP LTD MANDATE Hero motocorp ltd is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motocorp Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status.
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CSR ACTIVITIES
Hero Motocorp takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream. An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Foundation has adopted various villages located within vicinity of the Hero motocorp factory at Dharuhera for integrated rural development. This includes:
? Installation of deep bore hand pumps to provide clean drinking water. ? Constructing metalled roads and connecting these villages to the National Highway (NH -8). ? Renovating primary school buildings and providing hygienic water and toilet facilities. ? Ensuring a proper drainage system at each of these villages to prevent waterlogging.
23 ? Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants.
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HERO MOTOCORP AND CORPORATE SOCIAL RESPONSIBILITY In the year 2000, Hero Motocorp ltd, formulated its mission statement and corporate philosophy. The first to introduce cleaner four-stroke engines in the country, environmental concerns are close to the company’s corporate heart which is why they go that extra mile to ensure that each one of the hi-tech four-stroke motorbikes goes meets the most demanding of pollution norms at every level. This is a policy the company has followed since its inception.
The company An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Hero Foundation has adopted various villages located within vicinity of the Hero motocorp factory at Dharuhera for integrated rural development. This includes: Installation of deep bore hand pumps to provide clean drinking water, Constructing metalled roads and connecting these villages to the National Highway (NH - 8), Renovating primary school buildings and providing hygienic water and toilet facilities, Ensuring a proper drainage system at each of these villages to prevent water-logging, Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants. The company has also set up the Raman Munjal Vidya Mandir which began with three classes and has now grown into a modern Senior Secondary, CBSE affiliated co-educational school with over 1200 students and 61 teachers. The school has a spacious playground, an ultra-modern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library and a computer centre.
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Raman Munjal Memorial Hospital
Multi-specialty hospital set up by the Hero Motocorp, equipped with the latest diagnostic and surgical technology. The Raman Munjal Memorial Hospital provides healthcare to the rural population in and around Dharuhera, and also caters to accident and trauma victims driving along the Delhi-Jaipur highway. Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care services to the local community. Free health care and medical camps are now a regular feature in the Hero Group's community outreach program.
Raman Munjal Sports Complex
The Raman Munjal Sports Complex developed by the Company has basketball courts, volleyball courts, and hockey and football grounds are used by the local villagers. In the near future, sports academies are planned for volley ball and basket ball, in collaboration with National Sports Authority of India.
Vocational Training Centre In order to help local rural people, especially women, Hero Motocorp has set up a Vocational Training Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring, embroidery and knitting. The Company has helped women trained at this center to set up a production unit to stitch uniforms for Hero Motocorpemployees. Interestingly, most of the women are now self-employed.
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Adult Literacy Mission
This Scheme was launched on 21st September, 1999 , covering the nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with a modest enrollment of 36 adults. Hero Motocorpis now in the process of imparting Adult Literacy Capsules to another 100 adults by getting village heads and other prominent villagers to motivate illiterate adults.
Marriages of underprivileged girls Marriages are organized from time to time, particularly for girls from backward classes, by the Foundation by providing financial help and other support to the families.
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CONCLUSIONS & IMPLICATIONS The study has revealed that Corporate Social Responsibility (CSR), for the corporate sector is more about corporate community involvement than anything else. The participation of the corporates in the community betterment programmes, going beyond their economic arguments is what they call it CSR. Hero Motocorp is found to be involved in CSR activities. However, the degree of their involvement differs from company to company.. As regard the benefits of CSR for the corporates is concerned, almost all the factors that have been enlisted in the interview schedule are found to be important for the corporates that have been studied. The company is found to be having codified CSR rules and Guidelines for their employees as well as non employees also w.r.t. environmental policy measure, labour rules and disaster management policies etc. For example, the environmental policy of Hero Motocorp .The company have incorporated these Rules and Guidelines in their vision documents. The codified CSR guidelines of a company, argues the respondents, positively enhances the image of the corporates. The respondents believe that it is through the CSR activities a company gets more positive publicity than the advertisements given by the companies to boost the sale of the products of the companies. Attitudes to broader social responsibility issues have changed drastically in the past few years. The factors leading to this trend are the global standards set by the international corporate houses and the corresponding domestic pressure associated with it. Although CSR itself requires money for its implementation, the objectives set by the corporate houses as part of CSR activities and their realization have positive impact on
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the profit and corporate image of the business houses.
There is no fundamental
dichotomy between long-term profit-maximization and social responsibility. Education and health welfare of the under privileged sections of the society are rated higher in the practice of CSR activities followed by the corporates that have been studied. This is followed by environment and health. One thing should be noted here is that whereas the education and health measures taken by the corporates are more voluntary in nature the environmental activities are more due to governmental enforcements. The corporates have their employee volunteers in their headquarters as well as in their respective fields, they have a greater role to play in the later case. The number spreads to thousands and varies according to the size of the company and the diversification of the same. As regards the budgetary provision for CSR activities by the companies, all the three companies that have been studied do have a separate budgetary provisions for the CSR activities. The share of CSR budget out of the total budget of the company varies from one to the other and it depends on the size of the company, the total budget outlay of the company and the CSR policies and practices followed by it. In the present study, it is NTPC which takes the lead followed by followed by Hero Motocorpand ACC. As regards the company policy on CSR activities is concerned, it constitutes an integral part of the company’s policies and do not undertake it in a fragmented manner rather in an integrated and participative method. Apart from the need factors and the governmental directions, the companies have also undertaken various CSR activities for their employees and non-employees as part of their image building process and to earn good will. CSR activities are more effective for the company than pursuing advertisement methods. The present study has also revealed that the companies not only pursue CSR activities but also undertakes review measures at regular intervals to objectively assess their
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implementation. The reviews are normally undertaken at two stages i.e. after completion of a project and annually. Each CSR project is reviewed separately to assess the impact it has created in the context of the objectives for which the project was conceived and implemented by the company.
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doc_474443252.doc
this is the project report made by me on the csr activity of hero corp
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NEW DELHI INSTITUTE OF MANAGEMENT NEW DELHI
A REPORT ON
"AN EMPIRICAL STUDY OF CORPORATE SOCIAL RESPONSIBILITY OF HERO MOTOCORP LTD,"
SUBMITTED TO: PROF: MEENA SINHA
SUBMITTED BY: NIKUNJ SHARMA
GAMMA-143
`
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ABSTRACT In this thesis, i have undertook a comprehensive review of the CSR Practices presently prevailing at the three target companies, HERO MOTOCORP,. For the purpose of investigation, I have chosen both primary as well as secondary source of information to get the results. I consulted many books on the related topic like books on CSR and also visited number of libraries for the research purpose. I have mentioned related texts in the literature review section of the report. After all the research work and collection of facts, the i have came to know about different practices which are prevelant in the target companies. The study has revealed that Corporate Social Responsibility (CSR), for the corporate sector is more about corporate community involvement than anything else. The participation of the corporates in the community betterment programmes, going beyond their economic arguments is what they call it CSR. the company that have been studied Hero Motocorpfound to be involved in CSR activities.
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ACKNOWLEDGEMENT
I would like to express my sincere gratitude to the New Delhi Institute Of Manegment for providing me an opportunity to Write report on “ corporate social responsibility” where I got an learning about no. of csr activities done by Indian companiey.and I also like to thank to all manger of HERO MOTOCORP. Who have helped me during my project.
I would like to thank my external guide Prof. Meena Sinha for giving his valuable suggestion and guidance through out the work in the absence of which the accomplishment of this project work would not have been possible. I would also like to thanks Ms.Sudeep Chatterjee who is area manager of Hero Motocorp.
{NIKUNJ SHARMA(GAMMA143)}
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TABLE OF CONTENTS
INTRODUCTION CSR DEFINITION CSR REPORTING CSR-INDIAN PERSPECTIVE CSR-GLOBAL PERSPECTIVE LITERATURE REVIEW
HERO MOTO CORP LTD BRIEF HISTORY MISSION/VISION STATEMENT CSR ACTIVITIES
CONCLUSIONS & IMPLICATIONS
5 INTRODUCTION
THE World Business Council for Sustainable Development has defined corporate social responsibility (CSR) as the "ethical behavior of a company towards society". Corporate Social Responsibility (CSR) is a concept which defines that organization, especially (but not only) corporations, have an obligation to consider the interests of, customers employees, communities, and ecological considerations in all aspects of their operations. This obligation is seen to extend beyond their statutory obligation to comply with legislation. Corporate social responsibility is more a business question than a legal question. The social and environmental problems that our world faces are intractable, complex, and multi-faceted and there is evidence claiming that business has been a contributor to these problems. Most of this evidence indicates business is poised to be one of the more powerful and effective agents in the solutions. A clear 'best practice' for corporations hoping to engage in strategic corporate responsibility is to engage with multiple stakeholders and to strategically partner across sectors. It stands to logical reason that one effective partnership to highlight is between business and academia: a not so typical forprofit and not-for-profit partnership. Little focus and attention has been given to the opportunity and potential of academic partnerships with business to advance the Corporate Social Responsibility (CSR) agenda. If we are to truly change the global management paradigm to one of sustainability and integrated strategic CSR, one critical and rudimentary step in this process is to build this management mentality into our core management training: we must educate future management leaders in the critical theory, frameworks, and practice of integrated strategic CSR, just as we educate them in traditional areas of finance, marketing, and accounting (Kellie A. McElhaney, Unpublished Thesis). It is important to distinguish CSR from charitable donations and "good works". CSR goes beyond charity and requires that a responsible company take into full account its impact on all stakeholders and on the environment when making decisions. This requires the company to balance the needs of all stakeholders with its
6 need to make a profit and reward shareholders adequately. The scale and nature of the benefits of CSR for an organisation can vary depending on the nature of the enterprise, and are difficult to quantify, though there is a large body of literature exhorting business to adopt measures beyond financial ones. Corporate social responsibility (CSR) is an extended model of corporate governance and then accounts for a voluntary approach to CSR, meant as voluntary compliance with CSR strategic management standards, in terms of an economic theory of self-regulation based on the concepts of social contract, reputation and reciprocal conformism. CSR is closely linked with the principles of sustainable development, which argues that enterprises should make decisions based not only on financial factors such as profits or dividends, but also based on the immediate and long-term social and environmental consequences of their activities. Today’s heightened interest in the role of businesses in society has been promoted by increased sensitivity to and awareness of environmental and ethical issues. Issues like environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers are highlighted in the media. In some countries government regulation regarding environmental and social issues has increased. Critics of CSR attribute other business motives, which the companies more often dispute. For example, some believe that CSR programmes are often undertaken in an effort to distract the public from the ethical questions posed by their core operations. It has been suggested that CSR activity is most effective in achieving social or environmental outcomes when there is a direct link to profits: hence the CSR slogan "Doing Well by Doing Good". This requires that the resources applied to CSR activities must have at least as good a return as that that these resources could generate if applied anywhere else, e.g. capital or productivity investment, lobbying for tax relief, outsourcing, off shoring, fighting against unionization, taking regulatory risks, or taking market risks—all of which are frequently-pursued strategies. Whatever altruistic values the company once had becomes socially responsible only to the extent that it enhances the corporate brand and makes sense for long-term profits. Which is not necessarily the wrong way to do corporate social responsibility? Profit-seeking corporations, constrained
7 and buttressed by moderate government regulation and spending, did far more to increase the welfare of the world than a proliferation of ‘socially responsible’ governments. Firms may be able to reduce their cost of capital by appealing to socially responsible investors.
The evolution of the relationship between companies and society has been one of slow transformation from a philanthropic coexistence to one where the mutual interest of all the stakeholders is gaining paramount importance. Companies are beginning to realize the fact that in order to gain strategic initiative and to ensure continued existence, business practices may have to be molded from the normal practice of solely focusing on profits to factor in public goodwill and responsible business etiquettes. An examination of some of the factors which have led to the development of the concept of corporate social responsibility (CSR) would be ideal starting ground for the conceptual development of suitable corporate business practices for emerging markets.
It has been observed that consumers consider switching to another company's products and services, speak out against the company to family/friends, refuse to invest in that company's stock, refuse to work at the company and boycott the company's products and services in case of negative corporate citizenship behaviors . Last but not the least, firms all over the world is beginning to grasp the importance of intangible assets, be it brand name or employee morale. Only firms that have gained the goodwill of the general public and are ideal corporate citizens will be to develop these intangible assets into strategic advantages. The cumulative contribution of all the above mentioned factors can be summarized by figure below.
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Social responsibility theorists assume that profit-maximization is incompatible with broader social interests, so that managers should be free to serve society generally rather than exclusively shareholders. In fact, markets powerfully constrain anti-social corporate conduct. It follows that managers would serve society’s interests best by focusing on long-term profit-maximization. However, the corporate form inherently gives managers significant slack to diverge from profit-maximization. The solution is to fundamentally change the governance structure of publicly held firms toward a partnership-type model that reduces managers’ control over the firm’s cash. This move is facilitated by the shift toward thicker markets, which decreases firms’ need to lock assets up in a strong and durable corporate entity. The main impediment to such a change is the corporate tax, which gives managers incentives to retain earnings.
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Methods of CSR reporting Moon (2002) distinguishes three types of CSR reporting ‘community involvement’, ‘socially responsible production processes’ and ‘socially responsible employee relations’. During the initial stages of development of CSR in emerging economies, the community involvement is more along the lines of a philanthropic involvement with company involvement limited to developing minimal or rather the absolutely necessary amount of communal goodwill necessary to operate in the business environment. As compared with the developed countries like US, CSR in developing countries is seen as part of corporate philanthropy where corporations augment the social development to support the initiatives of the government. However in the US it is seen as a strategic tool which helps the organizations to have a legitimate existence in the society. CSR is considered inbuilt in the business existence of the traditional firms in the emerging markets like India. However, trends in this regard are heartening with companies trying to establish strategic alliances with the state and the civil society thus establishing the presence of CSR as an institution in these markets. The remaining parameters are internal to the firm involving the molding of their business activities while incorporating CSR practices. As companies start to embrace CSR practices to a greater extent, it leads to changes in production processes so that all environmental and societal norms are also satisfied even thought they may not contribute to the profit maximizing objective of the firm. This will mean that human rights agreements are also upheld taking into account the rights of the local communities. CSR also leads to evolution of employee relations in the company in such a way that employees become major stakeholders with definite decision making powers especially in the area of formulation of CSR policy.
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CSR and development With the retreat of the state in economic activity in India, the imperative for business to take up wider social responsibilities is growing. The situation is complex and India is facing a compounded set of corporate responsibility challenges. The ‘first generation’ corporate responsibility agenda concerning conflicts between companies and communities over the control of natural resources is widespread. Examples include struggles between rice growers and shrimp farms, land disputes between plantation owners and indigenous communities, and resistance from communities to mining projects. Yet India also faces a range of ‘second generation’ issues relating to hazards of industrial production, exemplified by the 1984 Bhopal tragedy, but now encompassing a growing number of incidents across the subcontinent where industrial air and water pollution, and the dumping of waste is going beyond the limits of social and environmental tolerance. And, finally, as the pace of urbanization continues and liberalization opens up India to global consumption patterns, many of its cities are simultaneously confronting the ‘third generation’ responsibility issues related to products and services, whether they are auto pollution norms or pesticide residues in mineral water. Whereas business cannot be expected to take on the role of governments, in a situation where a majority of the population lives below the poverty line and has little or no access to basic public services such as health, education, water, and electricity, and where there are a multitude of complex sustainability challenges, CSR certainly has a potential for becoming a real tool for development—human, social, and economic. The public’s expectations of business are also growing. A TERI opinion poll in India found that Indians feel that the business sector must play a wider and more expansive societal role. In addition to providing good quality products at reasonable prices, companies should strive to make their operations environmentally sound, adhere to high
11 labour standards, reduce human rights abuses and mitigate poverty. But the poll also revealed that people are not yet judging companies in the marketplace according to these
criteria. Developing such market-oriented pressures could become a powerful lever for change. One example of an initiative that emphasizes the development role of business is the Sustainable Livelihoods Project of the WBCSD (World Business Council on Sustainable Development)3, which aims at doing business with the poor in ways that benefit them and the company. The success of this business model will be instrumental in shaping the future of CSR as a development strategy.
Corporate social responsibility – current scenario Today business managers live under continuous pressure “to excel” or “to achieve”. Competitive environment builds more and more pressure on them to adopt all such methods that might ensure achievement of business goals. Values and ethics at this juncture become irrelevant. Hazardous work conditions of mining corporations, cement industries, exploiting child labour in glass and cracker industry, greedy pricing by pharmaceuticals companies on monopoly products are a few examples. However, all companies are not alike and many have come forward for the cause of society. .In 2002, the top ranking companies included Johnson & Johnson, Apria Healthcare, Colgate Palmolive and General Electric. Some other companies namely ABB, Aracruz Celulose, General Motors, Dow Chemical, Mitsubishi Group, Novartis and Rio Tinto are also involved into the CSR programme while moving ahead in their business. Asea Brown Boveri, the Swiss engineering corporation, is a sponsor of the Global Sustainable Development Facility (GSDF) and an active member of the World Business Council for Sustainable Development (WBCSD). It is a world leader in developing eco-efficient
12 technologies in a wide range of industry areas from electric transmission to transportation and is building a global network to install these technologies in many developing and transition economies. Aracruz Celulose, the world's largest exporter of bleached eucalyptus pulp, is often cited for its efforts to promote sustainable development through tree plantation, harvesting and pulp production, processed in Brazil. General Motors, the world's largest automobile manufacturer is involved in various environmental protection initiatives and partnerships. Similarly, Dow Chemical, a US corporation was selected to participate in the GSDF for, inter alia, “abiding by the highest standards of human rights, environment and labour standard norms, as defined by UN agencies. Mitsubishi Group has been actively cultivating an image of environmental responsibility through advertising and specific environmental projects. Novartis, the Swiss life science corporation, is another participant in the GSDF and member of the WBCSD. It is often cited for its efforts in the fields of poverty alleviation and environmental protection. Rio Tinto, the British company, is often cited for its standards of environmental reporting and for promoting continuous social development and sustainable livelihood. CSR provides a number of advantages to business like lowering and limiting litigation, reduction in taxes, protecting brand image, improving customer satisfaction and reducing absenteeism, employee turnover and increasing the ability to retain talented employees etc. In India, Tata Group strongly favors and follows the concept of CSR, while the Reliance Group argues strongly against it. India's largest and internationally best-known Tata group of Companies, founded by Jamsetji Tata, believes in pioneering concept of trusteeship in management. Benefits of the profits of many of the companies in the group are channelled back to the people through the major philanthropic trusts, as exhibited in . It may be observed that during recent years profits of the company exhibit a fluctuating trend but their expenditure on society is consistent. Nearly 80 per cent of the capital of the holding company, Tata Sons Limited, is held by these Trusts. As a result, great national institutions have come into being in the areas of science, medicine, atomic energy and performing arts. J.R.D. Tata, who has been instrumental in conducting the first social audit in India and perhaps in the world, remarks, “While profit motive no doubt provides main spark for
13 any economic activity, any enterprise which is not motivated by consideration of urgent services to the community becomes outmoded soon and cannot fulfil its real role in modern society”. Besides Tata Group, the other companies which have adopted and followed the CSR in India are: BHEL, Wipro, Bajaj Auto Ltd., Larsen & Toubro, Sriram Investments, Otis Elevator Co. India, ACC, Asian Paints, Brook Bond, Colgate Palmolive, Escorts, SAIL, ITC etc. The contribution of these companies towards CSR encompasses various initiatives like starting social trusts, anti pollution measures, adopting villages, family planning clinics, training unemployed youth, and community development activities etc. Further, they conduct social audits on a voluntary basis, provide medical, recreational facilities, develop sports, undertake consumer education campaigns, avoiding unethical and deceptive advertising and so on. Azim Premji, Chairman of Wipro, has created enormous trust for facilitating primary and elementary education in India. Reliance group, founded by Dhirubhai Ambani, propounds the other school of thought, which is opposed to CSR as such. “As an industrialist my job is”, declared Dhirubhai, “to produce goods to satisfy the demand. Let us be clear about it. Everyone has to do his job. My commitment is to produce at the cheapest price and the best quality. If you dabble in every thing then you make a mess of things. If we cannot take care of our shareholders and employees and start worrying about the world, then that is hypocrisy”. Thus, one can evidently find arguments and counter arguments in favour and against the issue of CSR. However in Indian context, acceptance of social responsibility is no more than rededicating ourselves to cherished values of our ancestors in the field of business. In older times, whenever people of the country were under the social or natural problems, leading businessmen have literally thrown open their treasure chests to provide the required assistance and help to the needy. Gandhiji reminded us of these values, when he propounded the theory of trusteeship. As a sequel to that, more and more companies are now realizing that they can no more function or to be judged solely on the basis of their thick bottom-lines and fulfilling their economic objectives only. A positive impact on employees, customers and community at large has assumed an equal or greater significance in the overall success of the companies and building their brand image. This
14 realization has made them undertake socially responsive actions, which are also strongly proponed by Vedic philosophy.
CSR-INDIAN PERSPECTIVE India is among the few countries where more than four out of five organizations are practicing Corporate Social Responsibility (CSR), ranging from donating to local charities to undertaking global fair labor standards, an international survey conducted by the Society for Human Resources Management (SHRM) has revealed. According to SHRM, human resources personnel in India, Brazil, Mexico and Australia are more likely than those in the United States to report that their organization has formal CSR policies. Brazil reported highest participation rate at 95 percent with the United States at 91 percent. The employees in India and Brazil, the survey found, are encouraged to spearhead volunteer programs. In the United States, HR professionals cited contributions to society, public relations strategies and employee activism as top drivers. CSR practices are also seen as important to employee loyalty, morale, retention, recruitment and productivity, all of which are key responsibilities of HR professionals. China has the lowest percentage for encouraging employees to spearhead CSR programs and Chinese respondents reported the lowest rate of participation in CSR practices, SHRM reported. Over half of the organizations surveyed recognize employee participation in volunteer programs, with the United States leading at 72 percent. The study, titled '2007 Corporate Social Responsibility: A Pilot Study,' surveyed human resource (HR) professionals in India, the United States, China, Mexico, Brazil, Australia and Canada. "Organizations are increasingly assessing the social and environmental impact of their business decisions," according to Susan Meisinger, president and chief executive officer of SHRM. "As a result of globalization, I believe more organizations
15 will incorporate CSR practices in their business strategies. As these practices increase, HR professionals will play a larger role in CSR programs, from strategy to implementation," she said. In the United States, Brazil, Australia and Canada, the main obstacles to CSR programs were reported to be cost, unproven benefits and lack of support from senior management. "While some organizations consider cost to be an obstacle to CSR practices, others point to improved image, competitive advantage and greater market share as clear benefits,"
stated Meisinger. While the types of CSR practices varied among countries, they did not vary by organizational sector. For-profit public and private companies, nonprofit organizations and government agencies reported participating in the same types and range of practices. According to SHRM, this study has revealed that the majority of organizations across these seven countries have policies pertaining to corporate social responsibility. The report presents a global view of corporate social responsibility practices and the integration of corporate social responsibility in organizations' business decisions. Intra-organizational responsibility for creating and implementing corporate social responsibility strategies is also explored in the report. Floods, droughts, cyclones, earthquakes, landslides and avalanches are some of the major natural disasters that repeatedly and increasingly affect (World Disasters Report 1999, International Federation of Red Cross and Red Crescent Societies, Report of High Powered Committee on Disaster Management, Government of India, 2001). In the 1970s and the 80s. Earthquakes, droughts and famines were the biggest killers in India. The situation stands altered today, it is probable that a combination of factors altered today, it is probable that a combination of factors like better reservoir management and food security measures have greatly reduced the deaths caused by droughts and famines. Floods, high winds and earthquakes dominate the reported injuries, with ever increasing numbers in the last ten years. The last three decades have been associated with a large number of earthquakes in Asia that have a relatively high injury to death ratio.
16 In India, the role of CSR has been gaining momentum for a decade now. The realisation that the participation of the private sector can foster the public-private partnership is vital in terms of sharing resources, bringing in expertise and appropriate technologies. This can enhance visibility of campaigns, and bringing about civil society response. Stressing the need for management stewardship for giving a thrust to nation's economic development, President APJ Abdul Kalam on 7 May 2007 while distributing the corporate social responsibility awards urged the corporate India to contribute to the upliftment of society besides creating wealth. "For a prosperous and developed India, the important thrust will be on the growth in the number of such creative leaders who can
create wealth to their institutions and also contribute to the upliftment of the environment and the people in their neighbourhood," . NTPC was also one of the industrial houses that have been on this occasion. Kalam said the industry houses should be concerned about their corporate social responsibility and give "more to the society than what they have drawn." Kalam said education should be an important part of the corporate social responsibility and industry can do a lot in rural areas by providing infrastructure for the schools in the form of drinking water, sanitation, transport, sports complexes and computer facilities. In addition, he said, corporate houses can arrange special lectures for imbibing value-based education to improve quality of learning by children. He said schools in India can have at least one hour of moral science classes every week to help students acquire "enlightened feelings and enlightened powers" to understand daily events and the gospels of permanent truth linking man to his environment. Referring to the issue of energy independence, the President said business houses can take up urgent action for conservation of energy, promoting use of renewable energy to the maximum extent in their plants and facilities. The business houses, Kalam said, can also work on development of solar energy and wind energy either on stand- alone mode or in partnership with Indian and European
17 firms for providing a cost effective energy sources to the community. The strategy to achieve energy independence, he said, should focus on increasing use of renewable energy (solar, wind and hydro power), electrical power from nuclear energy and biofuels. He said the industry should consider participating in world knowledge platform missions -- water, health, agriculture and food process, knowledge products, transport, habitat, disaster management and capacity building -- as business opportunities, while simultaneously fulfilling corporate social responsibility. The society makes a corporation guilty for engaging in profits. Business is stuck with labels of being exploitative. In course, the corporation loses self-esteem. This mindset has to change. He felt that an individual's contribution to social good has greater impact than a corporate's per se (Business Daily from THE HINDU group of publications Tuesday, Nov 14, 2006).
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CSR-GLOBAL PERSPECTIVE Today's globalization raises new challenges regarding how to develop trading relationships that support the UN's Millennium goals of reducing poverty and ensuring greater environmental security.Companies are aware that they can contribute to sustainable development by managing their operations in such a way as to enhance economic growth, increase competitiveness and ensuring at the same time environmental protection and promoting social rights. Thus, Corporate social responsibility (CSR) is a concept whereby companies integrate social end environmental concerns in their business activities and in interaction with their stakeholders on a voluntary basis. Corporate social responsibility is one of the responses to the imbalances resulting from the acceleration of the globalization process: ? imbalance between the rapid process of liberalization and the time necessary to elaborate the international regulatory framework for these exchanges; ? imbalance between the advanced governance systems in industrialized countries, and the lack of such governance in developing countries as well as at international level; ? imbalance between the highly developed economic pillars of global governance (IMF, World Bank, WTO) and the embryonic state of the social and environmental pillars of such a system. In this global context, voluntary social and environmental practices of business, going beyond companies' existing legal obligations, can play a major role in filling the governance gap in an innovative way. CSR is not a substitute, but a complement to hard law. As such it must not be detrimental to public authorities' task to establish binding rules, at domestic and/or at international level, for the respect of certain minimum social and environmental standards. The focus of the debate in this respect has now moved on from a simple dichotomy between voluntary and binding instruments, towards the overarching challenge of devising
19 reporting tools and verification mechanisms to ensure proper compliance with CSR commitments.
HERO MOTO CORP LTD
BRIEF HISTORY When Hero Cycles and Honda Motor Company of Japan inked their joint venture in India in April 1984, few could have imagined that the two would go on to create history and become the subject of a case study at business schools, internationally. But that's the Hero Motocorpsaga for you. In a little over two decades, the world's largest manufacturer of bicycles and the global leader in motorcycles have created not only the world's single largest motorcycle company but also the most endearing and successful joint venture for Honda Motor Company worldwide. The company has sold over 15 million motorcycles and has consistently grown at double digits since its inception and today, every second motorcycle sold in the country is a Hero Honda. In two decades, Hero Motocorphas built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana that now churn out over 3 million bikes per year. In this period, Hero Motocorphas set up over 2400 customer touch points, comprising a mix of dealers, service centres and stockists across rural and urban India. Today, Hero Motocorpis an amalgam of winning networks and relationships with internal and external stakeholders, including Investors, Dealers, Vendors and Employees. These relationships have helped the company hold on to the mantle of World No.1 for years in succession. What makes Hero Motocorpwell, Hero Honda, is synergy. The two partners, leaders in their respective domains, have been able to consistently draw on each other's strengths. The Hero Group's deep domain knowledge of the Indian market and its supplier network has meshed with Honda's mastery over four-stroke engine technology to create modern and fuel-efficient machines at affordable prices for India 's 250-300 million strong
20 middle class. Progressively through the 1980s, the 1990s and now in the 2000s, Hero Motocorphas relied on 3 R's-- Reach, Research and Reliability as its basic building blocks. Using feedback from the market, a fully-equipped R&D center has consistently created best practices in designing, testing and harmonization, besides placing strong emphasis on road safety and ride quality. This emphasis has helped Hero Motocorpbuild products that are ahead of their time. In the 1980s, for example, Hero Motocorpbecame the first company in India to prove that it was possible to drive a vehicle without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of commuters across India , and Hero Motocorpsold millions of bikes purely on the commitment of increased mileage. Hero Motocorpwas also one of India 's first automotive companies to get close to the customer. Over the years, feedback has flowed back and forth seamlessly through a unique CRM program - the Hero MotocorpPassport Program which now has over 2.5 million members on its roster. The program has not only helped Hero Motocorpunderstand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors. The best is yet to come. Hero Motocorpis powering its way through a market that is still to unleash its true potential, as barely two per cent of the population has been penetrated so far! It isn't surprising that the company is in no mood to take its hand off the throttle. As Brijmohan Lall Munjal, the Chairman, Hero MotocorpMotors succinctly puts it, "We pioneered India's motorcycle industry, and it's our responsibility now to take the industry to the next level. We'll do all it takes to reach there.'' MISSION/VISION STATEMENT HERO MOTO CORP LTD MISSION
21 Hero Honda’s mission is to strive for synergy between technology, systems and human resources, to produce products and services that meet the quality, performance and price aspirations of its customers. At the same time maintain the highest standards of ethics and social responsibilities. This mission is what drives Hero Motocorpto new heights in excellence and helps the organization forge a unique and mutually beneficial relationship with all its stake holders. HERO MOTO CORP LTD MANDATE Hero motocorp ltd is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and world-class products with cutting edge technology from Honda Motocorp Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status.
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CSR ACTIVITIES
Hero Motocorp takes considerable pride in its stakeholder relationships, especially ones developed at the grassroots. The Company believes it has managed to bring an economically and socially backward region in Dharuhera, Haryana, into the national economic mainstream. An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Foundation has adopted various villages located within vicinity of the Hero motocorp factory at Dharuhera for integrated rural development. This includes:
? Installation of deep bore hand pumps to provide clean drinking water. ? Constructing metalled roads and connecting these villages to the National Highway (NH -8). ? Renovating primary school buildings and providing hygienic water and toilet facilities. ? Ensuring a proper drainage system at each of these villages to prevent waterlogging.
23 ? Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants.
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HERO MOTOCORP AND CORPORATE SOCIAL RESPONSIBILITY In the year 2000, Hero Motocorp ltd, formulated its mission statement and corporate philosophy. The first to introduce cleaner four-stroke engines in the country, environmental concerns are close to the company’s corporate heart which is why they go that extra mile to ensure that each one of the hi-tech four-stroke motorbikes goes meets the most demanding of pollution norms at every level. This is a policy the company has followed since its inception.
The company An Integrated Rural Development Centre has been set up on 40 acres of land along the Delhi-Jaipur Highway. The Centre-complete with wide approach roads, clean water, and education facilities for both adults and children-now nurtures a vibrant, educated and healthy community. The Hero Foundation has adopted various villages located within vicinity of the Hero motocorp factory at Dharuhera for integrated rural development. This includes: Installation of deep bore hand pumps to provide clean drinking water, Constructing metalled roads and connecting these villages to the National Highway (NH - 8), Renovating primary school buildings and providing hygienic water and toilet facilities, Ensuring a proper drainage system at each of these villages to prevent water-logging, Promoting non-conventional sources of energy by providing a 50 per cent subsidy on biogas plants. The company has also set up the Raman Munjal Vidya Mandir which began with three classes and has now grown into a modern Senior Secondary, CBSE affiliated co-educational school with over 1200 students and 61 teachers. The school has a spacious playground, an ultra-modern laboratory, a well-equipped audio visual room, an activity room, a well-stocked library and a computer centre.
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Raman Munjal Memorial Hospital
Multi-specialty hospital set up by the Hero Motocorp, equipped with the latest diagnostic and surgical technology. The Raman Munjal Memorial Hospital provides healthcare to the rural population in and around Dharuhera, and also caters to accident and trauma victims driving along the Delhi-Jaipur highway. Besides setting up a modern hospital, the Foundation also regularly provides doorstep health care services to the local community. Free health care and medical camps are now a regular feature in the Hero Group's community outreach program.
Raman Munjal Sports Complex
The Raman Munjal Sports Complex developed by the Company has basketball courts, volleyball courts, and hockey and football grounds are used by the local villagers. In the near future, sports academies are planned for volley ball and basket ball, in collaboration with National Sports Authority of India.
Vocational Training Centre In order to help local rural people, especially women, Hero Motocorp has set up a Vocational Training Centre. So far 26 batches comprising of nearly 625 women have been trained in tailoring, embroidery and knitting. The Company has helped women trained at this center to set up a production unit to stitch uniforms for Hero Motocorpemployees. Interestingly, most of the women are now self-employed.
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Adult Literacy Mission
This Scheme was launched on 21st September, 1999 , covering the nearby villages of Malpura, Kapriwas and Sidhrawali. The project started with a modest enrollment of 36 adults. Hero Motocorpis now in the process of imparting Adult Literacy Capsules to another 100 adults by getting village heads and other prominent villagers to motivate illiterate adults.
Marriages of underprivileged girls Marriages are organized from time to time, particularly for girls from backward classes, by the Foundation by providing financial help and other support to the families.
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CONCLUSIONS & IMPLICATIONS The study has revealed that Corporate Social Responsibility (CSR), for the corporate sector is more about corporate community involvement than anything else. The participation of the corporates in the community betterment programmes, going beyond their economic arguments is what they call it CSR. Hero Motocorp is found to be involved in CSR activities. However, the degree of their involvement differs from company to company.. As regard the benefits of CSR for the corporates is concerned, almost all the factors that have been enlisted in the interview schedule are found to be important for the corporates that have been studied. The company is found to be having codified CSR rules and Guidelines for their employees as well as non employees also w.r.t. environmental policy measure, labour rules and disaster management policies etc. For example, the environmental policy of Hero Motocorp .The company have incorporated these Rules and Guidelines in their vision documents. The codified CSR guidelines of a company, argues the respondents, positively enhances the image of the corporates. The respondents believe that it is through the CSR activities a company gets more positive publicity than the advertisements given by the companies to boost the sale of the products of the companies. Attitudes to broader social responsibility issues have changed drastically in the past few years. The factors leading to this trend are the global standards set by the international corporate houses and the corresponding domestic pressure associated with it. Although CSR itself requires money for its implementation, the objectives set by the corporate houses as part of CSR activities and their realization have positive impact on
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the profit and corporate image of the business houses.
There is no fundamental
dichotomy between long-term profit-maximization and social responsibility. Education and health welfare of the under privileged sections of the society are rated higher in the practice of CSR activities followed by the corporates that have been studied. This is followed by environment and health. One thing should be noted here is that whereas the education and health measures taken by the corporates are more voluntary in nature the environmental activities are more due to governmental enforcements. The corporates have their employee volunteers in their headquarters as well as in their respective fields, they have a greater role to play in the later case. The number spreads to thousands and varies according to the size of the company and the diversification of the same. As regards the budgetary provision for CSR activities by the companies, all the three companies that have been studied do have a separate budgetary provisions for the CSR activities. The share of CSR budget out of the total budget of the company varies from one to the other and it depends on the size of the company, the total budget outlay of the company and the CSR policies and practices followed by it. In the present study, it is NTPC which takes the lead followed by followed by Hero Motocorpand ACC. As regards the company policy on CSR activities is concerned, it constitutes an integral part of the company’s policies and do not undertake it in a fragmented manner rather in an integrated and participative method. Apart from the need factors and the governmental directions, the companies have also undertaken various CSR activities for their employees and non-employees as part of their image building process and to earn good will. CSR activities are more effective for the company than pursuing advertisement methods. The present study has also revealed that the companies not only pursue CSR activities but also undertakes review measures at regular intervals to objectively assess their
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implementation. The reviews are normally undertaken at two stages i.e. after completion of a project and annually. Each CSR project is reviewed separately to assess the impact it has created in the context of the objectives for which the project was conceived and implemented by the company.
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