In a 2009 International Finance Corporation (IFC) study about 5 emerging markets, India figured as the country with the worst implementation standards on environmental, governance and social responsibility issues. Other studies also indicated India’s lack of focus on social responsibility, especially among Indian companies.
As a result India created a Corporate Week and launched the Voluntary Guidelines for Corporate Social Responsibility (CSR) and the Voluntary Guidelines for Corporate Governance. The guidelines aim to encourage Indian companies to adopt the best practices on these areas.
Indian’s Ministry of Corporate Affairs said: “the corporate sector needs to assume responsibility for developing social responsible practices assuring wealth distribution and well-being for the communities where they operate.”
The CSR Guidelines recommend that CSR initiatives must be an integrated part of a company’s policies and must be aligned to business goals. It includes 6 pillars that must be observed:
- Stakeholder engagement to inform about businesses inherent risks and related mitigation strategies
- Rejection of abusive, unfair, corrupt and/or anti-competition business practices
- Respect to workers rights regarding working environment, career development and freedom of association. Commitment to not hire children or use forced labor and the maintenance of equal opportunities for all, without discrimination
- Respect human rights, avoiding involvement with any violation
- Adoption of environmental policies, preventing pollution, recycling and managing natural resources on a sustainable manner. Consideration for challenges regarding climate change by adopting cleaner production methods, promoting energetic efficiency and environmental friendly technologies
- Execution of social and economic development activities for the community, especially the ones around its operations
It also recommends the dissemination of CSR policy, activities and progress to stakeholders and the society in general through websites, annual reports and other communication methods.
The Guidelines for Corporate Governance includes:
- Independent Board of Directors
- Function separation between the CEO and the President of the Board
- Executive compensation based on performance for a significant part of executives’ remuneration package
- Transparency disclosing critical information, its identification and strategies for mitigation
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