April 30, 2004
Dutch companies in India yet to live up to corporate responsibility
Dutch companies in India only very partially practice corporate social responsibility (CSR). Most multinationals do have an official corporate policy or a code of conduct on the issue, but hardly involve their Indian daughter company in its development. Neither do they monitor if the policy is implemented or not. Small and medium sized - internationally operating - companies (SME's) usually do not have a CSR policy. Hardly any company does check if the production in its sub-contracting chain is being carried out in line with internationally agreed labour and (other) human rights and as well as environmental standards. This is also the case with regard to a highly sensitive issue like child labour.
These are some conclusions from the report 'Corporate Social Responsibility - Policy and practices of Dutch companies'. The report was commissioned by the India Committee of the Netherlands (ICN) and written by CREM (Consultancy and Research for Environmental Management). CREM interviewed the management of nine companies in The Netherlands, while the Indian NGO 'Partners in Change' interviewed their Indian counterparts as well as dozens of 'stakeholders' (from suppliers to NGO's and unions). Sector-wise the companies belonged to banking, tourism, energy, food processing, seed multiplication, car industry, software, chemicals and leather. Twelve other companies provided information via a survey, mail or phone. In total 40 companies were approached.
To get the companies to co-operate it was agreed that their names would not be mentioned.
Human rights and environment
The report shows that large-scale violation of human rights in which the government was involved - like the mass murder in 2002 on approximately 2000 Muslims in Gujarat - did not cause Dutch in Gujarat to speak out on the issue. Companies expect the Dutch government or the European Union to take the initiative on such issues.
Companies usually do not have an active policy to tackle the under-representation of women and Dalits (the so-called casteless or scheduled castes) in jobs requiring higher qualifications.
The CSR policy of Dutch companies is practiced mostly with regard to environmental issues like saving energy and material, emissions and waste. This is however hardly the case down their sub-contracting chain. Also very little attention is being paid to the issue of biodiversity.
CSR Frame of Reference
The research on the CSR policy and practice of Dutch companies in India was conducted along the lines of the CSR Frame of Reference (CSR-FoR) for international business behaviour. The CSR Frame of Reference was developed in 2003 by the Dutch CSR Platform, consisting of 35 organizations. It contains norms in the areas of human rights, labour, the environment, consumer protection, corruption and economic behaviour that are derived from international treaties. It also consists of operational principles like chain responsibility, involvement of stakeholders, transparency and reporting and independent monitoring and verification.
Indian expectations of companies
Most Indian non-governmental organizations that were interviewed expect companies to contribute to community development and social-economic development (quite a number of companies indeed contribute to community development). Both aspects however are not mentioned in the CSR Frame of Reference.
In The Netherlands the first issue is often considered as a form of charity and not as CSR (which is supposed to be related to the impact of the functioning of the core business of the company). The second aspect relates for example to the expectation that companies are taking the indirect effects of their business, like a possible net loss of jobs, into consideration while making investments. This however is not the case.
The project and the report
The report includes a large number of recommendations to companies, non-governmental organizations and government authorities to improve policies for corporate responsibility and accountability. The reports also contains numerous quotes from companies and stakeholders that were interviewed as well as overviews of policies and practices per issue, e.g. in the field of labour or environment.
India Committee of the Netherlands, e-mail: email@example.com
CREM, e-mail: firstname.lastname@example.org
Partners in Change, e-mail: email@example.com
The research was financed by the Dutch Ministry of Housing, Spatial Planning and Environment (VROM) and by the non-governmental organization ICCO and guided by a Steering Committee consisting the Ministries of VROM and Foreign Affairs, The Federation of Dutch Trade Unions, ICCO, Novib (Oxfam Netherlands), SOMO (Foundation for Research on Multinationals) and the Centre for the Promotion of Imports from Developing Countries