Lecture 13: 16 February, 2009

I started the lecture with an introduction to Dow Jones Sustainability Index.

The index is based on the stock values of the top 20 % of the Dow Jones Index companies which have been assessed as the best in their sector in terms of their performance in economic, environmental and social dimensions.

The assessment is based on how the companies address opportunities and risks in all the three dimensions, especially through startegy, management and industry specific initiatives. For example, under the economic dimension the following criteria are assessed: (a) Strategic Planning (opportunity), (b) Organizational Development (opportunity) and (c) Corporate Governance (risk). Similarly in the environmental dimension the following are assessed: (a) environmental charter, (b) environment, health & safety reporting, (c) environmental profit and loss accounting, (d) eco-design, (e) eco-efficient products (a -e Opportunities), (f) environmental policy, (g) responsible person for environmental issues, (h) environmental management system, (i) environmental performance, (j) hazardous substances, (h) environmental liabilities (f-h risks). In the social dimension the sub-criteria are: (a) stakeholder involvement, (b)social reporting, (c) employee benefit, (d) employee satisfaction, (e) remuneration systems, (f) community programmes (a - f opportunities), (g)social policy, (h) responsible person for social issues, (i) conflict resolution, (j) equal rights and non-discrimination, (k) occupational health& safety standardr, (l) Lay-offs and Freedom of Association, (m)standards for suppliers and (n) personnel training in developing countries.

The assessment is carried out based on the information received through (1) the filled questionnaire specific to each industry group circuated by the SAM group (www.sam-group.com, (2) company documentation (e.g. Sustainability Report, Annual Financial Report etc.), (3) publicly available information (e.g. from media, reports etc.) and (4) personal contact with the companies.

The above methodology aims to produce an investable index (DJS Index) in which all the component stocks are easily tradable.

For a company, the assessment provides two important inputs: one, it enables the company to benchmark itself in the three dimensions of sustainability with others in the sector and the other is that it enables shareholders to make their choices regarding trading in the company's stocks.

We then discussed one example, Philips Electronics, of the DJSI evaluation of a sector leader. The information (scores) in each element and each sub-element is provided, along with the average score in each (sub)element as well as the best scores in these elements. Also given is the information on the next best company and its overall scores compared to the leader. Information on companies which will be dropped from the DJSI next year is also given in the same report.

Next we discussed about the neighbourhood programmes; it is normally found that after the Johnesburgh conference, most of the corporate bodies have neighbourhood programmes in the area of Education, Health and Environment. There are quite a few corporate programmes on education, including educating the physically challenged and the poor, sholarships for higher education, education of the girl child, building of dispensaries and hospitals, providing clean drinking water to the village, conducting health camps, cataract operations, tree plantation etc. In order to effectively implementing these programmes in the society Corporates usually take the help from non-governmental organizations (NGOs) operating in the target areas. Many NGOs have now become partners to the Corporate bodies in improving the lives of people in the rural/ poor areas.

There are two types of NGOs; one the international NGO, like the World Wildlife Fund (WWF) and the other is a locally establsihed NGO, like for example, CRY, Helpage India etc. India is the country with the maximum number of NGOs (not for profit) running to about a million. Then we discussed about the types of NGOs based on their activity - there are NGOs which work on policy matters (e.g. PRAYAS), some take up specific causes and are actively involved in achieving their goal (e.g. Narmada Bachao Andolan) and some others are involved in developmental activities (e.g. Amarseva Sangam). There are NGOs who work in specific areas, like environmental areas, health areas, social areas, education areas etc. We briefly noted the following environmental NGOs active in India: Centre for Science and Environment (CSE, New Delhi), Greenpeace, Toxic Links, Kalpaviruksh (Pune); NGOs like Development Alternatives have slowly moved towards becoming social enterprises, between corporates and NGOs. They have programmes which earn profit to sustain the organization; but they work in areas (e.g. rural and appropriate technology) where corporates do not venture. We also talked about DHAN Foundation and PRADHAN, both NGOs with focus on improving the lives of rural poor - they are partially funded by aid agencies and partly by their own activities. See, for example, www.indianngos.com and www.karmayog.org for more details of Indian NGOs.

With this class we have completed studying all the subjects mentioned under the CSR syllabus, except the reading of all the mentioned papers. Those who are interested should read all the papers mentioned in the syllabus.

All the best to you in your examination and beyond.