Green Initiatives under Corporate Social Responsibility: An Empirical Study on Maharatna Companies of India

Abstract

Over the past few years, as a consequence of rising globalization and pressing green issues, the perception of the role of corporates in the broader social context within which it operates, has been altered. Corporates consider themselves as an integral part of society and accordingly act in a social responsible way that goes beyond economic performance. As a result of this shift from purely profit to profit with social responsibility, many corporate are endorsing the term ‘Corporate Social Responsibility (CSR)'. The research questions examine – do the corporates incorporate green issues in their business practices i.e. do they consider environment protection activities as a social and ethical responsibility? If yes, what CSR initiatives being taken for conservation and protection of environmental parameters as well as environmental pollution prevention & control and how the corporates implement their CSR initiatives as a part of their business strategy? For the purpose, the present study has made an attempt to understand the green initiatives made by large firms of India to study their CSR practices in the context of environmental protection.

The aim of this paper is to study and understand the CSR initiatives being taken by selected Indian maharatna companies in the area of environmental pollution prevention & control; to examine the corporates' approach to work and their mode of action for implementation for CSR initiatives in the field of environment management; and to measure empirically the extent of corporate environment protection related activities under CSR and its reporting in annual reports of those companies and to assess how far different company characteristics can explain the variation, if any, in the extent of such reporting.

For measuring the green initiatives under CSR and its reporting in annual reports of the companies, we have evolved a weighted disclosure index. The analysis reveals that Environment Protection Disclosure Score obtained with respect to 11 environment protection related disclosure indicators ranges between 9.09% to 90.91% with average of 49.35% and standard deviation of 27.70. The analysis further reveals that 43% companies (3) have attained less than 40% score, on the contrary, only one company has attained more than 80% score. It concludes that though all the seven Maharatna companies, having net profit of more than Rs. 500 crores, are meeting guidelines formulated by Department of Public Enterprises regarding expenditure range for CSR activities, yet expenditure for environmental protection related activities and its disclosure are very insignificant. Further, Environment Protection Disclosure Scores are regressed on the determinants of extent of disclosure. This study provides competing arguments on the relative importance of each of the factors in the corporate environment protection disclosure level determination. Among the company specific factors, two factors, viz., ‘profit after tax' and ‘expenses incurred on CSR' are having significant influence on the extent of environment protection disclosure.

Finally, the paper concludes that social responsibility is regarded as an important business issue of Indian companies irrespective of size, sector, and business goal. Therefore, CSR actions have positive impacts not only on development of community but also in their business. The authors reveal some lesson on CSR practices in India which can provide guidance to corporate entities for better implementation of CSR activities in the area of environmental pollution prevention & control for improving the quality of life of local people along with inclusive growth and sustainable development.