Global Insight: Spotlight on Corporate Citizenship in India

Since 2014, India has jumped from being the world’s eighth-largest economy to the fifth-largest economy, with a gross domestic product (GDP) of $3.9 billion (USD).¹ That number has been fueled by key sectors such as agriculture, services, and information technology. According to a Federated Hermes analysis, India’s GDP is on track to grow by more than $400 billion USD annually, a scale that only the U.S. and China surpass.² 

These are impressive statistics, but they tell only part of the story. India is the world’s most populous nation, with more than 1.4 billion people living there. While that accounts for more than 17% of the world’s population, India only produces about 7% of the world’s economic output.³ Despite the widespread perception in India that the economy is improving, life remains difficult for millions. In 2022, more than two in five people (43%) said they struggled to afford food in the past 12 months. However, India’s large workforce is a significant competitive advantage for growth as the country aims to establish itself as a global hub for design and manufacturing. The Indian government’s “Make in India, Make for the World” initiative aligns with this labor advantage by incentivizing major international companies to invest in manufacturing in India.⁴ The hope is to boost skill development, increase the number of women in the workforce, and make reforms to the labor market.

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The growth of ESG legislation and policy initiatives in India

India was the first country globally to legally mandate corporate social responsibility (CSR). In 2013, India amended its Company Act for various purposes, including improving corporate governance, ensuring effectiveness, and protecting investors. With Article 135 of this law, CSR activities and related disclosures were mandated in 2014, and the regulations were further strengthened in 2019. According to the evaluation of Morgan Stanley Capital International (MSCI), companies in India that diligently carry out ESG management have higher profits than those that do not. ESG has risen as a significant issue in India, but not many companies are actively practicing ESG management. Despite this regulation, management practices in Indian business are still catching up. It is anticipated that it will take a while for ESG management to become entrenched among Indian companies.⁵

In 2012, the Securities and Exchange Board of India (SEBI) mandated the top 100 listed companies by market capitalization file Business Responsibility Reports (BRRs) from an ESG perspective.⁶ These BRRs enabled businesses to demonstrate the adoption of national voluntary guidelines based on ESG principles and engage with their stakeholders beyond regulatory financial compliance. This was extended to the top 500 companies in 2015 and further extended to the top 1000 companies in December 2019. In 2021, the SEBI expanded on the BRR, replacing it with the Business Responsibility and Sustainability Reporting (BRSR).

In 2014, India became the first nation to mandate that companies spend a portion of their profits on CSR initiatives. The rules in the mandate say that companies with a certain turnover and profitability must pay 2% of their average net profit on CSR activities. Section 135 of India’s Companies Act rules make it mandatory for companies with an annual turnover and profitability to spend 2% of their average net profit for the past three years on CSR.⁷ The law also requires that all such companies establish a CSR committee to oversee the spending.⁸

From an ESG perspective, the Indian government’s policy commitments around renewables, financial inclusion, healthcare, and other sectors give cause for optimism and present ample opportunities for companies to align with the UN Sustainable Development Goals (SDGs).⁹ The purpose of these management and disclosure regulations is to improve the quality of life for the Indian people. Achieving gender equality and protecting labor rights are huge areas of opportunity to achieve the economic expansion needed to provide millions of people with things like better education and improved healthcare.¹⁰

Here, we look at three groups that are making an impact in achieving these goals in India to help the environment and society as a whole.

Tata Motors Limited (TML): Making Investments in the Community

Since its inception over 150 years ago, the Tata Group, India’s largest conglomerate, has remained a steadfast steward of public good, committed to creating a positive social impact. One of its divisions, Tata Motors Limited (TML), is a leading Indian Original Equipment Manufacturer (OEM) offering an extensive range of integrated, smart, and e-mobility solutions. The company takes preventive measures to avert environmental risks and ensures compliance with applicable regulations. TML in India drives all its initiatives on sustainability under the guidance of the Board Committee on Safety, Health, and Sustainability (SHS). Its operations are guided by the Tata Code of Conduct, which encompasses the principles of reduce, recycle, recover, and refurbish. The Safety, Health, and Environment (SHE) Councils at the business level, supported by the SHE Apex Committee at the plant level, are responsible for reviewing the performance every month. All TML plants are responsible for implementing energy, environment, and occupational health and safety management programs.

One function of the Tata Motors Prolife business division is remanufacturing automotive components that have ended their useful life. In 2020, the program helped remanufacture or recycle the equivalent of 33,615 engines, which has increased by about 5% yearly. This success has translated into nearly $30 million in revenue generation. Remanufacturing an engine has significant economic benefits and a positive impact on sustainability as it cuts the use of raw materials and energy needed to make new products.

TML is also working to improve access to health care in those areas. Through partnerships with state and central governments, non-profit groups, and other philanthropic organizations, it has created initiatives that aim to tackle infectious diseases, improve services for maternal and neonatal health, and increase access to cancer care in the country.

In 2014, Tata Group launched Tata Engage, a platform to connect over 700,000 employees, families, and retirees with volunteer opportunities. This platform offers three ways to get involved: experiential volunteering events through Tata Volunteering Weeks, skill-based weekend projects, and volunteering for Tata disaster responses. For the past five years, employees have combined to work 1 million volunteering hours annually and surpassed 1.5 million volunteer hours in 2020.

POSCO Maharashtra: Making Moves to Reforest

POSCO Maharashtra is a joint venture between POSCO, a global steel company, and Maharashtra Industrial Development Corporation (MIDC), a state government agency in India. This company offers high-quality galvanized and Galva-annealed steel for construction, home appliances, and automotive industries.

POSCO Maharashtra understood its responsibility to restore green cover reforest areas in its communities. In 2015, it initiated a tree planting activity, planting approximately 9000 saplings over a six-year period in the common area of the Maharashtra Industrial Development Corporation and three surrounding villages. In 2021, the corporate citizenship team did a physical survey of the area following the tree plantation and found that because of a lack of community engagement to care for the trees and environmental destruction, only 10% of saplings survived.

In 2022, the company launched a new strategy that involved providing durable two-year-old saplings of various horticulture species chosen by local farmers. A total of nineteen horticulture species were made available and selected for their diversity and native characteristics. This approach aimed to enable farmers to generate income from the plants within three-to-five years which helped motivate them to take care of the saplings. The outcome of this strategy was positive, as almost 60% of the plants survived. This design played a significant role in building confidence within the community. In 2022, 3,427 saplings were given to more than 900 farmers of eight village councils covering 24 villages. In 2023, 5,273 saplings were given to more than 1,100 farmers of ten village councils covering 36 villages.

Infosys: The Priority for Net-Zero

Infosys, a prominent Indian IT company founded in Pune, offers business consulting and IT services. It is India’s second-largest IT company and reached a market value of $100 billion in 2021. Infosys had 274 global offices, with a significant presence in India, the U.S., China, Australia, Japan, the Middle East, and Europe.

Infosys prioritizes climate change across its operations. Environmental considerations are key in everything from mergers and acquisitions to office leases and stakeholder engagement. Beyond maintaining carbon neutrality, Infosys actively strives to improve its sustainability performance. This includes embracing clean technologies in internal operations and client solutions to minimize environmental impact. Some of the commitments Infosys has taken part in is a commitment to maintain carbon neutrality across Scope 1, 2, and 3 emissions as well as taking part in a climate pledge through a partnership with Amazon and Global Optimism, and aims to achieve net-zero carbon emissions by 2030. Infosys’s strategy for achieving carbon neutrality involves improvement to the operational efficiency of its diesel generator sets, transition to electric vehicles (EVs) for company-owned vehicles, to design and build or lease new offices with a low Energy Performance Index (EPI), sourcing renewable power, and promoting EVs among employees, among other initiatives.

Infosys has adopted renewable energy in its power mix to enhance its efforts toward meeting the environmental goal of carbon neutrality. Infosys has set up solar photovoltaic (PV) panels on the rooftops of office buildings. Infosys boasts 14.4 megawatts (MW) of rooftop and ground-mount solar PV panels across its company facilities. Further, Infosys has set up a 40 MW captive solar power plant at Sira, Karnataka. In total, Infosys has 60 MW of total installed solar capacity. Infosys also procures green energy through third-party power purchase agreements. Through these measures, Infosys has a 57.9% share of renewable energy in its power mix for India operations.

Meanwhile, Infosys Springboard is a flagship digital learning platform that empowers people, communities, and society with skills to be successful in the 21st century. It boasts a rich curriculum encompassing digital literacy, cutting-edge technologies, and essential life skills. Aligned with India’s National Education Policy 2020, the program leverages partnerships with world-renowned digital institutions to empower over 10 million individuals with digital skills by 2025.