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COUNCIL FOR COMMUNITY INITIATIVES

Protocol - Corporate Sustainability



This document is for the purposes of Training and Internal Assessment.

© 2007 Tata Sons Limited & Tata Services Limited

For Restricted Circulation Only. All Rights Reserved.January 2007


Social Responsibility is central to the core values we adhere to in the Tata group for over a century. Our Companies have not only been proactive on compliance to regulatory requirements but have had a far sighted vision in ensuring sustainability in business processes; restoration of biodiversity and conserving wildlife where possible.

In the recent years, our Companies have marshaled these strengths together more consciously to institutionalize all this through the Tata Council for Community Initiatives (TCCI), what they have been doing for many, many years. The chief aim of this effort is to mitigate risks arising out of environmental & social factors; improve the quality of life of the people in the communities we serve; and, innovate ways in which technology and managerial competence reach the underserved.

The Tata Quality Management Services (TQMS) and the TCCI have partnered now for some time to integrate social responsibility with the business excellence process. The Tata Index for Sustainable Human Development was developed in 2003 and major companies deployed it to build improved levels of assurance on the delivery of social responsibility initiatives at the company level.

The process of experimentation and innovation continues further, wherein a Tata CSR Protocol is developed as one more step to deepen the institutionalization of social responsibility through the Internal Assessment process of the Tata Business Excellence Model (TBEM). Based on the three years’ feedback, this Protocol offers a set of suggestions to assist a Tata Company to develop its CSR practice with a greater focus on content and specific initiatives that have been collectively agreed upon at a group level. This version is specially designed to encourage CSR Facilitators and the TBEM Internal Assessors to work together in embedding CSR into the Internal Assessment process.

We are sure that this would be useful, and we welcome suggestions for making it more effective in the months to come.

Sunil Sinha Anant NadkarniChief Executive Officer Vice President Group - CSR Tata Quality Management Services Tata Council for Community Initiatives



CSR Assurance and Assessment Process

Based on the three annual cycles conducted on the Tata Index so far by major Tata companies, the following are some of the suggestions. These are collated centrally so that your collective effort would be useful to assist any Tata company to review its CSR performance. The CEO & CH-SR are Process Owners, and CSR goals are built into the balance scorecard / KRAs for senior managers and key CSR Facilitators.

Sr. No. Assurance levels Points Values Break-up (P+O)

Systems Response: Level – I 275 (150+125)

1 Leadership Commitment and Involvement 55 ( 30+25 )

2 Management Structure and Deployment 55 ( 30+25 )

3 Strategy Development & Action Plan 55 ( 30+25 )

4 Review Mechanism, Process Documentation and Reporting, Com-munication & Awareness

110 ( 60+50 )

People Response: Level – II 175 (100+75)

1 Selection, Career Development of key Employees, Performance Man-agement and Succession Planning

45 ( 25+20 )

2 Training for Professional, Organizational, Managerial Competence and Enhancement of Role in CSR

45 ( 25+20 )

3 Training for Leadership Development, Enrolment of other employ-ees, Personal Learning, Development and enhancing Role in CSR

45 ( 25+20 )

4 Volunteer Scheme and increasing / maturing degree of Volunteering 40 ( 25+15 )

Program Response : Level – III* 550 (220+330)

1 Risk management of Social / Environmental impact; Establish Processes on Sustainability; Strive towards developmental change, Biodiversity Restoration & Wildlife Conservation:

250 ( 100+150 )

2 Serving Communities around basic needs in the neighbourhood 100 ( 40+60 )

3 Building Community & Sustainable Livelihoods, extending core com-petence and with Poor as Partners/ strengthen potential capacities

100 (40+60)

4 Encouraging Social & Novel Entrepreneurships to convert existing charity-driven initiatives into sustainable ventures

100 ( 40+60 )

Total Points 1000 ( 470 + 530 )

* Initiatives agreed upon at Annual CSR Workouts are updated here from time to time.


Systems Response: Level-I Process = 150 + Outcomes = 125 275

There are five major points for action under this Level that will demonstrate explicit commit-ment and involvement of senior leadership in providing direction to company level CSR and also ensure that the intent is actually deployed and implemented.

1. Leadership Commitment and Involvement: Process = 30+ Outcomes = 25 55

a. In the Tata group, senior leaders demonstrate explicit commitment and deep personal involvement to support CSR. Besides

setting overall direction and implementation, they encourage Level II and other managers to actively support and to personally

involve in CSR activities so that, by example they help create the desired culture. [1.1 a & b]

b. Senior leaders initiate CSR voluntarily and go beyond stipulated regulation. A proper assessment (by third party if necessary) is

conducted to ensure that business, environmental and social risks are evaluated and minimized. It involves initiatives taken to

build organizational / professional capacities on Sustainability; and extends to how the organization is being equipped to deal

with complex and tough social problems, when a need arises.

c. An appropriate emphasis is evident in developing non-financial goals for the Company – economic, environmental and social. The process includes evolving human development goals, indices and measures to all CSR work as the overall purpose linked to ‘improving the quality of life’. [1.2 b & c]

2. Management Structure and Deployment: Process = 30 + Outcomes = 25 55

a. The CEO or MD of the company is ex-officio Member of the Tata Council (TCCI) and attends Council Meetings (without proxy) to share experiences and provide overall group-level direction.

b. The Article of Association on Social Responsibility (drafted by JRD Tata earlier adopted by all major Tata Companies) is adopted. The CEO identifies a Director on their Board to oversee CSR and forms a CSR Committee of at least two Members and coordinates with other related Committees, where necessary. The objective is to address and to protect shareholder / stakeholder interests through a responsible corporate governance process into which CSR is fully integrated. [1.2 a (1)]

c. A senior level executive, preferably Level II is the Corporate Head-Social Responsibility (CH-SR). The heads of community development, environmental management, industrial health / safety and related functions will support the CH-SR and form a CSR Cross Functional Team. Depending upon the size and structure of the organization, all heads of functions and operations will be the members of this CFT.



3. Strategy Development & Action Plan: Process = 30 + Outcomes = 25 55

a. The CEO encourages the CH-SR and Cross Functional Team to evolve a formal CSR strategy with a three to five years long-term

perspective and projection in mind. The strategy could be formulated with the help of external agencies and experts. This could

also be evolved with appropriate involvement of all other stakeholders. CSR strategies address not only the present needs of

businesses / markets / communities, but take into account future environmental and social impacts. Negative impacts, if any, are

proactively anticipated and mitigated. [1.1 a (3); 2.1 a (2)]

b. This strategy is the basis for the CSR Annual Business Plan and is backed by appropriate budget, resources, and the time of all

employees involved. The Company is encouraged to develop a “matrix” enlisting the technological and managerial capacity

/ strengths and articulate broadly how it could reach the targeted stakeholder [TCS-CAALP; TIL’s – Learning Disability; Artificial

Limb are examples]. [2.2 a & b; 6.2 b]

c. At a company level, CSR plans are inclusive of community development, employee welfare on issues like HIV/AIDS or disability.

CSR includes environmental management, occupational health and safety, biodiversity and ecological restoration, conservation of

wildlife and endangered species. This process assures that it includes dealing with and addressing any form of actual or potential

undesirable impact it has on people and the ecology.

4. Review Mechanism, Process Documentation and Reporting, Communication & Awareness. [4.1 a & b; 4.2 a, b & c; 7.6 a]:

Process = 60 + Outcomes = 50 110

a. CSR is periodically reviewed almost like any other function, at operational, divisional and corporate levels. Specific actions are

taken on OFIs and issues raised.

b. CSR is widely reported internally and externally in the spirit of making information available to the public. Annual Reports

carry briefs on all major CSR aspects. Special reports will be prepared as required by each initiative (Sustainability, Global

Compact, Tata Index, SA-8000) and certified, as stipulated.

c. All communication channels and forms of awareness building are deployed to disseminate required CSR messages / materials to

employees and concerned stakeholders.

d. The objective to inform, encourage employee involvement and update on the latest in CSR matters is considerably achieved and

measured through employee surveys, their increasing participation and involvement.

e. As agreed upon at Workouts, GRI Reports are to be ready by 29th July every year along with the Tata Index assessment and

Communication on Progress for Global Compact, and where necessary the Reports are audited by end September each year.


1. Selection, Career Development of key Employees, Performance Management and Succession Planning [5. 1 b & c] :

Process = 25 + outcomes = 20 45

a. The Company has a process to identify, select and position CSR facilitators. b. CSR Facilitators have goals, targets and performance appraisals and systematic assessment of CSR performance is

carried out.

2. Training for Professional, Organizational, Managerial Competence and Enhancement of Role in CSR. [5. 2 a & b] :

Process = 25 + outcomes = 20

45

a. Training needs for CSR are assessed and building CSR capacity is a routine function. b. Advanced training in technical, operational aspects could support exceptional performance - the prime aim being to constantly upgrade requisite capacity.

3. Training for Leadership Development, Enrolment of other employees, Personal Learning, Development and enhancing Role in CSR

Process = 25 + Outcomes = 20

45

a. Leadership development is key to CSR. Employee enrollment by motivation is an important role of CSR Facilitators. b. It is recognized that CSR Leadership is founded on “Servant as Leader” approach and is offered to those who by choice are willing to undertake their own personal journey towards reflection, develop more empathy and towards their

self-development.

4. Volunteer Scheme and increasing / maturing degree of Volunteering [T. CoC Clause 10]

Process = 25 + outcomes = 15 40

a. The Company has a proper policy and process / scheme to encourage volunteering (ideally linked with the Strategy on CSR). The volunteering process is highly customized and sensitive to include the existing initiatives. Urban and Rural locations, type of company operations and other peculiarities of the business are also taken into account while designing the process. Recognition of Volunteers is key to this process.

b. It would be possible to accurately substantiate on the number of Volunteers in a Company, the Volunteering hours spent and

broad areas of their work content.

c. The Company has a two-way communication system that helps to reach all employees. Preferably, a report on Volunteering is

brought out periodically and snippets updated on websites and even Annual Reports, (celebrating exceptional cases of

Volunteering just as much as Profits!)

d. As our companies are operating in an increasingly global environment, adequate care is taken to include the sensitivities and

practices that are suitable to local communities abroad so as to serve their needs.

e. Our companies have well structured processes to create a good work / life balance [Eg. Tata Steel Domestic Management.

PEOPLE RESPONSES: Level-II Process = 100 + Outcomes = 75 175

Positioning the right people is important to build credibility and continuity, and is part of the “brand assurance / deliverable”. CSR functions are treated at par with all other functions, more as integral rather than separate / add-on work. While putting the right people is one part, training, orientation, updating and development of facilitators on a constant basis isanother important aspect. The HR function is the process owner.



Program Response: Level-III : Process = 220 + Outcomes = 330 550 At the Program Level a Company assesses its performance on the CSR initiatives taken for local communities, at national and global levels and / or at a technological or managerial level that directly impacts the lives of people. These initiatives evolve at Company and group levels. The challenge is to enhance the extent of change possible so that people move away from dependence and charity or welfare and take the first steps on the economic ladder and to the various domains of social-markets. At our end, typical project work moves towards creating an enterprise driven by entrepreneurship – generating not only opportunities but more jobs. This Level examines issues such as encouraging social-innovations, the ability to manage scale, evolve strategic alliances and make policy impact. Finally all activity culminates in building community-based institutions that enable empowerment and sustenance. Internally, the key challenge continues to be about building a capacity for minimizing risks and establishing Sustainability considering local, national and global legal-domains. The CH-SR is the Process Owner.

1. Risk management of Social / Environmental impact; Establish Processes on Sustainability; Strive towards developmental change, Biodiversity Restoration & Wildlife Conservation: [6.1 a] :


a. If required, companies need to build capacities, systems on Sustainability due to the nature of their operations; deploy the

Generation 3 Guideline of the Global Reporting Initiatives (GRI); establish / certify for SA 8000. A healthy stakeholder dialogue

and engagement process is vital to the business.

b. As indicated the Tata Index, Communications on Progress (CoP) under the UN Global Compact are deployed. In the Index, where

possible MDGs and other human development indicators are evolved / linked to consciously enhance and measure human

development in every possible decision and action. Programs address the important aspect of “diversity” in the belief that it only

adds more value.

2. Serving Communities around basic needs in the neighbourhood: [1.2. a & b]


a. Health is built as a capacity that improves quality of life. Cause / Concern related Programs address HIV/AIDS, TB Control, Disability,

Child malnutrition and so on.

b. Focus on Women is about gender issues and empowerment to participate in socio-economic development, besides nurturing

families.

c. The Child is central to overall development and Programs address primary and adult education, are proactive about Learning

Difficulty / Disability; Focus on overall development of Youth as the foundation of the future concentrating on building capacities

that have potential for remuneration, while also making them good citizens.


3. Building Community & Sustainable Livelihoods, extending core competence and with Poor as Partners/strengthen potential capacities:


a. Programs graduate to imparting skills, trades and vocations that practically / professionally equip the youth to earn increasing

levels / trends in incomes and build economic, environmental and social capital for their community to increase the asset base. It

would include organizing existing artisans, craftsmen & promote local arts and handicrafts.

b. Create institutions around the above initiatives to help create better products / marketing and sustain processes and income

generation. Increasing the number of Self-help groups, micro-finance teams and to build other institutions as explicit form of

building community to create sustainable value, are examples.

4. Encouraging Social & Novel Entrepreneurships to convert existing charity - driven initiatives into sustainable ventures:


a. Health or Education programs initially charity based could be redeveloped on a ‘market’ or pricing model so as to generate partial

or full revenues, delivered as public goods [Eg. JUSCO].

b. Developing projects to generate self-employment that not only help small groups but scale up to assist large / regional

population to create new jobs and earn steady incomes. Replication and policy impact are pressing needs and so are key

measurable.



CSR Assurance and Assessment Process: WORKSHEET for the year 2006-2007

The aggregate score for the company is as follows. The top five OFIs are attached with proposed action.

Sr. No.

Assurance levelsPoints Values

Break-up (P+O)

Actual Scores

Systems Response: Level – I 275 (150+125) 226

1 Leadership Commitment and Involvement 55 ( 30+25 ) 42

2 Management Structure and Deployment 55 ( 30+25 ) 46

3 Strategy Development & Action Plan 55 ( 30+25 ) 50

4 Review Mechanism, Process Documentation and Reporting, Communication & Awareness

110 ( 60+50 ) 88

People Response: Level – II 175 (100+75) 114

1 Selection, Career Development of key Employees, Performance Management and Succession Planning

45 ( 25+20 ) 28

2 Training for Professional, Organizational, Managerial Competence and Enhancement of Role in CSR

45 ( 25+20 ) 30

3 Training for Leadership Development, Enrolment of other employees, Personal Learning, Development and enhancing Role in CSR

45 ( 25+20 ) 28

4 Volunteer Scheme and increasing / maturing degree of Volunteering 40 ( 25+15 ) 28

Program Response: Level – III 550 (220+330) 327

1 Risk management of Social / Environmental impact; Establish Processes on Sustainability; Strive towards developmental change, Biodiversity Restoration & Wildlife Conservation:

250 ( 100+150 ) 145

2 Serving Communities around basic needs in the neighbourhood 100 ( 40+60 ) 85

3 Building Community & Sustainable Livelihoods, extending core competence and with Poor as Partners/ strengthen potential capacities

100 (40+60) 45

4 Encouraging Social & Novel Entrepreneurships to convert existing charity-driven initiatives into sustainable ventures

100 ( 40+60 ) 52

Total Points 1000 ( 470+530 ) 667

Signature Signature

Corporate Head – SR Process Owner for Assessment (TBEM Assessor)

Date: 29th July XXXX


Scoring Band Descriptors

SCORE BAND

BANDNUMBER

BAND DESCRIPTIONS

0-30% 1 The Company demonstrates early to beginning stages of developing and implementing a systematic

approach to CSR. However, there is lack of conceptual understanding and more of compliance to instruc-

tions rather than emphasis on proactive initiatives. There are major gaps in approach and deployment with

random progress and performances observed; although there is compliance to all basic requirements

of regulation. Programmes are mostly charity based and the companies are engaged in dedicated social

work or supplements government’s function and overlaps with work better suited for the social sector.

The deployment mechanism or CSR Cross Functional Team (CFT) comprises of one or two persons with

part-time responsibilities for CSR. The CFT does not regularly review and its work-plans are related to doing

more of the same traditional forms of social activities over the years. There are major gaps in addressing

business risks arising out of social and environmental factors. While there are policies and intents commu-

nicated on CSR, there is no evidence of sustained leadership support or direction provided to motivate

and guide CSR. The overall focus is to develop a systematic approach and put in place systems for CSR.

30-60 % 2 The Company demonstrates significant conceptual clarity on CSR initiatives, and these evolve out

of corporate expertise, skills, technology, organizational capabilities and various competencies that

typical companies extend to the underprivileged. There are basic systems for environmental

management and complete compliance to the regulation. There is presence of a proper deployment

mechanism (CSR CFT) that meets regularly and is in the early stages of evolving a 3-5 years strategy

on CSR. There are early signs of developing human-development goals and other measures, which

link routine CSR activities to the overall Organizational purpose of improving the quality of life.

However, there is no evidence of a systematic approach of enlisting business risks arising out of social

and environmental factors and addressing them. CEO and Senior leaders do provide an annual path

on CSR although a deeper level of involvement is not evident across the Organization. The status of

deployment is still desirable across the organization. The overall focus is to integrate CSR systems with

employee participation, Volunteering and high degree of engagement / heightened levels of passion.

60 % and above 3 The Company demonstrates a systematic approach backed by fact-based and well-evaluated proc-

esses aimed at continuous improvement on CSR. The Company has a clear 3-5 years perspec-

tive and strategy evolved through a bottom up process of consensus amongst stakeholders and

members of the CSR team. The CSR – CFT members are selected through a regular process, trained

and appraised through a performance management system. The process of succession ensures a

fair degree of continuity. CSR is part of Corporate Governance and the Board oversees CSR perform-

ance. There are systematic processes of enlisting business risks and a progressive approach to address

them. The company has a credible trend of encouraging innovations wherein core competencies

are applied in solving difficult problems related to the marginalized and the underprivileged people.

The Company has a track record of exemplary initiatives in scaling up activities, influencing pol-

icy and building Community. There is excellent integration and alignment in Organizational ap-

proach, learning, creation and sharing of best practices. There is a systematic process evident in en-

gaging stakeholders through a healthy dialogue creating exemplary recall and goodwill among

members of the community. The focus is on increasing levels of maturation and synthesis between

systems and employee engagement in a way that CSR is becoming a culture within the Organization.



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