Community Development And Corporate Social Responsibility

Published Date: 02 Nov 2017

Café Coffee Day, India’s largest retail café chain, has nearly 1400 cafes in India and owns several operations in its supply chain. CCD’s focus has not only been on the product that they provide i.e. coffee, but also on the service including the ambience, thus concentrating on the overall customer experience leading to the development of its mission "To be the best Cafe chain by offering a world class coffee experience at affordable prices". The competitive rivalry in the industry has been increasing with already established players like Barista expanding and the entry of new players like Starbucks adding to the competition. The rising level of income, financial independence of students and professionals, and cosmopolitization of cities has led CCD to expand in Tier III cities like Udaipur. As CCD follows a non-franchise model, its centralized operational, marketing and management strategies were implemented in these cities. However, as the customers and their needs in Tier III cities vary from those in the upper tier cities, the marketing strategy was not very successful. Also with the opening of several new fast food chains like KFC, Pizza Hut and Subway in the recent past, the marketing strategy in Udaipur needs to be revamped. Based on the analysis of CCD’s overall marketing strategy through both secondary data and primary data collected through interviews and customer survey, it is concluded that pricing strategy, customer targeting, customer loyalty, order delivery time and outlet locations are the key areas of concern in Udaipur. Increased promotion to create awareness about price bundling, introducing online ordering, customer loyalty cards, opening low investment outlets, and opening locations around educational institutions and places with more competitors are recommended to tackle some of the difficulties faced by CCD in Udaipur.

Introduction

NTPC Limited, a state owned enterprise established in 1975, is India’s largest power generation and electric utilities company. With a currently installed capacity of 39,674 MW, NTPC aims to increase its generation capacity to 75,000 MW by the year 2017 (NTPC Limited, 2012). Currently operating 16 coal-based and 7 gas-based power plants across the country, NTPC’s mission is to "Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society" (NTPC Limited, 2012). The incorporation of "contribution to society" in the mission statement itself clearly highlights NTPC’s commitment to becoming a socially responsible organization.

The preamble to NTPC’s carefully articulated Corporate Social Responsibility (CSR) and Community Development (CD) Policy, mentions that "NTPC resolves to be a socially responsible corporate entity and to lead the sector in the areas of resettlement and rehabilitation with thrust on CD, environment protection, including effective ash utilization, and energy conservation. NTPC resolves to contribute towards sustainable power development by discharging corporate social responsibilities (CSR) that would positively impact on customers, employees, shareholders, communities, and the environment in various aspects of its operations. However, activities and expenditure related to staff benefits are not counted as CSR" (NTPC Limited, 2010). These two statements indicate the type of CSR initiatives that NTPC has undertaken or plans to undertake and also underline the intended beneficiaries of the initiatives.

CSR Initiatives at NTPC

The CSR activities of NTPC can be broadly classified into three types – Rehabilitation and Resettlement (R&R) of project affected persons (PAPs), Environmental initiatives, and Community Development programs for PAPs (once the R&R is completed) and other communities. The rehabilitation programs provide land and employment opportunities while the resettlement provides alternate residential plots (brother, 2013). The key focus of the CD initiatives is to facilitate infrastructure development to improve health, education, access to drinking water/sanitation and providing vocational training (NTPC Limited, 2010).

Resettlement & Rehabilitation (R&R)

NTPC, ever since its inception, even when there were no specific guidelines from the government regarding rehabilitation and resettlement of the displaced, has been implementing measures towards R&R. When NTPC’s first generation projects (i.e. projects prior to 1993) were being executed, it was sensitive towards rehabilitation and resettlement (R&R) issues. Providing employment at its plants in various capacities, allotment of shops, or offer of small contracts to the displaced people, were some of the measures implemented.

More recently, after the introduction of government directives towards R&R, NTPC has made a conscious effort to contribute more towards the displaced people than merely implementing the directives. NTPC has treated R&R as a responsibility and not as a philanthropic or welfare gesture towards the society. Its comprehensive R&R policy, formulated for the first time in 1991, has been revised over the period to make it more relevant and inclusive.

The R&R policy was formulated with a clear understanding that NTPC will compensate the PAPs not just on the basis of land lost but also for the loss of livelihood. Also the compensation is considered at an individual level rather than for the family as a whole. The policy, therefore, takes cognizance of the tribal people, agricultural laborers (with and without land), and people dependent on other crafts for their livelihood, together classifying them into twelve distinct type of PAPs. Depending on their category, the rehabilitation options for the PAPs include:

Providing land for land

Providing self-employment opportunities such as dairy, poultry, handicraft etc.

Setting up shops

Awarding small contracts

Providing employment at plants

The resettlement measures include:

Alternate housing plots with basic infrastructure

Arrangement of transport to the new settlement

NTPC has empowered the PAPs to choose the rehabilitation schemes/options themselves based on their requirements, providing them assistance to take an informed decision. Also depending on the local conditions and needs, certain customized options, not laid down in the R&R policy, have also been provided to PAPs. Social scientists and consultants have been consistently employed by NTPC to better under the local socio-economic conditions and develop communication channels with the PAPs and NGOs. These measures of NTPC are part of its conscious effort to build a relationship of trust with PAPs.

Environmental Initiatives

NTPC has done a commendable job as far as environment management is concerned. As a player in the power sector, NTPC’s main focus is to fast-track the power sector development in our country, which also leads to an adverse impact on the environment. But, NTPC has tried to counter this adverse impact by taking practical measures of all forms to save the environment and ecosystem in and around the sites where it undertakes projects. Some of the key initiatives taken by NTPC include:

Environment impact assessment: Measuring the impact on the environment due to its projects allows NTPC to accordingly installs processes & equipment to counter the effects.

Disaster management: In case of any natural disasters like earthquake, to make sure that the environment is safe, NTPC has a Disaster Plan Management to cater to such incidents.

Environment management system: "NTPC Environment Policy and Environment Management System" mandates NTPC to incorporate pollution control devices operating at high efficiency, minimize wastage of resources, maximum ash utilization, etc.

Preserving the ecosystem: NTPC promotes a culture of care for the environment among all its employees, thereby ensuring better commitment towards the ecosystem.

Afforestation: With the help of professional horticulturists and Special Purpose Vehicles (SPVs), NTPC has planted 14.9 million trees around its power plants to absorb the emissions and reduce the ill effects from those stations to the environment.

Pollution monitoring system: Periodic conduction of pollution monitoring and environmental audits at its power stations ensures compliance with environmental norms.

Ash utilization: Ash Utilization Department (AUD) at every power station makes best use of the coal ash produced which can be used for making cement and concrete products.

Environment engineering group (EEG): It inspects project sites by conducting Environment Impact Assessment and chooses sites which are environmentally attuned.

Environment management group (EMG): It formulates environmental policies and pollution reduction techniques which the plants in operational stage will follow.

Centre for Power Efficiency & Environmental Protection (CenPEEP): Through creation of CenPEEP in association with USAID NTPC strives to lessen the emission level of GHGs per unit of electricity produced by installing state-of-the-art, eco-friendly technologies

Waste management: NTPC Energy Technology Research Alliance (NETRA) has done a commendable job in waste management by embracing a policy of zero liquid discharge.

Forest banks: NTPC’s unique proposal to state forest departments to start "Forest Banks" by picking a land and planting trees helps in maintaining a balance of the ecosystem by absorbing the ill effects of plants in case a power project comes up in that area nearby.

Community Development - Infrastructure

NTPC’s ambitious targets for rapid expansion by 2017 require it to entail new Greenfield projects and expansion of the existing projects. This has made CSR – R&R a critically important aspect of its expansion strategy. In addition to the basic household infrastructure provided as part of R&R for the PAPs, NTPC also carries out several other infrastructure related projects as part of its community development initiative for PAPs as well as surrounding communities.

Construction of individual and community toilets and drainage systems near its plants

Construction of community centers and bus stops

Construction of at least one school building, girl’s hostels and augmenting existing school buildings in the areas nearby to its project. At present 23 schools are being run by NTPC Limited and have benefited more than 20000 students. (NTPC Limited, 2012)

Providing drinking water facilities through tankers, construction of water tanks, bore wells and hand pumps, and development of wells and ponds.

Construction of approach roads and internal roads to connect people to the main roads.

Provided electricity and illumination facilities in adjacent villages

Community Development - Health

NTPC has performed amiably in the field of health by launching a number of initiatives like:

Free medical camps organized for eye care, ENT, General surgery, gynecology, and obstetrics along with camps for physically challenged persons and lepers.

Family welfare programs including preventive healthcare check-up camps are regularly organized in the villages.

Specifically female oriented health programs in addition to the awareness programs for AIDS, Hypertension, Diabetes, ill effects of smoking, and chewing tobacco as well as drinking are conducted.

They have also been associated with pulse polio drive, TB eradication and some other government health projects.

DOT Centers (part of NTPC Foundation): Directly Observable Treatment Centers have been established by NTPC for TB patients. Free van service is also available for these.

Lastly they have also tried to promote alternative medicine facilities.

Community Development - Education

Fifteen to 20 percent of NTPC’s CSR-CD budget is reserved for education. NTPC has a school adoption policy and introduces programs to increase its reach. They promote rural culture, sports, adult education, and female education. NTPC provides education aids and tools, as well as provides scholarship to the needy. Their adopted schools are managed by DAV association, Kendriya Vidyalaya society, and DPS. Some of the activities on education are:

Tuition classes at 50% lower rates

Regular training programs for teachers and principals

Organizing workshops conducted by NSD, Scouts and Guides, and SPIC-MACAY

Functional adult literacy which empowers directed learning is also arranged

Inclusive education for children with special needs. NTPC’s pilot project of inclusive education at Dhari has been a success with children coming from nearby villages and it has plans to gradually adopt these practices at other NTPC schools

Community Development - Vocational training

One of the seven tenets of strategy sustainability is considering people in and around as most valuable resources. To leverage this point NTPC is involved in providing training for various job-oriented courses for unemployed youth and women. Motor rewinding, repairing electronic gadgets, binding, screen-printing and motor driving are some of the courses conducted for youth while food preservation, tailoring, embroidery, and stitching are conducted for rural women. It also runs Information and Communication centers (ICTs) for imparting IT skills to the physically challenged so as to make them part of the mainstream. Developing these skills helps unemployed and needy people earn their livelihood. It is also helpful for NTPC as they easily get such kind of skilled people nearby their township or projects.

Community Development - ITI Adoption

ITIs, popularly known as Industrial Training Institutes are considered as the spine of vocational education in India and they help in providing training for developing workforce required for skilled professions in the industry. But, of late, ITIs have been facing various issues like inadequate trainers, flaws in training structure, shortage of modern equipment and weak connection with the industry. These deficiencies in the system are creating a huge mismatch between the workforce produced by the ITIs and the workforce required by the industry. To overcome such issues, NTPC with the help of the state and the central governments is trying to upgrade ITIs by adopting seventeen ITIs and establishing nine new ones. NTPC helps in providing management expertise to run the ITIs. With the help of this pleasant gesture from NTPC, there has been a significant increase in the number of employable and skilled youth living in the vicinity of NTPC.

NTPC projects and stations first identify the ITIs in their vicinity they are willing to adopt and then with the consensus of state government for adoption, they form an Institute Management Committee (IMC). Members in IMC are from local industry and nominees of the State Government. Institute Development Plan (IDP) is then prepared by IMC and an interest free loan of Rs 2.5 crores is approved by the central government which can be repaid in 20 years.

Institutional setup for CSR implementation

NTPC follows a three tier structure to implement its Community Development (CD) initiatives (NTPC Limited, 2010). At the top level, the CD cell at the Corporate Centre is responsible for policy matters, approving community development action plans, training the CD staff, allocating budget and monitoring the progress of the initiatives. Next, at the regional level, the regional headquarters is responsible for ensuring the implementation of the CD initiatives. It also plans and monitors the initiatives at the unit level and provides updates to the corporate headquarters. It is at the operating station level that individual plans based on the assessment of the village needs are developed. The CD cell at operating stations is responsible for the preparation of plans, actual implementation and keeping a closer check on the financial and physical progress of the initiatives.

The CD cells are staffed with dedicated people to work on the CD initiatives while other employees at NTPC also volunteer in the actual implementation. A village development advisory committee (VDAC) is formed before the CD initiatives are planned. The VDAC includes Gram panchayats, representatives from district administration, NGOs and PAPs. It is in consultation with the VDAC that the needs of specific villages are determined and the action plan for the initiative is developed (NTPC Limited, 2010). The VDAC also plays a role in determining the utilization of the maintenance funds once NTPC withdraws after the completion of the CD activities.

Planning of Community Development (CD) initiatives

The CD projects are planned keeping long-term goals of setting up infrastructure and arranging for their maintenance. Need assessment surveys (NAS) is carried out at an in-depth village-stakeholder level to collect information related to demography, occupation, literacy levels and socio-economic status (NTPC Limited, 2010). Based on this survey, the needs of the most vulnerable sections of the community are captured and prioritized. NTPC also co-ordinates with central and state governments along with NGOs in preparing the action plan to ensure that they do not overlap with their initiatives. Also, any initiatives that can be carried out to support the existing government initiatives are considered during the planning. Then, a detailed plan with deliverables, budget requirement and time-frame is prepared. Each plant is allocated a separate budget for its CD initiatives. During allocation of funds, keeping the long-term perspective in mind, NTPC usually allots 65% of the funds for long-term incremental plans, 15% for new activities or those related to expansion of existing R&R plan while another 20% for maintenance of infrastructure initiatives carried out in the past.

Monitoring and Evaluation of CD initiatives

NTPC follows a two-tier monitoring policy to evaluate the progress on each of its CD initiatives. Internally, the CD cell keeps track of monthly progress of the project by measuring progress along pre-defined metrics. Additionally, the VDAC representatives, the local government and the station CD cell evaluate the project on a quarterly basis. The regional headquarters monitor the implementation carried out by the CD cells at the respective stations. An annual social audit, involving review of progress of one plant’s initiatives by another plant is also carried out. This also helps in the sharing of best practices involved in the CD implementation across plants. Externally, credible agencies are employed to evaluate the project and provide required feedback at least once in two years. It is this evaluation that is considered as final.

Analysis of the CD initiatives

While R&R is something that an organization like NTPC cannot do without, some of its initiatives in community development and environmental protection have diverse benefits. We will analyze these activities by understanding their impact on the key stakeholders, the likely short-term and long-term consequences, and the sustainability of these initiatives.

The key people impacted by NTPC’s CD activities in infrastructure development, health, education and vocational training include NTPC, the community and the employees. These initiatives directly affect the community by improving the standard of living and health of the beneficiaries in the short run and allowing NTPC to operate without facing resistance from the community. However, as NTPC conducts surveys, co-ordinates with the village people and also ensures the maintenance of these initiatives, it builds a long-term relationship of trust with the community. This relationship helps NTPC, a power plant, by providing a healthy, skilled and motivated workforce. The employees volunteering for such activities get a sense of satisfaction and others feel motivated to work for a socially responsible organization. In turn, these activities also impact the shareholders as the operational short-comings of a socially responsible organization are more likely to be overlooked by them thus helping NTPC maintain its market capitalization and brand image.

While environmental initiatives can be considered a part of the duties of NTPC due to the nature of its work, NTPC’s implementation of innovative ideas shows its dedication to the task. The primary stakeholder in its environmental initiatives is the society. People living in the vicinity and the employees are directly impacted, keeping them safe from the hazardous discharges. Activities like Ash utilization make their effect felt in the short term while Environment Impact Assessment studies help in preserving the environment in the long term. Such activity, while meeting the environmental regulations mandated by the government, also cements the commitment made towards environment and the reputation thus built makes the organization a favored recipient of investments for future growth.

The planning structure followed by NTPC represents a scientific approach by keeping all the stakeholders involved through the creation of VDAC and allocation funds not just for construction but also maintenance of the initiatives. By co-coordinating with the government and the NGOs, efficient implementation of schemes is made possible and it also ensures that activities are not merely duplicated but developed to support existing initiatives.

The three-tier monitoring and evaluation structure followed by NTPC makes everyone involved in the implementation process accountable. Having a dedicated CSR team coordinating with the plant teams also ensures that plant managers do not try to reduce their costs by ignoring CSR. Setting measurable monthly goals and bringing in social and external audits, ensures that activities are not merely carried out on paper but actually lead to community development.

However, NTPC’s long term association with its initiatives means that withdrawal from them becomes difficult. Once commitments are made to communities they cannot suddenly withdraw this support as the community begins to rely on them. This may however not be a problem as government’s recent inclinations towards mandating CSR spending means that NTPC is not likely to consider withdrawal.

Being a responsible corporate citizen, NTPC has tried to elevate the social standard of the people to make them capable of competing with the mainstream of a developing India. It is really difficult to gauge the success of these developments and the level of satisfaction among the people from these projects mentioned in books of NTPC Limited.

Conclusion

Having looked at NTPC’s focus on CSR, we need to understand the role and importance of CSR in the overall development of an organization. CSR is not just limited to fulfilling government mandate or creating goodwill for the company, it also plays a significant role in creating sustainable businesses by developing relationships and collaborating with all the stakeholders and the community. Businesses are based on prudence and trust. Developing and maintaining a trustworthy relationship with the stakeholders and the community is not a simple task as trust takes time to build but can be broken very easily. CSR activities help in building this trust and create a reputation for the organization. It could also benefit the primary business of the company by improving the bottom line, like in the case of NTPC by creating a suitably trained low cost work force. CSR may also help in increasing sales by creating goodwill for the company. Efficient employees want to join responsible firms that care for the society and their employees. Thus building a sustainable model for discharging CSR becomes crucial for a business’ growth. The crucial factor in making the activities sustainable is by implementing them in their true sense and not just to adhere to the regulations. If it is the latter then, CSR activities only become an unavoidable cost to the company without adding any value to its business or the society.