Along similar lines is the ACM – Infosys Foundation Award in Computer Sciences, established in August 2007 and carrying a cash award of USD 150,000 provided by the Infosys Foundation Endowment. It aims to reward educators and researchers whose work in software systems foster innovations that address existing challenges in the domain.
Assessment
Unlike a number of Indian companies whose education related welfare activities focus primarily on issues of primary/basic education, Infosys’ initiatives are unique in that they are associated exclusively with the domain of higher technical education, a segment in which it is arguably the most respected company in the country. This allows it to create perfect synergy between its everyday business activities and its investments in the above initiatives because unlike a lot of other companies who get into CSR without doing their homework and as a result get accused of doing it for ulterior motives, Infosys’ engagement with the field of technical education is a natural extension of its business practices.
Its approach in this direction must also be lauded. While Narayana Murty has been accused in the past of favouring foreign universities when it came to giving grants, his decision of having Infosys establish the above awards is a godsend for the research establishment in India because though grants may be siphoned off by agencies without the threat of accountability, awarding individuals for their excellence is more effective as it provides a greater encouragement for others to follow in their shoes.
But Infosys has not completely ignored the primary and secondary education sectors either. It has just approached it in a different way and yet received accolades all the same. A case in point is the Akshaya Patra Foundation, which was founded in 2000 and has three senior Infosys members apart from numerous Infosys volunteers who work towards providing free midday meals to schoolchildren. The foundations functions in partnership with state and central governments and currently serves over 1.3 million students in 7699 schools across India. Its impact is easy to assess from third party recognitions: it was awarded an International Fellowship by the US Congressional Hunger Centre, it received the 2008 CNBC India Business Leader of the Year Award and it even made it to the MBA curriculum as a case study at the Harvard School of Business in 2007.
Similarly, Infosys BPO’s work on ‘Project Genesis’, under which it works to improve the written and spoken communication capabilities in addition to the analytical skills of students in Tier 2 and 3 towns of the country so that they become employable, was awarded as the best CSR initiative at the 8th National Outsourcing Association (NOA) Awards 2011, in London. It was especially lauded for making sure that no expense was incurred by the participating academicians in the program.
Community Development
Unlike the education schemes already mentioned, community development initiatives do not at first seem the best fit with the company’s existing activities. However, Infosys has done its share of work in this domain too and while most of it has been in the vicinity of its offices, there are projects like the Flood Relief Project for the victims of northern Karnataka in which the company has participated quite actively. Only last year the first phase of their initiative to construct 2250 houses across 18 villages was completed and subsequently these houses were handed over to the villagers.
Assessment
This aspect of Infosys’ CSR efforts can also be criticized for not matching with the core business abilities of the organization. The question to be asked is whether Infosys could have done a better job as simply a service consultant (a domain in which it already has expertise) to a third-party organization and have the latter handle the actual on-ground developmental work.
Also, nearly all of Infosys’ developmental work has come in the neighbourhood of Karnataka. The scalability of this work can be called into question much like in the case of the Infosys Foundation. Regionalized developmental work can always raise questions about its sincerity, i.e. whether they are simply means to appease the local public/authorities.
Infosys Eco Group
Plans and Implementation
Infosys has been considering the worsening impact of businesses on the environment for several years and has understood the importance of a clean environment and energy efficient solutions. It has hence committed itself to come up with innovations which positively impact the environment and can lead to large energy savings. Many of these have been implemented at Infosys itself. Under this initiative of “Green Innovation”, Infosys has not only come with a number of ideas but has also implemented some of them in tangible forms:
iSustain: Carbon energy and resource management tool that helps the user to generate and monitor the use of various resources such as energy and water etc. being used, take majors to allot them efficiently and also monitor the carbon footprint.
InGreen Energy Management: A tool used by Infosys to monitor the energy consumption at micro level and to take majors to cut on unnecessary usage. Using this, Infosys has been successfully reducing its carbon emission at a rate of more than 5% per annum.
InGreen Personal Carbon Calculator: A tool that helps the user organizations to assess their impact on ecological systems in terms of carbon emission.
Smart Integrator for Smart Grid: A device that continuously monitors the power usage of various devices in the range using a sensor and controls them accordingly.
Infosys also plans to become carbon neutral and shift to entirely renewable energy by 2017.
The steps taken for the same seem to be promising which include building of renewable energy power generation plants (recently they have built a solar energy plant at Jaipur Campus) and aiming for a platinum rating, the highest rating given by LEED (Leadership in Energy and Environmental Design) for environment friendly architecture. In January 2012, the third building at the Mysore Campus achieved this rating.
Besides these, Infosys has been taking small but effective measures to reduce its own energy consumption, such as building designs with maximum exposure to natural light, design of windows which could lead to reduction in room temperature thus saving on air conditioning consumption of energy, increasing use of green power and use of recycled water. (Refer Exhibit 1)
Assessment
In year 2011, Infosys has saved more than 4 lakh units of conventional energy units through the use of the renewable energy sources. Not only has this helped in energy conservation but it has also resulted in savings of Rs. 20 Crore for the organization. In a similar way, innovative ideas such as smart integrator, rooms having maximum exposure to day light, optimum room temperature maintenance measures and use of LED and CFL tubes in place of conventional ones saved more than 7 lakh units of electricity, accounting for monetary benefit of Rs. 35 lakhs.
In addition to these, Infosys is working closely with the Karnataka Government and Karnataka Electricity Regulatory Commission (KERC) for implementation of renewable energy power plants. It has been successful in convincing KERC to remove the cross-subsidy on renewable energy thus reducing its cost. Moreover as a result of these efforts, KERC has made it compulsory for the power utilities in Karnataka to buy at least 0.25% of total energy in form of solar energy, which will cost the end users only 4 paise more than regular rate per unit.
Though listed under the CSR activities and initiated as ‘Green Innovations’, the activities mentioned above are not only intended to improve the environmental conditions as a social need but are also aimed at a reduction in Infosys’ energy consumption thereby giving it a competitive advantage as it can sell these innovative solutions to its clients as well. It is these latter observations that have been points of concern for critics who blame Infosys of hyping its energy savings and accuse it of ‘Greenwashing’. [18]
Employee-Driven CSR
Employees at Infosys are given ample opportunities to contribute to the society. This way of engaging employees to have hands on experience on CSR can also help the society, which needs responsible citizens to contribute man hours. The policy also helps these employees to attain their personal aspirations of serving the society.
This sabbatical policy was initiated in the year 2008, where all the employees are encouraged to work through Infosys Foundation to support the needs of the society. The company as an entity is greatly supportive of its employees in executing the initiatives.
The employees are made to pledge that they will make a difference to the society on a consistent basis. For effective execution, the company has individual divisions which run independent of each other under major themes like Health, Art, Education, Rural welfare and Rehabilitation and Targeted inclusive growth.
A governance framework has also been put in place to streamline and implement the employee driven CSR initiatives in order to provide operational efficiencies and financial transparency.
CSR Groups and Location
Pragati - Bangalore
The Volunteers are actively involved in providing additional support to government schools on weekends. They exploit the skills and experience of retired school teachers in Bangalore to assist them in their efforts to provide free education for children in government-sponsored childcare centres and orphanages.
Prerana - Mangalore
The volunteers have set up a Scholarship Disbursement For Meritorious Students
A total of 500 students, including those pursuing professional courses, from various districts of southern Karnataka were supported to the tune of Rs. 1,871,995 of which Rs. 1,540,220 was provided by Prerana.
Akansha - Bhubaneshwar
Akansha partners with Infosys foundation in case of education and rehabilitation of victims affected by natural disasters such as tornadoes, cyclones and floods.
Prayas - Chandigarh
This is the Corporate Social Responsibility team of Infosys Chandigarh. In association with J.P. Eye Hospital, Mohali it has organized a free eye check-up and operation camp in the campus for the under privileged. The volunteers even went to different slums and colonies to ensure that maximum people benefitted from this camp.
Sneham - Chennai
In collaboration with ‘Sarva Siksha Abhiyan’, Sneham volunteers have trained the rural students in improving their English, computer skills and eco awareness. The team has donated over Rs. 750,000 to projects like notebook distribution, classroom flooring and furnishing, buying science lab instruments and sanitation projects.
Mamata Welfare Society - Hyderabad
The volunteers awarded 200 meritorious students from economically challenged families scholarships worth Rs. 800,000. They also donated notebooks and stationery to over 1000 children of the Infosys support staff.
Assessment
The employee-driven initiatives suffer from many of the same issues as the Infosys Foundation. The scope currently is extremely local and the nature of activities is multifarious and unstructured. Perhaps, if more tie-ups with the NGOs in the local regions could be arranged, a more focussed approach could be adopted in meeting the real needs of the affected people.
But here again, considering that these are teams of volunteers only, the magnitude of CSR activities taken up is quite praiseworthy and Infosys should take care that it does not try to institutionalize this distinctive nature of its CSR practice. Any issues of implementation should be addressed by allowing the various employee initiatives to have greater contact with each other in order to share their best practices.
Financial Viability of CSR
There are various parameters on which Infosys can quite clearly be seen to be superior to the other players in its industry. (Refer Exhibit 2) The most important of these has to be its profit margins, which are the best in the business. Thus, you would expect a larger portion of its profits to be invested in CSR than its competitors. However, on actually going through the numbers a different picture emerges.
In the year 2011, Infosys reported a net profit of Rs. 8,415 Crore and donated approximately 35 crore rupees to Infosys foundation and a onetime transfer of INR 12 crore of Infosys science foundation. If we take the ratio of Infosys net profit and its contribution to CSR it comes out to be only 0.5 %. Also Infosys has till date donated approximately INR 400 Crore to the Infosys foundation which is 0.2 % of its market capitalization of INR 158,626 Crores.
We can compare these numbers with those obtained from hypothetical allotments of 2%, 5% and 10% share of its profits to see how much more it could have proactively invested in CSR without adversely affecting its shareholders’ value. (Refer Exhibit 3) These values show that the company can indeed do a lot in increasing the share allotted to CSR activities out of its profit margins, as currently they are quite insignificant.
It is seen that even at 2% (which is the minimum CSR allotment ascribed under the soon-to-be-implemented New Companies Bill) the company will more than double its current CSR share of Rs. 42 crore out of its profits. At 5% this figure will be ten times its current amount, without significantly hurting the overall profit margins of the company.
Hence, on the financial front at least, the performance of Infosys can be seen to be well below the standards that might be expected of an organization of their standing.
Conclusion: Overall Observations
Having provided individual assessments for Infosys’ various CSR categories, this report will end with an overall assessment of Infosys’ performance in this sphere. This valuation cannot be done in any fixed quantifiable terms; however third party ratings and assessments can be taken into account to arrive at a decision ourselves.
Although currently there is no formal organization in India which rates companies according to their CSR performance, according to Karmayog, an NGO that is informally engaged in this activity for listed companies, Infosys has a Rating of 4 on a scale of 5. [19] This makes it one among only 16 companies with similar ratings and with no company having a rating of 5, it also makes Infosys the joint best company when it comes to CSR in India.
These ratings are calculated by taking the actual impact of reported CSR activities on the ground through the opinions and experiences of both employees and outsiders who are affected by them. Infosys has also consistently maintained this rating over the last four years.
However, the rating criteria of Karmayog still have many gaps that need filling. The companies are rated upon criteria divided into Minimum Necessary, Sufficient and Negative without proper justification as to why this is done. Also, the referral method wherein the ratings are discussed with the company itself which can then veto the findings or provide its own views, again leaves too much say in their own hands, thereby skewing the ratings’ objectivity.
Internationally, indexes like the FTSE 4GOOD Index and the FTSE KLD 400 Social Index have been used to rank companies and they are designed to help investors, who may be socially conscious, to account for environmental and social effects of an organization’s activities in their investment choices. A similar Index is also the Calvert Social Index, which is a stock market index created by Calvert Investments.
Applying the same indexes in India should be a priority for our authorities as they will provide greater transparency in rating the CSR efforts of organizations. It will also promote companies like Infosys who consciously try to woo investors through their positive CSR activities, to have a firm basis on which to differentiate themselves from their competition in this regard.
Thus, if they are sincere in their efforts, an impartially managed index like the above can be of great benefit for Infosys.
Meanwhile, the national and international awards that the company has received over its lifetime in the field of social welfare count as a convincing argument in favour of the efficacy of its CSR practices.
However, certain issues like narrow scopes of implementation and the numerous unstructured programs need to be sorted out before Infosys can aim for that 5 – Rating on Karmayog and truly be differentiated from others on the basis of CSR alone. Doing so can make it a model for all Indian corporates to follow.