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Corporate Social Responsibility in an Indian Public Sector Organization: A Case Study of NTPC*

CASE STUDY, CORPORATE SOCIAL RESPONSIBILITY
ET Cases - GSMC, 20 Pages
AUTHOR(S) : Dr. Moumita Acharyya Assistant Professor, IILM, New Delhi

Case Preview

Corporate Social Responsibility in an Indian Public Sector Organization: A Case Study of NTPC

 

NTPC, a Public Sector Undertaking (PSU), founded by the Government of India in 1975, under the Ministry of Power, Government of India, incorporated under the Companies Act 1956, is engaged in the business of generating power (electricity) and allied activities. The Company operates its activities from its Headquarters situated at New Delhi. It was ranked 384th in the world in the Forbes Global 2000 ranking for the year 2012. As on March 31st 2013, the Company held 75% of its equity shares. NTPC does its main business in generation and sale of power to power distribution companies of the country and State Electricity Boards in India. Consultancy and contracts of turnkey projects are also undertaken by NTPC, which include engineering, project management, construction management and operations management of power plants. Of late, the company has also engaged itself into oil/gas exploration and coal mining activities. Being the largest power company in India, it generates about 45KMW of power which is about one fifth of total national capacity but it contributes to more than a quarter of total power generated in India. This is because the company operates its power plants at higher efficiency levels. In May 2010, NTPC was conferred Maharatna status by the Government of India.

NTPC – Core Values

The company’s core values as stated on the company’s website signify the importance of being committed which are as follows:

B Business Ethics
E Environmentally & Economically sustainable
C Customer Focus
O Organizational & Professional Pride
M Mutual Respect and Trust
M Motivating Self and Others
I Innovation and Speed
T Total Quality for Excellence
T Transparent and Respected Organisation
E Enterprising
D Devoted

NTPC – Products and Services

In the year 1975, NTPC was established to give a boost to thermal power generation. Parallely NHPC was also formed. Earlier, there was no power generation in the central sector, and everything was at the state level. Under the leadership of Mrs. Indira Gandhi, it was realized that power being such a basic and important need cannot be centralized only at the state level. So, power became a major component and several portfolios were identified as the main products and services............

Objectives of the Case Study

Understanding the effectiveness of the society and community-related practices (in terms of sustainability) adopted by the leading PSU (NTPC) is the main objective of this case study.........

Methodology of the Case Study

The sample for the study comprised of 20 middle and senior level executives working in NTPC. Document analysis of the company’s Annual Reports was also done. Each interview was semi-structured with few fixed parameters within which the interviewer has to restrict so as to avoid deviation and unnecessary exaggeration. However, few important steps were followed in all the interviews as a prerequisite: ........

Reasons for Adopting CSR Practices

The interview analysis revealed that the organization believed that growth is only possible through an inclusive approach. The survival and existence of every organization depends on the acceptance and cooperation of the society. The company cannot grow in isolation and it has to include the society in its growth, not as an obligation but to create a responsible business movement throughout the community................

CSR at NTPC

NTPC believes in doing business by adding value to the community and society around its stations on a sustainable basis through dedicated policies, institutional setup and engagement process to promote inclusive growth. It values the partnerships it builds with the communities around its units. For NTPC, CSR is not only a responsibility but also about maintaining an effective social relationship.............

CSR Objectives of NTPC

1. Leading the sector to protect environment in the areas of effective ash utilization, peripheral development and energy conservation practices.
2. .........

CSR – Community Development Policy

NTPC have a separate CSR-CD policy which covers a wide range of activities staring from Unit level - Regional level - National level, including implementation of key programs through the company foundation. NTPC aims to be a socially responsible corporate entity and to lead the sector in the areas of R&R and CD.............

CSR Structure at NTPC

NTPC committed itself to social development since inception and hence has a comprehensive R&R policy for CD activities. CD activities in green field area, according to the company’s policy, starts as soon as a new project is conceived and thereafter extensive peripheral development activities are taken up along with the project development. A separate CSR-CD Policy covers a wide range of activities starting from unit level to regional and national level including implementation of key programs through ‘NTPC Foundation’..............

Three-Tier Structure of CSR at NTPC

NTPC follows a three-tier structure for implementing their CSR-CD activities as below:

1) Corporate center
2) Regional headquarters
3) Operating stations at each region.

However, besides the institutional set-up of the organization for CSR, the NTPC also organizes.....................

CSR process at NTPC

The CSR process comprises of five stages (Exhibit V). These are as follows:

1. Budget Allocation

As per current DPE norms, the company Board has approved to incur 1% of net profit of the previous year for CSR and.....................

2. Planning

The company has adopted a Bottom-p approach for planning. Activities are planned based on Need Assessment Survey..............

....................

Key Community-Related Initiatives by NTPC

Highlighting the importance of being sensitive to the requirements of the local community, one of the respondents mentioned that CSR focus of the company is to build relationships with the society. The company works in a very systematic and planned way towards CSR. From the interviews, it was found that the company always emphasizes on a long-term perspective towards CSR..................

Corporate Philanthropy: The ultimate aim of the organization’s CSR is in making the community independent and empowers them with education and other livelihood
opportunities for a sustainable future.................

Community Volunteering: The volunteering in various community activities within the organization are promoted through the NGO’s created by the employees at their respective power stations.............

..............

Sustainability Mechanisms of the CSR activities

NTPC has a systematic mechanism to ensure the effectiveness of these CSR activities. NTPC hands over the functioning of the assets created by them to the Village Development Advisory Committee............

Corporate Social Responsibility Awards by NTPC

• NTPC awarded with BT-CSR Awards 2016 - NTPC has bagged 2 prestigious awards in CSR – Public Sector Enterprise of the Year and Swacch Bharat Categories in Bureaucracy Today-CSR excellence awards held on July 14th 2016 recognizing social initiatives of corporate organizations and contribution of those who have driven social change in India through their unique CSR initiatives.
• .............

Organizational Strengths with Respect to Society and Local Community

Highlighting the CSR activities as being the strength of the organization, the following have been identified as the core benefits:

CSR integrated with core business strategy – The company has integrated the concept of CSR with their core business strategy. The company has been very responsive in their approach to solve the local community’s needs on time................

Promoting volunteerism – The company has a well-organized system to encourage and accommodate the volunteers for CSR activities...........

..............

Organizational Areas of Improvement with Respect to the Society and Local Community

CSR scope – The concept of CSR is applicable to all the stakeholders of the company. The respondents replied that the company promotes CSR activities mainly where the plants are established and it is limited to the plant level.........

Mode of interaction – The company does not have a system of societal interaction directly at all the levels. Apart from the volunteers, it is only the Human Resource department which channelizes the communication between the company and society............

........................

Assignment Questions

I. Does NTPC’s CSR strategy have an impact on the local community? Why should the company engage in CSR?
II. .................

Exhibits

Exhibit I: Characteristics of the Sample of Interviewees

Exhibit II: CSR Structure of NTPC

Exhibit III: Pictorial Representation of NTPC CD Staff

Exhibit IV: A Glimpse of CSR Structure at NTPC

Exhibit V: CSR Process at NTPC

Exhibit VI: NTPC Chart of Various Social Initiatives

Exhibit VII: Sustainable Mechanism of CSR initiatives at NTPC

Teaching Note Preview

Corporate Social Responsibility in an Indian Public Sector Organization: A Case Study of NTPC

 

Synopsis

The society and the nearby local community is the major resource pool for any company to plan for their manpower requirements and also the level of acceptance for all company operations. The society is one such entity on which the organizational existence depends. The organization is dependent on the society both for inputs – labour and other materials and also for output – consumption of products and services produced. So, it is not just a mere duty which needs to be fulfilled rather an organization should consider giving back to the community which deserves it in its right spirit. In this teaching note, the case study of an Indian Public Sector Undertaking like NTPC is being used to describe their various key community-related initiatives. NTPC being one of the “Maharatna” companies has undertaken various CSR initiatives not only within their local vicinity but also in and around the areas of functioning. The two key issues of the case study are ‘sustenance’ and ‘effectiveness’ of their key community-related initiatives. Because of the plants being situated in different parts of the country, the geographical and (sometimes) demographical diversity adds on to the complexity of maintaining consistency within the implementation of the key community-related initiatives. This brings up to the question on the sustainability and effectiveness of the CSR initiatives.

Prerequisite Conceptual Understandings (PCUs)/Before the Classroom Discussion

  • • Michael E.Porter, Mark R. Kramer, “Strategy and Society: The link between competitive advantage and corporate social responsibility”, Harvard Business Review, 2007, pp 1 – 16.
  • • Oliver Falck, Stephan Helbich, “Corporate social responsibility: Doing well by doing good”, Business Horizons, 2007, 50, pp 247-254.
  • • Kotler.P, Hessenkiel.D, Lee.N, “Good Works! Marketing and Corporate initiatives that build a better world and the bottom line”, John Wiley and Sons, 2012.

 

Case Positioning and Setting

It can be used in various graduate and undergraduate courses related to CSR, corporate citizenship, ethical leadership, general management, strategic management and public sector business. The case is relevant for MBA Program and Executive Development Programs. It can also be used in courses related to public sector business. The case provides an idea about the functions and processes which these large scale Indian organizations undergo while implementing their key community-related initiatives.

Assignment Questions

I. Does NTPC’s CSR strategy have an impact on the local community? Why should the company engage in CSR?
II. Do you think that NTPC’s present CSR communication is helpful in averting the community disturbances arising from land acquisition?
III. What, in your opinion, should NTPC do in order to make their key community-related initiatives more sustainable?

Teaching Plan

This case needs to be distributed in advance and can be discussed in a class time of 75-90 minutes as follows:

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Abstract

Corporate Social Responsibility (CSR) as a concept and practice has received increasing importance, particularly in the last couple of decades. There is enough evidence worldwide on the potentially significant role that firms can play in furthering social, ecological and environmental sustainability. Some organizations are adopting the CSR practices voluntarily while others have to be coerced. Various CSR initiatives that firms have been engaging with are adult education, women empowerment, water and energy conservation, medical assistance and so on. The motivations or reasons for adopting CSR initiatives also vary from primarily philanthropic to strategic concerns. Today, CSR has become an integral part of the business strategy of most organizations, be it the multinationals, public sector or private sector firms. The general belief among the public is that private firms engage in CSR activities to a significantly higher extent when compared to the public sector firms. However, some of the public sector firms such as NTPC, NHPC, BHEL, BPCL, etc. have also been fore-fronting implementation of a range of CSR activities as part of their business strategy.

The present research seeks to understand the nature of CSR activities undertaken by NTPC, a public sector undertaking of India. NTPC is a Central Public Sector Undertaking (CPSU) under the Ministry of Power, Government of India, engaged in the business of generation of electricity and allied activities. NTPC has adopted several innovative CSR initiatives in and around its plants. CSR has been synonymous with company’s core business strategy of power generation. Community development though CSR is viewed as a prime responsibility. The classification provided by Haberberg and Mulleady (2004) was used to identify the reasons for adopting CSR actions by firms. The model identifies five such reasons, viz. philanthropic, normative, competitive, coercive and enlightened self-interest. The result suggests that ‘Philanthropic reason’ was found to be the most dominant reason for adopting CSR action.



Pedagogical Objectives


The case can be used to explain various theoretical concepts:
  • Corporate sustainability through CSR activities
  • Effective communication of CSR activities within the firms
  • Understand the consequences of short-sighted approach for CSR

Case Positioning and Setting


It can be used in courses related to CSR, corporate citizenship, ethical leadership, general management, strategic management and public sector business. The case is relevant for MBA and Executive Development Programs. It can also be used in courses related to public sector business. The case provides an idea about the various processes which these large-scale Indian organizations undergo while implementing their key community-related initiatives.


* GSMC 2017, IIM Raipur


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