Corporate Social Responsibility in India: Implications for foreign retail banks

By Sandra van der Lingen

Submitted in partial fulllment of the requirements for the degree of European Master of Business Administration (Euro*MBA) July, 2009

Prof. Andr Sobczak

Supervisor

Chapter 1 Introduction and purpose of the thesis

Part 1: Introduction Corporate Social Responsibility1 0

Chapter 2 Corporate Social Responsibility
2.1. Introduction CSR 2.2 CSR frameworks

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Chapter 3 CSR and the banking industry

3.1 Categorization of banks 3.2 Development of CSR in banking 3.3 Literature review CSR and banking 3.4 Specic CSR activities for the banking industry 3.5 CSR in banking: risk management or a business opportunity?

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Part 2: Indian CSR

Chapter 4 Non Western CSR
4.1 One size ts all approach for CSR does not exist 4.2 CSR drivers developing countries

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Chapter 5 CSR in India

5.1 We are like that only 5.2 CSR drivers India 5.2.1 Internal drivers 5.2.2 External drivers 5.3 Implicit and explicit CSR in India 5.4 Todays CSR status 5.4.1 Summary of market research on Indian CSR

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Chapter 6 The Indian retail banking industry and CSR

6.1 The Indian banking industry 6.2 CSR in the Indian banking industry
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 6.3 Website analysis Indian banks 6.3.1 Conclusions website analysis 6.4 CSR expectations of Indian banking consumers 6.4.1 Literature review consumer perceptions and CSR 6.4.2 Indian Banking Consumer perceptions survey 49 51 52 53 55

Part 3: CSR by foreign banks in India

Chapter 7 Local and global dimensions of CSR
7.1 Globalization and CSR 7.2 Framework for structuring global CSR

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Chapter 8 CSR programs of foreign retail banks in India

8.1 Foreign retail banks in India 8.2 Website analysis foreign retail banks 8.2.1 Conclusions website analysis foreign banks 8.3 Case studies 8.3.1 Global banks with different origins 8.3.2 Similar global objectives 8.3.3 Commitment to the Indian market place 8.3.4 Customizing CSR for local needs 8.3.5 Application of Chaudris CSR framework to the four banks 8.3.5 Conclusions case studies

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71 72 73 74 75 76 76 77 83 84

Chapter 9 Concluding remarks

9.1 Limitations of this research

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9 Work Cited 10 Appendix

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Appendix 1: Questionnaire for semi-structured interviews case studies 102 Appendix 2: Questions online survey Indian Banking consumers 104

 Appendix 3: Online survey results question 5 Appendix 4: Online survey results question 10 Appendix 5: Full description case studies Deutsche Bank Standard Chartered HSBC ABN Amro Appendix 6: List of persons interviewed 106 107 108 108 113 118 122 127

List of Tables
Table 3.1: CSR categories banks 19 25 28 35 Table 4.1: Economic multipliers Nelson

Table 4.2: CSR drivers in developing countries and the CSR response

Table 5.1: Comparative overview culture dimensions India and western countries

Table 5.2: Ten point social charter for Indian business Table 6.1: CSR website analysis Indian retail banks

37 49 56 57 58 59 60 62 64 72 83 84

Table 6.2: Mean outcomes survey consumer expectations Table 6.3: Mean outcomes CSR model

Table 6.4: Mean outcomes credibility of the banking sector Table 6.5: Mean outcome perception of foreign banks

Table 6.6: Mean outcomes CSR as a tool to attract more customers Table 6.7: Ranking priorities by Indian consumers

Table 6.8: Rankings CSR priorities by Australian and Indian consumers Table 8.1: CSR website analysis foreign retail banks

Table 8.2: Type of CSR programs applying Chaudris model Table 8.3: Factors which inuence local responsiveness

List of Figures
Figure 2.1: The pyramid of Corporate Social Responsibility Figure 4.1: The CSR pyramid for developing countries Figure 4.2: Drivers of CSR in developing countries Figure 5.1: Comparative overview value dimensions 14 24 27 33 56 61 63

Figure 6.1: Summary of respondents online survey consumers expectations Figure 6.2: Results business to business model versus modern view

Figure 6.3: Results support of an increase by the bank of the amount of money spent on social causes Figure 6.4: Results pay more for products of socially responsible bank Figure 7.1: Framework for the structuring of global CSR

63 70 86

Figure 8.1: The level of globalization versus localization of CSR programs foreign banks

Chapter 1 Introduction and purpose of the thesis

The aim of this thesis is to get a better understanding of the way western multinationals implement global Corporate Social Responsibility (CSR) programs in India. For increased efciency these programs are often standardized with the aim of implementing them the same way everywhere in the world. This may not be very appealing to Indian stakeholders because of the difference in cultural, economic and political aspects. This study will examine if this is indeed the case. The thesis is written as part of an International executive business MBA program. To make the ndings relevant for international management executives, the focus will not be on Indian CSR in general but on the way multinational retail banks in India implement CSR. The retail banking industry has been chosen for several reasons. First, there an abundance of research on CSR in industry sectors such as manufacturing and oil and gas but there is not much literature available on CSR in the banking industry. This thesis could provide some new insights in this area. Second, with a population of over one billion people and impressive growth rates India is a land of opportunity for international banks. The management of these banks need to know how to operate in this complicated market which is faced with intense competition and tight government regulation. Lastly, the banking industry is one of the few industries in India where foreign companies operate as independent entities instead of being part of a joint venture. In many industry sectors, for example telecom, retail, and insurance, the Indian government does not allow western companies 100% ownership. This makes it difcult to analyze the CSR programs because the programs of these banks can not be considered as 100% owned by the home country as they could have been inuenced by the local partner. A special area this thesis will focus on are consumer perceptions of CSR. To get an understanding of the cultural context, it is important to look at the perceptions of local stakeholder groups and not only at what the companies have to say about their CSR efforts. Companies may say that their CSR programs t the Indian situation but is that really the case? In the banking industry, customers are a major stakeholder group and understanding their perceptions are of critical importance for the nancial success of the bank. This thesis will therefore also take into account their perceptions of CSR.
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 Besides providing advice to multinational banks about the set up of their Indian CSR programs to improve their competitive positioning, this thesis also contributes to better insights in Indian CSR which is benecial to the international business community. After attending a summer course on CSR in Europe, Richard Welford of CSR-Asia.com wrote on his blog: What strikes me about events like this is that many speakers (academics in the main)talk as if Asia did not even exist. I don't want to name names but it is quite illuminating to hear people talk from an American perspective (for example)and completely ignore Asia, or when they do mention Asia, actually get it wrong (Welford, 2008). The views of Welford are conrmed by others. Kumar writes: A weakness is the tendency for the agenda to be set at a global level largely by institutions located in the industrialized world, with little understanding of the diversity of approaches and track record in other parts of the world (Kumar, 2001). Jamali observes that very little is known of the practice of CSR in developing countries (2007). Belal (2001) emphasizes the need for more studies on CSR in non western countries because this will give valuable insights to the jaded palettes of Western scholars. The purpose of this thesis is to provide new insights concerning Indian CSR. Indias economy has shown extraordinary growth during the past few years. It is expected that in the year 2030 India will be amongst the three largest economies in the world. Indian conglomerates such as TATA and Mital are buying companies in the West. Knowledge of Indian CSR is therefore crucial to get a complete picture of global CSR trends. This thesis basically addresses three key questions: Does Indian CSR differ from western CSR? Do Indian banking consumers value CSR? What are the implications for foreign retail banks operating in India?

 Method The analysis is based on a review of academic literature, company reports, reports of nongovernmental organizations (NGOs) and press reports. The academic literature covers a wide range of topics including general CSR concepts, CSR in emerging markets and in India, organizational management, consumer perceptions and CSR and cultural management. This variety of topics allows to analyze the issue of implementing a global CSR program in a local market from different management perspectives. Besides the literature review, the thesis also presents case studies of four foreign banks operating in India. The case study analysis consists of desk research (review of CSR reports, CSR websites and press reports) and four semi structured interviews with the CSR managers of the banks working in Mumbai. The aim of this analysis is to identify to what extend the banks adjust their global programs to t the Indian CSR situation. To get an understanding of the perceptions of the most important stakeholder group for the selected foreign banks, retail banking consumers, an online survey was conducted. The aim of the survey was to analyze whether Indian consumers value CSR. If they dont attribute positive values to CSR, it does not make commercial sense for foreign retail banks to put much effort in executing local CSR programs aimed at consumers. Attention must be given to the fact that this study does not include the perceptions of other key stakeholder groups such as employees, employees, local governments and NGOs. The analysis of the perceptions of the full range of external stakeholder groups is beyond the scope of this thesis because it would simply take too much time and will need to be studied separately. The online survey was sent randomly to urban Indian professionals working for multinationals in different business sectors in April 2009. To ask Indian professionals to complete the online survey, about 10 people working for multinational companies were approached at a social club in Mumbai and asked to forward a link to the online survey by email to their Indian colleagues. The survey was completed by 98 middle class urban Indian retail banking consumers. The online survey consisted of ten questions, generated by Lime Survey, an online survey tool, and took about 10 minutes to complete. The questions of the survey are included in Appendix 2.

 Structure The thesis is divided into three parts. The rst part consists of a general introduction on CSR and discusses CSR in the banking industry. The second part focusses on Indian CSR. Finally, the third part discusses the way international banks implement their CSR programs to t the Indian situation. A more detailed description of the chapters is provided below. Chapter two starts with a general introduction on CSR. Chapter three describes CSR in the banking industry in general and in the retail banking in particular. Chapter four focusses on CSR in emerging markets and highlights the fact that CSR is context specic. Chapter ve focusses on CSR in India and analyses the specic CSR drivers for this country with a special focus on cultural differences. Chapter six provides information on the Indian retail banking industry and describes some of the problems the sector is faced with. Furthermore this chapter presents the results a scan of the websites of six Indian banks to determine how explicitly they communicate their CSR policies and activities to banking consumers. Lastly, chapter six includes the results of the online survey. Chapter seven focusses on local and global aspects of CSR. This analysis allows to focus more in depth on the rational for multinational banks to localize their CSR and presents the framework for the organization of local CSR developed by Chaudri (2006). Lastly, chapter eight highlights the CSR programs of a selection of multinational banks in India. It starts with an introduction on the landscape the foreign banks operate in. This is followed by an analysis of the local websites of these multinational banks to determine if there are any interesting differences in the way the banks communicate about CSR locally and globally. To conclude, this chapter contains the results of four case studies comparing their CSR strategies and programs on a local and global level. The four banks are: Standard Chartered Bank, Deutsche Bank, HSBC and ABN Amro. Chapter nine contains the concluding remarks and lists some of the limitations of this research.

Part 1: Introduction Corporate Social Responsibility

Before analysing Indian CSR, this rst part of the thesis provides a general introduction on CSR. It will introduce a few CSR models which will be used later in the thesis to analyse Indian CSR. The chapter also discusses the main characteristics of CSR in the banking industry.

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Chapter 2 Corporate Social Responsibility

This consists of two paragraphs which aim at introducing the main academic CSR concepts. The conclusion is that they have all been developed by Western academics.

2.1. Introduction CSR

Companies around the world are increasingly being pressured to behave in socially responsible ways. Stakeholders expect them to care for their employees and the communities they operate in and to run their organizations in an ethical way. If companies fail to behave responsibility and behave as good citizens, they run the risk of being scrutinized in the international media and hurt their corporate reputations.

To avoid corporate scandals companies realize the importance of socially responsible behavior, but what is this exactly? Corporate social behavior everywhere in the world is governed by principles such as respect for human rights, sustainability, integrity, diversity. These are all universal principles, meaning that they should all be applied to everybody regardless of geography, culture, religion or profession. However, despite the fact that they are universal they can be practiced in many different ways. According to Wood, the principles of CSR leave substantial room for managerial discretion in determining what social issues are relevant and in what way the should be addressed (Wood, 2002). Mehra observes: ultimately these (the universal principles) have to nd practical local expression to stand a chance of implementation (Mehra, 2006). The Enron and Satyam corporate fraud cases provide good examples of different views on what socially responsible behavior stands for. When the Satyam scandal came out in the open in January 2009, it was described as Indias Enron moment. However, while the Enron case has been in the news for over ve years and has led to extensive legal proceedings in the United States, the Satyam scandal was quickly put to rest by the Indian government authorities within three months time. With the help of the government the company was sold to a competitor and so far there have been no changes made to the corporate governance codes for Indian companies. It seems as if the Indian authorities and Indian society consider the legal and ethical responsibilities of Satyam being less important than the companies economic responsibility to provide thousands of jobs to BPO workers.
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This example shows that societies have different views on how to apply universal principles and how to behave responsibly. Both the US and India agree that corruption is not acceptable but both societies deal with corruption in different ways. The next paragraph will present the different concepts of CSR.

2.2 CSR frameworks

There is a variety of denitions of CSR, each focussing on different dimensions. A widely used denition is developed by the World Business Council for Sustainable Development (WBCSD) which emphasizes the sustainability dimension of CSR: Corporate social responsibility is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large" (WBCSD, 2001). They state, in other words, that corporations have an obligation to fulll the needs of a wider group of stakeholders. The European Commission developed a denition which puts more emphasis on integrating CSR with business operations: "A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment. A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis" (European commission, 199?). Although most companies in the world today agree that corporate social responsibility is part of the daily business practice, this idea is not shared by everyone. In 1962, Milton Friedman argued that the sole responsibility of business was to increase prots, creating jobs and wealth in the process. He argued that managers who use corporate resources for social causes are doing so only to advance a personal agenda such as promoting their self image (McWilliams, 2004). Believers in the business is business approach ascertain

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 that the government, not individual companies, should work on realizing a country's social goals. An Indian corporate with believe in this approach is Dhirubhai Ambani founder of the Reliance group. He is quoted as saying: As an industrialist my job is to produce goods to satisfy the demand. Let us be clear about it. Everyone has to do his job. My commitment is to produce at the cheapest price and the best quality. If you dabble in every thing then you make a mess of things. If we cannot take care of our shareholders and employees and start worrying about the world, then that is hypocrisy (Sharma and Talwar, 2005). In 1984, Freeman introduced a stakeholder concept of corporate social responsibility. He argues that values are necessarily and explicitly a part of doing business (Freeman, 2004). Freeman argues that economics and ethical values cannot be separated and that a companies should aim at creating value for all stakeholders and not only its shareholders. A challenger of Friedmans business is business approach is Carroll (Carroll cited in Visser, 2006). He argues that the primary responsibilities of a company are economic and legal. Carroll believes that in pursuing making prots, a corporation should take into account ethical considerations. If a company fails to do this, society will bring the corporation under a legal framework. Before that happens it is advisable that corporations understand and perform social activities voluntarily (Sharma and Talwar, 2005). In 1991, Carroll presented his model as a pyramid consisting of four types of CSR responsibilities:

Figure 2.1: The Pyramid of Corporate Social Responsibility

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Source: Carroll, 1991, cited in Visser 2006

Carroll states that although every responsibility has always existed, economic responsibilities are the basic building block and its relative weighting is therefore higher. Examples of economic responsibilities are: creating jobs and fair pay for workings, providing return on investment for shareholders, and the creation of new products and services. According to Jamali and Sidani (2008a) legal responsibilities are related to legal compliance and playing according to the rules of the game. Ethical responsibilities entail activities that are not codied into law but are expected of business by societal members. In Carrolls model philanthropic responsibilities are represented as the top of the pyramid of corporate social responsibility. Jamali and Sidani argue that these responsibilities are most controversial because they are potentially in conict with the prot making objectives of a company (2008). An alternative model which is in line with Carrolls thinking was introduced in 1984 by Freeman (2004). This is the so called stakeholder model for CSR. He argues that values are necessarily and explicitly a part of doing business and that CSR is a valid part of doing business. Freeman argues that economics and ethical values cannot be separated and that a company should aim at creating value for all stakeholders and not only its shareholders.

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 The CSR landscape is still developing. Since Carroll, alternative CSR models have appeared. A more recent framework is the corporate social integration model proposed by Porter and Kramer in 2006. This is again an Anglo-American model and, similar to Carrolls Pyramid, they identify economic benets as the main driver for CSR activities. Porter and Kramer do not prioritize CSR responsibilities like Carroll did, but they focus on competitive advantage and core competencies. They state that a CSR strategy becomes more effective if a business creates a corporate social agenda based on its core competencies.

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Chapter 3 CSR and the banking industry

A limited amount of academic research available on CSR in the banking industry. This chapter aims at providing an overview of the main CSR activities of banks. Many CSR activities are common to all industry sectors. However, there are certain CSR categories which are specic for banks. These will be discussed in the last paragraph.

3.1 Categorization of banks

There are different types of banks including investment banks, commercial retail banks and asset managers and each of them offers different types of nancial services. This thesis focusses on commercial retail banks. Retail banking refers to banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks (Wikipedia editors). Typical retail bank services include savings and checking accounts, mortgages, personal loans and debit and credit cards. Banking services such as term deposits are highly standardized. They are also characterized by a high involvement of the customer (Bloemer and de Ruiter, 1999).

3.2 Development of CSR in banking

Compared to other sectors like oil and gas and chemicals, the banking industry was relatively slow to implement CSR. The reason is the low direct societal and environmental impact of banks. Banks play a more indirect role through the projects and businesses they decide to fund or, in other words, through the nancing of a more sustainable economy (Noyer, 2008). The 2008 banking crisis has shown that banks can have a direct and signicant impact on society. The collapse of several banks has resulted in a worldwide nancial crisis inuencing consumer spending, millions of job losses and company closures. In 2000, international NGOs, such as Friends of the Earth, started attacking international banks through media campaigns with them aim of stopping them to nance much criticized projects such as the Chad Cameroon oil pipeline and the Three Gorges dam in China. One highly publicized case involved Citigroup and the Rainforest Action Network (RAN). The NGO accused Citigroup of providing nancing for destructive logging, mining and oil exploration projects. To stop Citigroup and other banks from doing this, RAN launched the Global Finance Campaign which would last four years. The NGO was present at Citi16

 groups shareholders meeting questioning the board in front of all the other shareholders. To solve the situation Citigroup decided to collaborate with RAN and meet regularly to discuss the issues. These discussions have resulted in a close working relationship between the bank and the NGO working together on developing environmental policies. In the same period, there were more actions taken by international NGOs to pressure the banks. For instance, in 2003, a group of NGOs launched Banktrack, an online watchdog to monitor the effect of commercial banks on people and the environment. In the same year, over 100 civil organizations including WWF and Friends of the Earth signed the Collevecchio Declaration on nancial institutions and sustainability. The declaration outlines six principles that nancial institutions should embrace: a commitment to sustainability, to "do no harm," to responsibility, to accountability, to transparency and to sustainable markets and governance. According to this declaration Financial institutions (FIs) such as banks and asset managers can and must play a positive role in advancing environmental and social sustainability. It also states that financial institutions should acknowledge that like all corporations, they exist as creations of society to act in the public interest.

Acknowledging the growing importance of CSR and to take action against the pressure from the International NGOs, major global banks including Citigroup, ABN Amro, HSBC and Barclays Bank signed in 2003 the Equator Principles agreement for their project nance activities. This industry standard promotes responsible environmental stewardship and socially responsible development by evaluating the threats that projects pose to forests, natural habitats and indigenous populations (Yeomans, 2005). Following the growing awareness of the importance of doing good banks have invested huge amounts of money in CSR strategies to be perceived as socially responsible by the different stakeholder groups. This race to be the best performer in CSR has resulted in the launch of many CSR awards everywhere in the world. In 2008, the Dow Jones Sustainable Index Fund, launched in 1999, ranked ANZ Banking group from Australia as the most sustainable bank worldwide out of 100 banks globally. UK-based Banking magazine, The Banker, announced in September 2008 that Standard Chartered won the award for the best overall CSR bank. The bank won the award for its risk management approach and the investments made by the bank in emerging markets economies and nancial inclusion.

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3.3 Literature review CSR and banking

Academic research on CSR in the banking industry is scarce. An EBSCO search on the terms CSR and banking generates only four results. A similar search with the key words CSR and manufacturing results in over 200 ndings. This shows that there is much more interest from the academic world for this particular industry. The reason for the lack of research could be the same as why banks were relatively slow to implement CSR, namely the fact that their direct societal and environmental impact is limited. In his work on the effect of CSR on the branding of nancial services, Ogrizek (2002) states that the scope of CSR is much broader than charitable activities, philanthropy and community involvement. He argues that it includes business practices, including environmental management systems, human resource policy and strategic investment for a sustainable future. Another CSR study related to banking and particular retail banking was conducted by Rugimba et al. in 2008. In a study on the perceptions of retail banking consumers regarding banking services from a CSR perspective they divide CSR actions of retail banks into four dimensions: The range and quality of the product offerings The quality of communications between banks and their customers The nature of nancial service delivery The practices of the banking industry in response to emerging social, economic and political forces Its interesting to see that there is a ne line between good service delivery and CSR. Opening a help line to answer customer complaints, is that CSR or customer service or both? In relation to CSR you could argue that activities such as data protection and privacy policies fall under the category responsible selling and marketing and are therefore CSR related.

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 Another study on CSR and retail banking by Pomering and Dolnicar (2006) distinguishes between CSR activities that more strongly benet customers (i.e. open new branches and add staff, defend customer privacy) and those that benet the broader community (contribute to community programs). Again the distinction is not completely clear. For example opening new branches in rural areas, is not only benecial to customers but it is also has a positive impact on the broader community because more people will be able to make use of banking services (increased nancial inclusion).

3.4 Specic CSR activities for the banking industry

To be able to identify which CSR activities are specic for banking, the global CSR reports and websites of several international banks have been reviewed. The review is aimed at listing and categorizing the different CSR activities and to identify which CSR categories is are specic for banks. Four of the banks which are part of this review are the same ones as for the case study analysis. They are Deutsche Bank, HSBC, ABN Amro and Standard Chartered Bank. Dankse Bank is also included to give a more complete overview as this bank has developed some innovative CSR initiatives targeted at retail customers. The table below provides the results.
Table 3.1: CSR categories banks CSR category Employee engagement Common to all Specic for industries banks X Activities and programs by retail banks Payroll giving schemes (all banks) Great place to work program (Standard Chartered Bank) Great Managers program focused on diversity and inclusion awareness (Standard Chartered Bank). Seeing is believing program to ght eye diseases (Standard Chartered Bank) RBS super grounds: corporate sponsorship program of school playgrounds (RBS) Financing of renewable energy Reduce own carbon footprint Management of sustainable and responsible investment funds (SRI)

Community investment

Protecting the environment

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CSR category Responsible supply chain management Responsible banking and lending Common to all Specic for industries banks X X Activities and programs by retail banks E-procurement system (HSBC) Use of environmental criteria in tenders Equator principles project nance Fees and charges in line with regulations Stringent privacy policies Customer satisfaction surveys Sub prime mortgage crisis helping distressed home owners (HSBC) Management of sustainable and responsible investment funds (SRI) Treating customers fairly training program (Standard Chartered Bank) Micro nance Parent Study Loan for students, who are "among the most nancially vulnerable in our society" (Danske Bank). Website to teach 5-7 year olds about money (Danske Bank) Know your customer principle

Financial inclusion

Tackling nancial crime

The rst four priorities, employee engagement, community investment, environmental protection and responsible supply chain management are generic for all industries, including banking. The last three priorities, responsible lending and banking, nancial inclusion and tackling nancial crime are specic to the banking industry The right column provides examples of CSR activities and specic programs run by banks.

3.5 CSR in banking: risk management or a business opportunity?

Ogrizek notes that risk management is the most important reason for banks to actively engage in CSR. Banks may face nancial claims and severe reputation damage if they are involved in controversial transactions damaging shareholder value. As a result of this the know your client principle has become the most important CSR responsibility in banking (Ogrizek, 2002).

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 Instead as a risk, Ogrizek emphasizes that banks should perceive CSR as an opportunity to build a strong and competitive brand. In todays world, brand management is one of the main factors for the success of a bank. In his paper Ogrizek points out the importance of communicating the social raison d'tre. He explains that brands are increasingly used as societal role models. According to Ogrizek this is related to the decline of the church, the police and other authority gures. Ogrizek writes that increasingly, they (global companies) will have to demonstrate publicly that their business is of benet to the society in which they operate. Banks which consider CSR and sustainability as a business opportunity are actively integrating CSR in the business. This is more in line with Porters and Kramers concept of CSR as discussed in paragraph 2.2. Examples of sustainable banking products include providing energy-efcient loans, management of sustainable and responsible investment funds (SRI), and selling sustainable retail banking products such as the paperless HSBC banking account. Another important CSR opportunity for banks is micro nance. This responsibility is especially relevant for India with so many unbanked.

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Part 2: Indian CSR

The previous chapter provided an introduction on CSR and highlighted the specic characteristics of CSR in the banking sector. The next chapters will focus on India. As an introduction to Indian CSR, chapter four discusses CSR in emerging markets. This chapter introduces Vissers model identifying CSR drivers for developing countries. This is followed by an analysis of the Indian CSR context in chapter ve. Chapter six focusses on Indian banking.

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Chapter 4 Non Western CSR

India is a non western country and this could have implications for the way multinationals implement CSR locally. Before discussing Indian CSR, this chapter will therefore highlight the CSR context for developing countries. This chapter will rst present the characteristics of CSR in developing countries. Furthermore it will discuss the CSR drivers for the non western parts of the world.

4.1 One size ts all approach for CSR does not exist
At its rst international CSR forum in 1996, the World Business Council emphasized that there is no one-size-ts all CSR approach and that global companies should recognize local and cultural differences when implementing global policies (WBCSD, 1998).

Visser, an academic researcher specialized in CSR in developing countries, raises several issues concerning the cross-continental CSR debate (Visser, 2006). First, he emphasizes the fact that the CSR drivers in developing countries differ from the West. Only, if you have a full understanding of the CSR drivers in the country a corporation operates in, is it possible to run an effective CSR program. Furthermore, Visser questions the desirability and appropriateness of striving for universal, standardized approaches and models for CSR. Institutions such as the Global Reporting Initiative are striving to implement international standards throughout the world. Although this is a good initiative from a transparency point of view, the question is whether the guidelines should allow for localization1 . Another point brought forward by Visser is the dominant position of the developed world in determining the CSR agenda. In 2008, Matten and Moon presented a framework to explain the differences in CSR approach between countries. Their research focusses in particular on the differences between the United States and Europe but they apply the framework also to non western countries like India. The researchers identify two different concepts of CSR: implicit and explicit. By explicit CSR they refer to corporate policies that assume and articulate social responsibilities. It is left to the choice of the corporation to act responsibly or not. By implicit CSR Matten and Moon refer to the corporations role within the wider formal and
1 The Global Reporting Initiative is working on developing local chapters but it is not known yet what they will look like.

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 information institutions for societies interests and concerns. Implicit CSR is mainly related to mandatory requirements for corporations to be involved in CSR. In other words its not their own choice. Matten and Moon argue that in the case of implicit CSR corporations will not articulate their own versions of such responsibilities. In other words, these companies will not communicate explicitly about CSR because they dont perceive it as a voluntary action and as such they will not mention CSR explicitly on their websites. In their research paper Matten and Moon further argue that explicit CSR is dominant in the United States while European companies practice more implicit CSR. The model of Matten and Moon will be used in chapter ve in the discussion on Indian CSR. Visser, adjusted Carrolls CSR pyramid to make it t the situation in emerging countries (Visser, 2006). He proposes the following model:
Figure 4.1: The CSR pyramid for developing countries

Source: Visser, 2006

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 In Vissers pyramid, economic responsibilities are still the most important. However, philanthrophy comes second. Legal responsibilities and ethical responsibilities are at the top of the pyramid. Economic responsibilities in developing countries need to be dened differently from the narrow focussed prot denition in the US. In developing countries they are more related to the economic multipliers as identied by Nelson (2003).
Table 4.1: Economic multipliers Nelson

Economic Multipliers Nelson:

1. Generate investment and income 2. Produce safe products and services 3. Create jobs 4. Invest in human capital 5. Establish local business linkages 6. Spread international business standards 7. Support technology transfer 8. Build physical and institutional infrastructure Source: Nelson, 2003

According to Visser, in emerging markets, philanthropic responsibilities come second after economic responsibilities. Visser mentions four reasons for the prominent role of philanthrophy: The philanthrophic traditions in most developing countries and the socio-economic needs of the country Companies realize that they cannot succeed if the communities they operate in fail Many developing countries have become dependent on foreign aid and therefore there is often an ingrained culture of philanthropy Many developing countries are still at the early stages of CSR and often even dene CSR with philanthropy.

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 After studying the CSR context in developing countries, Visser denes CSR as: The formal and informal ways in which business makes a contribution to improving the governance, social, ethical, labour and environmental conditions of the developing countries in which they operate, while remaining sensitive to prevailing religious, historical and cultural contexts (Visser et al., 2006). Vissers analysis concentrates on Carrolls CSR model. What about other and newer western CSR concepts? Can these be applied to developing countries? In the previous chapter, the stakeholder model was mentioned. In this model, close interaction with and responsiveness to the expectations of stakeholders such as governments, employees, customers and suppliers is very important. It is to be seen if the nature of the traditional family owned business conglomerates which is still a dominant business model in many emerging markets allows for a stakeholder approach. These businesses are more likely to be inward looking instead of outward looking which is a requirement for a stakeholder approach. A western CSR concept of a more recent date is the corporate social integration model of Porter and Kramer, discussed in paragraph 2.2. In the emerging markets where companies are expected to support the government solving social issues due to a governance gap, the theory of Porter and Kramer could work. However, their framework is still far from the reality of businesses in emerging economies where the core competences concept has not yet developed. In many traditional Indian business conglomerates CSR is still a very fragmented activity, isolated from the rest of the business and not part of the overall business strategy.

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4.2 CSR drivers developing countries

To analyze why CSR in developing countries is different from the western CSR thinking, Visser identies ten CSR drivers for the non western world (Visser, 2006). In paragraph 5.2 these drivers will be applied to the Indian situation.
Figure 4.2: Drivers of CSR in developing countries

Source: Visser, 2006

Internal drivers refer to pressures from within the country, while external drivers have a global origin. The ten drivers are discussed on the next page.

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Table 4.2: CSR drivers in developing countries and the CSR response

CSR drivers Cultural tradition Socioe-conomic priorities

CSR response CSR in developing countries is shaped by sociocultural inuences such as religion, and charitable traditions. CSR in developing countries is mostly aimed at targeting socio-economic challenges in the countries such as healthcare improvement, poverty alleviation and education. Private business in developing countries assume the role of government institutions which are too weak to effectively address social problems. CSR is used as a tool for companies in developed countries to gain access to new markets (bottom of the pyramid concept) Due to democratization, privatization and deregulation, businesses take greater responsibility for social and environmental issues. CSR is often shaped by crises especially of a philanthrophic nature. For example the Tsunami or other crises such as the Union Carbide disaster in Bhopal India in 1984. CSR codes and standards such as the Global Reporting Initiatives Sustainability Reporting Guidelines are a key driver for CSR in developing countries. CSR is also driven by standardization imposed by multinationals trying to achieve global consistency among its subsidiaries and operations in developing countries. The trend for socially responsible investing (SRI) is increasingly becoming a driver for CSR. SRI investing is becoming increasingly popular. Several stakeholder groups actively promote CSR in developing countries. They are NGOs (for example Corporate Watch), trade unions but also the media play a critical role. Multinationals impose more requirements on their supply chain. Allegation of poor labor standards at suppliers have severely damaged the corporate reputation of several multinationals such as Nike in the nineties.

Governance gaps

Market access

Political reform

Crisis response

International standardization

Investment incentives

Stakeholder activism

Supply chain

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Chapter 5 CSR in India

This chapter discusses the effects of cultural, economical and political developments on the Indian CSR approach. It supports the idea that Indian CSR is very specic and that western CSR models cannot be implemented in India very easily. Before discussing Indian CSR, the rst paragraph introduces the unique positioning of India.

5.1 We are like that only

While the CSR discussion is dominated by western CSR thinking, Indians generally feel that whats been invented in the West does not work in India. Rama Bijapurkar used a very familiar Indian phrase as the title of her book on consumer India We Are Like That Only. She writes that India and Indians are not going to become like someplace else or someone else, but will continue to march down their own road to their own future destination (Bijapurkar, 2007). Because of this we are like that only attitude, Indians are not eager to adopt CSR practices from other countries. Instead Indians prefer to shape a CSR model according to their own beliefs and strongly imbedded in their own values and traditions. Furthermore the Indian market is very complex as will be discussed below. Multinationals entering the Indian market must make an effort to understand this complexity. Its just impossible to expect that tried CSR strategies will automatically work in India. India is a schizophrenic country (Bijapurkar) with 23 main languages, various religions and extreme differences between rich and poor and urban and rural India. According to World Bank data of the population of more than 1.1 billion people over 70% lives in rural areas. Many people living in the rural areas do not have access to basic necessities such as water, education and health care. Since 1990 India has been one of the fastest-growing economies in the world. In 2007 Indias GDP grew by 7% (World Bank). At the same time however over 77% of the population lives on less than 1 dollar a day (Reuters, 2007). This number is based on a report from the government run National Commission for Enterprises in the Unorganised Sector (NCEUS). Indians working in the unorganized sector do not receive any social security benets from the government.

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 Another factor making the Indian society very diverse is the distinction between age groups. The population can roughly be divided into two age groups: the rst one is the post-independence generation brought up with the socialistic believes of Neru and before that the colonial times and the second one is the globally integrated, free-market generation. India has about 450 million people below the age of 21. The diversity described above makes it necessary to focus on a specic market segment when describing CSR in India. As there are many Indias there are also many different ways of looking at CSR. A state run company in Gujurat has a very different CSR outlook than the global and modern IT companies such as Infosis. The diversity requires a made for India practice or a local customized CSR strategy for the Indian market.

5.2 CSR drivers India

This paragraph presents the main drivers for Indian CSR. The analysis is based on Vissers framework for developing countries discussed in chapter four.

5.2.1 Internal drivers

Cultural tradition

Indian culture is greatly inuenced by the dominating Hindu religion. 81% of Indias population is Hindu. Caste structure is an important element of Hindu belief. As a result of the caste thinking "In India, responsibility was traditionally limited to 'insiders' (Guptara, 2005). People are expected to look after members of their own immediate and perhaps the extended family. Some care may be given to members of the clan the family belongs to or at the most to members of the same caste. Guptara writes that according to traditional Hinduism people who practice philanthropy outside their own caste are, in technical terms, "unHindu" because they are breaking caste (Guptara). Caring for outsiders was not the responsibility of people. Guptara is very extreme in his thinking on Indian CSR in the sense that he states that Indian CSR does not exist. He argues that CSR values like caring for people outside the family and equality of all humans have all been introduced by Christians or Muslims.

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 Other writers on Indian CSR however are convinced that Indian CSR exists and that it is not something new as some people in the West may think. Sharma et al. (2005) write: However in Indian context, acceptance of social responsibility is no more than rededicating ourselves to cherished values of our ancestors in the eld of business. In older times, whenever people of the country were under the social or natural problems, leading businessmen have literally thrown open their treasure chests to provide the required assistance and help to the needy. This is conrmed by another academic, Arora, who argues that the Indian CSR history dates back to ancient times and is deeply embedded in the Indian culture and evolved as a social welfare philosophy embedded in corporate philanthrophy (Arora, 2004). According to Muniapan and Das (2008) Indian CSR nds its origin in Vedic literature such as the Ramayana which was written 5000 years ago. According to Vedic literature, the role of the sovereign or the accumulator of wealth to take care of the welfare of the subjects (stakeholders) and in return the king will grow as the Sun grows and shines at dawn and after its rise (Muniapan and Das). A more recent CSR inuence has been Mahatma Gandhi. With him a wider movement for national responsibility started in India. Ghandi introduced in India the notion of trusteeship. According to Ghandi, owners of property should voluntarily manage their wealth on behalf of the people. He wanted capitalists to act as trustees (not owners) of their property and conduct themselves in a socially responsible way. Ghandi had a strong inuence on the Indian business tycons, especially those running the traditional family owned business conglomerates and they took their role to help build the nation and promote socioeconomic development seriously (Kumar, 2001).

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 Applying Hofstedes framework One way to explain Indias cultural characteristics is by looking at the value system. This will be done by applying Hofstedes value dimensions. The reason for choosing Hofstede is that his value dimensions say something about the handling and perception of CSR strategies. However, using Hofstedes framework has its limitations. First, the model has been developed two decades ago and the world has changed a lot since then including India. Since 1980, India has changed from a socialist oriented country to a country with one of the fastest growing economies in the world. Furthermore India is a schizophrenic country as discussed in paragraph 5.1. A single Indian culture does not exist and individual Indians will have different beliefs. Its therefore difcult to generalize ndings on Indian culture. Despite these limitations, the model is still useful in describing some of the key characteristics of the Indian social system which has been inuenced to a large extend by the Hindu religion. This religion has existed for over thousands of years and is still today a dominant factor of inuence in Indian society. Comparison India with other Asian countries

To show Indias dominant values, the chart on the next page rst compares the ratings for different Asian markets, including two of Indias closest neighbors, Pakistan and Bangladesh. Interestingly, until the partition in 1947, India, Pakistan and Bangladesh belonged to the same country. Since the partition they have developed differently, also inuenced by difference in religion. Pakistan for example is a Muslim country while India is predominantly Hindu.

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Figure 5.1: comparative overview value dimensions Individualism Long Term orientation 150.0 Power distance Uncertainty avoidance Masculinity

112.5

75.0

37.5

0 India Bangladesh Pakistan Hong Kong China Japan

There are signicant differences between the scores of the different countries which conrms the conclusion that the one-ts all CSR approach for the Asian region will not be effective. The different ratings are discussed below: Individualism (IDV)

The high Individualism score of India is remarkable. With an IDV score of 48, India ranks 21 in the individualism index for 50 countries, right behind the wealthy countries. This is interesting because most emerging markets are extreme collective societies where the interests of the group prevails over the interest of the individual. In individualist societies everyone is expected to look after himself or herself and his or her immediate family (Hofstede, 1991). This outcome is in line with the caste thinking and with respect to CSR this could mean that Indians are less interested in the collective good. Power Distance (PD)

Hofstede describes power distance as the degree to which the less powerful accept an unequal distribution of wealth. In other words it deals with the way society handles inequal-

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 ity. The high power distance score of 77 with a ranking of 10/11 corresponds most with the Hindu religion which states that individuals need to accept ones place in the world. Power distance is also related to the way subordinates experience the decision making style of their boss. The high score for India signies that Indians respect authority and expect their superiors to be autocratic and paternalistic. This behavior in Indian society is already strongly present in the school system. The educational system in India is very teacher centered. In the class room the teacher initiates all communications and the students are not expected to criticize or to speak up without being asked to. In Sanskrit the word for teacher is guru which means weighty or honorable (Hofstede, 1991). Also in the workplace, subordinates will expect their boss to tell them what to do. Similar to other countries with a high power distance, the ideal boss in the subordinates eyes is a benevolent autocrat or a good father (Hofstede). With respect to CSR this outcome explains the importance of the Indian CEO in driving CSR programs. Uncertainty avoidance (UA)

Uncertainty avoidance for India is relatively low. With a score of 40, India ranks 45 out of 50 countries. The world average is 65. Pakistan scores considerably higher on Uncertainty avoidance with a score of 70 and a 24/25 ranking. It means that the two countries are very different in their tolerance of the unpredictable. Workers and managers in India are therefore more likely to perceive uncertainty as a normal feature of life and accept each day as it comes. There is a link to the Hindu belief in the sense that this religion offers a certainty of life after death through incarnation. In a way Hindu religion helps to avoid uncertainty. Masculinity

With a score of 56, masculinity in India is moderate. In more feminine cultures CSR is expected to be more modest, tender and concerned with the quality of life.

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 Comparison India with western countries

As pointed out in the rst chapter most CSR thinking and global CSR strategies of multinationals originate from the West. The table below provides the culture dimensions of India, the US and some key European countries:
Table 5.1: Comparative overview culture dimensions India and western countries
Dimensions of culture India US Difference UK Difference 35
42

Germany

Difference 35
42

Power distance

77

40

37

Uncertainty avoidance

40

46

-6

35

65

-25

Individualism/collectivism

48

91

-43

89

-41

67

-19

Masculinity

56

70

-14

66

-10

66

-10

Long term orientation

61

29

37

25

36

31

30

While the differences between India and the other countries regarding masculinity and - in the case of the US and UK - uncertainty avoidance are moderate, power distance, individualism and long term orientation are signicantly different. It shows that these are all culturally very different countries. What does this mean for the handling and perception of CSR strategies? This question will be answered by using the results of a study by Beekun et al. (2008). They analyzed ethical decision taking, a key component of CSR, in the US and Egypt. Between these two countries there is a signicant difference in power distance (39) and individualism (-54). The same difference occurs in the comparison between India and western countries. Comparing India and the US, the differences are respectively 37 and -43. Beekun et al. conclude that respondents in the U.S. who are low on Power Distance and high on Individualism where likely to view the decision making outcome in ethics scenarios as more unethical then the higher Power Distance oriented and less individualistic Egyptians. One of the values which was used in the ethics scenarios was justice. The principle
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 of justice is mainly focussed on fairness and equality for all. Because of the Hindu believe that individuals need to acceptant ones place in the world it is likely that the people in India attach a different value to the principle of justice compared to people in the West. The western countries with a low power distance score are much more likely to aim for equality for all regardless of status. Socio-economic priorities

Despite its economic growth India is faced with major social challenges including illiteracy, poverty and insufcient healthcare facilities. The country does not have a well developed social security system in place. Only 3% of the population pays income taxes and the collection rate is only 10% of GDP (Reuters, 2005). To address the social problems the government has identied the strengthening of social service delivery as one of its most urgent tasks. Other priorities include effective disaster management, participatory local government, skill development and entrepreneurship and empowerment of the undepriviledged (Viswanath, 2004). Faced with major social problems its understandable that the Indian government puts less focus on environmental CSR issues. The Government is in talks with other countries about reducing CO2 emissions but they keep pressing that the environmental policy should not hurt the progress of the social agenda. During the 2009 election campaign environmental issues were also not high on the agenda of the political parties. The majority of the voters in the largest democracy in the world want to hear political leaders talk about economic progress instead of environmental sustainable growth of the country. Governance gaps

The role of Indian corporates in society differs considerably compared to the West. In a country with so many social challenges it is to be expected that businesses take a more responsible role to address these issues. The Indian Government tries to take its responsibility but the challenges are so big that its simply not possible for the government to deal with them without involvement of other parties. Its mostly up to the companies itself. It is to be expected that the Government has higher expectations of a companies involvement in solving social issues than in the West. The government acknowledges that it needs the corporate sector to play a role in solving the countries social problems. In 2007, President

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 Singh, speaking at the annual conference of the Confederation of Indian Industry (CII) themed Inclusive Growth Challenges for Corporate India presented a ten-point social charter for Indian business (Singh, 2007):
Table 5.2: Ten point social charter for Indian business

Ten point social charter for Indian business:

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. First, have a healthy respect for your workers and invest in their welfare Two, corporate social responsibility must not be dened by tax planning strategies alone Three, industry must be pro-active in offering employment to the less privileged, at all levels of the job ladder Four, resist excessive remuneration to promoters and senior executives and discourage conspicuous consumption Five, invest in people and in their skills Six, desist from non-competitive behaviour. Seven, invest in environment-friendly technologies. Eight, promote enterprise and innovation, within your rms and outside Nine, ght corruption at all levels. Ten, promote socially responsible media and nance socially responsible advertising.

A special characteristic of the Indian society is the weak legal system. The country has labour laws and environmental laws and other social oriented laws, partly because of the colonial past, but there is a lack of adequate law enforcement and a very high level of corruption. The public does not trust its law enforcers and, because of the corruption, Indian businesses must make more effort to convince stakeholders about responsible behavior. Also the role of organized labor unions is smaller compared to the West. With so many people working in the unorganized sector, it is up to the companies themselves to decide if and how they will protect the labor interest of the people working for them. India has a long tradition of merchant charity. The public very much relies on the social responsibility of the important business icons to solve social issues. Industrials like TATA and Birla have given the example. The Tata group, founded in 1868, were amongst the rst Indian industrialists to practice CSR. Their key business driver was to fuel increased prosperity of India and not making prots (Hughes, 2004). Tata's founder Jamsetji Tata said: "In a free enterprise, the community is not just another stakeholder in business, but is in fact the very purpose of its existence."

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 The business model of Tata allows for the prots of many of the Tata companies to be given back to the people through philanthropic trusts. The CSR reputation of Tata is so strong that today, the company is perceived as the most responsible company by the Indian public, way ahead of any western counterparts. In India employees look at their employer as if its the government. As such the corporates play the role of the former maharajas (Hughes, 2004). The CEO of Indian airline carrier Jet Airways is an example of how Indian corporates still take great care of their staff. In October 2008, the airline had to lay off almost 900 staff due to nancial difculties. Within 48 hours after the decision was taken, the staff could return to work. To defend his decision, the chairperson of Jet Airways, Naresh Goyal, was quoted as saying: "I could not sleep at night. I was mentally disturbed when I saw tears in their eyes. I apologize for all the agony you went through." He said he had made a "personal decision without any external pressure. The management will have to understand this," he added (Sacked staff's tears force Jet Airways boss into U-turn (Haaba.com, 2009). Some Indian states governments are much more outspoken in their appeal to the corporate sector to be actively involved in CSR. On 27 September 2008, the state of Gujurat, with a population of over 50 million people, announced a new policy stipulating that corporates would be allocated developmental activities in sectors like health, education and environment based on the size and scale of their industrial operations. Corporates in Gujurat will also be obliged to appoint a dedicated CSR director who will work with an ofcial of the District Rural Development Authority (DNAIndian.com, 2008). Market access

As mentioned by Visser, CSR is used as a tool for companies in developing countries to gain access to new markets (bottom of the pyramid concept). With a population of over 1 billion people India provides many market opportunities for companies at the bottom of the pyramid. Indian companies and multinationals launch initiatives to reach out to the poor. An example is Nokia. In 2007, Nokia commissioned a study by the Center for Knowledge Societies to analyze the revolutionizing of economic and social life in rural India through

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 mobile communications. Commenting on this initiative, Veli Sundback, Executive Vice President, Corporate Relations and Responsibility, at Nokia, said: "Mobile phone ownership in India is growing at a phenomenal pace. This new found mobility undoubtedly has the potential to make a major contribution to socio-economic development, and we recognize the responsibility we have to play a key role in achieving this (Nokia, 2007). Political reform

Over the years the political landscape in India has changed signicantly which had its impact on corporate responsibility. After Independence in 1947, India adopted a socialist model with increased state control and strict trade regulations. This policy was rst practiced by Nehru with a strong focus on self reliance and local production and state intervention. Indira Ghandi who was in government from 1966 until 1977 and again from 1980 until 1984 nationalized the banking sector. According to Kumar (2001) the Nehru period gave rise to a statist model of CSR where elements of corporate responsibility were well dened for Indian corporates in labour laws and other regulations and management principles. Using the framework of Matten (Matten and Moon, 2008) this can be described as an implicit model of CSR where the companies take up their responsibilities without it being their own choice. In 1973, the government issued the Foreign Exchange Regulation Act. This Act, meant to 'Indianize' foreign companies, required foreign companies to reduce their shareholdings to 40%. This regulation signied that for two decades, until the start of the liberalization in 1991, Indian companies were more or less shielded from worldwide CSR developments. In 1991, after a period of strong state control, the government started cutting taxes and import duties and changed regulations for foreign shareholding. The barriers with the West slowly disappeared. The 1990s were characterized by deregulation and liberalization which changed the relationship between government, society and business. With the decline of government, involvement of the business community in solving social issues became more important (Balasubramanian et al., 2005). As a result of the deregulation there was an increased focus on efciency, effectiveness and protability and this also lead Indian businesses to revise their CSR policies and become more pragmatic. Because of the

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 deregulation Indian businesses regained control of their own business agendas. After a period when the government decided more or less what the corporates should do, CSR became a choice again. In other words, Crisis response

As a developing country India has met with many natural disasters and incidents. One of the worst disasters in Indian history was caused by a US company, Union Carbide. This was in 1984, killing at least 3,000 people immediately. It is not clear to what extent this accident has lead to a change in CSR practices and stricter regulations. However, this disaster resulted in a hugh amount of negative publicity for foreign companies operating in India.

A more recent disaster was the Tsunami in 2004 killing 10,000 Indians. The Indian Government managed to provided some relieve to the victims through the Prime Ministers National Relief Fund but this was not sufcient. Indian businesses increased their philanthrophic activities and involved employees in helping the affected communities.

5.2.2 External drivers

This section discusses the external drivers. Because India only started with the liberalization of its economy in 1990, the external drivers may have had less impact than the internal drivers on the development of CSR. Furthermore, the external drivers are likely to have had more impact on Indian companies doing business with overseas businesses or having foreign shareholders, and less on the Indian State Owned or purely Indian operating companies.

International standardization

International standardization is an important driver for Indian businesses to focus on CSR, especially for those engaged in overseas business. The Indian based Global Compact Society founded in 2003 today has 50 members. About 180 Indian companies are registered with the UN Global Compact Initiative.

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 Investment incentives

Baskin identied strong external investor interest in corporate governance and SRI in Asia as one of the key drivers for CSR in the Asian region (Baskin, 2006). In India there has been a sharp increase in foreign shareholding. Because the stock market has become an important source of capital for Indian companies, they need to pay much more attention to transparency and accountability. Foreign investors will not accept any irresponsible social behavior by the companies they have invested in. Worldwide there is an increased focus on responsible investments and India also benets from this trend. Early 2008 Dow Jones, launched the faith based Dharma indices measuring the performance of 254 Indian companies that focus on good governance and environmental friendliness (Lakshman, 2008). As of 2008, SAM, the sustainability investment group, will include India for the rst time in its yearly assessment of the Dow Jones Sustainability Indexes to address the needs of global investors (SAM, 2008).

Stakeholder activism

In the western world the media are an important driver of the increased focus on CSR. Companies fearing reputation damage due to negative media reports, maximize their efforts to successfully implement CSR programs. This is different in India where the public and the media have been criticized for not being more questioning of big companies. Their reluctance can be blamed on a traditional sense of respect towards large companies. Some people explain this by the important role large companies such as Tata and Reliance are seen to have played in Indias economic growth. Another reason for the lack of questioning the corporate worlds is the idealization of wealth. Wealth in Asia brings power. It is idealized here in a way it isnt in European markets, says Chandran Nair, founder and chief executive of Global Institute for Tomorrow, a Hong Kong-based think tank. The questioning of the role of business in society following corporate crisis such as Enron in the US has not been as important in India compared to other countries. Another reason is the we are different attitude by Indian corporates as discussed in the India is different paragraph. Campaigns by the international NGOs against the big corporates have had less impact in a country where people feel that what happens outside India does not apply to them.

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 Supply chain

Multinationals increasingly impose requirements on their supply chain to avoid reputation damage in their home countries and on a worldwide level. For Indian companies supplying goods to western companies this is a driver to critically review the production processes to ensure they meet international safety and quality standards. Although supply chain issues exist in India, it is on a lower scale compared to China which has a much larger manufacturing industry.

5.3 Implicit and explicit CSR in India

Chapter four presented the model of Matten and Moon (2008) which distinguishes between implicit and explicit CSR. Their research compared the US and Europe but they also made observations concerning Indian CSR. In their paper they write that India was always a country with long-term implicit CSR through the traditional family owned business conglomerates where the business tycoons see it as their duty to help build the nation and care for their people. They also state that this is now slowly changing towards a more explicit CSR model due to the external drivers explained above. This could be true for the modern Indian corporates but there are still many Indian companies where CSR is motivated by the more implicit Ghandian values of giving back to society.

5.4 Todays CSR status

CSR is a young management practice in India. Only since 2000, CSR really took off in the country. Only since 2000, CSR really took off in the country. An increasing number of Indian companies is now actively involved in CSR. The Indian based Global Compact Society founded in 2003 has currently about 50 members. About 180 Indian companies are registered with the UN Global Compact Initiative. Reecting the growing interest in CSR, several awards have been launched for Indian corporations excelling in CSR. An example is the Corporate Social Responsibility Award launched in 1999 by Businessworld-FICCISEDF.

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 Despite the growth of CSR there are many critical observers. In May 2008, Business World published a special CSR edition. In the foreword the editor writes: Some companies pursuing CSR are doing it in isolated, localized islands within their businesses. The efforts of CSR departments or foundations of these companies are no less worthy, but do not amount to enlightened CSR. Professor Dipankar Gupta at Jawaharlal Nehru Universitys School of Social Sciences comments in the same CSR publication: Though most Indian companies want to be socially responsible, hardly any understand what that entails. Arora and Purarik conclude in their paper on Indian CSR that: Although the corporate sector in India beneted immensely from liberalization and privatization processes, its transition from philanthropic mindsets to CSR has been lagging behind its impressive nancial growth (Arora and Purarik, 2004). 5.4.1 Summary of market research on Indian CSR Since 2000, the Indian CSR debate has intensied. As part of the increased level of interest in CSR, several research institutes published survey based research. One of the surveys, Corporate Social Responsibility, Perceptions of Indian business conducted by Kate Brown from the Centre for Social Markets in 2001 in collaboration with an Indian NGO, concluded that CSR is mostly understood by Indian businesses as a commitment or obligation to society. Half of the survey respondents stated that they have a responsibility to help with social problems in India. As reasons for changes to CSR attitudes in India, the respondents answered: raising awareness followed by reputation and rising domestic standards. The researchers do not mention the number of respondents in their report and therefore the validity of the survey results needs to be questioned. Another survey, published in the same year by TERI-Europe had the objective to capture perceptions and expectations (related to corporate responsibility) of three stakeholder groups: general public, workers and corporate executives (Kumar, 2001). The survey in-

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 cluded 1,212 respondents (1,003 public representatives, 107 workers and 102 company executives). Kumar writes: A weakness is the tendency for the agenda to be set at a global level largely by institutions located in the industrialized world, with little understanding of the diversity of approaches and track record in other parts of the world. According to the TERI-Europe survey, Indian companies are rated better then multinationals regarding their CRS programs by different stakeholder groups including employees and the general public. In the list of the most admired CSR companies there are very few mentions of multinationals. Tata is mentioned as the most responsible Indian company. Multinationals are rated low for trustworthiness. Asked about who do Indians trust to work in the best interest of society, global companies in India are rated worse than the Indian government and large Indian companies by the general public (Kumar, 2001). According to Kumar this indicated that global companies are not giving their due to Indian society and that a majority of foreign companies need to make major changes to improve their public standing. It is not surprising that multinationals are not very positively perceived by the Indian public. Stories on misbehavior of foreign companies have dominated the Indian news for a long time. One of the worst disasters in Indian history was caused by a US company, Union Carbide in 1984. In 2002, UNDP - with PWC, the British Counsel and CRR - conducted the Corporate Social Responsibility Survey 2002, India (UNDP, 2002). The objective of the survey was to ascertain the predominant perceptions on CSR in India and the role that companies dene for themselves in todays society. The survey also tried to identify the obstacles which hinders adoption of CSR. A total of 102 companies responded to the survey. One of the key ndings was that Indian companies claim that a desire to be a good corporate citizen and improved brand image drive CSR. Regulatory compliance was given much less importance.

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 In 2008, another survey was carried out by TNS India and the Times Foundation. According to the survey, for many businesses, CSR was a way to improve the public perception of the company. Half of the companies use CSR to brand the company among the people (Times of India). Goals for CSR initiatives mentioned by the companies include nation building and providing localized rural employment and livelihood opportunities to empowerment but also wealth creation, raising quality of life and social well-being of communities, striving for harmony with nature and a greener world.

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Chapter 6 The Indian retail banking industry and CSR

This chapter analyses CSR in the Indian retail banking sector. It starts with a short introduction on the Indian banking sector concluding that the Indian banking industry is still highly regulated by the government. The Indian banks, contrary to the foreign retail banks, have the competitive advantage of a high geographical coverage. Paragraph 6.2 discusses CSR in the Indian retail banking industry. Public reporting by Indian banks on CSR issues is low. This indicates an implicit way of communicating about CSR. The paragraph further shows that there are several areas where the retail banks work closely together with the government to help solve social issues. Paragraph 6.3 contains a website analysis with the aim of identifying the CSR activities of the Indian banks. The conclusion is that Indian banks do not mention CSR explicitly on their websites. The CSR related information is mostly related to customer care and ethical business standards. A nal observation is that the Indian banks (with the exception of one, YES bank) do not seem to consider CSR as a business opportunity. To complete this chapter, the last paragraph presents the results of the online survey amongst a selected group of Indian banking customers. To get a complete overview of Indian CSR in the banking industry, its not sufcient to look at what the banks say about CSR. Its necessary to take into consideration the CSR expectations of external stakeholders, in this case Indian banking consumers.

6.1 The Indian banking industry

The Indian banking industry, governed by the Banking Regulation Act of India (1949), can roughly be divided into three major categories, Public Sector Banks (PSBs), Indian private sector banks and foreign banks. The Banking regulation Act allowed "to regulate, control, and inspect the banks in India." It also stipulated that no new bank or branch could be opened without approval from the government. In the 1960s the banking industry had become one of the main drivers for the Indian economy and one of the largest employers. Till 1969 most banks were privately owned. This changed when Indira Ghandi decided on 19 July 1969, to nationalize 14 commercial banks and move from class banking to mass banking. In 1980 six other commercial banks were nationalized.

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 In the early 1990s, the government liberalized the economy including the banking industry. As part of the process a small number of banks were privatized. This deregulation has made the sector highly competitive. Since the privatization, private sector banks (also known as new generation tech savy banks) have developed much faster than the Public Sector Banks. For instance, the private sector banks have been much more innovative launching internet banking and investing in a wide network of ATMs. A major issue for the Public Sector Banks is their less productive workforce compared to the private banks. They are also under tight government control making it difcult for them to develop competitive strategies. A major competitive advantage of PSBs though is their enormous geographical coverage which enables them to reach out to the majority of the Indian population in both urban and rural areas. The State Bank of India has over 10,000 branches throughout India. As a comparison, the largest commercial bank, ICICI Bank, has 1,268 branches.

6.2 CSR in the Indian banking industry

The Indian banking industry affects the sustainable development of India in many ways. Banks lend considerable amounts of money to Indian corporates to nance expansion plans and hiring more people. As such it is a major driver of GDP growth and employment. The banking sector itself employs almost 1 million people. Banks in India are heavily involved in Micro Finance projects nancing small businesses at the bottom of the pyramid improving nancial inclusion. Indian banks are also a major driver for Indias consumption boom. The number of bankable households in India is estimated to grow at a CAGR of 28.10% during 2007-2011. Retail banks continue to introduce new products and services adapted to the needs of Indian households. An example is the two wheeler nance industry. The Indian government and the Indian Central Bank (Reserve Bank of India - RBI) are an important player in the CSR landscape for banks through the so-called Priority Sector Lending program. RBI sets targets in terms of percentage (of total money lent by the Banks) to be lent to certain sectors, which in RBI's perception would not have had access to organized lending market or could not afford to pay the interest at the commercial rate. This is also called directed credit in Indian Banking system. Priority sectors comprise amongst others small scale industries and state sponsored organizations for scheduled
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 castes and scheduled tribes. The Priority Sector Lending scheme also applies to foreign banks operating in India but their targets in terms of money lent are lower. Another government scheme which involves Indian banks is the Debt Waiver and Debt Relief Scheme for farmers initiated by the Ministry of Finance. This scheme is aimed at helping small farmers who found themselves into severe financial difficulties because they cannot repay existing loans. There are also examples of more local initiatives. Last year the Indian Finance Ministry launched a Pilot Microcredit Scheme in New Delhi to provide Micro nance loans to slum dwellers in Delhi (Black, 2008). In this scheme, the government collaborates with several Public Sector Banks and local NGOs. RBI wants banks to take up more CSR responsibilities, also on a voluntary basis. In December 2007, RBI sent a circulair to all banks to encourage them to take up CSR responsibilities (RBI, 2007). In the circulair, RBI acknowledges the contribution of nancial institutions including banks to sustainable developments: considering the crucial role they play in nancing the economic and developmental activities in the world. The main focus of the circulair is on global warming and climate change. There is no mention of sustainable economic development. It therefore seems to be written based on the western, environment dominated, CSR agenda. The banks are requested to put in place a suitable and appropriate plan of action towards helping the cause of sustainable development. It is to be seen how effective the circulair will be. Especially because the Central Bank does not provide information on the type of actions to be taken by the banks. It only writes that the banks are requested to put in place a suitable and appropriate plan of action towards helping the cause of sustainable development. There is no time table attached or mention of follow up actions. Public reporting by Indian banks on CSR issues is low. Of the 716 companies that issued a GRI report in 2008, there was only one Indian bank, ABN Amro India (2008 GRI list).2 However, this does not mean that Indian banks are not active in CSR. Using Matten and Moons terminology, this does suggest an implicit style of CSR (see paragraph 4.1).

2 2008 GRI list. In 2008, 118 nancial institutions reported following GRI standards. The vast majority of the GRI banks were European (74 out of 118 banks)

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6.3 Website analysis Indian banks

To get a sense of the level of CSR activity by domestic Indian retail banks, this paragraph analyzes the websites of Indian banks. The aim is to identify the type of CSR communications provided to customers through the Internet and to determine if there are any remarkable differences between the Indian banks and the foreign banks. The website analysis includes one state bank, one public sector bank and four commercial banks. The rst two banks, State Bank of India and the Bank of India, were selected because they are the banks with the highest number of branches in India, respectively 10,369 and 2.805 (RBI). Amongst the commercial banks, AXIS bank, HDFC and ICICI have the highest number of branches (643, 743 and 1268) and for that reason they are part of the analysis. HDFC also has a good CSR track record. Recently it won the Asian Banker best retail bank award and in 2007 this bank received the 'Best Corporate Social Responsibility Practice' Award from The Bombay Stock Exchange and Nasscom Foundation's Business for Social Responsibility (HDFC website). Finally, YES bank was chosen because it is the only Indian bank that has chosen to make CSR an integral part of its brand positioning. The results of the website analysis are limited in the sense that the information only provides insight in the level of communications of the banks through the Internet. From the website analysis no conclusions can be drawn about the intensity of the overall CSR communications activities. Other communications tools such as print advertising have not been examined and it could be, although unlikely, that banks use these alternative tools to communicate about CSR initiatives.

Table 6.1: CSR website analysis Indian retail banks

Name
State bank of India (State bank)

CSR mention on website

Comments

Direct link to corporate govern- No dedicated CSR website. Mostly ance information information related customer service Direct link to right to information and privacy issues. act Direct link to Customer Care information Mention of Computer Security Day

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 Name
Bank of India (Public Sector Bank)

CSR mention on website

Credit counseling services Do not call me button Complaint form Fair lending practice code Fair practice code Section on Agricultural waiver and debt relief scheme 2008 Report on social banking: implementation of Priority Sector Lending scheme Quick access to Code of Commitment to Customers Quick access to Grievance Redressal Mechanism and Complaint Form Quick access to Do not call registry Quick access to information on how to protect an account (security and privacy) Under Investor Relations link, Code of conduct for Directors and Code of conduct for Employees Quick access to do not call registration Link to complaint form Under About us link to security page Link to HDFC scholarship program

Comments
No dedicated CSR website. Mostly information related to customer service. The available CSR information is related to projects implemented as part of government scheme. These projects are not self initiated.

Axis Bank (Commercial bank)

No dedicated CSR website. Mostly information related to improved customer service. Large number of procedural documents to highlight the ethical values of the bank.

HDFC Bank (Commercial bank)

ICICI Bank (Commercial bank)

No dedicated CSR website. Self initiated scholarship program for customers. Most information is related to improved customer service. Through its website the bank offers possibility to make a religious online donation to a Hindu temple. The bank is active in providing micronance and self help group nancing but does not label this as CSR in its communications. Furthermore HDFC supports local NGOs like the Smile foundation but again there is no mention of this on the corporate website. Link to online security No dedicated CSR website. Most inLink to complaints form and safe formation related to customer care banking and ethical business practices. InterLink to use of unparliamentary estingly there is no clearly visible link language by customers to or mention of the ICICI Foundation Link to safe banking informa- on the corporate website. This seems tion to imply that there is no link to the Link to privacy commitment business. The Foundation has a sepadocument rate website Code of conduct document for (www.icicicommunities.org) employees and directors is to be found at the bottom of text on About us No link on the website to ICICI Foundation

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 Name
Yes Bank (Commercial bank)

CSR mention on website

Link to Lender Fair Practice Code Link to Grievance redressal Link to Complaint form Link to Do not call registry Link to Citizen charter Direct link to Responsible Banking on home page. Sustainability is mentioned as one of the key differentiators for the bank.

Comments
Only bank with a responsible banking section on its website. Furthermore the bank provides extensive customer care information. On the website the bank also provides information about partnerships with local NGOs and YES community. YES community was launched through the retail bank network and organizes special events around Planet Earth at its branches. The bank does not provide an online CSR report.

6.3.1 Conclusions website analysis Below is a summary of the main ndings. Because of the small number of banks that are part of the analysis the ndings are not representative for all Indian banks. Yes Bank is a different case because they do integrate sustainable banking in their business proposition and the ndings below do therefore not apply to this bank. Indian banks do not mention CSR explicitly on their websites. This does not mean that the banks are not active in the eld of CSR. The banks simply dont communicate about it explicitly on their websites. By doing a more thorough Internet search it is possible to nd information on CSR activities of the banks. The information on the ICICI foundation is an example. Furthermore the banks actively support the government with the execution of programs focussed on improving the livelihoods of people. HDFC for example sells Self Help accounts. The lack of CSR mentions can be explained by the fact that Indian banks only recently have begun to adopt the language and practice of CSR. This is following the observations of Matten and Moon (2008) and discussed in chapter four. Another explanation could be the trust factor in Indian society. Balsari (2004) notes that ingredients of CSR have always been present in various forms of business activity in India. He argues that the major element was trust and corporate dont have to write CSR explicitly in their publications to be engaged in CSR.

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 CSR related information is related to customer care and ethical business standards. Most CSR information on the Indian websites is related to issues which have a direct impact for the customer and is related to customer care. For instance, every bank shows a do not call me button on the home page and most banks have a direct link to a complaint form. Many of the banks also provide direct web access to written down policies outlining the responsibilities of the bank towards its customers or its employees. None of the Indian banks promote green banking products or ethical investment products on its website. The website analysis reveals that the banks do not see CSR as a business opportunity in the sense that they actively promote green banking products or other CSR related products on their websites.

6.4 CSR expectations of Indian banking consumers

The previous chapters revealed that the Indian CSR experience is different from the West. For banks to run successful CSR programs they need to be aware of these differences and adjust the CSR strategies and programs accordingly. Of vital importance in localizing the CSR strategy are the expectations of external stakeholders. In each country, banks deal with different stakeholder groups including media, government, NGOs, investors, and banking consumers. These groups have their own CSR priorities. When a foreign bank designs a CSR strategy for India it needs to be aware of the perceptions of all these groups. It falls beyond the scope of this thesis to analyze the CSR perceptions of the full range of stakeholders. That would simply take too much time. Therefore the focus will be on one stakeholder group in particular: retail banking consumers. The reason for choosing banking consumers is that their perceptions of retail banks are of vital importance for the growth of the retail banking sector which is dealing with intense competition. To be able to use CSR to win customers banks need to know what Indian customers care about. These causes will need to be included in the CSR portfolio.

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 To help banks in India to build effective CSR programs, this chapter analyses whether Indian consumers will think more positively about their bank if it is actively involved in CSR. It may be that Indian banking customers simply dont care about CSR and dont see a need for banks to be active in that area. If that is the case, it does not make much sense for retail banks to put effort in localizing their CSR strategies and programs from a customer point of view. This chapter also answers the question if Indian consumers have different CSR priorities compared to consumers in other countries. If the answer is yes, localization of the CSR programs will be required. The basis for the comparison will be an Australian study by Pomering and Dolnicar who analyzed the Customers Sensitivity to Different Measures of Corporate Social Responsibility in the Australian Banking Sector. They conclude that Australian retail banking consumers will look favorably upon CSR initiatives once made aware of a rm's initiatives (Pomering and Dolnicar 2006). This leads to the question whether there will be a similar relationship in India. After elaborating briey on general academic literature on consumer perceptions and CSR, the results of an online survey amongst a sample of 98 high end Indian retail banking consumers will be presented. The conclusion of the survey is that there is a relationship between customer satisfaction and the banks CSR program as long as it focusses on the right things.

6.4.1 Literature review consumer perceptions and CSR To handle the high competitive pressure, retail banks continue to improve customer service and invest in increased opening hours, more ATMs, easy internet banking process and bank ofces with a pleasant atmosphere. CSR is usually not considered by management as a way to attract more customers or to increase overall customer satisfaction. The question is whether this is a right decision. Several studies and theories have identied a relationship between CSR and customer satisfaction. Luo et al. mention three of such theories in their research paper (2006): Institutional theory and stakeholder theory suggests that a companys action appeal to the multidimensionality of the consumer not only as an economic being but also as a member of a family, country or community

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 A strong record of CSR creates a favorable context that boost consumers evaluations of and attitude towards the company A third stream examines the antecedents of customer satisfaction. All else being equal, consumers derive better perceived value from a product which is made by a socially responsible company.

There is more literature available on the benets of CSR for companies. Bhattacharnay et al. (2004) write that companies today are increasingly aware of both the ethical and business case for engaging in CSR. Not only is doing good the right thing to do, but it also leads to doing better through its positive effects on key stakeholder groups (2004). An increasing number of companies start to communicate actively about their CSR initiatives to different stakeholder groups, including consumers. Companies like Starbucks and Ben& Jerrys actively communicate about doing the right thing to strengthen their brands and differentiate themselves from competitors. According to an IBM study released in February 2009, Attaining Sustainable Growth through Corporate Social Responsibility, the majority of business executives believes that CSR activities are giving their rms competitive advantage, primarily due to favorable responses from consumers. A 2008 survey by ad agency Edelman amongst over 6,000 consumers in 10 different countries including India, China and Japan reveals that 63% of consumers think brands spend too much on marketing and advertising and should put more into a good cause (Edelman, 2008). Most studies on the relationship between CSR and customer satisfaction focus on the consumer goods industry instead of services. Consumer goods have very low switching costs. It is easy for consumers to buy an another product of a competitor. Differentiating marketing strategies, for instance through sustainable marketing, are therefore of critical for the branding of consumer goods. There are only few studies available on the relationship between CSR and customer satisfaction amongst banking customers. Banking services are different from consumer goods in the sense that they are more standardized and have always had higher switching costs. As a result of the higher switching costs, it could therefore happen that consumers will stay with their bank although they feel that other banks have a better CSR performance. Although the switching costs in the services industry are higher than in the consumers goods industry, they are declining in many countries in the world due to the increased use of electronic banking services which makes
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 it easier for consumers to open bank accounts with multiple banks. It is therefore to be expected that retail banks will increasingly use the same type of differentiating marketing strategies as consumer good companies. When discussing switching costs, it is likely that the switching costs for Indian banking consumers are higher due to regulatory requirements to open a bank account, compared to some other countries in the West. As a result of the higher switching costs, it could therefore happen that Indian consumers will stay with their bank although they feel that other banks have a better CSR performance. 6.4.2 Indian Banking Consumer perceptions survey This section will present the ndings of an online survey amongst a sample of 98 high income middle class urban Indian retail banking consumers. The aim of the survey is to analyze whether Indian consumers care about CSR. If they dont care, it does not make sense for foreign retail banks to put high effort in executing local CSR programs aimed at consumers. The online survey was sent randomly to urban Indian professionals working for MNCs in different business sectors in April 2009. To ask Indian professionals to complete the online survey, about 10 people working for multinational companies were approached at a social club in Mumbai and asked to forward a link to the online survey by email to their Indian colleagues. The online survey consisting of 10 questions, generated by an online survey tool, Lime Survey, took about 10 minutes to complete. The reason for choosing high income urban professionals is that they are the target customers of foreign retail banks. Given that there is a selection bias, the results of this survey cannot be generalized to the entire population. In total, 97 people fully completed the survey (n=97). The majority of the respondents (75%) work in Mumbai. 52% of the respondents are between 25 and 34 years old. 60% of the respondents is male.

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Figure 6.1: Summary of respondents online survey consumers expectations Number of account holders with foreign bank, 38 Number of account holders with Indian private bank, 49 Number of account holders with Indian state bank, 9

9% 40% 51%

The questions of the survey are included in the attachments. Below are listed the main ndings. Overall high end banking consumers do not feel strongly about CSR activities by banks but swing slightly to the positive side. In the rst part of the survey, respondents were asked to indicate to what extent they agree with a total of 11 statements about social responsible behavior of banks. Each statement is linked to a 5-point Likert scale ranging from I fully agree (1) to I fully disagree (5). The table below provides the mean for each statement.
Table 6.2: Mean outcomes survey consumer expectations Rank Statement 1 Banks take a real interest in the environment and try to improve it 2 Foreign banks are more active in doing good for society then local banks 3 I dont care if my bank does good for society as long as I get good customer service 3 Banks in India play an active role in closing the gap between the have and not haves 4 Banks do not want to help local residents because it is not protable 5 Bank prots are too high 6 Banks are helping the community by providing them with work, not by donating money Mean 3.38 3.30 3.30 3.17 3.05 2.62 2.57

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Rank Statement 7 The main reason for a bank to do good for society is nancial return 8 Bank should be actively involved in solving social problems 9 I will have a more positive perception of my bank if it shows high activity in addressing social problems in India 10 A bank is a commercial institution and its major aim is to make a prot Mean 2.52 2.36 2.35 2.21

To get more insight in the perceptions of the banking consumers the statements have been grouped. The rst few statements were related to the CSR model. The aim is to answer the question whether Indian consumers want their bank to focus on CSR even if it costs the bank money. See below.
Table 6.3: Mean outcomes CSR model
Category 1 CSR model 1 Bank prots are too high 2. Banks should be actively involved in solving social problems 3. Banks are helping the community by providing them with work, not by donating money 7. A bank is a commercial institution and its major aim is to make a prot 8. A bank should only donate money to a good cause when there is a real benet for the bank Mean 2.62 2.36 2.57 2.21 2.73 2.498 s/d 1.05 1.36 1.22 1.27 1.43 1.266

The respondents were most outspoken regarding the statement that a bank is a commercial institutions and its major aim is to make a prot. Nearly 70% of the respondents gave a positive ranking of 1 or 2 which seems to indicate that the majority of the people believes that a banks sole purpose is to make prot which is in conict with the philanthrophy model of CSR. At the same time, the majority of the population (61.5%) responded positively to the statement that banks should be actively involved in solving social problems. The conclusion could be that the respondents believe the bank should be involved in CSR as long as it does not have an impact on prots. To determine the overall perceptions of the target population regarding CSR the mean of all the responses of the statements together has been taken. The mean of the means is 2.498 which is relatively close to the centre of 3. This could signify that overall high end

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 banking consumers do not feel strongly about CSR activities by banks but swing slightly to the positive side. The next category is related to credibility of the banking sector. These statements were included to determine if the population is skeptical about the efforts of banks to address CSR issues.
Table 6.4: Mean outcomes credibility of the banking sector
Category 2 Credibility of the banking sector Statement 4. Banks do not want to help local residents because it is not protable 5. Banks take a real interest in the environment and they are trying to improve it 9. Banks in India play an active role in closing the gap between the have and not haves 11. The main reason banks do good for society is for nancial return Mean 3.05 3.38 3.17 2.52 3.03

From these results the conclusion can be drawn that consumers are rather skeptical about the banks and CSR. Only 23% of the respondents agreed with the statement that banks take a real interest in the environment and they are trying to improve it. The 23% was calculated by taking the percentage of the respondents who provided a 1 or 2 ranking to this question. The majority of the respondents believes that the banks do not take a real interest in the environment. This is important for banks to know when they communicate about their initiatives in the eld of environmental protection. The respondents were also skeptical concerning the role banks in India play in closing the gap between the have and not haves. This is evidenced by the response to statement number 9 where only 29% of the respondents gave a positive reply while 33% was indifferent with a 3 ranking. From the results of the survey it is not possible to determine the reason for the skepticism of banking consumers. There could be a lack of knowledge amongst the respondents about the CSR activities of banks. The relationship between banks and environmental issues could be unclear. Again these results are quite close to the centre which could signify that the respondents are somewhat indifferent and they just dont have an opinion on the matter.

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 Indian consumers do not perceive foreign banks to be more active in CSR than local Indian banks. One statement was added to see if respondents distinguish between foreign and Indian banks and if they feel foreign banks are more active in CSR. This is not the case. The mean is 3.30. In other words, the majority of the respondents disagrees with the statement. This nding corresponds with the earlier observations about the we are like that only attitude of Indians in chapter four. In general Indians feel that what has been invented in the West does not necessarily work in India. It also conrms that while the western world may believe that they are have better CSR programs and are more active in CSR this is not perceived as such by Indian consumers.
Table 6.5: Mean outcome perception of foreign banks
Category 3 Perception of foreign banks Statement 6. Foreign banks are more active in doing good for society than local Indian banks Mean 3.3

To identify if interesting differences occur in response between holders of a bank account with a foreign bank and Indian bank account holders the respondents were split into two groups: foreign bank account holders and Indian bank account holders (both private and state banks). The hypothesis is that the foreign account holders will agree more with the statement that foreign banks are more active in doing good for society than local Indian banks. The mean for the foreign bank account holders is 2.97 compared to a higher mean of 3.52 for the Indian bank account holders. This suggests that the hypothesis is true. To analyze if this is a signicant difference the t-value has been calculated. With a t-value of 8.5608 and a population of 92 the conclusion can be drawn that at a 95% signicance level, the data provides sufcient evidence to conclude that there is a difference. This means that our hypothesis is true. This could be perhaps because holders of an account with a foreign bank are better educated about its CSR programs.

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 Consumers feel more positive about their bank if it is involved in CSR The last two statements were aimed at determining whether CSR can be used as a tool to attract more customers because it will change consumers perceptions of banks. Both statements are answered in a way which support this claim. 60% of the respondents indicated agreed that they will have a more positive perception of their bank if it is active in addressing social problems in India. In line with this response, the majority of the respondents (51.1%) did not agree with the statement I dont care if my bank does good for society as long as I get good customer service.' The results of these statements seem to indicate that banks could use CSR as a tool to strengthen their corporate reputations.
Table 6.6: Mean outcomes CSR as a tool to attract more customers
Category 4 Statement Mean

CSR as a tool to attract more customers

10. I will have a more positive perception of my bank if it shows high activity in addressing social problems in India 12. I don't care if my bank does good for society as long as I get good customer service

2.35

3.3 2.825

However, although there is a positive effect on consumer perceptions of the bank, respondents dont seem to support a CSR model where the bank gives back to society when there is no real business benet. The next question in the survey asked respondents if they expect their bank to focus on generating prot for shareholders (business is business model) or give back to society even if it costs the bank money. This question could be answered by the survey respondents by selecting one of the answer options. 47% of the respondents selected option 1: I expect my bank to give back to society even if it costs money and there is no real business benet. 35% of the respondents selected option 2: I expect my bank to focus on generating prots for shareholders. Over 17% of the respondents did not provide an answer to this question which means that they are either indifferent or they feel they do not have enough knowledge of the matter to be able to provide an answer. Whatever the reason, they do not want their bank to give back to society even if it costs money. This means that a total
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 of 53% of the survey respondent does not expect their bank to give back to society when it costs money. The 53% includes the survey respondents who did not provide an answer.
Figure 6.2: Results business to business model versus modern view 50.0 Percentage 37.5 25.0 12.5 0
Give back to society even if it costs money Focus on generating profits for shareholders No opinion

In developing business plans, banks need to remember that, ultimately, the respondents value good customer service most. In the next section of the survey respondents were asked to rank in order of importance the following factors: Treat employees well Give to charity Ensure good prots for shareholders Responsive to consumer needs

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Table 6.7: Ranking priorities by Indian consumers Factor 1 Responsive to consumers needs 2 Ensure good prots for shareholders 3 Treat employees well 4 Give to charity Percentage 75% 15% 9% 1%

For the respondents being responsive to consumer needs is most important. All respondents agree that responsiveness to consumer needs is the most relevant factor and this will be important for banks to remember. Giving money to charity is not considered to be important at all. This seems to conrm that Indian consumers from the sample group do not support a philanthrophy model of CSR and do not value the philanthrophic responsibilities as much as suggested by Vissers CSR model in chapter four. The data also support our previous nding that the respondents feel that banks should focus on ensuring good prots for shareholders. Respondents dont seem to approve of increasing the amount of money spent on social causes. While donating to charity received a very low ranking, 47% of the survey respondents indicated that they want their bank to intensify the level of giving back to society. The data further show that only 2% want the level of intensity of giving back to society to decrease and 28% wants the level of intensity to remain the same. A relatively high number of people (18%) did not provide an answer to this question. This brings the percentage of respondents who do not support increasing the amount and those who did not provide an answer to almost 50%. This indicates that the majority of the respondents does not support an increase by their bank of the amount of money spent on social causes.

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Figure 6.3: Results support of an increase by the bank of the amount of money spent on social causes 50.0

37.5

25.0

12.5

0 Intensify Decrease Remain the same Dont know

Next respondents were asked to indicate if they are willing to pay more money for products of a socially responsible bank. The majority of the respondents (52%) indicated that they will be willing to pay more money. 40% answered they are not willing to do that, while 8% of the respondents did not provide an answer. Despite the 52% of respondents who say to be willing to pay more money, there is also a large group of people who is not willing to do that. Banks should take this into account when they conduct a cost benet analysis for the investment in the branding of more socially responsible banking products.
Figure 6.4: Results pay more for products of socially responsible bank 60

45

30

15

0 Willing Not willing Dont know

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 To analyze whether the CSR priorities of Indian banking consumers differ from CSR priorities of consumers in other countries, an Australian study by Pomering and Dolnicar was used as a comparison. This study is interesting in the sense that it measures the perceptions of consumers of a developed country, in this case Australia. The researchers in the Australian study presented a set of CSR scenarios to a total of 415 respondents through an online survey. The respondents could choose for each scenario whether they would feel more positive about their bank. To identify if differences exists between Australian banking consumers and Indian banking consumers, the same scenario's were presented to the Indian respondents. The hypothesis is that there is a difference in perception between Indian and Australian consumers. In the online survey Indian respondents were asked to indicate whether they would feel more or less positive about their banks in different scenarios. 1 indicates you feel more positive and 5 indicates you feel less positive.' The ranking for the Indian consumers is based on the percentage of respondents who stated that they feel more positive (ranking 1 and 2).
Table 6.8: Rankings CSR priorities by Australian and Indian consumers Australian consumers 1 1 2 3 Your bank defends customers privacy Your bank will open new branches and add more staff Your banks employees are most happy in Your bank commits 1% of its prots to their jobs community programs Your bank tops the social responsibility ranking Your bank launches a scholarship program for underprivileged children Your bank is praised for good environmental performance in the media 4 5 Your banks new CEO agrees to cut pay Your bank is praised for good environmental performance in the media Your bank commits 1% of its prots to community programs Your bank launches a scholarship program for underprivileged children Your bank tops the social responsibility ranking Your banks employees are most happy in their jobs Your bank will open new branches and add more staff Your banks new CEO agrees to cut pay Indian consumers Your bank defends customers privacy

6 7

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 The data reveal that, similar to Australian banking customers, Indian consumers rate the bank policies to defend customers privacy highest. Consumer privacy, which falls under the responsible banking and lending practices of the bank, is in the self interest of the consumer. So similar to Australian banking consumers, the Indian banking consumers rate the actions of banks which are in their own self interest highest. Despite the similarities in responses, there are differences which seems to support the hypothesis that Indian consumers have difference CSR perceptions than Australian consumers. It is worthwhile to identify where some of the interesting differences occur. First the ranking of pay cut for the CEO differs signicantly (fourth vs seventh ranking). This outcome seems to be consistent with different ethical norms in India where employees dont feel that they have a say on their bosses salary because of the power distance. This could also suggest that Indian consumers dont have strong feelings about executive pay and executives taking responsibility for disappointing nancial results or business failures. Another difference is the ranking of employee well-being. The table reveals that Australian consumers value employee well-being more than the sample group of Indian survey respondents. Another interesting outcome is that Indian consumers feel less positive about environmental actions from their banks compared to community driven initiatives. This is a difference compared to the Australian survey respondents. 46.4% of the respondents gave an overall rating of 4 on a scale of 1 to 5 when asked if they would feel more positive about their bank if it would be praised for good environmental performance.

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Part 3: CSR by foreign banks in India

The previous part of the thesis focussed on Indian CSR and CSR by local retail banks. The conclusion of the analysis is that due to differences in economic, cultural and political factors, Indian CSR is different from Western CSR. From the online survey the conclusion can be drawn that Indian consumers from the target group are indifferent towards CSR. In the responses they did not express a strong support for CSR even though they are not against it. The third part of the thesis will focus on the implications for foreign retail banks in India. International banks such as Deutsche Bank, HSBC, ABN Amro and Standard Chartered have invested large amounts of money in the development and execution of CSR programs. This third part of the thesis answers the question how foreign retail banks in India, in view of the Indian CSR situation, have localized their global CSR programs to improve their competitive position. For the analysis four case studies have been used This part of the thesis starts by explaining about the local and global aspects of CSR and a discussion on global citizenship. This chapter also presents the framework for organizing global CSR developed by Chaudri.

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Chapter 7 Local and global dimensions of CSR

This chapter focusses on the way organizations structure global CSR. It provides a summary of academic literature on organizational management in a global context. It also discusses the global aspects of CSR. The conclusion is that it is not easy for international operating banks to nd an effective framework for the organization of local CSR. CSR requires local responsiveness while multinationals in many business sectors standardize functions and processes and products to achieve global consistency and cost reductions. This is especially the case in retail banking were most banking products are standardized globally. Banking is also a sector where managing risks is of upmost importance for the success of the company. By giving local teams more autonomy the bank has less control on maintaining high global standards for risk prevention and control.

7.1 Globalization and CSR

Through international expansion companies hope to be able to benet from higher growth rates outside their home country and higher efciency and protability of current operations (Rugman and Verbeke, 2008). For the past few years the growth rates in emerging markets such as India and China are higher than in Europe and the US. This motivates many companies to start operations in these markets. However, internationalization and shifting business to a country such as India, poses new strategic challenges to organizations. In the pre-globalization era, companies only had to deal with issues in the home market. They are now confronted with a shift to questions and pressure from stakeholder groups in the host countries as well. Besides being local citizens, multinational companies turn into global corporate citizens. Post (2000) denes global corporate citizenship as: The process of identifying, analyzing, and responding to the company's social, political, and economic responsibilities as dened through law and public policy, stakeholder expectations, and voluntary acts owing from corporate values and business strategies.

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 According to this denition, global corporate citizenship requires local responsiveness. A company needs to be able to understand the local issues and respond to them in an appropriate way in every country it operates in. Post (2000) states that the introduction of a global brand in a developing country with a promising consumer market is not likely to succeed against domestic competitors unless the global company establishes its credibility as a local company. The company also needs to be aware of local stakeholder expectations. For example, in case of a natural disaster, local stakeholders may expect multinationals to assist with the disaster relieve. If the local branch of the multinational needs to await approval from the head ofce in the home country, it may be to slow to respond causing a negative public response. This is what happened to several multinationals in China right after the Sichuan earthquake in May 2008. In the days following the earthquake, many multinationals pursued a global CSR policy in line with their international standards. The result was that they donated much less money than their local Chinese counterparts. As a response, Chinese consumers called for a boycott of products of multinationals and they gave the companies, including Nokia, Samsung and Coca Cola the nickname of "international iron roosters." This term refers toa bird that will not give up a single feather, and its usage highlights the perceived stinginess of these international rms (McGinniss, 2008). To assist multinational companies in operating in emerging countries international organizations have developed guidelines. For instance, in 1976, the OECD adopted the OECD guidelines for Multinational companies covering areas such as child labor policies, trade union recognition and combating bribery. Although helpful, these type of guidelines are not sufcient. Companies also need to develop internal organizational competences and dene their role as a global corporate citizen to be able to work effectively abroad. This however is conicting with the way many multinationals operate. As mentioned in the introduction, multinationals usually strive for standardization to achieve global consistency among its subsidiaries and operations in developing countries. Standardization allows a company to build a global brand and it enables the company to achieve cost reductions. It also enables companies to maintain international quality standards. Chaudry (2006) writes that a globally integrated strategy allows multinationals to maintain policies, process and structures that are consistent with their mission and values across all relevant cultures. In

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 this sense, a globally integrated strategy for CSR is the saver option in a time when corporate reputations can be destroyed in a days time due to the power of the international media. Chaudry also argues that an extensive dependence on global consistency might lead to insensitivity of complex local responsibilities and result in a loss of local cooperations. Post states that one of the biggest changes for global businesses is the need to shift focus from the traditional geocentric emphasis on home country and community to a polycentric awareness of how interconnected and interdependent businesses are with other cultures and societies. A company cannot operate in isolation in distant markets. To be successful it will need to build relationships with other stakeholders. For this the company must make sure that the proper resources and processes are in place. The next paragraph will look at different structuring options.

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7.2 Framework for structuring global CSR

Based on existing organizational management literature, Chaudri developed a framework for the structuring of global CSR. In the next chapter this model will be used to identify which types of structuring options the foreign banks in India use.
Figure 7.1: Framework for the structuring of global CSR

Source: Chaudhri, 2006

The framework shows two variables: global and local themes on the X-axis and global and local execution on the Y-axis. Each structuring option has its advantages and disadvantages which are highlighted next to the boxes. Chaudhri applied the model to the global einclusive program of Hewlett Packard which the companies executes in Africa and India. The conclusion of her study is that there is no program which can be classied as entirely global or local. The level of globalization and localization is not an absolute but is exible depending on the scope of implementation and the nature of the CSR initiative. In the next chapter, Chaudris framework will be used to answer the question how four foreign banks in India structured their CSR.

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Chapter 8 CSR programs of foreign retail banks in India

Foreign retail banks in India are faced with major difculties to expand their business because of intense competition and government regulations. They are not allowed to buy a stake in a local bank and with new foreign banks coming to India, the market place is getting overcrowded with fewer customers per bank. All foreign banks target the same, small, niche market in the urban areas. Competition intensies even more because the gap between Indian commercial banks and foreign banks becomes smaller in terms of service levels. This chapter discusses the way foreign retail banks in India have localized their global CSR programs. The chapter starts with a brief introduction on foreign retail banks in India which will be followed by a web scan which shows how banks adapt (or not) to the local context. The next paragraph provides four case studies of foreign retail banks to describe to what extend they have localized the global CSR programs to better t the Indian situation. The full descriptions of the case studies can be found in the Annexes.

8.1 Foreign retail banks in India

The rst foreign bank to start operations in India was the Comptoire descompte de Paris which opened its rst branch in Calcutta in 1860. In those days the foreign banks mainly focussed on trade nance. Today 31 foreign banks operate in India. Its not easy for foreign banks to operate in India due to tight government regulation. For instance, there is a limit to the number of branches foreign banks are allowed to open. They are also not allowed to acquire a local private bank except in the case of a weak bank identied by the regulator. Local subsidiaries set up by foreign banks are not able to open branches freely. Foreign banks expect the government to announce further plans for deregulation by the end of 2009 but this may be delayed due to the nancial crisis. Compared to foreign banks, Indian banks have a much greater geographical coverage which is a competitive advantage. The reach of foreign banks is limited to the urban areas while Indian banks are spread out in the rural areas as well. Due to their limited geographical reach foreign banks are inclined to focus on niche markets. For instance, the top-end NRI market (Non resident Indians or Indians living overseas) and private banking.

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 Competition amongst foreign banks is high and is expected to intensify as more foreign banks enter the Indian market. The latest foreign retail bank to enter the Indian market is Barclays. In May 2007, the bank opened its rst retail outlet and it now has a network of ofces in ve different locations. Barclays announced that it wants to target all segments of the market and not only the top end like other international players but without a wide branch network this will be difcult to achieve (The Economic Times, 2007). With the entry of new players, the market becomes more fragmented and competition more intense. Foreign banks will have to adopt alternative approaches to win the race for the customer. A major factor of success will be the servicing of the middle and lower middle class population spread across the country but this is difcult to achieve with a limited branch network.

8.2 Website analysis foreign retail banks

This paragraphs presents the results of an analysis of the websites of foreign banks in India. This analysis is similar to the one conducted amongst the websites of local banks (see paragraph 6.3). The aim is to determine if foreign banks communicate differently than Indian banks about CSR on their local Indian websites. The four foreign banks included in this website scan are the same as the ones that are part of the case study analysis (see paragraph 8.3). Two more banks were added, Barclays Bank and Citigroup, to get a better overview.
Table 8.1: CSR website analysis foreign retail banks Name CSR mention on website HSBC Bank India Corporate Sustainability is part of main navigation menu on home page Direct link to the HSBC scholarship program Direct link to customer complaint page Direct link to do not call service Direct link to Policies and Fair Practices code Direct link to online security Comments HSBC provides localized CSR information on its website. Easy to access. Integral part of the website with dedicated CSR are. The bank also provides a CSR fact sheet in pdf format. Furthermore they provide customer care information. Information on products is standardized. There is no mention of localized banking information.

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Name ABN Amro India CSR mention on website Link to news release about ABN Amro wildlife awards Link to Micro nance website Direct link to do not call registry Direct link to grievance form Direct link to Code of Banks commitment to customers Direct link to Information security alert Direct link to do not call registry Direct link to customer feedback form Comments No explicit mention of CSR policy on website. Only ad-hoc posting of CSR related press release on home page. Many direct links to customer care related information. Global CSR information accessible through ABN Amro worldwide link.

Deutsche Bank India

Standard Chartered India

Barclays Bank India

Citibank India

No explicit mention of CSR on website. No other localized information. Website shows a globally standardized look and feel. Bank shows Indian advertising under marketing campaign link. No mention of involvement in Indian community or Foundation work. Information on global CSR program accessible through group site. Direct link to do not call registry Mostly customer care information. Direct link to customer feedback No explicit mention of Indian CSR form program. Information on global Direct link to fair practices code for CSR accessible through link suslending products tainability at the bottom of the In the bottom menu link to global home page. sustainability website Brief mention of two Indian commu- No explicit mention of Indian CSR nity programs on about us page program on home page. Website do not call button does give a local feel with descripgrievance redressal form tion of local activities and Indian CSR activities under about us. Direct link to complaints No explicit mention of CSR on Direct link to do not disturb home page. The website gives a Direct link to online security localized feel because of use of Direct link to privacy policy Indians in photography. Mainly Separate section for use credit re- customer care information. Interacsponsibly tive and localized section on use credit responsibly. It contains recommendations from Indian expert for example.

8.2.1 Conclusions website analysis foreign banks This analysis shows that, except for HSBC and, to a lesser extent, Barclays Bank, foreign banks are hesitant to mention CSR explicitly on the local website. This is remarkable because on a group level every foreign bank has a dedicated CSR website with very detailed descriptions of the CSR policies. A comparison with the local Indian banks reveals that both the foreign and the local banks focus foremost on providing customer care informa-

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 tion. Another observation is that the websites of the foreign banks have mostly an international look and feel with only a very limited amount of localized information. The outcome of the website analysis is that generally global banks dont seem to be willing to use CSR as a way to build their corporate reputation in the local market. While CSR is clearly seen as a business opportunity on a global level this is not yet the case in the domestic markets. Obviously local Indian retail customers are not perceived as a major CSR stakeholder group.

8.3 Case studies

This chapter presents four case studies which describe how foreign banks adapt their CSr programs to the Indian situation. The aim is to answer the question which bank is best positioned to respond to the CSR expectations of Indian stakeholders. The four banks which are part of this analysis include: Deutsche Bank, ABN Amro, Standard Chartered Bank and HSBC Group. These four banks were selected because they are different in many ways. Deutsche Bank, for example, can best be described as a European regional bank with a smaller retail business outside the home region. Standard Chartered, on the contrary, is a true emerging markets bank deriving most of its revenues from the Asian and African markets. ABN Amro was included because of its very long presence in India and because it was the rst bank ever in India to publish a CSR report taking a frontrunner position in that respect. HSBC positions itself as the worlds local bank. It will be interesting to see how this positioning translates itself in the way they localize CSR. The case studies are based on the information available on the websites of the banks and CSR reports. In addition, four semi structured interviews with the CSR managers of the four banks in India have been conducted. These interviews were conducted in the months of December 2008 and January 2009. To analyze if there are any interesting differences which could inuence the local responsiveness of the banks the comparison has been divided into four parts. The rst part deals with a general discussion of the banks activities and their historical background. This is followed by a description of the Indian activities of the banks. The chapter concludes with a discussion of the global and local, Indian, CSR policies of the four banks. The full descrip-

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 tion of the CSR programs of the four banks can be found in the annexes. This chapter summarizes the main ndings concerning the local responsiveness of the banks and tries to identify which type of structuring options from Chaudris framework the banks have selected. 8.3.1 Global banks with different origins While all four banks position themselves as global banks with wide international networks, they have very different origins. Deutsche Bank was founded in 1870 in Germany but as a local German bank, it focussed from the beginning on foreign business. End 2007, Deutsche bank had 81,000 employees worldwide in 75 countries. Of the 1.949 branches, 949 are located in Germany. 65% of the banks workforce is employed outside Germany. The headquarters are in Germany. Retail banking Services are currently offered in eight countries in total of which only two countries, India and China, are located outside of Europe. Most of the sales of Deutsche Bank retail is derived from its home region. Deutsche Bank can be referred to as a strong European home region bank, Standard Chartered on the contrary can best be described as an emerging markets bank. With its headquarters in London, Standard Chartered Bank has strong roots in emerging markets where it generates 93% of its revenues. The bank was founded in 1969 through the merger of two banks: The Standard Bank of British South Africa founded in 1863 and the Chartered Bank of India, Australia and China, founded in 1853. Today the bank has over 75,000 employees, 1,750 branches and operates in over 70 countries in Asia, Africa and the Middle East. In the Asia Pacic region, Standard Chartered has presence in 23 countries. The third bank, HSBC group, was established in 1865 to nance the growing trade between China and Europe. In 1998, the bank decided to adopt a single brand for all its businesses with the aim of enhancing worldwide recognition of the group. It positions itself as the worlds local bank which is also the banks tag line: the worlds local bank. Today the bank has presence in over 85 countries and employs more than 300,000 people with a network of 9,500 ofces.

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 Lastly, ABN Amro is an international bank with Dutch origins. It originated from a merger in 1990 between Amsterdam-Rotterdam (AMRO) and Algemene Bank Nederland (ABN). The historical roots of the bank go bank to the foundation of the Nederlandse Handelsmaatschappij (Netherlands Trading Society, NTS) in 1824. As of 31 December 2007, ABN Amro had more than 4,000 branches in 53 countries and a staff of more than 99,000 people. In 2007, the bank was acquired by a consortium of three banks: Royal Bank of Scotland, Fortis and Bank Santander. When the rst interview with the CSR manager, Viram Balsari, was conducted in November 2008, ABN Amro was still managed as approximately separate entity. In the meantime, the take over of the Asian business of ABN Amro by Royal Bank of Scotland has further developed. The ABN Amro CSR program has been put on hold to await the outcome of the integration process. The last ABN Amro sustainability report was issued in 2006. The 2007 sustainability report was issued in collaboration with the consortium partners Fortis, RBS and Santander. 8.3.2 Similar global objectives Although they use different wordings, all four banks indicate that they want to be active in CSR to make the environment in which they operate more sustainable and to create social capital. All four banks also have an impressive CSR track record. For instance, the four banks are listed in the FTSE4Good index and the Dow Jones sustainability index for example. The banks mainly differ regarding their global themes. HSBC for example has a very strong emphasis on the environment while Standard Chartered identied health as it key global CSR theme. 8.3.3 Commitment to the Indian market place The rst bank in this review, Deutsche Bank has presence in India for over 25 years but only in 2005 the bank started retail banking operations. Today Deutsche bank India has 3,500 employees and 13 branches. Chartered Bank opened its rst branch in Mumbai and Calcutta, India, in 1858. Today the bank has presence in 33 cities where it serves customers from 80 branches and employs 18.000 people.

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 HSBC was established in India for more than 150 years. HSBC's origins in India date back to 1853, when the Mercantile Bank of India was established in Mumbai. In 1959, the Mercantile Bank of India was acquired by The Hongkong and Shanghai Banking Corporation (HSBC) and the head ofce of the HSBC Bank was established in Mumbai. According to the annual report India is a key market for HSBC. It now has 47 ofces and employes 7,700 people. Lastly, ABN Amro started operations in India in 1920 with the opening of a branch in Kolkata. The bank currently has 28 branches in the main Indian cities and almost 3,900 employees. ABN Amro India services 1,5 million retail banking clients. The conclusion is that three out of four banks (Standard Chartered, HSBC and ABN Amro) have a long presence in India which enabled them to build relationships with local stakeholders and gain knowledge of the Indian market place. It also allows these banks to demonstrate their commitment to the Indian market to customers and other local stakeholder groups. 8.3.4 Customizing CSR for local needs This paragraph will discuss in more detail the local CSR programs of the four banks. The information is to a large extend based on semi structured interviews with the CSR managers of the banks in India. Deutsche Bank

Deutsche Bank runs a program in India is because it strongly believes it needs to be embedded in the community. There is a clear distinction between the CSR issues dealt with by Deutsche Bank India and Deutsche Bank global. A major element of the global program is fostering creativity through sponsoring of art works. This theme is not a prime focus in India. Art is not on the CSR agenda because its not relevant to the Indian situation. Deutsche Bank India chooses to focus primarily on education. The Deutsche Bank model is mixed with a strong focus on local execution and initiative. The CSR responsibilities at Deutsche Bank are held by the corporate communications ofcer who reports directly to the CSR. This is 1 FTE. CSR is not integrated in Deutsche Bank Indias

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 external communication program. The bank does not publish a separate CSR report for India although they would like to have one. Standard Chartered

Standard Chartered does not have a localized CSR strategy although the countries have some exibility. According to the CSR manager, Pratima Harite, India adapts the global policy. She states that the centre selects the issues but the countries can determine if it suits the country. In India, the bank focusses on health and education and youth and women. These themes are initiated on a global level. While implemented on a local level, there is little room for local customization. CSR is handled by corporate affairs. There is a centre of expertise (sustainability) at a group level with about 13 staff. Its very much a top down approach directed from the centre. Four factors explain the strong global inuence. First, the global themes are relevant for the Indian situation. Health and education are umbrella themes for all countries. Furthermore, the lack of staff. At Standard Chartered, CSR falls under the responsibility of corporate affairs and is handled in India by one full time employee. A third reason is the fact that the main programs are run as part of the Global Clinton Pledge. Working with local stakeholders and changing local priorities can hamper the effectiveness of the global CSR initiative. This is why the global CSR team may be reluctant to work with local partners. A fourth reason for standardization is the need for brand consistency. The biggest issues in India are the lack of resources for staff and budget. In India there is one CSR staff. You want to do more but thats not possible says Pratima Harite. The budget is sanctioned at group level. There is a scope to move to local also and the local organization is free to adopt other programs but they must have the resources to do so. At the moment the Centre is the initiator and the facilitator. The monitoring and evaluation of the programs is very stringent because they are run as part of the Clinton Global initiative. There is a strong focus on audited information at group level. For the environment there is a global environment system in place. The evaluation team consists of Standard Chartered employees from different countries.

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 The different focus areas are at different development phases. Overall Pratima is satised with the support she receives from the centre. She says that for new strategies you prefer to have more intervention. According to Standard Chartereds CSR manager Indian banks perform better because their products and services appeal more to the Indian public. They are more tailored to their needs. She observes that cultural differences play a role. For example, women empowerment uses sports as a channel. They focus on a sport which is not very known in India, netball. The cause itself was still very important. There is a clear sense that global CSR comes rst in terms of priority. The shareholders are part of the group and they are most important. The local entity always comes second. The local organization focusses most on the programs which are most relevant to India. Community investment may be slightly more important. Following the global program, India now also implements an environmental program. Its still in its infant stages in India. The bank organizes an environment week for employees. The bank is in the process of making an inventory of the use of paper in each country. Developed by specialists on a group level, the rst project, Seeing is Believing, is aimed at the prevention of eye care. The program was launched in 2003 as a community investment initiative. The bank adopted it as a local Indian program in 2005. The vision of Seeing is Believing is global in nature and the essence of the program stays the same in all countries. The bank works mainly with international NGOs. Relationships on a local level are maintained on a local basis after being initiated and identied on a global level. There is minimal interference in the program of local government authorities or other local players. While global in nature the Indian team can customize the program to a certain extent to local needs. For example, the rst objective of Seeing is Believing was to have one catractical surgery for each employee. The Indian organization could easily pass that number. To maximize the success of the program the Indian organization took the initiative to focus more on the prevention of eye diseases. The possibilities for further customization however are limited due to the strong centralized governance structure and the uniform centralized guidelines of the Clinton Global Pledge. There is an advisory board in the UK with also independent members such as Goldman Sachs.

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Standard Chartered does not yet publish an Indian CSR report but expects to do so in two to three years from now. The global sustainability review does not contain separate information on India or any other of the host countries. The bottom navigation on the home page contains a sustainability link leading visitors to the global sustainability website. HSBC

HSBCs India initiatives are guided by the United Nations Millennium Development Goals (MDGs). The bank in India addresses six of eight MDGs: Eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, combat HIV/AIDS and other diseases, ensure environmental sustainability and enhance global partnership for development. In contrast to the global program with its strong focus on environment, HSBC India puts education rst because this is more relevant for the Indian situation. The bank runs the future rst program, a ve-year, US$ 10 million initiative of the HSBC Global Education Trust. The program supports 131 projects across 39 countries. HSBC India also runs several environmental focussed programs. An example is the Earth Sciences Forum. Its a Public Private Partnership between HSBC in India and the Indian Ministry of Science and Technology and Ministry of Earth Sciences to develop solutions to climate change. HSBC also sponsors the HSBC Young Rangers club to make children more aware of the importance of caring for the environment. To position itself as a frontrunner on climate issues HSBC was a senior partner at Delhi Sustainable Business Development Summit in 2008 organized by TERI and the Confederation of Indian Industry. Furthermore, the bank is an active participant in several Indian industry federations such as the CII national CSR committee and the Council for Fair Business Practices. HSBC India has a strong local CSR team consisting of six people headed by Unmesh Brahme a senior CSR practitioner who is a regular speaker at CSR conferences in India and abroad. Because the program is run locally, HSBC is able to respond quickly to national issues. For instance, HSBC was quick to help the victims of the Mumbai Terrorist attacks in November 2008.

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 HSBC India is the only foreign bank which invests heavily in CSR communications to local stakeholders. The bank publishes a separate corporate sustainability report for India, Corporate Sustainability at HSBC in India. According to Unmesh Brahme, this report shows the long term commitment of HSBC to the country. The report focusses on the three themes: nancial inclusion, environment and volunteering. HSBC is the only one amongst the four banks to have a dedicated localized CSR section on its website. ABN Amro

In 2007, ABN Amro India received the Financial Times/IFC Emerging Markets Sustainable Bank of the Year 2007 award for its strong performance in the eld of sustainability. ABN Amro India was also the rst nancial institution in India to publish a Sustainability report. In India, the ABN Amro India foundation focusses on four core themes: environment, poverty alleviation, underprivileged children and relief and rehabilitation during disaster. Poverty alleviation however has most attention. According to Balsari The environment does not hurt people at the personal level. Health is the closest to the Indian citizens. According to Balsari, Indian banks do not yet see sustainability as an opportunity. This is contrary to ABN Amro. ABN Amro India for example is one of the few banks to promote sustainable energy funds. ABN Amro was also one of the rst banks in India to enter the micro nance market. These activities broke even in 2003 and these activities are now protable. Its a combination of CSR and a pure business activity for the bank. The ABN Amro model is decentralized with coordination from the centre. The ABN Amro India team has much autonomy and they set their own objectives. The bank employs one full time senior manager responsible for the ABN AMRO Foundation India (AAFI). In addition there is a Micro nance and Sustainable Development Department (MF&SD). Each Business Unit is represented by a Sustainable Development Champion who is the link between the MF&SD department and the respective business. The bank also has an account manager in the communications team. However, according to Balsari the knowledge of the communications team with respect to CSR could be improved. In India, the ABN Amro India foundation focussed on four core themes: environment, poverty alleviation, underprivileged children and relief and rehabilitation during disaster. There was no link to the business which means that the team could decide independently

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 from the businesses which causes to support. Following the take over by RBS, ABN Amro runs several RBS programs: GAYE (Give As You Earn) - a payroll giving program, community cash back and MoneySense. These are all examples of program duplications. Some of these programs require little localization such as the GAYE program. Indian employees are very much involved in this program. Other RBS programs such as the RBS Supergrounds program require more localization. RBS Supergrounds is a community program where RBS helps schools to improve the school playgrounds. This program will need to be tailor made for India where the priorities of schools which often lack basic necessities such as teachers and school books are completely different. The Foundation work of ABN Amro is expected to end soon as the ABN Amro Foundation has stopped to exist. In India, ABN Amro is an important player in the eld of Socially Responsible Investing (SRI) and micro nance. The bank also runs a local stakeholder engagement program working with Indian CSR organizations such as TERI: BCSD. This is the Indian chapter of the World Business Council for Sustainable Development. ABN Amro was also invited by the Indian government as an expert partner to provide inputs on rural credit and micro nance. In 2007, ABN Amro India published the rst Sustainability Report. This was the rst time a nancial institution in India ever published such a report and it shows the banks commitment to the Indian market place. Except for the annual report, external communications of CSR initiatives is limited. There is no button on the Indian ABN Amro website to CSR related information. The news section on the home page shows links to CSR related news releases. Other CSR related information on the home page is related to consumer services: grievance redressal information, complaint form, code of banks commitment to customers, etc. In the About Us section of the website, the bank refers to its Micro nance activities.

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 8.3.5 Application of Chaudris CSR framework to the four banks One of the questions asked at the beginning of this chapter, was which type of CSR framework the four banks apply using Chaudris model. The table below provides examples of activities of the four banks. It shows that in line with Chaudris conclusion (see chapter seven) none of the programs can be described as fully globally integrated or fully locally responsive. The four banks show a mix of the four models:
Table 8.2: Type of CSR programs applying Chaudris model Bank ABN Amro Globally integrated Program extension UK supergrounds program (RBS) GAYE (payroll program) Glocal Localization of global programs such as the UK super grounds program Locally responsive

Deutsche Bank

Standard Chartered

mirroring what we are doing at a global level Limited local HR resources. No local visibility of CSR activities. Limited local HR Seeing is believ- Global programs resources. ing can be adapted to Stakeholder dia- Aids program local needs logue on a local level is almost non existent. Strong link with Clinton initiative Strategy is initiated at the level of the head ofce. Impact evaluation is centralized.

Indian CSR report. Local CSR programs only relevant for India (forrest) Local stakeholder engagement program working with Indian CSR organizations. ABN Amro was also invited by the Indian government as an expert partner to provide inputs on rural credit and micro nance. Mentor plus pro- The CSR themes The Indian CSR gram in the regions are team has a 100% different depend- say in what proing on local needs ject to support

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Bank HSBC Globally integrated Focus on the millennium goals Program extension Glocal Localization of main themes: less focus on environment and more focus on relevant themes for India such as education. Locally responsive Indian CSR report Indian CSR website. Active participant in different industry groups. Ofcial partner of Indian government with respect to climate change initiatives. Strong and senior local HR team. Local autonomy is part of the brand promise of the bank

8.3.5 Conclusions case studies In the previous chapter, the question was asked which bank is best positioned to respond to CSR expectations of Indian banking consumers. As mentioned in chapter seven, the main criteria is local responsiveness. To allow for a comparison of the four banks, the main factors which inuence local responsiveness have been summarized in a table:
Table 8.3: Factors which inuence local responsiveness

Bank

Factors in favor of local responsiveness

Factors not in favor of local responsiveness

Deutsche Bank

India is growth market for the bank Bank allows for regional differences The Indian CSR team has a 100% say in what project to support

Started retail operations in India only in 2005 Presence is limited to the big cities Global branding and standardization of banking services Lack of CSR staff / only 1 FTE who has joint responsibility for Corporate Communications Local CSR not key focus area No link to the business

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Bank

Factors in favor of local responsiveness

Factors not in favor of local responsiveness

Standard Chartered

Presence in India since 1858 India is important growth market for the bank Cultural diversity part of DNA of the bank Vast knowledge of emerging markets issues Management team with various nationalities International stakeholder program managed by international team Banks focusses on CSR theme which is relevant for Indian market

Global branding and standardization of services Presence in limited to the big cities Stakeholder program managed by international team / not on a local level Lack of CSR resources High focus on maintaining global standards CSR not yet considered as a business opportunity

HSBC

Strong historical roots in India Head ofce of the bank was established in Mumbai Senior CSR staff Focus on execution of local stakeholder program Localized approach with autonomy on a strategic level for the local teams Local CSR is key focus area of the bank consistent with the worlds local bank positioning Strong roots in India Local team has been given substantial autonomy Senior CSR team CSR is considered as business opportunity (strong micro nance focus)

Global branding and standardization of services Presence in limited to the big cities HSBC global has strong focus on environment which is not a top priority theme in India / more difcult to sell in India

ABN Amro

Global branding Presence in limited to the big cities Take over by UK home country bank

The analysis shows that three of the banks, HSBC and ABN Amro have opted for a more localized approach with autonomy on a strategic level for the local teams and local responsiveness. Standard Chartered chooses for a globally integrated and standardized approach which allows the bank to maintain policies and processes which are consistent with the global CSR brand. Deutsche Bank started its CSR program only recently. This bank seems to consider CSR as a 'discretionary' responsibility and it is not as developed yet as the programs of HSBC and ABN Amro. The conclusion that Standard Chartered Bank has the least localized CSR program is conrmed by the outcome of a short questionnaire completed by the CSR managers. They answered eight questions with the aim of determining to what extend the CSR strategy is localized. The chart shows that Standard Chartered has by far the highest level of global standardization leaving little room for the local Indian team to develop localized strategies.

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 HSBC, Deutsche Bank and ABN Amro follow approximately the same pattern. However, the type of CSR activity differs considerably. While Deutsche Bank focusses mainly on community investment, HSBC and ABN Amro runs a much broader CSR program including an extensive local stakeholder program.
Figure 8.1: The level of globalization versus localization of CSR programs foreign banks
Standard Chartered Deutsche Bank HSBC ABN Amro

Local versus Global

5 4 3 2 1 0

Where do most new CSR activities come from?

Our CSR program can be described as

Definition of procedures

Selection of issues?

The analysis further indicates that:

How is the Indian CSR strategy developed?

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Monitoring and evaluation

External Verification

Setting of targets

 There is a difference in investment in CSR staff.

The four Indian banks run local Indian CSR programs but in different ways. One of the main differences is the investment in CSR staff. HSBC has a team of six dedicated CSR professionals headed by a senior Manager. On the other extreme, Deutsche Bank employs only one CSR manager who has a dual responsibility for CSR and corporate communications. Standard Chartered mainly duplicates international run programs and therefore the need for senior managers is less. They also seem to be worried that too much local autonomy will have an impact on the safeguarding of international standards. The intensity of local CSR communications is less compared to global CSR communications. Two of the four banks provide localized information. The webscan seems to indicate that the corporate communications departments of the banks are not as heavily involved in communicating to local stakeholders about CSR activities, at least as far as the Internet is involved. ABN Amro and HSBC both publish a separate CSR report for India. HSBC places extensive CSR information on its local Indian website. It shows that both banks are committed to communicating with their local stakeholders. Only two of the banks have corporate resources in place to ensure effective local stakeholder approach. The banks with more CSR staff in place, are more involved in local stakeholder management. Both ABN Amro and HSBC are actively involved in several Indian CSR platforms for the nonprot sector and the government. Both banks perceive themselves as front runners regarding CSR. Standard Chartered is also very active in stakeholder management but predominantly on an international level. The CSR issues of Standard Chartered Bank are most relevant for Indian market. As an emerging markets bank, Standard Chartered focusses on issues which are most relevant to the Indian market place because they are mainly healthcare related (HIV, eye care). This makes it easier to duplicate global programs. This is different in the case of Deutsche Bank. A global program to promote art will not be very effective in India. The CSR teams of the four banks have the freedom to customize the programs for local needs.

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 Standard Chartered Bank is a special case.

Standard Chartered Bank is a special case. Its CSR program is very much standardized and the local team has few possibilities to localize the programs. Stakeholder management activities are initiated outside India and not by the local team. This seems to be a deliberate choice of Standard Chartered to ensure that, as a global bank, it can build a global CSR reputation. Furthermore it allows the bank to maintain international standards. Contrary to HSBC, its not Standard Chartered Banks ambition to be perceived as a global local bank. Instead they want to be seen as a global bank with a culturally diverse workforce. The head of Corporate Communications Standard Chartered India is of African origin and works in India on an expat assignment.

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Chapter 9 Concluding remarks

CSR becomes increasingly important around the world. A large number of multinationals is attracted to the Indian market place because of its enormous consumer market and growth potential. The aim of this thesis was to understand if Indian CSR is different from western CSR concepts, what the expectations are of Indian retail bank customers and the implications for foreign retail banks with operations in India. To answer these questions, desk research was conducted supplemented by an online survey amongst Indian retail bank customers and semi structured interviews with the CSR ofcers of four foreign retail banks. Does Indian CSR differ from western CSR? This question can be answered afrmatively. CSR in India is different mainly due to a difference in cultural traditions and because of the socio-economic challenges of the country. The Indian cultural traditions play a very important role in shaping Indian CSR. To analyze the cultural traditions the value dimensions of Hofstede were used. With a IDV score of 48, India ranks 21 in the individualism index for 50 countries, right behind the wealthy countries. In the context of CSR this could imply that Indians are less interested in the collective good compared to people from other emerging markets. The high power distance score of 77 corresponds most with the Hindu religion which states that individuals need to accept ones place in the world. It explains why many Indians seem to accept the enormous inequality in the country and the paternalistic role of CEOs who play a crucial role in driving CSR programs. Another important driver for CSR in India are the socio-economic challenges the Indian government is faced with. Different from western countries, India deals with major social challenges including illiteracy, poverty and insufcient healthcare facilities. This explains why community investment as a CSR activity is likely to be given more priority inside India than environmental protection, an issue which is very high on the agenda of western politicians and CSR inuencers. Another difference with the West is that the Indian

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 government and other stakeholders expect companies to play a role in solving social issues. The Indian government can simply not do it on its own. The analysis of the CSR drivers allows to explain why the western CSR models need to be adapted to make them effective in India. Firstly, the model of Carroll. Visser presented an alternative model for developing countries. In Vissers model philanthrophy comes second, right behind economic responsibilities. This is in line with the Indian CSR reality where it is expected that businesses take a more responsible role to address social issues. Legal responsibilities are less of a priority in a country with a weak judicial enforcement system. Another model used in this thesis is the implicit, explicit model of Matten and Moon. The business houses have a long tradition in giving back to society through the traditional family owned business conglomerates where the business tycoons see it as their duty to help build the nation and care for their people. Using the terminology of Matten and Moon, CSR in India can therefore best be described as implicit. The fact that Indian companies dont communicate about their CSR activities explicitly does not mean they are not active in CSR. The analysis also shows a difference between the Indian CSR situation and the corporate social integration model proposed by Porter and Kramer. They argue that companies should link their CSR activities to core competencies. However, in India many companies operate as conglomerates with many different activities and CSR is still a very fragmented activity. There are only very few companies where CSR and strategy are closely connected. It is therefore questionable if the model of Porter and Kramer will work in the Indian context. Do Indian banking consumers value CSR? The online survey revealed that Indian consumers from the target group are relatively indifferent towards CSR. The respondents are mostly interested in good customer care. The online survey seems to indicate that the majority of the people believe that a banks sole purpose is to make prot which is in conict with the philanthrophy model of CSR. The respondents also dont seem to support increasing the amount of money spent on social causes.

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What are the implications for foreign retail banks operating in India? The four case studies show that the four banks have similar global CSR objectives but they have chosen for a different mix of global versus local solutions to adjust their global programs to the Indian CSR situation. Standard Chartered has the highest level of global standardization leaving little room for the local Indian team to develop localized strategies. HSBC runs the most localized program with a senior CSR team and localized CSR communications and a localized stakeholder program. The question is which model will be most effective in India. Its not possible to provide a conclusive answer to this question based on the available data. However, as observed earlier there are signiant differences between Indian and Western CSR. An international company operating in India cannot simply ignore these differences and stick to a standardized CSR program because it wants to protect international quality standards or is afraid that localization could damage its corporate reputation. The implications for the banks with regard to their efforts to attract more customers are not so clear. As with all management decisions, this requires a cost versus benet analysis. The online survey revealed that Indian consumers are somewhat indifferent towards CSR. It is therefore likely that extra investments in CSR will not directly result in business growth through consumer generated revenues. From a business perspective it would be more effective to invest in better customer service. The above does not imply that banks should refrain from implementing CSR. On the contrary. To become a true global citizen, banks need to be local responsive and this requires a localized CSR program with a senior CSR team. Even though banks should not expect immediate business growth, on the long term it will help them to build a strong platform for further business expansion once the market opens up by developing strong relationships with local stakeholders. Due to the governance gap it could be worth the effort to explore opportunities to work together with local government actors to help solve social issues. The banks also need to critically review the CSR priorities and ensure that the issues t the local agenda. To bring the priorities more in line with the socio-economic priorities of the Indian government the focus should be less on western issues such as

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 environmental protection and more on nancial inclusion helping the millions of unbanked in India to escape poverty.

9.1 Limitations of this research

This thesis tried to describe Indian CSR but this is impossible as there are many different Indias. The thesis is also limited to a certain industry sector: banking. A sector where the societal and environmental impact is not as evident compared to other sectors such as manufacturing and the gas and oil industry. Furthermore, the thesis focusses on a particular stakeholder group: middle class urban Indian retail banking consumers. Certain aspects have been left out deliberately such as the employee benets of CSR, a major driver of many CSR programs. Despite the limited nature of the research the thesis attempts to help foreign companies in India to get a better understanding of the cultural and socio-economic differences between the West and India and the CSR implications.

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 Manrai, L.A. and Manrai, A.K., 2007. A eld study of customers switching behavior for bank services. Journal of Retailing and Consumer Services, Volume 13, Issue 3, pp 208-215 McGinnis, A. et al., 2009. The Sichuan Earthquake and the Changing Landscape of CSR in China, April 20 in Knowledge@Wharton McKinsey, India Banking 2010, Towards a high performing sector, executive summary. Year unknown Muniapan, B. and Das, M,. 2008. Corporate Social Responsibility: a philosophical approach from an ancient Indian perspective, International Journal Indian Culture and Business Management, Vol. 1, No. 4, 2008 Nelson, J., 2003. Economic Multipliers: Revisiting the Core Responsibility and Contribution of Business to Development. [Policy Paper]. London: International Business Leaders Forum (IBLF) Nokia, 2007. Mobile Communication is Revolutionizing Economic and Social Development in Rural India. [Press release]. 24 January. Available at: http://www.csrwire.com/press/press_release/23898-Mobile-Communication-is-Revoluti onizing-Economic-and-Social-Development-in-Rural-India Noyer, C., 2008. The history and future of corporate social responsibility. [pdf]. Welcome speech by Mr Christian Noyer, Governor of the Bank of France, at the Symposium ICCA EABH, Paris, 27 October. Available at: http://www.bis.org/review/r081106a.pdf Ogrizek, M., 2002. Forum Paper: The Effect of Corporate Social Responsibility on the Branding of Financial Services. Journal of Financial Services Marketing. Vol 6, pp. 215-228

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 Pomering, A. and Dolnicar, S., 2006. Customers Sensitivity to Different Measures of Corporate Social Responsibility in the Australian Banking Sector, Faculty of Commerce Papers, University of Wollongong Porter, M.E. and Kramer, M.R., 2006. Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, December, Vol. 84 Issue 12, pp. 78-92 Post, J.E., 2000. Moving from geographic to virtual communities: Global corporate citizenship in a dot.com world. Business & Society Review. Spring, Vol. 105 Issue 1, p27 Quazi, A.M and O'Brien, D., 2000. An Empirical Test of a Cross-national Model of Corporate Social Responsibility. Journal of Business Ethics. May, Part 1, Vol. 25 Issue 1, pp. 33-51 RBI, 2007. 2007-08/216 DBOD. No.Dir. BC. 58/13.27.00/2007- 08 RBI, 2009. A prole of Banks 2007-2008. [Internal publication]. Available at:
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10 Appendix
Appendix 1: Questionnaire for semi-structured interviews case studies
This questionnaire serves as a discussion guide for face-to-face interviews with CSR professionals working for foreign retail banks with operations in India. The objective of the interviews is to gather in-depth information on the level of localization of international CSR strategies.

Section A: Strategy and issues

What is the CSR strategy of your bank on a global level? What are the main activities of this strategy on the global level? When did your bank start to have activities in the field of CSR? Why does your bank implement this strategy? Which stakeholders are involved in the definition and implementation of your CSR strategy? Does your bank define a specific strategy on CSR for India? Why? / Why not? If yes, what are the three main objectives of your CSR strategy in India? If yes, which stakeholders are involved in the definition and implementation of this strategy? What local CSR programs does your bank run in India? Have you defined specific targets for these programs? What is the activity level with regard to the main programs (low/medium/high)? Are CSR issues integrated in your banks strategy? At the global level? At the Indian level? Section B: The CSR organization What does the CSR organization look like? Organizational chart (global CSR and local) Jobs and titels Responsibilities Size of the CSR organization (global and local) Other facts and figures

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From your experience as a CSR manager, what are the biggest CSR issues faced by the bank today from an organisational viewpoint on a local level? Are CSR issues integrated in the evaluation of the local managers of your bank? From an Indian perceptive, are there any local CSR needs which are not being properly addressed by the centre?

The following questions will be answered based on a 5 point scale to determine the level of localisation of the banks CSR policy. [Please indicate with a C where you think the mentioned CSR policies are India specific or defined by the banks global policies. Please put an F where you think the bank needs to be to maximize the effectiveness of the local CSR policies] How is the Indian CSR strategy developed? Our CSR program can be described as: Where do most new CSR initiatives come from? Selection of issues? Settting of targets? Definition of procedures? Monitoring and evaluation? External verification?

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Appendix 2: Questions online survey Indian Banking consumers

What is your gender? What is your age group? Where do you live? Please indicate if you have your main bank account with an Indian public sector bank, an Indian private sector bank, or a foreign bank with offices in India? In this section we ask you to rate the extent to which you agree or disagree with a few statements
(Please rate 1 to 5 where 1 is 'I fully agree' and 5 is 'I fully disagree')

Bank profits are too high Banks should be actively involved in solving social problems Banks are helping the community by providing them with work not by donating money Banks do not want to help local residents because it is not profitable Banks take a real interest in the environment and are trying to improve it Foreign banks are more active in doing good for society then local Indian banks A bank is commercial institution and its major aim is to make a profit A bank should only donate money to a good cause when there is a real benefit Banks in India play an active role in closing the gap between the haves and not haves I will have a more positive perception of my bank if it shows high activity in addressing social problems in India The main reason banks do good for society is for financial return I don't care if my bank does good for society as long as I get good customer service Please say which of the following statements comes closest to your own view? Choose one of the following answers: I expect my bank to give back to society even if it costs the bank money I expect my bank to focus on generating profits for its shareholders No answer Which of the following factors is most important to you? Responsive to consumer needs Give to charity Ensure good profits for shareholders Treat employees well Please say whether you feel your bank should intensify the level of giving back to society? Increase Same

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Decrease Don't know No answer Please say if you arewilling to pay more money for products of a socially responsible bank? Yes No No answer Please state whether you would feel more/the same/or less positiveof your bank in the following scenarios:(1 = you feel less positive, 3= you feel the same, 5 = you feel more positive) Your bank is praised for good environmental performance in the media Your bank launches a scholarship program for underpriviledged children Your bank defends customers privacy Your bank commits 1% of its profits to community programs Your banks new CEO agrees to cut pay Your bank tops the social responsibility ranking Your bank will open new branches and add more staff Your banks employees are most happy in their jobs

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Appendix 3: Online survey results question 5

Below is provided the list with the responses in percentages.
(1 = you feel less positive, 3= you feel the same, 5 = you feel more positive)

1
Your bank is praised for good environmental performance Your bank launches a scholarship program for underpriviledged children Your bank defends customers privacy Your bank commits 1% of its prots to community programs Your banks new CEO agrees to cut pay 2.06

2
3.09

3
17.53

4
46.39

5
27.84

No answer
3.09

2.06 3.09 3.09

4.12 5.15 3.09

12.37 8.25 16.49

35.05 24.74 24.74

43.30 56.70 49.48

3.09 2.06 3.09

24.74

13.40

26.80

11.34

15.46

8.25

Your bank tops the social responsibility ranking Your bank will open new branches and add more staff Your banks employees are most happy in their jobs

3.09 3.09 4.12

3.09 4.12 4.12

20.62 23.71 22.68

25.77 24.74 25.77

44.33 41.24 42.27

3.09 3.09 1.03

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Appendix 4: Online survey results question 10

Below is provided the list with the responses in percentages.
(1 = I fully disagree, 5 = I fully agree) 1
1 2 3 4 5 6 7 8 9 Bank prots are too high Bank should be actively involved in solving social problems Banks are helping the community by providing them with work, not by donating money Banks do not want to help local residents because it is not protable Banks take a real interest in the environment and try to improve it Foreign banks are more active in doing good for society then lcoal banks A bank is a commercial institution and its major aim is to make a prot Banks in India play an active role in closing the gap between the have and not haves I will have a more positive perception of my bank if it shows high activity in addressing social problems in India The main reason for a bank to do good for society is nancial return I dont care if my bank does good for society as long as I get good customer service 15.5 34 21.7 14.4 4.12 10.3 37.1 6.19 34

2
18.6 26.8 22.7 19.6 18.6 15.5 30.9 22.7 25.8

3
41.2 15.5 32 22.7 23.7 22.7 14.4 33 18.6

4
6.19 13.4 7.22 26.8 34 27.8 9.28 20.6 11.3

5
5.15 9.28 9.28 12.4 16.5 18.6 8.25 15.5 9.28

No answer
13.4 1.03 7.22 4.12 3.09 5.15 0 2.06 1.03

10 11

27.8 15.5

29.9 16.5

14.4 17.5

16.5 20.6

11.3 29.9

0 0

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Appendix 5: Full description case studies

Deutsche Bank Deutsche Bank was founded in 1870 in Germany. While it was a local German bank, it focussed from the beginning on foreign business: "The object of the company is to transact banking business of all kinds, in particular to promote and facilitate trade relations between Germany, other European countries and overseas markets."

The direct aim of the bank was to challenge the British banks, which dominated the nancing of German foreign trade. In 1873 the bank opened its rst foreign branch in London, followed in 1909 by the opening of branches in Istanbul and Brussels. In the 1970s, the bank increased its global reach and its focus on retail banking. In 1988, the bank opened 12 more branches in the Asia Pacic region. Since the millennium, the bank has expanded its reach in emerging markets like China, India and Russia. End 2007, Deutsche bank had 81,000 employees worldwide in 75 countries. Of the 1.949 branches, 949 are located in Germany. 65% of the banks workforce is employed outside Germany. The headquarters are in Germany

Deutsche Bank has two lines of business, Private Clients and Asset Management and Corporate and Investment Banking (CIB). Private and Business Clients is Deutsche Banks retail network and is part of Private Clients and Asset Management business unit. The network has grown considerably the past few years expanding mainly in Italy, Spain and Poland and in home market Germany. Retail banking services are currently offered in eight countries in total of which only two countries, India and China, are located outside of Europe.

Most of the sales of Deutsche Bank retail is derived from its home region. It is therefore better to refer to Deutsche Banks retail banking arm as a home region company instead of a global bank. The market presence in the host region is much weaker than in the home region. It is therefore likely that the host region will receive less managerial attention.

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Cultural t of Deutsche Bank to the Indian market place Deutsche Bank has strong cultural roots in Europe and in Germany in particular. The head-ofce of the bank is located in Frankfurt, Germany. The Board Members have predominantly the German nationality. The head ofce for the Asia Pacic region is located in Singapore. However, with the centre of the retail activities in Europe it is likely that the key decisions for the retail market are taken in Germany.

Indian presence Deutsche Bank has presence in India for over 25 years but only in 2005 the bank started retail banking operations. Today Deutsche bank India has 3,500 employees and 13 branches. To announce the launch on 18 October 2005, Rainer Neske, a Member of the Group Executive Committee of Deutsche Bank, said: As the leading retail banking provider in Germany and parts of Europe, we have keenly followed the developments in India - one of the most exciting growth markets in the world. The number of afuent Indian consumers is increasing, the market for consumer goods is expanding and private customers demand for excellent advisory services and high quality banking products continues to rise. This is an exciting market that Deutsche Bank seeks to serve by providing advanced value, innovation and convenience to Indian customers. (Deutsche Bank press release).

Deutsche Bank has a long history in CSR. For over 80 years, Deutsche Bank is the sponsor of the Villa Romana Fellowship, the oldest German art prize. Several members of the board are actively involved in CSR. The bank is listed in the FTSE4Good index, the Dow jones sustainability index and is certied in accordance with ISO14001. Deutsche Bank is also an active participant in the UN Global Compact Initiative and it adheres to several other socially responsible obligations such as the Principles for Responsible Investment and the OECD guidelines for Multinational Businesses. The bank manages various responsible asset management funds including the DWS Invest Responsibility Fund.

Global CSR The umbrella theme of Deutsche Banks CSR activities is more than money: building social capital. On its global website, the bank states: Deutsche Bank regards Corporate Social Responsibility not as charity but as an investment in society and in its own future. This is in line with the banks mission statement regarding sustainability: Thinking Today about Tomorrow. The goal of the

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banks CSR program is to create social capital. Josef Ackermann, Chairman of Deutsche Bank provides the following rationale for the CSR activities of the bank: "We do not consider our corporate social responsibility program to be charity with our shareholder's money but rather as an investment in our own future, as well as in the future of society (Deutsche Bank website).

The CSR strategy of Deutsche Bank is standardized but the bank does allow for regional differences. Deutsche Bank chooses not to have a global CSR identity across all markets. The CSR themes in the regions are different depending on local needs. The themes range from art and solar impulse to sports and disaster relieve. The main themes for the Asian region are health and education. The bank leverages its core competencies in ve areas of activity: sustainability, corporate volunteering, social investments, art, education.

To localize the global CSR program, Deutsche Bank funds several regional foundations including the Asian foundation. In 2008, Deutsche Bank announced the establishment of the Deutsche Bank Middle East Foundation. Commenting on the launch CEO Ackerman said: Our decision to establish the Deutsche Bank Middle East Foundation stems from our deep seated belief in the necessity of companies contributing to the societies in which they operate (Deutsche Bank press release November 23, 2008).

The reason why the bank runs a program in India is because the bank strongly believes it needs to be embedded in the community. Also on the Indian website the bank writes about its deep commitment to the Indian market. According to Chetiar Deutsche Bank is mirroring what we are doing on a global level. Each country can localize. Deutsche Bank India is not involved in the outreach programs with an eye of building a customer base and it does not actively promote its CSR activities amongst its customer base, says Linus Chetiar, the Indian CSR manager. He continues: We rather let not your right hand see what your left hand is doing.

There is a clear distinction between the CSR issues dealt with by Deutsche Bank India and Deutsche Bank global. A major element of the global program is fostering creativity through sponsoring of art works. This theme is not a prime focus in India. Art is not on the CSR agenda because its not relevant to the Indian situation. Deutsche Bank India chooses to focus primarily on education.

Deutsche Bank India runs the CSR program as part of the Asia Foundation launched in 2003. The program is relatively new and the bank still needs to get it of the ground. The Asia foundation runs

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a regional and a country program. The theme for the regional program is to create opportunity for children with HIV by providing support and education. In addition, each country is allocated a separate budget to run its own community program. The common theme of all programs is access to education, a vital opportunity towards escaping the cycle of poverty.

Organization The Deutsche Bank model is mixed with a strong focus on local execution and initiative. According to Chetiar the Indian CSR team has a 100% say in what project to support. The team also initiates and manages several local relationships, for example with Pratham India Education Initiative. Currently the bank in India runs about 10 programs with different NGOs.

The CSR responsibilities at Deutsche Bank are held by the corporate communications ofcer who reports directly to the CSR. This is 1 FTE. For a country as diverse and large as India the manpower resources are very limited. The CSR ofcers and the CEO of the bank are both Indian. Chetiar reports to the head of Asia Pacic communications in Hong Kong. For additional support the Indian branch can rely on the support team for the Asian foundation in Hong Kong. By coordinating the activities through the Hong Kong ofce, the German CSR head ofce team tries to bring the responsibilities closer to the Asian host region. However, the fact that both Hong Kong and India are part of the Asian region does not mean that the cooperation between the two countries will always be successful because there are many differences in culture. Its also questionable that the Hong Kong CSR would have a better understanding of local Indian CSR issues then the German CSR team.

For the nancing of the program, the bank has a regional Asian budget and an Indian budget. These budgets complement each other. The Indian budget is evaluated in India. There are no gures available on the CSR spending of Deutsche Bank India or the impact of the CSR activities.

Activities The main criteria for the selection of new projects are volunteering aspects and the level to which it meets the criteria of the underprivileged. Employee volunteering is a very important aspect of the Deutsche Bank CSR program. Employees are motivated to volunteer through paid leave.

In addition to self initiated programs, there are a few examples of project duplication. For instance, the Mentor plus program, launched in 2004, in Germany , in which employees act as mentors to

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young adults is also implemented in India. For several weeks Deutsche Bank India employees spend time on teaching children from under privileged backgrounds English.

Communication CSR is not integrated in Deutsche Bank Indias external communication program. The bank does not publish a separate CSR report for India although they would like to have one. The CSR manager of the bank mentioned this is something they might consider doing in the future. He explained that Deutsche Bank India only started the program ve years ago, and they need time to get it of the ground before focussing on reporting. In the different countries Deutsche Bank operates in, Deutsche Bank UK is the only country that publishes a separate community report. CSR is not mentioned on the Indian country website. Information about Indian community activities are included in the Asia Foundation report.

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Standard Chartered Standard Chartered Bank was founded in 1969 through the merger of two banks, The Standard Bank of British South Africa founded in 1863 and the Chartered Bank of India, Australia and China, founded in 1853. While the headquarters of the bank are in London, Standard Chartered Bank has strong roots in emerging markets where it generates 93% of its revenues. On the website the bank describes itself as an international bank and as an emerging markets bank. Its strategic intent is to be the world's best international bank leading the way in Asia, Africa and the Middle East. As an emerging markets bank, Standard Chartered was the rst foreign bank to open a rural village bank in China in February 2009.

Today the bank has over 75,000 employees, 1,750 branches and operates in over 70 countries in Asia, Africa and the Middle East. In the Asia Pacic region, Standard Chartered has presence in 23 countries. The bank focusses on consumer, corporate and institutional banking. Consumer banking services are offered in over 40 markets to 12 million customers. In 2008, this business line accounted for 43% of total income. The product range includes credit cards, personal loans, mortgages, transaction banking, wealth management and private banking services to individuals and SMEs.

Cultural t of Standard Chartered Bank to the Indian market place While the international head ofce of the bank is in the UK, its not the banks home country. With 93% of its revenues derived from emerging markets, its makes more sense to consider Asia, Africa and the Middle East as Standard Chartereds home region. The bank has its cultural roots in many different countries and cultures especially in Asia. As a consequence it is not possible to use Hofstedes value dimensions to analyze the cultural t between Standard Chartered Bank and India because there are not two cultures for the comparison. The group executive director consumer banking, Steve Bertamini, has extensive experience in the Asia Pacic region where he worked 22 years for GE. On the website, Standard Chartered refers to its global team. Every year over 2.000 employees are working on cross-border assignments (website Standard Chartered). According to the website the bank offers a well-rounded career that is truly global in scope: Our size and reach facilitate exposure to international banking standards and work experience by providing employees with opportunities to travel, interact and learn from other cultures.

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Indian activities Chartered Bank opened its rst branch in Mumbai and Calcutta, India, in 1858. Today the bank has presence in 33 cities where it serves customers from 80 branches and employs 18.000 people. The bank offers the entire product range in India to retail and corporate banking customers. In 2008, Standard Chartered generated 12,5% of its income from India compared to only 9,7% from the United States and the UK. 24% of Standard Chartereds global workforce is employed in India.

Global CSR Standard Chartered Bank has an important track record in CSR. Standard Chartered is listed at the FTSE4good. Its also an active member of several CSR organizations including the Global Reporting Initiative, UN Global Compact, Climate Group, Global Banking Alliance for Women and the International Labour Organization. In 2008, the bank received the Banker Corporate Responsibility Commendations 2008 for 'Best Overall Bank', 'Best Corporate Finance' and 'Banking the Unbanked'. In 2009, Standard Chartered was voted as one of the 99 most ethical companies in the world by the US based Ethisphere institute.

Standard Chartered refers to sustainability as opposed to CSR. The slogan of the bank is: building a sustainable business. The bank denes sustainability as follows: development that meets the needs of the present without compromising the ability of future generations to meet their own needs. This denition was rst developed in the 1980s by Norwegian Prime Minister Groharlem Brundland and is also used by the World Business Council for Sustainable Development. In the 2008 Sustainability report Standard Chartered writes: we want to help protect the environment and to have a broader positive impact on the societies in which we live and work.

Many of the banks sustainability goals are linked to several of the Millennium Goals such as erediate extreme hunger and poverty and ensure environmental sustainability.

A key differentiator in Standard Chartereds CSR is the strong stakeholder approach. The bank writes: The bank must work closely with governments, customers and other stakeholders to ensure that we can continue to be a successful company for another 150 years.

Standard Chartered Bank has a strong focus on stakeholder management. The bank argues that in a fast changing world with complex and interlinked challenges it must work closely together with

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governments, customers and other key stakeholders to ensure business continuity. However, stakeholder dialogue on a local level is almost non existent as the initiative for stakeholder engagement is usually taken by the center.

The eight focusareas of Standard Chartereds sustainability goals are: Access to nancial services; Sustainable Banking; Community; Environment,Responsible Marketing, Financial Crime and Good Place to Work. Due to the banks large footprint in Africa, Standard Chartered is heavily involved in the HIV issue. Standard Chartereds original CSR program originated from Africa where Standard Chartered experienced that many of its employees contracted HIV. The bank therefore had a business related need to know more about HIV and implemented the African program in other countries. Other CSR programs include: Seeing is Believing, a global program aimed at ghting blindness, and the "Race for a Living Planet" campaign, where employees and other contribute money to environmental causes.

On group level several committees are involved in CSR. They are Wholesale Banking Reputational Risk Committee, Sustainability and Responsibility Committee, Human Resources Management Team, Environment Committee, Group Diversity and Inclusion Council. Sustainability is part of the Corporate Affairs division responsible for protecting and building the reputation of the bank. Each country has its own Corporate Affairs teams who work with their respective country CEOs to agree the communications strategy which will build and protect the reputation of the bank.

Standard Chartered does not have a localized CSR strategy although the countries have some exibility. According to the CSR manager, Pratima Harite, India adapts the global policy. She states that the centre selects the issues but the countries can determine if it suits the country. For example, the seeing is believing program is run in 20 countries and not in each of the 50 countries the bank operates. In India, the bank focusses on health and education and youth and women. These themes are initiated on a group level. While implemented on a local level, there is little room for local customization. Environmental issues are also integrated in the strategy but it is still in an infant stage in India.

CSR is handled by corporate affairs. There is a centre of expertise (sustainability) at a group level with about 13 staff. Its very much a top down approach directed from the centre. In the country, CSR is the joint responsibility of the Head of Corporate Affairs and the country CEO. As a result of Standard Chartereds HR policy of putting the right person at the right place regardless of his or her nationality, the person in charge is currently an expat.

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CSR is not part of the business evaluation or appraisal process. Employees however can link volunteering work with specic values which the bank promotes. For example an employee can indicate he or she has been trustworthy.

Standard Chartereds CSR program can best be described as glocal. Its a global bank and therefore a global program is suitable because it matches the reputation of the bank as a global company. According to Pratima Harite: subsidiaries of Standard Chartered would more likely develop a more India specic approach.

Four factors explain the strong global inuence. Firstly, the global themes are very relevant for the Indian situation. Health and education are umbrella themes for all countries. Secondly, the lack of manpower. At Standard Chartered, CSR falls under the responsibility of corporate affairs and is handled in India by one full time employee. A third reason is the fact that the main programs are run as part of the Global Clinton Pledge. Working with local stakeholders and changing local priorities can hamper the effectiveness of the the global CSR initiative. This is why the global CSR team may be reluctant to work with local partners. A fourth reason for standardization is the need for brand consistency.

The biggest issues in India are the lack of resources in terms of manpower and budget. In India there is one CSR staff. You want to do more but thats not possible says Pratima Harite. The budget is sanctioned at group level. There is a scope to move to local also and the local organization is free to adopt other programs but they must have the resources to do so. At the moment the Centre is the initiator and the facilitator.

The monitoring and evaluation of the programs is very stringent because they are run as part of the Clinton Global initiative. There is a strong focus on audited information at group level. For the environment there is a global environment system in place. The evaluation team consists of Standard Chartered employees from different countries.

The different focus areas are at different development phases. Overall Pratima is satised with the support she receives from the centre. She says that for new strategies you prefer to have more intervention.

According to Standard Chartereds CSR manager Indian banks perform better because their products and services appeal more to the Indian public. They are more tailored to their needs. She ob-

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serves that cultural differences play a role. For example, women empowerment uses sports as a channel. They focus on a sport which is not very known in India, netball. The cause itself was still very important. There is a clear sense that global CSR comes rst in terms of priority. The shareholders are part of the group and they are most important. The local entity always comes second.

The local organization focusses most on the programs which are most relevant to India. Community investment may be slightly more important. Following the global program, India now also implements an environmental program. Its still in its infant stages in India. The bank organizes a environment week for employees. The bank is in the process of making an inventory of the use of paper in each country.

Activities Developed by specialists on a group level, the rst project, Seeing is Believing, is aimed at the prevention of eye care. The program was launched in 2003 as a community investment initiative. The bank adopted it as a local Indian program in 2005. The vision of Seeing is Believing is global in nature and the essence of the program stays the same in all countries. The bank works mainly with international NGOs. Relationships on a local level are maintained on a local basis after being initiated and identied on a global level. There is minimal interference in the program of local government authorities or other local players. While global in nature the Indian team can customize the program to a certain extent to local needs. For example, the rst objective of Seeing is Believing was to have one catractical surgery for each employee. The indian organization could easily pass that number. To maximize the success of the program the Indian organization took the initiative to focus more on the prevention of eye diseases. The possibilities for further customization however are limited due to the strong centralized governance structure and the uniform centralized guidelines of the Clinton Global Pledge. There is an advisory board in the UK with also independent members such as Goldman Sachs.

Local CSR communications Standard Chartered does not yet publish an Indian CSR report but expects to do so in two to three years from now. The global sustainability review does not contain separate information on India or any other of the host countries. The bottom navigation on the home page contains a sustainability link leading visitors to the global sustainability website.

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HSBC The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking Corporation Limited, which was established in 1865 to nance the growing trade between China and Europe. In 1998, the bank decided to adopt a single brand for all its businesses with the aim of enhancing worldwide recognition of the group. Today HSBC, with its headquarters in London, is one of the largest banking groups in the world. It positions itself as the worlds local bank which is also the banks tag line: the worlds local bank. The tag line emphasizes HSBCs experience and understanding of a variety of markets and cultures while maintaining a local knowledge and understanding (HSBC Holdings, 2006). The bank provides the host countries enough autonomy to take independent decisions and to respond to local market circumstances.

The bank has presence in over 85 countries and employs more than 300,000 people with a network of 9,500 ofces. Retail banking, or Personal Financial Services as it is called within the bank, is an important business for HSBC. Worldwide the bank serves over 40 million retail customers. In 2008, the bank derived 24% of its results from Personal Financial Services. The bank has a true global footprint with an important focus on Asia and the emerging markets. Over 50% of the prots originate from the Asian region while Europe accounts for only 35%. 33,7% of its global workforce works in the Asia Pacic region (HSBC Sustainability report 2007).

HSBCs cultural t in the Indian market place Similar to Standard Chartered, its not possible to apply Hofstedes value dimensions to HSBC. HSBC operates as a local bank everywhere in the world and provides the local branches with a high level of autonomy to adapt to local circumstances. HSBC Board of Directors consists of senior managers with different cultural backgrounds including western European and Asian. The bank also has a non executive Indian board member, Mr. Murthy, the founder of Indian IT company Infosys. Managing diversity is an important element of the HSBC HR policy. The bank acknowledges that to be able to reach out to local populations it needs to recognize diversity as a competitive differentiator (website HSBC)

HSBC in India The bank was established in India for more than 150 years. HSBC's origins in India date back to 1853, when the Mercantile Bank of India was established in Mumbai. In 1959, the Mercantile Bank of India was acquired by The Hongkong and Shanghai Banking Corporation (HSBC) and the head ofce of the HSBC Bank was established in Mumbai. The bank introduced new banking technologies to India. It was the rst bank in India to open an ATM machine in 1987. According to the an-

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nual report India is a key market for HSBC. It now has 47 ofces and employes 7,700 people. The bank offers personal nancial services but also a range of other services such as commercial banking services to medium and small sized companies and asset management. With its personal nancial services, the bank targets the upper middle class consumers.

Global CSR CSR has always been a vital part of HSBCs strategy. Its also an explicit part of the HSBC brand. The HSBC Chairman Stephen Green, writes in the Chairmans message of the 2007 sustainability report that the bank aims at becoming one of the global brands in sustainability. HSBC Holdings plc. is listed on the FTSE4Good Index and is a leading partner is several climate initiatives such as the HSBC Partnership in Environmental Innovation. The aim of the partnership is to research climate change and other major forms of environmental damage, societys awareness of the issues, and to develop technologies to overcome some of the problems identied (source: press release, 8 december 2004). HSBC won several CSR awards. In 2006, the bank was named as overall winner in the rst FT Sustainable Banking Awards, in recognition of its leadership in merging social, environmental and business objectives: (source: press release HSBC, 14 June 2006). In October 2007, HSBC won the Asian CSR award for best Environmental Excellence in Asia. In 2008, the bank adopted the Climate Principles, a framework for climate best practices in the nance sector. HSBC was the rst bank to become Carbon Neutral.

CSR strategy and issues HSBC believes that the groups continued nancial success depends on its ability to address nonnancial issues. The bank considers CSR as a long term business endeavor. The bank emphasizes in its 2007 sustainability report that non-nancial issues do not exist in isolation from the banks core functions and operations and are integral to the way the bank does business. HSBC specically mentions giving back as one of the rationales for its CSR program. The bank states: We could not receive the hospitality of 83 countries and territories without giving something back. It is our responsibility to provide each market with transparent nancial services, and to facilitate economic development. We do this through the taxes we pay, the jobs we create, the services we provide, and the investment we make in local communities.

HSBC has a strong focus on environmental issues. In the 2007 sustainability report, HSBC dened the key CSR commitments for the bank in 2008. Interestingly most of them were environment driven. In addition to the environment, the key pillars of HSBCs CSR practice are education, nan-

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cial inclusion and employee engagement. Micro nance is specically mentioned as a CSR activity and not as a separate business. Its part of the nancial inclusion activities which consists of education, live and livelihood skills and capacity building micro nance. To determine the main issues HSBCs sustainability report should address, the bank conducted a series of stakeholder workshops. The most important issue for the Asian pacic region was sustainable prot growth. Least important were community impact and governance and prioritization of issues. Interestingly, the group of stakeholders participating in the workshops did not include retail customers.

Within headquarters and regionally. Regional ofces receive overall strategic and functional direction from Group Head Ofce. Working groups have been formed in France, Brazil, Hong Kong and the Middle East to co-ordinate CSR at national and regional levels.

HSBCs India initiatives are guided by the United Nations Millennium Development Goals (MDGs). The bank in India addresses six of eight MDGs: Eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, combat HIV/AIDS and other diseases, ensure environmental sustainability and enhance global partnership for development. In contrast to the global program with its strong focus on environment, HSBC India puts education rst because this is more relevant for the Indian situation. The bank runs the future rst program, a ve-year, US$ 10 million initiative of the HSBC Global Education Trust. The program supports 131 projects across 39 countries. HSBC India also runs several environmental focussed programs. An example is the Earth Sciences Forum. Its a Public Private Partnership between HSBC in India and the Indian Ministry of Science and Technology and Ministry of Earth Sciences to develop solutions to climate change. HSBC also sponsors the HSBC Young Rangers club to make children more aware of the importance of caring for the environment. To position itself as a frontrunner with regards to climate issues HSBC was a senior partner at Delhi Sustainable Business Development Summit in 2008 organized by TERI and the Confederation of Indian Industry.

The bank is an active participant in several Indian industry federations such as the CII national CSR committee and the Council for Fair Business Practices.

HSBC India has a strong local CSR team consisting of six people headed by Unmesh Brahme a senior CSR practitioner who is a regular speaker at CSR conferences in India and abroad. Because the program is run locally, HSBC is able to respond quickly to national issues. For instance, HSBC was quick to help the victims of the Mumbai Terrorist attacks in November 2008.

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HSBC India is the only foreign bank which invests heavily in CSR communications to local stakeholders. The bank publishes a separate corporate sustainability report for India, Corporate Sustainability at HSBC in India. According to Unmesh Brahme, this report shows the long term commitment of HSBC to the country. The report focusses on the three themes: nancial inclusion, environment and volunteering. HSBC is the only one amongst the four banks to have a dedicated localized CSR section on its website.

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ABN Amro ABN Amro is an international bank with Dutch origins. It originated from a merger in 1990 between Amsterdam-Rotterdam (AMRO) and Algemene Bank Nederland (ABN). The historical roots of the bank go bank to the foundation of the Nederlandse Handelsmaatschappij (Netherlands Trading Society, NTS) in 1824. This bank played an important role in developing trade between the Netherlands and the Dutch East Indies. Until the 1930s the bank hardly had any branches in the Netherlands but it maintained an extensive branch network in the Dutch East Indies and the Far East. After the Second World War, NTS opened a large number of branches both in the Netherlands, where the number of branches was doubled to 153, and abroad. After the merger with Twentsche Bank, NTS changed her name to Algemene Bank Nederland (ABN Bank) and in 1991, after the merger with Amro Bank, ABN changed its name to ABNAMRO. As of 31 December 2007, ABN Amro had more than 4,000 branches in 53 countries and a staff of more than 99,000 people. In 2007, the bank was acquired by a consortium of three banks: Royal Bank of Scotland, Fortis and Bank Santander. When the rst interview with the CSR manager, Viram Balsari, was conducted in November 2008, ABN Amro was still managed as a separate entity. In the meantime, the take over of the Asian business of ABN Amro by Royal Bank of Scotland has further materialized. The ABN Amro CSR program has been put on hold to await the outcome of the integration process. The last ABN Amro sustainability report was issued in 2006. The 2007 sustainability report was issued in collaboration with the consortium partners Fortis, RBS and Santander.

Cultural t of ABN Amro in the Indian market place The bank is currently undergoing a cultural transformation. ABN Amro, with its head ofce in Amsterdam, has strong international roots and experience in operating in overseas markets and managing local entities in host countries. In fact, international business has always been a very important part of Dutch history, going back to the successes in the seventeenth century of the East Indian Company. As a result of this international orientation, the Netherlands is home country to a relatively large number of multinationals including Unilever and Shell. With the take over by RBS, the Dutch international oriented business culture is expected to slowly disappear. RBS, a UK home country focussed bank, has few international operations and is predominantly a UK based bank.

ABN Amro started operations in India in 1920 with the opening of a branch in Kolkata. The bank currently has 28 branches in the main Indian cities and almost 3,900 employees. ABN Amro India services 1,5 million retail banking clients. The Indian website states that the bank offers specialized services by combining the local intimacy of a domestic bank with the support and resources of a global network offering world class products and services. (ABN Amro India website.) While the

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bank describes itself as a global bank, the CSR manager describes the Indian operations as 80% domestic and 20% global.

Global CSR ABN Amro has always been a promoter of CSR principles. It was closely involved in the development of the Equator Principles. In 2007, the bank won Financial Times (FT) Sustainable Bank of the Year award for achieving world-class standards in sustainable banking. Besides this overall award, ABNAMRO India has won the global Emerging Markets Sustainable Bank of the Year award (ABN Amro press release, 8 june 2007). The bank won the Emerging Markets Sustainable Bank of the year award for its leadership role in India. ABN Amro was also named the number three of the top 10 of the Worlds Greenest Companies by the Independent. The bank was listed in the Dow Jones Sustainability Index, the FTSE4Good Europe 50 and World 100 index and the Global 100 Most Sustainable Corporations in the world. With the acquisition of ABN Amro by the consortium of Fortis, RBS and Santander, ABN Amros CSR program will cease to exist. The three banks have expressed their commitment to combine their own best practices with those of the ABN Amro businesses.

Strategy and issues For ABN Amro sustainability means to live our Corporate Values and business principles and to satisfy the needs of the organization and our stakeholders, thus seeking to protect, sustain and enhance human, natural and nancial capital in the future. (source: ABN Amro sustainability report India 06-07). ABN Amro refers to duciary responsibility to create, distribute and preserve wealth. This is similar to Ghandi believes. In the view of ABN Amro, sustainability denes business excellence, innovation and the banks license to operate.

Global CSR activities While ABN Amro positions itself as a worldwide bank, the CSR activities are mainly concentrated in India, Brazil (through ABN ABN Amro Real) and the Business Unit Europe. These entities run their own programs. The bank focusses on six key areas: being accountable and transparent, protecting assets (mainly risk management), providing responsible nancial services, being an employer of choice, minimizing impact on the environment and supporting local communities. The bank clearly sees Sustainability as a business opportunity and not only as risk management. In 2007, the bank created Eco-Markets to identify climate change and environment related market opportunities. The bank also emphasized the need for its employees to become engaged in sustainability; it implemented different programs, such as a sustainability e-learning program, to achieve this.

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CSR Activities Below are listed several CSR initiatives: Being accountable and transparent: intense dialogue with external stakeholders and shareholders. Engagement and dialogue with several NGOs and interest groups. Interestingly the business unit Netherlands transformed the former dealing room into a Dialogues house where top speakers address issues such as sustainability, innovation and entrepreneurship. Providing responsible nancial services: the banks sees this increasingly as a business opportunity focussing more on ethical responsible investment funds and Eco-Indices. Being an employer of choice: focus on a diverse and inclusive workplace. Minimizing impact on the environment: the aim of the bank is to become carbon neutral. Supporting local communities: the aim is to create sustainable livelihoods. The projects focus on income generation, environmental protection and education. CSR organization ABN Amro Bank has appointed teams throughout the bank to implement the sustainability strategy and integrate it in the core business. Mid-2007 the bank set up a Sustainability Council consisting of business unit representatives working together with the central Sustainability and Risk Advisory teams of the bank. In 2007, the bank also focused on capturing sustainability related business opportunities. To support local communities, ABN Amro has a global community investment program run by the ABN Amro Foundation. With the take over of the bank, the Foundation will winds up its operations in 2008. Approximately 30% of the Foundation funds were spent in India. In 2007, ABN Amro India received the Financial Times/IFC Emerging Markets Sustainable Bank of the Year 2007 award for its strong performance in the eld of sustainability. ABN Amro India was also the rst nancial institution in India to publish a Sustainability report. In India, the ABN Amro India foundation focusses on four core themes: environment, poverty alleviation, underprivileged children and relief and rehabilitation during disaster. Poverty alleviation however has most attention. According to Balsari The environment does not hurt people at the personal level. Health is the closest to the Indian citizens. According to Balsary, Indian banks do not yet see sustainability as an opportunity. This is contrary to ABN Amro. ABN Amro India for example is one of the few banks to promote sustainable energy funds. ABN Amro was also one of the rst banks in India to enter the micro nance market. These activities broke even in 2003 and these activities are now protable. Its a combination of CSR and a pure business activity for the bank.

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Local CSR organization The ABN Amro model was decentralized with coordination from the centre. The ABN Amro India team has a lot of autonomy and they set their own objectives. The bank employs one full time senior manager responsible for the ABN AMRO Foundation India (AAFI). In addition there is a Micro nance and Sustainable Development Department (MF&SD). Each Business Unit is represented by a Sustainable Development Champion who is the link between the MF&SD department and the respective business. The bank also has an account manager in the communications team. However, according to Balsari the knowledge of the communications team with respect to CSR could be improved.

India received 30% of the ABN Amro Foundation money each year.

Local CSR activities In India, the ABN Amro India foundation focussed on four core themes: environment, poverty alleviation, underprivileged children and relief and rehabilitation during disaster. Following the take over by RBS, ABN Amro runs several RBS programs: GAYE (Give As You Earn) - a payroll giving program, community cash back and MoneySense. These are all examples of program duplications. Some of these programs require little localization such as the GAYE program. Indian employees are very much involved in this program. Other RBS programs such as the RBS Supergrounds program require more localization. RBS Supergrounds is a community program where RBS helps schools to improve the school playgrounds. This program will need to be tailor made for India where the priorities of schools which often lack basic necessities such as teachers and school books are completely different. The Foundation work of ABN Amro is expected to end soon as the ABN Amro Foundation has stopped to exist. In India, ABN Amro is an important player in the eld of Socially Responsible Investing (SRI) and micro nance. The bank also runs a local stakeholder engagement program working with Indian CSR organizations such as TERI: BCSD. This is the Indian chapter of the World Business Council for Sustainable Development. ABN Amro was also invited by the Indian government as an expert partner to provide inputs on rural credit and micro nance.

Local CSR communications In 2007, ABN Amro India published the rst Sustainability Report. This was the rst time a nancial institution in India ever published such a report and it shows the banks commitment to the Indian market place. Except for the annual report, external communications of CSR initiatives is limited. There is no button on the Indian ABN Amro website to CSR related information. The news section

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on the home page shows some links to CSR related news releases. Other CSR related information on the home page is related to consumer services: grievance redressal information, complaint form, code of banks commitment to customers, etc. In the About Us section of the website, the bank refers to its Micro nance activities.

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Appendix 6: List of persons interviewed

HSBC
Mr. Unmesh Brahme Senior Vice President, Corporate Sustainability | HSBC INDIA Group Communications and Corporate Sustainability Level 5, 52/60 M G Road, Mumbai 400 001 Date interview: 14 January 2009

Standard Chartered
Miss. Pratima Harite Corporate Affairs Standard Chartered Bank, 90 MG Road, Fort, Mumbai - 1, India Date interview: 8 December 2009

Deutsche Bank
Linus Chetiar Head corporate communications and corporate social responsibility Date interview: 11 December 2008

ABN Amro
Viraal Balsari Sustainable Development, India Brady House, Floor 3, 14 Veer Nariman Road, Horniman Circle Fort, Mumbai 400 023 Date interview: 23 January 2009 Moumita Sensarma Head Micro Finance and responsible banking Date interview: 29 April 2009

Yes Bank
Miss. Rita Soni Country Head-Responsible Banking Nehru Centre, Ground Floor, Discovery of India Dr. A.B. Road, Worli Mumbai 400 018 India Date interview: 2 March 2009

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