Corporate Social Responsibility at ONGC Ltd.

 
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Case Details:

Case Code : BECG066
Case Length : 22 Pages
Period : 1996-2006
Organization : ONGC Ltd.
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Oil and Natural Gas

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"ONGC is continuously and consciously involved and focused towards corporate social responsibility in all decisions and activities undertaken in the organization. ONGC is committed to allocate 0.75% of net profit of the year towards socio-economic development programmes."1

- Dr. Madhav Mehra, President, World Council for Corporate Governance, in May 2006.

"If trade and commerce - and by extension, business and industry - is not sensitive to its social and environmental contexts, it will not be sustainable. And if it is not sustainable, it will collapse."2

- Kamal Nath, Union Minister (commerce and industry), in May 2005.

Introduction

In May 2006, ONGC Ltd. (ONGC), a major Indian public sector company in the petroleum industry, received the 'Golden Jubilee Award for Corporate Social Responsibility in Emerging Economies - 2006', at the 7th International Conference on Corporate Governance organized by the World Council for Corporate Governance3.

Since its inception, ONGC had regularly contributed to various CSR initiatives in the areas of health, education, infrastructure, and culture. In 2003, it decided to allocate 0.75% of its net profit each year for various socio-economic developmental programs undertaken by the company. In 2004, it drafted a Corporate Citizenship Policy - a written guideline which was to provide a direction to the company's CSR initiatives.

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With growing globalization, Corporate Social Responsibility (CSR) had been increasing in importance as it helped organizations to improve their relationships with local communities, increase brand value, and build a good corporate image for themselves. Also, the socio-economic developmental activities undertaken by companies increased the purchasing power of the community, leading to an expansion in their market size.

In India, CSR began as a philanthropic activity where organizations contributed to social causes, but it was gaining in importance and becoming an essential activity for business (Refer Exhibit I to know more about CSR and Exhibit II for development of CSR in India).

Also it appeared that in the future, CSR in India would become more than a voluntary exercise. In a conference 'Implementing CSR as a Business Strategy - A Roadmap for Effective and Sustainable Penetration' organized by the Confederation of Indian Industry (CII)4 in December 2005, the possibility of a company reporting its CSR activities along with its financial reports was discussed.

"We should start putting it in the balance sheet,"5 said Kishore A. Chaukar, managing director, Tata Industries Ltd.

Corporate Social Responsibility at ONGC Ltd. - Next Page>>

1] "ONGC wins global award for corporate governance,"www.business-standard.com, May 15, 2006.

2] "Sustainable development, corporate responsibility must go hand in hand,"www.thehindubusinessline.com, May 29, 2005.

3] The World Council for Corporate Governance was established in 2001 with the mission to promote good corporate practices worldwide. It organizes an annual conference on corporate governance. The 7th international annual conference was held on and May 11 and 12, 2006, at Sussex. (Source: www.wcfcg.net)

4] The CII is a non-government, non-profit organization facilitating growth of industries in India. It has around 5,800 direct members from the private and public sector and an indirect membership of over 95,000 companies.

5] "CO's must report social, green activities in balance sheet,"www.thehindubusinessline.com, December 8, 2005.

 

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