Wednesday, May 19, 2010

[ZESTCaste] The caste system and CSR

Vol.6 Week 20 19/05/2010
The caste system and CSR

by Sharan Bal

India is the largest functioning democracy in the world, yet the
systemic perpetuation of caste discrimination enforces inequality at
the level we would expect under authoritarian regimes. Although caste
discrimination was officially banned by the Protection of Civil Rights
Act of 1976, the caste system is still entrenched in Indian society.

Social division based on caste dates back to 3,000 years ago and is
debated to have its roots in the ancient Hindu religious structure,
which demarcated five main strata of society with Brahmins at the top
and "untouchables" and tribal people at the base. In modern Indian
society, the lower castes are officially documented as Scheduled
Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC).
Untouchables came to be referred to as such from the belief that they
are polluted or dirty, hence not to be associated with, but are now
commonly referred to as Dalits.

It is a system in which your birth (heredity) determines the kind of
job you are allowed to do. However, in its more powerful incarnations,
it can be viewed as a chance for those in power to continue to exploit
lower caste Hindus into doing jobs deemed 'dirty'. Dalits are excluded
from land ownership, denied access to water (in fear of polluting it),
education and employment, subjected to separated housing and forced
assignment to manual scavenging (removing faeces from toilets that
cannot flush). Dalits are also excluded from society through denied
access to institutions vital for enabling social mobility such as
banks, business, and formal employment.

Since 1950 the constitution of India has upheld the reservation of
places for lower classes in politics, education, and employment. We
have seen this with political reservations for proportional
representation of lower castes in the Upper (members elected by
legislative bodies of States) and Lower (members voted by citizens)
Houses of Parliament and students from lower castes being given places
in state colleges. Yet, the debate of caste based reservations in the
business sector through the implementation of affirmative action
policies has sparked controversy and is unlikely to be mandated by the
Indian government in ways we have seen in the United States with
African Americans or in South Africa.

"After 60 years of constitutional legal protection and
support...Dalits face a unique discrimination in [Indian society] that
is fundamentally different from the problems of minority groups in
general. The only parallel to the practice of untouchability was
Apartheid in South Africa. Untouchability is not just social
discrimination. It is a blot on humanity." Monmohan Singh, Indian
Prime Minister.

For any company, national or multinational with a presence in India,
the caste system represents both a social and human rights risk to the
management of that company. It also represents an opportunity to
institute change through its CSR policies and practice. Because of the
caste system's intrinsic association with trade and employment, it
makes it a critical CSR issue and differentiates it from other
commonly understood aspects of diversity such as ethnicity.

A very interesting report written in 2007 by the UK branch of the
International Dalit Solidarity Network profiles multinationals
operating in India and their current CSR and employment policies with
respect to caste. Companies analysed included Shell, Unilever, Cadbury
Schweppes, HSBC, Standard Chartered Bank, Marks and Spencer, and
Tesco; companies that stakeholders would generally deem to be good CSR
performers. Many of these companies have signed up to the UN Global
Compact and the Sullivan Principles, among others initiatives with
explicit commitments to uphold human rights. In addition, they have
been operating in India for decades, so it is perplexing to see that
they are missing the connection between human rights and the caste
system in India.
The majority of these companies have extensive diversity policies
citing sexual orientation, physical appearance and thinking styles as
basis for non-discrimination; however, only HSBC explicitly mentions
caste as a basis of non-discrimination.

When approached by the Dalit Solidarity Network UK on this issue,
company responses were based on three major justifications:

1. Many companies stated that their hiring practices were based on
merit and as a result do not ask candidates to reveal caste, race or
origin at the time of recruitment and do not use it as reference in
any employee's career.

2. Furthermore, these companies believe their definition and policy of
diversity can be applied to all countries of operation, including

3. There is no need to include a caste statement specific to India
because a manager would not be discriminating on the grounds of caste

In response to the first justification: What these MNCs are failing to
understand is that they are entering a system of endemic
discrimination and that only recognising merit is futile in a context
whereby Dalits are denied access to the very opportunities and
institutions necessary to demonstrate and develop merit.

In response to the second justification: It is insufficient to
translate a diversity framework to the Indian context that does not
mention caste explicitly. CSR policies, including recruitment policies
must be localised to be made relevant in the region of operation. Any
company operating in the U.S. would be sure to mention ethnicity and
would be likely to include affirmative action quotas for African
Americans due to the historic social and political relevance to
American society. In a reverse sense, the rhetoric of ethnicity and
race is less relevant to India and cannot be equated to caste due to
the unique factors upon which caste discrimination is based. For any
diversity initiative to be relevant to India, it must mention caste.

In response to the third justification: While managers may not
necessarily discriminate on the grounds of caste, a manager would be
naive to believe caste is not in the minds and hearts of their
employees. A study conducted by Princeton University confirms that
Dalits and other minorities are discriminated against in the Indian
business sector because personal prejudices are bound to manifest.
Caste can be denoted through knowledge of a surname. Cases of
entrepreneurs changing their names to get their foot on the corporate
ladder abound. A company needs mechanisms to guard against prejudice
among local management and staff. If you are a foreign multinational
operating in India but are hiring local employees, they will be caste
conscious even if you are not.

Corporations in India need to become caste conscious rather than caste
blind if anything is to change. Due to the implications of the caste
system, merit cannot exist in an objective sense. Inequalities run
deep in society and institutions in India exclude Dalits from
opportunities for social mobility. Failing to acknowledge caste will
not change the status quo. Caste inequities can be reduced only by
highlighting caste and the divisions it perpetuates. It becomes quite
clear that few companies in India truly understand the business case
for diversity when they perpetuate the rhetoric that caste based
reservation should be abolished because merit and efficiency are in
danger. Leading companies in India are in a unique position to push
this business case for diversity through their CSR policies.

So how do companies do this? The Ambedkar Priniciples have been
established by the International Dalit Solidarity Network as a useful
set of guidelines for companies and investors to follow in order to
eliminate caste discrimination in the labour market. Bhimrao Ramji
Ambedkar has been regarded as a Dalit hero who escaped the cycle of
poverty, earned doctorates from Columbia University and the London
School of Economics, and later went on to chair the committee that
wrote the Indian Constitution alongside the likes of Gandhi, Nehru and
Jinnah. Key elements of the Principles include: implementing a plan of
affirmative action for Dalits; developing comprehensive training
opportunities for employees and potential recruits from Dalit
communities (with a focus on English language teaching); developing
effective monitoring mechanisms, such as external audits and liaising
with relevant sector and state departments to ensure proportional
representation; reporting on progress of their implementation; and
adopting board level responsibility for their oversight.

Here are some other suggestions on how to make your CSR caste conscious:

1. Localise your CSR strategy - Global CSR strategies are developed to
align with business practice to ensure sustainable operations that
reduce harm to the environment and act as a positive force in society.
However, in this complex world we live in, companies need to implement
policies with regard to local politics, culture and social norms. Your
company could start by adopting the Ambedkar Principles to demonstrate

2. Stakeholder Engagement – The best way to understand local issues is
through engaging local stakeholders to ascertain their perceptions and
expectations of your company. Prominent organisations such as the
International Dalit Solidarity Network and other stakeholders in this
area can prove to be very useful representatives of the disadvantaged

3. Workplace policies - As other CSR policies are localised to the
region of business operation, so too should workplace policies. The
inextricable link between employment and caste discrimination provides
an opportunity for companies to redress the imbalance through their
recruitment practices, training programs, and grievance mechanisms.
Examples of companies already demonstrating such initiatives include:
a) The Tata Group of companies have recently put in place a positive
discrimination policy, similar to affirmative action like in the U.S.
b) The Forbes Marshall Group is also drawing from US experience to
draft an affirmative action and diversity policy.
c) Voltas, the air conditioning and engineering services company
supports an initiative in vocational training for underprivileged
Dalit youth at a technical school in Mumbai.
d) HSBC has recently added caste as a non discriminatory factor in
their employment policy and signed the Ambedkar Principles
4. Supply Chain management - By engaging with a diverse network of
lower caste suppliers, companies can make a huge difference by
extending influence across their supply chain and providing much
needed business for minority suppliers to flourish. Furthermore,
companies should pay proper attention to Dalit workers in their supply
chains, especially in the agricultural and textile sectors, as they
may face discrimination against fair and just employment practices.

5. Community Investment – Caste awareness should be embedded into
community investment strategies. In rural areas where approximately
70% of the Indian population lives and the majority of Dalits remain
socially deprived, companies have an opportunity to affect change at
the grass roots level. Upon evaluation of effective community
investment programs in India, the major question is whether the
poorest of the poor are really being impacted, and this discussion
must include an analysis of the Dalits in rural areas. Many companies
operating in India will focus on empowerment of women, micro-finance
programs, rural community development, health and hygiene, and
education. Access to these programs must be extended to the Dalits,
who are potentially barred from access. The Ambedkar Principles
promote the inclusion of Dalits in the planning and implementation of
community development programs. Caste should also be included as a
factor in the measurement and reporting of community investment
programs and the impact that they have– how effective is your program
at building capacity amongst the most downtrodden in society and
providing opportunities for social mobility? ■

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