Corporate Social Responsibility

 

There is no generally accepted definition of the term CSR. It is used to describe a wide range of economic, social and environmental initiatives by businesses that go beyond legal and regulatory requirements and are mostly voluntary in nature. Of course, the first thing that a responsible organization must do is comply with laws and regulations that set essential minimum requirements for everyone. Health & safety, no discrimination & equal opportunities, environmental requirements are some of the social responsibilities of organization towards its internal and immediate impacted community which can be well met by complying laws and regulations.

The European Commission has defined CSR as a “concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. According to Shrivastava and Venketeshwaran(2001) there are two extreme views - companies that comply with the laws of the country they operate in are considered as ‘social responsible’; in the other extreme view, the CSR activities of a company are considered as purely philanthropic, in which case money is given for charity without expecting anything in return. However the widely accepted definition on CSR is given by World Business council for Sustainable Development,1998 as “CSR is the continuing commitment by a business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as local community and society at large”.

CSR in Indian Context

 

CSR is not new in India rather it has been traditionally practiced by Indian businesses since long time back as doing some charity and thereby contributing to the society by way of undertaking some community development activities - though ad hoc. However this very corporate philanthropy was not seen as an integral part of business as 7% of Indian companies by 1997 only demonstrated they had written policy on CSR. Corporate involvement in development tends to be ad hoc and CEO driven. Indian businesses perceive employees, their families, customers and shareholders as significant beneficiaries of their social responsibilities. Companies that work with communities do not necessarily distinguish between the privileged and underprivileged amongst them. Therefore the overall approach still seems to be driven by philanthropy rather than integrating it with core business activities.

 

What is characteristic of evolving CSR models is that they have been developed and used in the developed world. This does not imply that they are not relevant to the developing world - indeed they are. The issue is only that of prioritization. It is useful to remember the Indian context. India is a country where an estimated 350 million people live in absolute poverty. They are poor not only because of a shortage of material resources but mainly because of social- economic and political structures that have systematically denied them the right to access and control the resources they need for a life of dignity. Thus it is obvious that if economic growth must significantly reduce poverty and inequity, it must address these structural issues- which means placing particular emphasis on those who are socially and/or economically disadvantaged.

 

 

CSR in Mining Industries: an utmost need

 

India is recording a continuous growth in industrial development -leaving an impression that the country has potential to beat even most of the industrially developed countries of the world in a few years from now. This is true as well because the country has enormous resources - natural, mineral and technical & productive labour force.

 

Mining industries like industries in other sectors have also recorded a substantial growth since early 90s as the country went for globalisation. It opened the market for global business to come to India and exploit the mineral resources. In last 10 years we have witnessed that the laws have also been made liberal to a great extent - exposing the international as well as domestic businesses to go extensively for mining.

 

Mining in India deserves due credit as it has supported the industrial growth in India but fact also remains that it has led to impacting the environment and social life of the community located nearby. The corporate social responsibility of mining industries has not been satisfactory. Although there are laws and regulations, amended time to time, effectively they have failed to protect from manipulation and exploitation of environment and social laws by mining industries. Enforcement of laws has of course led to compliance in certain areas but Corporate Social Responsibility is beyond compliance and seeks mining industries to undertake voluntary endeavours in order to minimize the adverse impacts on the environment and society.

 

Growing voices of civil society organizations (CSOs) over the responsibilities by business will also seek to ask mining industries about their social responsibilities. The SAMATHA case and thereby the verdict of the honourable Supreme Court and people’s movement against Utkal Alumina are recent examples of resentment shown by different stakeholders especially the community and CSOs over poor corporate social responsibility practices. Some State Governments are also planning to bring laws on making social responsibilities a mandatory and inclusive activity of mining business. Already a law as “Public Hearing” has been incorporated where local people have been given power to exercise it for the approval for granting either a new lease or renewal for mining by Government.

 

Evidence suggests that mining companies will increasingly be obliged through public pressure to make pledges and set targets regarding environmental and social responsibility within the spheres of triple bottle line- economic, environmental and social. They will need to define robust strategies to achieve these goals, to evaluate their performance over time and to report coherently and comprehensively the results to their different stakeholders, both within and external to the firm, at the local, national and international level.

 

Failure to address these public interest concerns at this detailed level is likely to result in an increase in the imposition on mining companies of evaluations and rankings of environmental and social responsibility made by public interest groups through initiatives in which the companies themselves have not participated, eg. Work by Earthscan, Integrity Works, World Development, Business in the Community etc.

 

Subsequently a need is increasingly being felt that if an industry has to sustain, the social responsibilities can not be ignored. This has thrown numerous challenges before the mining community to join hands with the Government, local population and development agencies for sustainable development. Sustainable development implies that the mining industry has to take care of the economic and social concerns of the local community along with the mine development and the local community has to assist in viable business operation along with promoting their common self-interest.

 

Issues concern Mining sector

There are several issues involved with mining operations which come under the realm of CSR and need utmost attention by this sector:

 

Labour and Employment issues:

The term “labour relations” appears to encompass wide variety of issues including discrimination, trade union relations, corporate labour practices, wages and other issues.

Child labour

There are evidences of child labour involved in mining operations, if not in direct operations but some where in supply chain for sure. Although mining companies have been found fully committed to comply with related Indian laws and guiding international principles, eliminating child labour from the operations remains a challenge for the industries.

Environmental concerns:

There is a direct impact of very nature of business in this sector on environment. Also in the business chain mining meets the requirements of the main manufacturing industries and others which impact further on environment. However the immediate impact on Bio physical sphere includes effects over time on the health and ecosystem, on biodiversity conservation, on clean air and water and the physical base of healthy livelihoods: minerals, forests and agricultural soils.

 

 

Impact on Community:

It is evident that mining industries are geographically located in the least developed part of the country where most marginalised people- primitive tribes- live. Tribal constitutes almost 10% of the total populations of our country and anecdotal over 80% of their total population are still representation of people living below poverty line. Despite having forests and mineral richness, the mining areas are also known for its poverty. The mining areas every where in India represent a backward social and economical life of the community. People are struggling for sustenance -migrating in search of livelihood. These areas are represented by malnutrition, poor health - high infant/child mortality rate, higher mother mortality rate, death occurring mostly due to water borne and preventable disease; illiteracy; growing pauperisation; marginalization; dehumanisation and vulnerability. People have poor access to resources and services. These problems are further circumvented by the rising demands of labourers in mining establishments, which in due course has paralysed the traditional systems of tribes and intensified their existing problems.

 

What can a Mining Industry do?

 

It is therefore proposed that mining industries must volunteer to undertake CSR as an integral business activity which requires mining industries to integrate CSR into their business processes that includes formulation of a policy, development of programs, practicing CSR, measuring CSR and reporting CSR. A long term commitment is required and CSR must not be looked as a short term initiative.

 

In order to institutionalising the CSR, Mining industries are suggested to undergo step wise activities as per followings:

 

Activity 1 - to undertake the study of socio-economic and environmental impacts of mining in the vicinity.

 

Activity 2 - to develop a framework of CSR - formulation of policy and development of programmes.

 

Activity 3 - to develop strategies for operationalising CSR including partnership.

 

Activity 4 - to go for social audit and certification.

 

Benefits to Mining:

 

Many do think that practicing CSR is a cost and impacts on the financial performance of companies as they see in short term. But, fact is that CSR is an investment that provides social license to continue to operate business which is increasingly becoming very challenging and often is seen as threat. However it results into a ‘win-win’ proposition for companies as well as for all its stakeholders, which ensures the sustainability in long term as it takes care of underlying causes of business challenges.

 

• Improves financial performance
• Reduces costs
• Satisfies customers
• Improves the corporate reputation/image
• Reduces challenges
• Employee retention and loyalty

 

 

 

 

 

 

CSR Initiative - a “Road Map” at a glance

(A joint initiative of FIMI & IDF)

 

Initiative	objectives	Actions	outcomes	Tentative time frame
CSR study in Mining sector in India	To track down the understanding among Indian Mining Industries on CSR	A country wide and industry specific study is proposed to be undertaken in partnership with international organization	A comprehensive India Report of Mining industries’ perception on CSR	June 2005
Sensitization of FIMI members on CSR	To motivate companies for institutionalization of CSR as one of the Core business practices	·          One day regional workshop on CSR - each region ·          Meeting individual companies ·          Circulating relevant materials on CSR	·          A common understanding among FIMI members on CSR ·          Agreement on CSR to be included as one core business process not an ad hoc activity- Written policy.	Oct 04-Jan 05
National Dialogue on CSR in Mining industries	To raise the need and actions on CSR in the sector	One day seminar including interface with international and national CSR practitioners.	Increased commitments of companies	Oct 05
Development of CSR Policy of FIMI	To have CSR commitment of FIMI adopted by its stakeholders	A multistakeholders’ dialogue- one day w’shop	A CSR policy statement of FIMI (Written)	Jan 05
Deployment of Policy	To make CSR practice inclusive	Professional consultancy to individual companies	·          Increased CSR practices	Continued process
Social and Env. Award process	To “Raise the Bar”	Develop an improved award process of international standard	Recognition of award internationally as sort of certificate for companies on CSR practices	Next year Award

 

Services available:   1.      Research - ·        Socio-environmental impacts on stakeholders ·        Stakeholders’ Perception study 2.      Institutionalization of CSR ·        Sensitization ·        Policy and Strategy development ·        Design the Community Development Framework 3. Operationalising CSR ·        Implementation 4. Measuring CSR - Social Audit 5. Reporting & Verifying CSR