From its early beginnings, the Tata group has initiated policies and activities that are covered by what the world of business has come to recognise today as 'corporate social responsibility' (CSR). The Tata legacy of socially responsible business gives us an advantage that will help us greatly in the years ahead.
Today, we inhabit a rapidly changing environment — both at a national and international level. From 1907, when Tata Steel began operations in a yet-to-be-born nation, through the stages of being first a part of the colonial economy, then of an independent but state-controlled economy, and now, as a vibrant player in an international economy, I think the group has met its responsibilities with respect to nation building, and society at large.
It is a matter of pride that the group has played a pioneering role in the area of social responsibilities. Policies that the group initiated decades ago, later became a part of statutory requirements in labour relations, or environmental guidelines. It is only fitting that an iconic entity such as Tata Steel should be one of the founder members of the Global Business Compact (GBC), created by UN secretary general Kofi Annan. The GBC credo is that companies must play a larger role in society rather than merely earning profits.
Today, India is considered one of the powerhouses of the global economy; as a group we need to adjust our sails accordingly. If China is a powerhouse in manufacturing, then India has its strengths in the services industry. In the next 15 years or so, India will continue to dominate services industries such as IT, hospitality and tourism, among others. As far as these industries are concerned, I think that India has not even scratched the surface as yet.
Technology with a social purpose
Our range of products and services tell their own story. Affordable hotels (earlier indiOne, now renamed Ginger), the Ace sub-one tonne carrier, the small car that's round the corner, are all meant to be profitable — yet, they also represent a sense of social obligation. The environment has changed; but old philosophies continue to drive the group.
If we look at industries like iron and steel, we see that India has a distinct advantage over China because of its raw material availability and technical knowledge. The advantage has been hard earned. For long the smallest of the top 80 steel companies in the world, Tata Steel is gunning for the higher slots now. In terms of EBIDTA margins, it matches the top three already! While doing that, it has won the SA 8000 status from the UN for social accountability; and it is high on the corporate citizenship index.
Tata Steel is the cleanest, greenest steel operation in the world; its environment management is second to none. The company has also been committed to gender equality, which can be seen from the number of women workers that it employs. In a competitive age, old values continue to be taken forward.
Taking social responsibility abroad
What's important is that the group's CSR philosophies and actions have moved in tandem. A Tata enterprise abroad is a Korean enterprise in Korea, an African enterprise in South Africa, a Singaporean enterprise in Singapore.
Our entry into another country or region depends on the products we can profitably make there. But once we are in, we do not stop at creating profits; we get involved with the development activities of those economies — because we believe that we should give, rather than just take away. South Africa is a prime example. The group has started to train people in trades so that they can become self-employed.
If an international presence is an imperative in today's times, making progress in the new economy businesses is another. A country must find its own niche in today's international economy; for India that means developing, and consolidating its inherent strengths in the knowledge sector. As a group we are already a supplier of IT services and solutions to the world. We are now backing product development in pharmaceuticals, and R&D in emerging industries related to futuristic technologies, such as biosciences and nano technology.
As far as the new economy is concerned, India has people with considerable intellectual capabilities and skills who have felt the lack of opportunities for quite some time. We are now creating these opportunities; if we succeed in this, and get our best people back, the country will be a dramatically different place.
All factors considered, I think the ultimate solution for our energy problems is nuclear power. France, after all, meets 75 per cent of its energy requirements through nuclear energy. We need to use coal in the immediate future and nuclear energy in the near future — say, about ten years or so. Nuclear energy is clean and abundant and we must get over our fears in order to do better.
Till some time back, the Tata group was considered to be very inward-looking, one that concentrated only on domestic markets. Today, this perception has changed, and will continue to change, as the group continues to expand in various sectors. And it shall be with respect to our neighbours. India, I believe, will now play a major role in the economic development of the entire Asian region, and so will the Tata group.
The future corporation
Though existing companies will not die, the voice of the shareholder will increasingly come to the fore. Shareholder needs will take precedence over those of promoter families. The Tatas can serve as a good model. The group has used the Tata Trusts to create wealth for the nation, never for the family.
Employees will choose to work for those corporations that are perceived to be environmentally friendly. Community groups will want to have a say regarding which companies they want in their particular area; companies will need to be sensitive to such local concerns. The future will belong to those corporations that build win-win partnerships with shareholders, employees and community groups.
No one is prepared to settle for second best. It is heartening that in the last 15 years, the whole concept of quality has changed; hopefully, social responsibility will also become a sine qua non of doing business in this country.
Values and ethical standards are part of the social fabric of any society. We are proud that as a group we have grown without compromise at any stage. Add to that the corporate social responsibility scorecard.Related articles: