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Candida Moraes
The demands on corporations to fulfil
their social responsibility will become more insistent
as issues of environmental degradation and good governance
assume urgency, says Dr JJ Irani, director, Tata Sons
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
But, even as we continue to develop our strengths in
these areas, we have not lost sight of our old commitments.
The Group's engineering and technological skills are
being harnessed to develop affordable, high-quality
products and services for an aspiring class of Indians
and a burgeoning economy.
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
The government is now making it easier for Indian companies
to do business abroad; and we can expect many more Indian
business groups investing in countries such as South
Africa, the sub-Saharan region and in South East Asia.
The House of Tatas too has made its moves overseas.
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.
Challenges ahead
Even as we continue to address issues of national, societal
and business development, there are other challenges
looming ahead. Given the furious pace of development,
and the rising needs of economies around the world,
energy has emerged as a serious problem.
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
Sweeping economic, social
and technological changes are going to have an enormous
impact on business. The future corporation will have to
be more environmentally friendly, and shareholders will
also have a greater say in the running of it. The influence
of family-run companies, which India has had for many
years, will gradually decline.
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.
Quality matters
Today with a population that has travelled widely across
the globe, quality is the accepted norm.
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.
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Uploaded on August 28, 2006
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