Steel Firms Change Track on CSR

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As project sites and land acquisition emerge as flashpoints with people divided across political lines, steel companies are starting their corporate social responsibility initiatives even before they bring in the road rollers

NEW DELHI:  As criticism mounts against mining and metal companies for not doing enough to qualify as good corporate citizens, the sights of their management teams are turning increasingly towards non-core functions such as care for the environment and community development.

Those who have been observing the mining and metals industry over the years agree there has been a shift in attitudes and companies are now busy incorporating sustainability, environment protection and community development into their mainstream business agenda.

“Last year the debate was ‘why should we focus on sustainability?’. Now it is ‘how can we focus on sustainability’?,” Jairam Ramesh, minister for rural development, said recently at a Federation of Indian Chambers of Commerce and Industry event.

“This new awakening is not an either/or. It is a choice that we have to make and I think it is possible to integrate sustainability with mainstream growth,” said Ramesh.

India’s steel companies have been particularly vulnerable to attacks from non-government organizations and sceptical regulators because of the risk that their typically vast projects could lead to the displacement of thousands of people and the destruction of livelihoods.

Project sites and land acquisition have emerged as flashpoints when steel projects roll out, sometimes sparking violent clashes between the authorities and local protesters.

The site for South Korean steel-maker Posco’s proposed project in Orissa has been a six-year battleground between the authorities and the locals, divided between those supporting the state’s ruling Biju Janata Dal, which wants the plant, and those supporting the Communist Party of India that’s opposing it.

Tata Steel’s second steel plant coming up in Orissa has trundled forward after many years of hostility from local residents and a clash that led to 14 deaths at the time of land acquisition in 2006.

Steel companies have learnt the importance of getting local communities on their side. They are starting corporate social responsibility, or CSR, initiatives – be it cleft lip surgery for a local who needs it or installing street lights for residents in the vicinity – even before they bring in the road rollers.

Swelling budget

Typically, companies have been spending 2-4% of their net profit on CSR. The sums are set to increase as the new Mines and Mineral Development and Regulation Bill seeks to have coal miners spend 26% of their net profit for local community development. Other companies will spend an amount equivalent to the royalty they pay the state government.

CSR initiatives may be designed to win local goodwill, but professional social aid brought in by companies is capable of changing local lives for the better, say people who are running such programmes.

“We are not just concerned about what we are doing, but how we are doing it and what impact it will have on people’s lives,” says Prashant Kumar Hota, assistant vice-president for CSR, relief and rehabilitation and corporate communication at Jindal Steel and Power Ltd (JSPL) in Angul, Orissa.

JSPL plans to invest Rs. 50,000 crore on a 12.5 million tonne steel plant and 2,600 megawatt power plant in Orissa.

Under CSR, JSPL has spent Rs. 146 crore in Angul since 2005 on peripheral expenditure including rehabilitation and resettlement, Hota said.

CSR covers a wide swathe of activity—health, hygiene, nutrition, education, calamity management, youth and sports and community infrastructure.

“The CSR investment has created an enabling working environment for Essar,” said Jatinder Mehra, director at Essar Group. “The local community is an equal partner in the progress hence their stakes are as high as ours.”

Essar is focusing on self-help groups, health and education programmes to endear itself to locals in Chhattisgarh and Andhra Pradesh.

Apart from planting trees and using technology to diminish its impact on the environment, Essar has designed a bullock cart frame fashioned from steel so villagers cut fewer trees to build these vehicles with wood.

State-run Steel Authority of India Ltd (Sail) spent Rs. 64 crore in 2010-11 on diverse activities such as re-cycling, preservation of art and culture and enrolling girls in schools to maintain a reasonable gender ratio in schools.

“We are committed to continuously improving our social responsibilities, environment and economic practices to make a positive impact on society,” said chairman C.S. Verma.

Energy savers
Steel companies are typically power guzzlers with temperatures in their blast furnaces rising to between 900 and 1,300 degrees centigrade as iron gets converted into hot metal. Energy scarcity and increasing awareness of the need to cut their carbon footprint has turned companies into generous spenders on new, environment-friendly and power-saving technology.

“We use 5.98 giga calories of energy for every tonne of steel we produce and this is the lowest in India,” said Vinod Nowal, director and chief executive officer of JSW Steel Ltd. “This is the result of the conservation activities we undertake.”

JSW, which is stepping up its spending on CSR to Rs. 40 crore in 2012-13 across Karnataka, Rajasthan and Maharashtra from Rs. 25 crore in the previous fiscal year, has installed solar panels on its residential quarters and even produces power from wind mills. The upcoming provisions in the Companies Bill that seek to have companies spend a specified amount of their net profit on CSR as well as disclose details of their contributions to CSR are expected to increase the focus of companies on what they do by way of such initiatives.

(Sourced from LiveMint.com)

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Posted by on Apr 2 2012. Filed under Corporate. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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