The Hindu Business Line : `Business cannot ignore social, eco aspects'

Social and environmental responsibility has emerged as a critical factor as finance for companies to continue in operations, according to Mr Arun Narayan Singh, Deputy Managing Director (Corporate Services), Tata Steel Ltd.

Addressing the Amsterdam GRI (Global Reporting Initiative) Conference recently, he said commercial organisations have to build credibility by making available information transparently in the public domain.

Information on social and environmental aspects of performance, apart from mandatory financial reporting, has to be provided to have the right to operate in various locations.

Considerations other than monetary have become significant to all including mainstream investors as illustrated by initiatives such as the Global Compact, Triple Bottomline and GRI which have grown in importance along with the globalisation of businesses and the integration of global markets, he said.

The licence to operate is the society's trust that an organisation will work in the best interest of the society. Society itself is increasingly critical about the operating norms in the industry. Businesses cannot be seen as aggravating the problems of hunger, poverty, depletion of natural resources or inequalities. Entry barriers, adverse judgments from judiciaries or customer aversion to products, constitute denials of the licence to operate. The ban on industries using child labour, court order to move polluting industries away from the vicinity of the Taj Mahal are all instances of the withdrawal of licence to operate, he pointed out.

Organisations need to make a voluntary disclosure of their efforts in social and environmental responsibility for the stakeholders to decide. Reporting should be result of sustainability issues addressed as a part of business practice, Mr Singh said.

Balancing stakeholder needs, understanding their concerns, prioritising them and making them a part of the business process is essential. The Tata Group believes that industry cannot be an island of prosperity in a sea of poverty.

Sustainability is one of the seven key business measures under the Tata Business Excellence Model, the measure for social performance has considerable emphasis as social uplift of the poor is vital for the country. Communication and feedback instil confidence, helps in identifying new business opportunities and enables the organisation to work towards a clear sustainability strategy.

The mission of the Global Reporting Initiative is to make sustainability reporting as routine and valuable as financial reporting.

Industry is the user of the ecosystem and resources, which are the collective wealth of society. So the industry is accountable to the society and a structured model is vital for reporting social and environmental performance.

Apart from the licence to operate, reporting offers to the company the advantage of finding talent and employee motivation and retention, market value - if Tata Steel's stocks are retained for generations in a family it is because of its commitment to nation-building and trust as much as economic value. Tata Steel is a brand commanding a premium even when steel is viewed as a commodity. Investors and analysts are increasingly promoting companies that practice such values.

There is also evidence of a positive relationship between social and environmental practices and reducing costs, enhancing competitiveness and market position.

Nations come together to tackle world's problems through Millennium Development Goals.