Part 1

Business and Society
The collection of private, commercially oriented organizations
A broad group of people and other organizations, interest groups, a community, a nation.
3

Defining Business Objectives
There are five+ one major types of business objectives:
• Survival,
• Profit Maximization,
• Growth,
• Managerial Objectives,
• Sales Revenue Maximization,
&
Image and Social responsibility.

Growing Influence of Companies
Country/Company GDP/Revenues ($ bil) Global 500 Rank
1.
United States
2.
Japan
3.
Germany
.
4.
China
22. Exxon Mobil
23. Poland
24. Austria
25. Wal-Mart
26. Norway
27. Saudi Arabia
28. Royal Dutch Shell
29, Denmark
30. BP
$13,202
4,340
2,907
2,668
486
339
322
315
310
310
307
275
268
N/A
N/A
N/A
N/A
1
N/A
N/A
2
N/A
N/A
3
N/A
4

Present Business Environment
Increasing Demand from the Government
+
Increasing sophistication of general public
+
Increased Advocacy groups and watch Dogs
+
Regulatory regimes and Media TRPs
=
Costly and Challenging operating Environment

Why Interface between Business and Society on Social Issues Contd….
• India ranked at 119 in Global HDI index
• More than 500 million poor
• 62% literacy Rate
• 250 million do not have access to basic health services
• 450 million to not have access to Sanitation
In contrast
• India has one of the highest mobile penetration
• Some of the low cost business solutions have worked
This proves that business has the ability to be more effective in market led solutions in some situations

Contd………Why Interface between Business and Society on Social Issues
• Both are living organisms and have symbiotic relationship
– As seller of goods
– As buyer of goods and services
– As employer and employee
– As individuals and pressure groups
– As Govt and regulator
• Issues that matter
– Prices
– Safety
– Well Being/ Trust
– Income
– Opportunities
– Transparency

Societal Aspirations and Expectations
• Demonstrate a commitment to society through action.
• Insulate society from any negative impacts of company operations, products and services.
• Share benefits of company activities with key stakeholders.
• Increase revenues of company through innovative approach.
• Wealth creation and equitable distribution

Government
• “Are you exploiting my national resource to make profits?”
JV Partners
• “Am I getting maximum leverage from my association?”
Investors
• “Will I get sustained value from my investment?”
Common Man
• “While I pay more for different products, companies are reaping more profits!”
Communities around operational areas
• “What have they done for me while they make their millions on my soil?”
Media
• “I am concerned about my circulation /
TRPs ”
Peers – National &
International
• “How is it affecting my markets?”/
“Should I look at India?”
NGOs/Advocacies group
• “You are ruining the environment and exploiting people”

Who – is to be influenced?

13

Evolution of Stakeholder Expectations
Economic
Community
Govt
Environment Social
NGOs
Sustainability
Activists Media Groups
Peers

Complexity of Stakeholder Expectations
Trust Me
Community
Tell Me
Activists
Govt
Show Me
NGOs
Involve Me
Media Groups
Peers

Stakeholder Interface with Direct and
Immediate Business Impact
• Legal license to operate:
– Land title
– Permits
– Environmental approvals
• Social license to operate:
– Access to land: perceived legitimacy of title
– Community permission: ‘If you don’t listen when we have a small problem, we’ll make a big one”
– Social acceptance: ability to remain, expand, and operate uninterrupted
16

Examples of Unmatched Expectations and Its
Consequences
•
•
•
•
• Koodankulam- Atomic power plant
Nigeria – Niger Delta
Peru – Minera Yanacocha
Gulf of Mexico- BP Oil spill
Singrur- Tata Nano

Failed Engagement Costs
• Security
• Project modification
• Risk management
• Material damage
• Lost productivity
• Capital
• Personnel
• Reputation
• Redress
18

Section 3

Mapping Stakeholder Expectations- Illustration
Stakeholder Expectation
National level Politicians
Significance to Business/
Risk Linkage/ Opinion
Influencing
High - Fluctuates
Regional Politicians
Policy makers/ Compliance
Depts.
Local Govt. stakeholders
High- Fluctuates
Medium - Sustained
Large physically visible project
-do-
Adherence to best standards
Advocacy groups
Local stakeholders/ influencers
High- Sustained. Influenced by above 3
High- Fluctuating
Medium- Sustained
High- Sustained
Supplement local development effort
Local development.
Disclosures/ transparency, participation in development process
Creating platform for their visibility through opportunities of local development
Participation in progress Community (in project affected areas)
Public Low Seen to be doing good

Perceptions, Facts and Challenges
Issue Essar Community Challenges
Employment Cant employ locals. They don’t have required skills
Employment is my right.
Contracts
Development
CSR
Technical jobs cant be given
Infrastructure
To keep the community engaged
We are given only low value contracts.
Company has no serious intent to develop us
“If I have water- am I developed”
Not everyone can be employed.
Safety at site
Developing contractors and entrepreneurs requires much more than just training
Infrastructure is visible immediately and development is not
Superficial. No vision on “change” or
“solution”
Requires significant investment and long term plan

Cost of Conflict
Some survey’s suggest:
• >30% of cases involve a fatality/injuries, damage to property and/or suspension or abandonment
• 50% involve physical blockade
• Environmental/community health & safety issues are the most common proximate cause of conflict
• Most common underlying issues are economic and social – distribution of benefits, communication, consultation processes – that affect the quality of the relationship
22

Engagement Models with inclusions
Local
Community
Supply
Chain
Economic Development,
Health,
Education,
Infrastructure Development
Local Cooperatives
Best R&R policies
Local Employment Policy
Staff and
Employees
Best HR Policies
Training & development
Employee volunteer programme
Internal moves

Business Issues (Core Sector) and CSR
Business Issue Where CSR can help
Community expectations Help manage expectations through continuous engagement. CSR will enable engagement on developmental issues hence open a neutral engagement front
Contracts
Employment
Political influence
Help in developing small time contractors from community to offset pressure from big daddies
Provide skills for enabling employment elsewhere
Create forums where community leaders can stand besides Essar

Translating Perceptions, Facts and Challenges into Business Solutions- Core Sector
Issue
Contracts
Development
CSR
Business
Employment Cant employ locals. They don’t have required skills
Technical jobs cant be given
Infrastructure
To keep the community engaged
Community Challenges Potential Solution
Employment is my right.
We are given only low value contracts.
Company has no serious intent to develop us
“If I have water- am I developed”
Superficial. No vision on “change” or “solution”
Not everyone can be employed.
Safety at site
Prepare people with skills before the start of the project.
Provide multi skills to align with changing needs during project cycle
Developing contractors and entrepreneurs requires much more than just training
Infrastructure is visible immediately and development is not
Requires significant investment and long term plan
Have a long term vendor development policy that enables vendors to evolve at an early stage
Minimize gap between “your” and
“their” infrastructure.
Leverage their resources and participation
Participatory planning

Case Studies Where Business Models have Impacted Society
• Financial Sector-
– Awareness on Financial Tools has helped increase savings
– Micro finance has triggered rural economy and consumption
– Mahindra rural home finance
• FMCG
– Project Shakti and E- Choupal are globally acknowledged examples
• Kisan Kendra/ Agri Information and Services
– Tata, Mahindra, Rallis
• NSDC
– Created training modules with private sector particpation and sponsorship