May 26, 2008

life in financial markets: corporate social responsibility

As a journalist, I have never done any reporting on the petrochemical and oil refinery industries until recently when I was asked to write about Reliance Industries' (RIL's) corporate social responsibility (CSR) initiatives. My take on CSR is that while companies would always strive to produce more and profit more products that may or may not be hazardous to the society or the environment it is ultimately for urban educated consum
ers to apply their minds in using a little or more of the end-products of any company.

As an aside, for the first time, as a small part of my working on the CSR story on RIL I had a look at petrochemical manufacturing. Poly vinyl chloride (PVC) is one of the petrochemical products and it is made from the mixing of chlorine and ethylene and is used in many products. Some find PVC hazardous.

Other petrochemical products include polyethylene and polypropylene that are used in products similar to those in which PVC is used. Then, you have the polyester products from petrochemical plants that are used in textiles and other things. More about these and other petrochemical products can be read in the 5-6 pages around page 25 of RIL's annual report for the financial year 2007-08 that can be downloaded from their website.

Anyway, I visited the Hazira industrial belt (near Surat in Gujarat) where RIL has one of its petrochemical plants in India. Impressions from just one visit might not be wise to rely upon but I can at least share two photographs I took when I was there. The one to the right is a daytime (1110 hours) picture taken on 8 May and it shows a small part of the Hazira industrial area (that stretches from the western outskirt of Surat right upto Hazira port that lies on land reclaimed from the Arabian Sea). The photo above to your left is a nighttime (0133 hours) picture taken on 9 May of RIL's glittering petrochemical plant.

Coming back to the CSR story, here is what I contributed:


RIL has taken steps in CSR but it is early days yet to conclude whether these are baby steps or giant steps.

Sometime in March this year, Amisha (name changed), a young woman in her early twenties, staying on her own in a shanty in Silvassa was noticed by Gujarat State Network of People Living with HIV (GSNP+). She was HIV+ and even though her husband, working in a government authority body, had infected her, he threw her out of his home after she delivered a baby child (who was not HIV+). In a state of shock and hurt, she took to small-time work and earned a meagre sum of Rs 500 a month.

When she also developed tuberculosis and fell severely ill she was noticed by GSNP+ who immediately bought her to Reliance Industries' (RIL's) health centre at Mora village near its Hazira petrochemical plant at Surat district in Gujarat. This well-equipped health centre provides free treatment for tuberculosis treatment based on the strategy recommended by the World Health Organisation, known as Directly Observed Treatment, Short-course or DOTs in short. It also gives free treatment for phase I AIDS-affected people.

Amisha got swift treatment from RIL-appointed chief medical officer, Dr Ashok Mewara, and his team at the Mora health centre. "But she did not want to go back and insisted to us that she be allowed to work at the centre for just food and accommodation and no salary," says Dr Mewara. But Dr Mewara gave her the job of a cook as well as a salary. "She is now aiming to seek qualification as a nurse and we will support her."

This young woman might very well represent another side of RIL's tough corporate image of doing all that it takes to grow its businesses and profits year after year. The company, last year, even got the TERI (The Energy and Resources Institute) Corporate Award for Business Response to HIV/AIDS.

Other companies in India, who cover AIDS in their CSR initiatives, limit themselves to spreading awareness of risks and protection measures but RIL goes further and funds full-fledged treatment with the expertise of its NGO partners GSNP+ and Lok Vikas Sanstha. "RIL believes in doing it differently," says Dr. Shrinivas Shanbhag, group medical advisor at RIL. "We started the Mora centre in May 2004 on the back of a World Economic Forum request to join them in their fight against tuberculosis across the world."

Later that year, when many TB patients were getting diagnosed as HIV+, RIL upscaled the entire centre to include treatment for AIDS. RIL has started duplicating the Hazira model at its Jamnagar plant at Saurashtra and will soon go live with an AIDS-treatment at its Patalganga. According to a World Bank case study on corporate responses to HIV/AIDS, RIL spent Rs 75 lakh on the Hazira initiative providing active antiretroviral therapy to 330 patients and treatment to 166 tuberculosis patients and monitoring 626 HIV+ cases.

But RIL's CSR is not about fighting TB and AIDS though. Its annual report of 2006-07 lists several other projects encompassing healthcare, education, workforce safety and environmental health. These encompass initiatives at and around its plants such as Jamnagar, Dahej and Patalganga.

For instance, the 9-year old Dhirubhai Ambani Hospital, at Lodhivali in Raigad district on the old Bombay-Pune highway, provided free treatment to 453 highway accident victims during 2006-07 as well as free or subsidised treatment to other patients from poor families in the surrounding areas. In another case, RIL has tied up with the National Association for the Blind to fund corneal transplant surgeries, at Rs 5,000 per surgery, on those blind people who come from the poorest sections. Till date, it has funded 5600 surgeries.

Hardev Singh Kohli, executive director at RIL and a member of the company's health, safety and environment committee, recalls the time 20 years ago when Dhirubhai Ambani had invited him to join the Hazira unit when it was being set up. "He told me to ensure that if the villagers face any problem the company should take care of it." Kohli lists the initiatives.

In mid-90s, RIL contributed to the about Rs 25-30 crore cost of building of the Wier-cum-Causeway dam on upstream Tapi that supplies water to the industrial units at Hazira. Before this, the state government was diverting millions of litres of water from an irrigation canal to Hazira's industries and depriving farmer of water for crop cultivation. "Environmental concerns were raised but I told them that if any damage occurs RIL will take care of it," says Kohli.

Kohli also highlights RIL's initiatives in innovatively using polyester products. "Subsequent to the incidents of fire in train compartments, from the polyester plant we recently started making a product blended with bico fibre that is now being used by the Indian Railways in the cushions of seats of their coaches as an improved safety feature." The company recently started a project involving rag pickers who get PET bottles for it that is then recycled and converted into a fluffy fibre that is used filling in pillows and brings down their cost by half.

In a community initiative, Surat, two years ago, it constructed a new school building for physically disabled children for Disable Welfare Trust of India that provides free education to disabled children, and currently funded and got government approval for the school to extend their classes from 10th standard to 12th standard.

RIL's Corporate Sustainability Report (CSuR) for 2005-06 states the company's investment in various community initiatives across locations was Rs 36.45 crore in 2005-06. It was less compared to Rs 45.08 crore spent in 2004-05 because as the report stated "we believe in developing self-sustaining financially independent ventures for communities, like public schools and hospitals."

As with every major company in the country setting up large industrial units RIL has had its fair share of criticisms regarding environmental issues and acquisition of land from villagers that have their lands within the company's chosen factory sites. But it is also believed to the one company that pays a generous value for the land acquired for its projects.

Environmental issues remain. "The real risk is of what a single deadly mishap can do because at any given day the large manufacturing units of companies like Reliance are consuming crores of litres of water and tons of other hazardous raw materials into their manufacturing process," says Darshan Desai, a chemical engineer and member of Prayas Team Environment India, a Surat-based NGO into animal welfare and environmental protection.

New green technologies have helped RIL bring down emission levels at its various plants. The company's CSuR for 2005-06 stated that data on air emissions of sulphur and suspended particulate matter are captured via online monitors at each manufacturing location.

The report also lists other measures such as recycling 23,000 tons of packaging material, reverse osmosis plant at Jamnagar reducing overall water consumption there by 3 per cent, a 26 per cent reduction in hazardous waster generation over previous year from 27.46 thousand metric tons (tmt) to 20.43 tmt, a flare gas recovery system at Jamnagar reducing emissions of carbon dioxide, nitrogen and sulphur and only a marginal increase in total wastewater generated from 11.65 million cubic metres (mcm) in 2004-05 to 12.16 mcm in 2005-06.

Surprising it is therefore that RIL finds it name in the list of non-responding companies to the Carbon Disclosure Project ( that was launched in 2000 at No 10 Downing Street in London. The project that has institutional investors as its members, asks all large companies to disclose detailed information on greenhouse gas emissions. In 2006 and 2007, RIL and many other Indian companies, who were asked by the CDP, did not respond.
RIL has come a long way. The changing dynamics of the global marketplace is also making it fine-tune its CSR strategies. How much of it translates into real value and sustains, only time will tell.

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