Asian CSR (1) - The Jamshedpur story

Have you heard of Jamshedpur? If you haven't, as I suspect many readers of The Jakarta Post have not, a central point of my article is proved.

Jamshedpur is an industrial town in Eastern India, previously in Bihar state but now in Jharkhand state, and it is a striking oasis of improving standards of living and lifestyle indicators in an otherwise impoverished region.

What the many failed experiments in social re-engineering and redistribution of wealth in Eastern India - from caste-based governance to communist rule in the name of the proletariat to fancy bureaucratic programs that have amounted to little - have not been able to achieve, India's most famous and iconic industrial group, the house of Tata, has and continues to deliver.

For Jamshedpur is home to two of the Tata Group's leading companies, Tata Steel and Tata Motors. These entities have not just been achieving all round excellence in their respective industries (the intensely competitive steel, truck and automotive sectors) but they have also been a pioneering testimonial to the visionary direction provided by its generation of leaders.

The founder JN Tata said: "In a free enterprise, the community is not just another stakeholder in business, but is, in fact, the very purpose of its existence." JRD Tata, under whose stewardship the group strengthened its corporate base in the post independence period, claimed that "no success or achievement in material terms is worthwhile unless it serves the needs and interests of the country and its people".

And Ratan Tata, who has taken the group to new heights especially with the success of Tata Consultancy Services, the unprecedented launch of Nano as well as high-profile overseas acquisitions such as Jaguar, says: "I do believe that we, in the Tata Group, have held a view and sense of purpose that our companies are not in existence just to run our business and to make profit but that we are responsible and good corporate citizens over and above our normal operations."

In an age of distorted Western management models where greed, spinning, personal glorification, selective transparency and public relations have become drivers of corporate social responsibility (CSR), a study of what the Tatas have done in Jamshedpur highlights dimensions of Asian CSR worthy of emulation.

The group has for decades provided stable employment to generations of workers as well as indirect employment to small and medium enterprises, micro units and local suppliers. Since 1915, free medical aid has been provided to all employees and the group set up a welfare department in 1917, long before this became standard management practice in progressive companies.

A 225-acre Jubilee Park was created for citizens of Jamshedpur and this ranks alongside some of the best parks or open spaces created by India's erstwhile rulers whether the Moghul dynasty or British colonial governments.

More than the park, the group took over Jamshedpur's town planning from way back as 1902 when JN Tata started to take personal interest in the facilities for the workers and their surroundings. Over time it is not just the units that have achieved ISO certifications for quality but also the municipal services which are ISO 14001 certified, a feat that even the government of India has not achieved in its major cities like Delhi, Mumbai, Kolkata, Chennai or Bangalore.

The group's Town Service, Community Development and Social Welfare Department and Energy & Environment Cell oversee efforts in Jamshedpur related to environment management (over 1.6 million trees planted, 20 percent reduction in raw material consumption, 100 percent treatment of water and waste), medical services (98 percent immunization coverage and free reproductive health services to over 300,000 women in the region, 850 bed hospital and 11 medical dispensaries), education (Jamshedpur has three primary schools, six high schools and one college run by the company with further assistance given to around 500 private schools in other parts of the country) and emergency fire services, airport, sports facilities (30-acre JRD Tata Sports complex and academies for football, archery, adventure, etc.) and tribal development and support programs.

This inspiring range of activities arises not from some ulterior motive - publicity, sales, brand promotion, investor interest in stocks, awards, profile, government favors, etc. - but rather from the intrinsic belief that the community is an intrinsic stakeholder in the business enterprise and it is the duty (arising from voluntary self-awareness rather than government regulations that invariably end up creating red tape, corruption and misuse) of companies and its senior managers to act responsibly and adopt a pioneering zeal without broadcasting achievements at every opportunity. Responsible behavior is also at the core of environment, social and governance principles that are becoming a critical benchmark for objective external evaluation of large corporate bodies like the Tata Group.

Here, too, the group has been a pioneer establishing the Tata code of conduct in 1999 that mandates good governance through ethical behavior and Tata index for sustainable development in 2003. The group was the first signatory to the UN Global Compact that seeks adoption of responsible practices related to human rights, labor, environment and anticorruption. The company is a founder member of the Global Business Coalition on HIV/AIDS and leader in R&D in the steel sector aimed at achieving best practices in energy efficiencies, raw material substitutes, treatment of hazardous materials and employee safety standards.

The Jamshedpur story must be told and studied more often for it contains the hope of what can be achieved through successful Asian CSR.

Moreover, it has much relevance in Indonesia, whose gaping economic disparities, environmental, governance and social challenges will require similar responsible corporate practices if equitable growth is not to remain a pipe dream.

The author, who completed his MBA at XLRI Jamshedpur, is CEO of the international management consulting group, IndonesiaWISE, and can be contacted at amoltitus@indonesiawise.com. This is the first of a three part series on Asian CSR.