Global Compact: Corporate leadership in the world economy

10 November 2006

The Aditya Birla Group is a member of Global Compact, an international forum that operates under the aegis of the United Nations. The forum's vision is to usher in a "more sustainable and global economy."

There are ten basic principles outlined in its charter and the following highlight the thinking and initiatives of the Group in those areas.

Human Rights

1. Businesses should support and respect the protection of internationally proclaimed human rights

The Aditya Birla Group adheres to the Human Rights policy of the United Nations and Global Compact. It has a comprehensive policy and a code of conduct which is binding on all employees who must sign it on their induction into the Group. It protects the interests of the employee and other stakeholders. "Integrity, trust, fairness and honesty are the basics that guide our strategies, our behaviour and the relationships we build with people, both internally and externally. Each of us will exercise the highest level of ethical and professional behaviour," states the policy.

2. Businesses should make sure that they are not complicit in human right abuses

The Aditya Birla Group endeavours to uphold the human rights outlined in the Global Compact. Not only in terms of its employees, as detailed above, but also for others such as customers and business associates. This is what the policy states: "We are committed to our customers, to fulfilling their present needs and anticipating their unmet needs. We are dedicated to continually improve quality, usefulness and value of our products and services that help our customers enhance their performance. We provide value for customers through creativity, innovation, productive relationships, quick response and simplicity in all that we engage in."

The footprint of our social work today straddles over 3,700 villages, reaching out to more than two million people annually. Our community work is a way of telling the people among whom we operate that we care.

Our focus is on the all-round development of the communities around our plants located mostly in distant rural areas and tribal belts. All our Group companies have Rural Development Cells which are the implementation bodies. Projects are planned after a participatory need assessment of the communities around the plants. Each project has a one-year and a three-year rolling plan, with milestones and measurable targets. The objective is to phase out our presence over a period of time and hand over the reins of further development to the people. This also enables us to widen our reach. Along with internal performance assessment mechanisms, our projects are audited by reputed external agencies, who measure it on qualitative and quantitative parameters, helping us gauge the effectiveness and providing excellent inputs.

Our partners in development are government bodies, district authorities, village panchayats and the end beneficiaries -- the villagers. The Government has, in their five-year plans, special funds earmarked for human development and we recourse to many of these. At the same time, we network and collaborate with like-minded bilateral and unilateral agencies to share ideas, draw from each other's experiences, and ensure that efforts are not duplicated. At another level, this provides a platform for advocacy. Some of the agencies we have collaborated with are UNFPA, SIFSA, CARE India, Habitat for Humanity International, Unicef and the World Bank.

Our focus areas include education, health and family welfare, infrastructure development, social causes, sustainable development and livelihood, agriculture and watershed development. Recognising the work, the Asian Institute of Management, Centre for Corporate Social Responsibility conferred the prestigious Asian CSR award on Hindalco, a flagship company of the Aditya Birla Group. 80 organisations from across 11 countries had submitted 142 entries for the award.

In our own small way, we are endeavouring to build a better, sustainable way of life for the weaker sections of society. In doing so, our endeavour is also to raise our country's Human Development Index.

Labour Standards

3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

Our manufacturing locations have workers in the unionised cadre. Long term settlements are signed with the workers at regular frequencies wherein the management and union leaders sit across the table and negotiate the terms of the settlement. The process is peaceful and productive across all locations.

Being essentially a meritocracy and a peoples' organisation, our attention in the people area remains unwavering. We are enhancing the quality and the pace of institutionalisation of our systems and processes. These now embrace the entire life cycle of the employee's engagement with the organisation. Several new initiatives have been taken towards the well-being of our employees, particularly in the area of healthcare, education of their children and other critical aspects. We have cordial relations with our shop floor colleagues, creating a workplace environment that nurtures innovation and encourages people to constantly learn and grow.

4. The elimination of all forms of forced and compulsory labour

People are keen to associate with our Group out of their own volition. The terms and conditions are explained in detail openly before the appointment is formalised.

5.The effective abolition of child labour

The Aditya Birla Group does not employ child labourers.

6. Eliminate discrimination in respect of employment and occupation

We are an equal opportunities employer. Our policy states: "We respect the individual rights and dignity of all people. We believe in the inherent potential of employees and are fully committed to people development processes in our Group in a fair, equitable and transparent manner. We encourage employees to grow professionally and personally to their highest capabilities regardless of nationality, caste, religion, colour or sex."

Environment

7. Businesses should support a precautionary approach to environmental challenges

Our environment policy clearly states: "We are committed to sustainable development and to the health and safety of our employees and the environment surrounding our plants and to building co-efficiency in all of our operations and to guarding natural resources. We are committed to going beyond stipulated requirements and ensure energy conservation and productive recycling of waste."

The group believes in sustainable development. For us this translates into meeting today's needs without jeopardising the needs of future generations.

As signatories to the Global Compact, we subscribe to the triple-bottom line accountability. We regard social, economic and environmental responsibility as integral elements that drive our business. The group's brownfield expansion projects at the Hirakud Smelter-Power Complex, at the Muri Alumina Plant and the Dahej Copper Smelter, have all obtained environmental clearance from the Ministry of Environment and Forests and Pollution Control Boards.

8. Undertake initiatives to promote greater environmental responsibility

We relentlessly pursue the development of cleaner production processes that inherently reduce pollution levels and require fewer resources.To help us gauge and benchmark our environment management systems, we engage Professional Environmental Auditors such as KPMG, Bureau Veritas Quality International, Det Norske Veritas, the Central Salt and Marine Chemicals Research Institute and State Control Boards to conduct an in-depth environmental audit at our plants. These reports and certifications validate our commitment to environmental protection.

9. Encourage the development and diffusion of environmentally friendly technologies

Innovative waste disposal mechanisms combined with state-of-the-art industrial Effluent Treatment Plants (ETP) operate across all the Group's manufacturing units. The quality of effluents, water and air emissions are tested and monitored on an ongoing basis.

Treated effluents are re-cycled and used in factory processes or towards horticulture. In view of the acute drought and severe water shortage in the country, at many of the places where our plants are located, we have begun unique rainwater harvesting projects. Our commitment to environmentally friendly technologies have won our group companies several awards such as Greentech, TERI, Golden Peacock, central and state government awards as well as those from industry bodies such as CII and FICCI.

In the recent past, our companies have won the following major awards:

• Hindalco's Renukoot Plant was named the winner of the National Safety Award 2005 for the second consecutive year.
• Hindalco's Belur Sheet Plant was named the winner of the National Awards for Excellence in Water Management.
• CII National Award for Excellence in Energy Management-2004, to Hindalco.
• National Energy Conservation Award 2004 in the aluminium sector, by the Government of India, Ministry of Power, to Hindalco.
• Greentech Safety Gold Award in the metallurgy sector for Hindalco.
• The Stockholm Industry Water Award for Grasim, Nagda.
• Grasim Harihar was named one of the top performers with a three-leaf rating in the Green Rating Award by the Centre for Science and Environment.
• Greentech Environment Excellence Gold Award for Outstanding Achievement in Environment Management for Grasim Pulp and Grasim Cement Division, as also Carbon Black division of Indian Rayon.
• Golden Peacock Environment Management Award to Grasim Harihar.
• The CII Energy Efficient Award and Greentech Silver Award for Safety and Environmental Excellence for the Indian Rayon Caustic Soda Plant at Veraval.

10. Businesses should work against all forms of corruption, including extortion and bribery

The Aditya Birla policy clearly states: "I will not seek or encourage bribes or kickbacks in any form. I will not deal with a supplier who offers me a bribe to get a contract awarded." Adherence to the policy is total and no leniency is shown to a defaulter.

The Aditya Birla Group has re-articulated the values that spawn across its diverse businesses and locations and act as an organisational glue to bind people together. These values are: Integrity, Commitment, Passion, Speed and Seamlessness. The values drive the organisational thinking and processes-whether related to people, manufacturing, environment or community responsibility, the bedrock of the principles outlined by the UN Global Compact.

Here is what our Chairman Mr. Kumar Mangalam Birla has to say: "Great businesses are never built on the quick sands of opportunism. If living by our values means, perhaps growing at a pace slower than we would otherwise liked, so be it. For us, leadership lies at the heart of knowing what we stand for."