Corporate Social Responsibility in India
Publication Year: 2008
Corporate Social Responsibility in India is arguably the first comprehensive, well-researched book on the subject in the country. The author uses Indian examples, case studies and CSR role models from the Indian industry to explain the gap between Indian business needs and current practices. Practices and researches in economically developed counties have also been used extensively. As the Indian industry begins to enter international markets, it is going to be imperative to integrate CSR with business goals for long-term sustainability and healthy economic, social and environmental impact.
The book helps in understanding the meaning of business beyond financial numbers and tries to explain how even CSR can be used as a marketing tool and for business benefits. It dwells comprehensively upon the concept of CSR, from ...
- Front Matter
- Back Matter
- Subject Index
Copyright © Sanjay K. Agarwal, 2008
All rights reserved. No part of this book may be reproduced or utilised in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher.
First published in 2008 by
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Library of Congress Cataloging-in-Publication Data
Agarwal, Sanjay K.
Corporate social responsibility in India/by Sanjay K. Agarwal.
Includes bibliographical references and index.
1. Social responsibility of business—India. 2. Social responsibility of business—India—Case studies. 3. Industrial management—Social aspects—India. 4. Industrial management—Environmental aspects—India. I. Title.
HD60.5.I5A35 658.4′080954—dc22 2008 2008003873
ISBN: 978-0-7619-3628-2 (PB) 978-81-7829-792-7 (India-PB)
The SAGE Team: Sugata Ghosh, Maneet Singh, Vijaya Ramachandran and Trinankur Banerjee
[Page 5]Dedicated to my parents who always inspired and supported me to complete my studies[Page 6]
Originally, I planned to write an article on taxation issues of Corporate Social Responsibility (CSR), as I was having some litigation with tax authorities for my employer's tax matters.
As I delved deeper, I found the matter was not as simple as it appeared. General understanding of CSR, at least in India, is only of philanthropy. Even the most highly educated people, working with large corporate houses are unaware about CSR beyond philanthropy. However, on a larger canvass, philanthropy is only a small part of the total concept of CSR—not more than the tip of an iceberg. As Indian industry externalises, desperate to leave its footprints in international business, it is only a matter of time when these issues will start impacting rigorously on the Indian businesses.
Whatever little CSR is being taught in Indian business Schools is based on foreign case studies given in the books published abroad. There is no book available in the market which touches the total concept of CSR in the Indian context with Indian characters and Indian examples.
As Prime Minister Dr Manmohan Singh has rightly pointed out, there is quite understandably a difference in the approach of management philosophies and practice as developed in the United States, Europe and Japan. Perhaps one can even talk of the Chinese Model of Management. Clearly, there should be an Indian model too even as we learn from West and East, we must try to evolve our own paradigm of management education based on our own social and global attributes. After all, one of the guiding lights of modern management is—Think Global Act Local.
This book tries to bridge the gap between Indian business needs and the guidance available. The tone and presentation of the book do not talk about CSR as a philosophy, but as [Page 10]a business need. From the first chapter itself the book detaches CSR from mere philanthropy and makes it a business case. As one moves forward, second chapter onward it looks at larger picture of CSR i.e. Sustainable Development, its reporting, issues, tax angle and so on. The book not only analyses CSR efforts of several large Indian companies, but also identifies the best CSR strategy or projects in Indian circumstances.
Though all the research put in to make this book is done by me, it would not have been easy to complete it without the help of my colleagues Mr V. Krishnakumar, who took great pains to put large parts of the work on computer, especially graphs, charts and emblems.
Last but not the least, my sincere thanks go to my wife Renu and my children Kriti and Shivam who kept on reminding and persuading me, time and again, to sit and study about CSR.
Appendix 1: The India Development Policy Review 2006 Titled ‘Inclusive Growth and Service Delivery: Building on Indian's Success’[Page 255]
Released on Wednesday, 26 July 2006, the report has once again confirmed the tragedy associated with development without social cause. The report has identified two most pressing challenges for public action in India, i.e.,
- Institutional reform to enhance the capability of public sector institutions to ensure the effective delivery of core services.
- Sustaining rapid growth and making the process of economic growth more inclusive—across sectors, across regions and bringing the benefits of higher incomes and living standards to more people.
In the starting pages itself, the report quotes ‘India is the best of the world, it is the worst of the world—and the gaps are growing’. Following are some of excerpts from that report.
A more consistent attention must be given to assessing development progress not simply as a measure of an aggregate of economic activity but as an assessment of the inclusiveness of economic growth, with emphasis not only on the [Page 256]distribution of the gains but also on the security, vulnerability, empowerment and sense of participation that people may enjoy in social civic life. It is worrisome that in both economic progress and in service delivery, the gaps between the best and worse are growing. India often has among the world's best and worse across a range of indicators. India is an emerging global super power, joining the elite club of acknowledged nuclear powers; and India has child malnutrition rates among the highest in the world. Parts of India are indeed shining, but, as the election results of 2004 revealed, the greater intensity of the light heightens the contrast with the shadows where the shine has not reached.
The headcount poverty rate in rural Orissa (43 per cent) and rural Bihar (41 per cent) is higher than that similarly measured poverty rates of African countries like Malawi or Ghana. By the same standard, poverty rate in rural Haryana is (only 5.7 per cent) less than upper-middle income countries like Columbia and Brazil. Rural Punjab is only 2.4 per cent—approaching the rates of Costa Rica (famed for its social success). The gap between rural Punjab and Turkey which is knocking on Europe's door is only two percentage points—20 times smaller than the gap between Punjab and Orissa.
Even within relatively prosperous states, there are regions that do not share the general dynamism of the state. There are a number of districts in prosperous states that have infrastructure and human development indicators comparable to the worst-off districts in the poorest states. For example, in one district of Maharashtra over 80 per cent of households use clean cooking fuel, while at the same time less than 10 per cent of households living in another district in the same state have access to this basic provision. Access to toilets, low in most states with the notable exception of Kerala, ranges from over 70 per cent of households in one district to only 10 per cent in another in the state of Gujarat. There are large gaps in Infant Motality Rate (IMR) across districts—the worst districts in Maharashtra have IMR comparable to or higher than the average of the poorest states.
One important dimension of the income gap within the states is the rural-urban divide. During the 1990s, in most states, improvements in urban incomes outpaced rural [Page 257]incomes, widening the gulf between rural and urban India. As with states, the concern is not that rural incomes have not grown at all, but rather urban incomes have grown sharply and rural India has been left behind. A second dimension of within-state income disparities is the presence of backward regions within otherwise prosperous states. Karnataka, a middle-income state, has regions (Eastern and Northern) with poverty rates that are comparable to rural areas of the richest and the poorest states in the country. Maharashtra, India's highest-income state, is home to booming and prosperous Mumbai, but at the same time nearly 50 per cent of the population in its inland eastern region is close to or below the poverty line. Improving incomes in rural India is critical to reducing poverty, because nearly three-fourths of the poor continue to reside in rural area.
Parts of urban India are competing successfully not just in low skill services like call centres but in high skill services like consulting, software engineering and bio-medical research. Indian firms are pushing the cutting edge of technology and business in many fields—an Indian pharmaceutical company recently acquired a German firm to expand their business in Europe.1 But over half of the labour forces work in agriculture, often in conditions and with results that were surpassed centuries ago and agriculture is going slowly.
The top students from Indian Institutes of Technology are not just globally competitive but in many ways they set the global standards. The recent graduates of Indian Institute of Management and new private Indian School of Business are so in demand that the very top starting salaries are approaching one crore (approximately USD 225,000). Yet, the recent assessment of learning achievement in rural India, the first Annual Status of Education Report (ASER) found that in the worst five states more than half of children in class V could not read at the levels expected of class II children and more than two-thirds could not do simple division.
While there is increasing ‘medical tourism’, where people travel to India for high quality, low cost medical treatments—the typical primary health centre (PHC) doctor in Delhi is less competent than doctors in Tanzania. A detailed survey of knowledge of medical practitioners for treating five common [Page 258]conditions in Delhi found that the typical quality doctor in a public primary health centre has more than 50–50 chance of being recommending for a harmful treatment. With these facilities, medical practice has yet to reach the ‘do no harm’ standard.
Examples of best and worst cut across sector after sector. India's Supreme Court is world renowned, but local courts are backlogged and ineffective and local police is frequently a miasma of corruption and brutality. Delhi's new metro is a 21st century marvel while rural roads in many states are poor and often impassable.
These gaps are also playing economically. Interestingly, in proportionate terms, the most rapid growth of wages in the 1990s was at both the bottom and the top end of the wage distribution. The percentage growth of wages has been very fast at the very bottom (the 10th percentile) and at the top (8th, 9th and 10th deciles) but has been quite slow in the middle. This implies that absolute wage gains have been concentrated at the top-while the daily wage has increased by about 5 rupees per day (in 1993/94) for the bottom decile and about 10 rupees per day for the median (typical) worker wages have increased by 90 rupees a day for the worker in the top 10 per cent wage earners.
Going forward, at one place report concludes that if one worker shirks then the problem might be with the worker, but when 48 per cent of health care workers are not present, or when only half of teachers are present and engaged in teaching when visited during the school day then the problem is not with the individual but with the system. The focus on absenteeism does not mean that absenteeism is the disease; absenteeism is a symptom of a system in which the internal and external lines of accountability have broken down.
Over 60 per cent of India's rural poor do not have a bank account, and 87 per cent have no access to credit from a formal source.
More than 50 per cent of the rural habitations are not connected by road in the states of Bihar, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, West Bengal and Chhattisgarh.
While there are several options examined by the report in terms of what can be done to rectify the situation, one [Page 259]common thread running across it is that ‘to fix the pipes, you must first fix the institutions that fix the pipes’.
In other words, what is needed is not more of the same, but a radical reform of the institutional structures in service delivery that must result in improved accountability to those that consume these services and hence hopefully to superior service delivery.
‘Merely planning the changes right will not suffice’, the report warns. ‘Implementation is everything’, it repeatedly warns, occasionally quoting statement in a similar vein from the Prime Minister, Finance Minister and some of top bureaucrats to show that the government too is actually aware of this need.Note
1. On 15 February 2006, Hyderabad based Dr Reddy's Laboratories Limited acquired German generic firm betapharm for euro 480 million (around USD 570 million or Rs 2500 crore).
Appendix 2: Brief Note on Social Accountability (SA 8000)1[Page 260]
Sa 8000 stands for ‘Social Accountability 8000’. It is a standard which ensures the ethical sourcing for production of goods and services. It sets out basic standards and procedures regarding Health and Safety, the use of Child Labour, Forced Labour, Trade Union Rights, Remuneration and Working Hours, together with the Management Systems to deliver them.
Since the 1990s, more and more national governments, businesses, NGOs, consumer groups and concerned individuals in both developed and developing countries have realised the importance of ‘depolarisation’ of economic and human development and have developed many concrete strategies and models to promote sustainable development. SA 8000 is one such attempt.The Origin of SA 8000
Given worldwide access to capital, improvements in manufacturing flexibility and the speed of global communication, major retailers and brand companies in the west have been able to shift more and more production to low-cost producers around the globe. However, this increasingly extenuated global supply chain contributes to a large number of problems too.
[Page 261]In response to consumer groups' requests, in 1991, Levi Strauss & Co. became the first company to establish a comprehensive ethical code of conduct for manufacturing and finishing contractors worldwide. The 1990s saw a host of global brand names follow suit, such as Nike, Gap, Liz Claiborne, Timberland, Toys RUs and Avon. In 1995, the Council on Economic Priorities (CEP), a New York based research organisation focusing on corporation social performance for 30 years did a study on companies' policies on child labour and codes of conduct. CEP's findings showed the inconsistency among codes and the need for systematic independent verification, full implementation of the company codes. Later in 1997, CEP analysed 71 codes from US companies and found that these company codes typically do not cover all core labour rights—especially freedom of association/right to collective bargaining, limits on working hours and a basic needs age. In 1998, the ILO analysed 200 company codes, and they found similar results.
Thus, CEP set out to develop a more comprehensive code of conduct. They convened an international advisory board of companies, NGOs, and trade unions to oversee the development. The advisory board approved the publication of SA 8000 in fall of 1997, and in 1998 Social Accountability International was established, as CEP's accreditation agency, to oversee SA 8000's implementation and further development.
SA 8000 is the end result of the work of a commission formed by different parties, and its drafting was coordinated by the coordinata da CEPAA (Council on Economic Priorities Accreditation Agency), an NGO established in 1997 for this purpose, today known as Social Accountability International (SAI).
SA 8000 was developed by a multi-sector advisory board representing different perspectives and interests. SAI coordinated multiple rounds of conference, consultation, and discussion in two years before consensus was reached and the standard was published in 1997. The SAI advisory board continues to oversee the standard's interpretation, ongoing development and the quality of its implementation.[Page 262]SA 8000 is an Independent 3rd Party Verification System
Drawing on the verification model developed by International Organisation for Standardisation (ISO) 14000, SAI adopts an independent 3rd party verification system. To avoid conflict of interests, SAI does not certify companies directly. Instead, SAI accredits qualified global and local agencies to conduct certification audits worldwide. Accreditation to be an SA 8000 auditing body requires an extensive staff background in systems auditing, intensive training in SA 8000, and the institutional capacity to assure quality and responsiveness. After the issuance of certification, accredited certification bodies will conduct surveillance audits every six months to verify compliance and corrective actions. In turn, SAI conducts regular review on certification bodies' performance (office audits, evaluation audits) to make sure that certification bodies and auditors' auditing conforms with procedures developed.
The names and addresses of all SA 8000 certified facilities are available on the SAI website (http://www.sa-intl.org). Facilities that lose their certification are removed from this official list.
A built-in complaints and appeal system allows all interested parties, from workers working at the facility to local NGO groups, to challenge the certification. There have been a number of certifications withdrawn due to complaints filed directly or indirectly with SAI.SA 8000 Covers all Core Labour Rights
The SA 8000 Standard sets out clear and verifiable rules that cover all core labour rights contained in the widely accepted ILO Conventions, the United Nations Universal Declaration of Human Rights, the UN Convention on the Rights of the Child, and the United Nations Convention to Eliminate All Forms of Discrimination Against Women.
The Standard also requires that facilities seeking certification have management systems in place to assure ongoing compliance. Here is a brief summary of the nine elements of the SA 8000 Standard.[Page 263]
- Child Labour—no workers under the age of 15; minimum lowered to 14 for countries operating under the ILO Convention 138 developing-country exception; remediation of any child found to be working.
- Forced Labour—no forced labour, including prison or debt bondage labour; no lodging of deposits or identity papers by employers or outside recruiters.
- Health and Safety—provide a safe and healthy work environment; take steps to prevent injuries; regular health and safety worker training; system to detect threats to health and safety; access to bathrooms and potable water.
- Freedom of Association and Right to Collective Bargaining—respect the right to form and join trade unions and bargain collectively; where law prohibits these freedoms, facilitate parallel means of association and collective bargaining.
- Discrimination—no discrimination based on race, caste, origin, religion, disability, gender, sexual orientation, union or political affiliation, or age; no sexual harassment.
- Disciplinary Practices—no corporal punishment, mental or physical coercion or verbal abuse.
- Working Hours—comply with the applicable law but, in any event, no more than 48 hours per week with at least one day off for every seven day period; overtime must be voluntary and be paid at premium rate.
- Remuneration—wages paid for a standard work week must meet the legal or industry standards and be sufficient to meet the basic need of workers and their dependents; no disciplinary deductions.
- Management Systems—have in place the management systems needed to assure long-term compliance. This element requires that facilities seeking to gain and maintain certification go beyond simple compliance and to institutionalise the intent and elements of the standard. Senior management commitment, written and implemented policy, regular performance review, access to information, and communication plan are among the requirements. Management Systems is one [Page 264]of the key elements that distinguish SA 8000 from other code initiatives.
In most developing countries, the public still don't have much awareness of CSR or SA 8000, though more and more companies are eager to get certificates such as ISO 9000, ISO 14000, which cover product quality and environmental protection respectively.
An important characteristic of SA 8000 is that it is not based simply on verifying compliance, on one occasion, with the requirements of the standard but is related to a continuously evolving system, founded on the element of prevention.Benefits of Implementing SA 8000
There are many benefits of Implementing SA 8000, which includes:
- Satisfies Customers' Needs.
- Helps National and International Recognition.
- Improved efficiency.
- Increased productivity.
- Reduced waste.
- Enhanced profitability.
- Allows the company to operate consistently.
- Gives a competitive edge.
- Encourages investment.
- Continuous improvement in working conditions.
Following is the sample of Social Accountability policy-SA 8000 of a Manufacturing Company.Note
1. Based on working paper presented by Social Accountability International at the ADB Regional Technical Workshop on Labour Standards at Manila, Phillipines, 18–19 September 2002.
Appendix 3: CSR Policy of a Multi Product, Multilocational Indian MNC[Page 266]ScopeObjectivePolicy
- XYZ Limited is a socially committed organisation and a socially responsible corporate citizen. It attaches great importance to discharging its overall social responsibilities to the community and the society. The company's philosophy towards corporate social responsibility is the continuing commitment to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. Thus, the company believes in building a better, sustainable way of life for the weaker sections of society and in raising the country's human development index.
Constituents of Corporate Social Responsibility:
- Business Ethics and Transparency.
In this regard:
- The company will maintain high standards of integrity and corporate governance practices to maintain excellence in its day-to-day operations.
- The company is committed to conduct its business in an open, honest and ethical manner.
- The company will communicate its environmental policies, objectives and performance openly and honestly to its partners and others with an interest in its activities, including customers and suppliers. They should be encouraged to communicate their views.
- Environment, Health and Safety.
In this regard, it will be the dedicated endeavour of the company to:[Page 268]
- Protect the health and safety of all individuals affected by its activities including its employees and the public at large.
- Provide a safe and healthy working environment.
- Promote responsible environmental practices to mitigate threats to the environment and to society at large.
- Review regularly its business practices and performance to identify how it can improve its energy efficiency, minimise packaging and reduce water usage, waste disposal and air emissions.
- Recognise that pollution prevention, resource conversion are key to a sustainable environment and the Company should effectively imbibe these concepts into business decision-making.
- Ensure that the environment is fit for the intended purpose, and health and safety issues are of the utmost importance and rank high in terms of priority.
- Review of compliances with local and national requirements with respect to environment, health and safety.
- Create organisational awareness on environment management through need-based training and communication.
- Stakeholder Relations.
The company will endeavour to:
- Conduct business relationships with integrity and courtesy. The company's aim is to build long-term relationships with its associates.
- Trade fairly with all its suppliers and provide support for small, local or specialist producers.
- Communicate to the stakeholders its expectations in the areas of health, safety and worker's welfare, and good environmental practices.
- Treat employees fairly and with dignity and strive for fulfilment of their goals and aspirations.
- Ensure application of fair labour practices while respecting existing laws in force.
- Provide equal opportunities to employees and discrimination, intimidation or harassment of employees will not be tolerated. [Page 269]
- The company's philosophy entails that the wealth that one generates and holds is to be held as in a trust for its multiple stakeholders.
- Human Rights.
In this regard:
- The company will not tolerate abuse of human rights and will not engage or be a party to any activity that encourages human rights abuse.
- The company will always attempt to build trust, deliver mutual advantage and express respect for human dignity and rights with all stakeholders.
- Community Investments:
Socio-economic development intended by the company under the CSR would mean investing part of the company's profits beyond business for the larger good of the society. In addition:
- The company will take active part in community investment programmes.
- The company will support innovative programmes in health, education, social services, environment, infrastructure development as well as cultural and public projects.
- It will be the company's endeavour to provide employment and economic opportunities in nearby communities and the society at large.
Responsibilities-Implementation, Monitoring and Evaluation of CSR initiatives:
- The authority and responsibility for initiation, dissemination, discussion, execution, monitoring and evaluation of initiatives taken under the CSR Policy should be assigned to the specific individuals by the business head.
- The designated authorities will be responsible for:
- Compilation of the CSR Plan for the year.
- Monitoring and comparison of the CSR Plan vis-à-vis CSR projects/activities initiated. [Page 270]
- Selection of an NGO or other partners in execution of CSR activities, if any.
- Arranging for training of the concerned personnel in CSR techniques and methodology.
- Periodic evaluation of benefits envisaged against the CSR project vis-à-vis actual benefits realised.
- Appointing an external agency for evaluation of benefits of CSR activities.
- The designated authorities should prepare the overall financial budget for the CSR activities during the year and the budget, along with the CSR Plan, should be presented to the Board for approval.
Communication of CSR Initiatives and Reporting:
- The designated authorities should develop communication strategies for effective communication of CSR initiatives to various stakeholders, viz. shareholders, customers, employees and public at large, in consultation with the Corporate Communication Department of the company.
- The communication with the stakeholders should be two-way. In addition to communicating the details of various CSR projects and benefits arising out of them, feedback from the stakeholders should be sought to revisit the CSR initiatives of the Company to make the required changes, if any.
- The designated authorities should ensure generation of periodic reports which should contain:
- CSR initiatives undertaken during the period.
- CSR schedules and their adherence.
- Benefits achieved v/s envisaged.
- Actual v/s budgeted expenditures.
- Feedback of stakeholders on the CSR initiatives.
- Awards won by the company, if any.
- Major hurdles in execution of any of the CSR project/activity
- The report should be presented to the board at periodic intervals.
Appendix 4: Countries in the United Nations Framework Convention on Climate Change[Page 271]Annexure-1 Countries in the United Nations Framework Convention on Climate Change
[Page 274]Major Non-annexure-1 Countries
Appendix 5: How to Participate in the Global Compact[Page 275]
As a voluntary initiative, the Global Compact seeks wide participation from a diverse group of businesses and other organisations. To participate in the Global Compact, a company:
- Sends a letter from the Chief Executive Officer (and endorsed by the board) to the Secretary-General of the United Nations expressing support for the Global Compact and its principles.
- Sets in motion changes to business operations so that the Global Compact and its principles become part of strategy, culture and day-to-day operations.
- Is expected to publicly advocate the Global Compact and its principles via communications vehicles such as press releases, speeches, etc.
- Is expected to publish in its annual report or similar corporate report (e.g. sustainability report) a description of the ways in which it is supporting the Global Compact and its ten principles.
In terms of the practical ways in which companies pursue the principles, the Global Compact offers engagement opportunities to all participants through the following:
- Global Policy Dialogues. Each year, the Global Compact convenes a series of action-oriented meetings that focus on specific issues related to globalisation and [Page 276]corporate citizenship. The meetings bring businesses together with UN agencies, labour, non-governmental organisations and other groups to produce solutions to contemporary problems. Issues addressed have included ‘The Role of the Private Sector in Zones of Conflict’; and ‘Business and Sustainable Development’.
- Local Networks. The Global Compact encourages the creation of local structures and networks at the country or regional level. Such networks are designed to support: the implementation of the ten principles; mutual learning and information exchange; the convening of local/ regional dialogues on globalisation issues; partnership projects; and the recruiting of additional companies. The Global Compact Office and UNDP facilitate and support the process leading to the formation of these local structures.
- Learning. Companies are invited to share examples of corporate practices on the Global Compact web portal. In addition, participants are encouraged to develop in-depth case studies and analysis, and to use these for learning activities in the corporate and academic worlds. Local, regional and international learning events support the sharing of knowledge.
- Partnership Projects. The Global Compact encourages companies to participate in partnership projects with UN agencies and civil-society organisations that are aligned with UN development goals.
[Page 277]Sample Letter
Approved by the American Bar Association
New York, NY 10017
Dear Mr Secretary-General,
Reference is made to the United Nation's Global Compact to encourage corporate consideration of universally-accepted principles to harmonise the role of business and society. The Global Compact recognises that, because of the wealth that business creates, businesses are part of the solution to world peace and security and a decent standard of living and quality of life.
I am pleased to confirm that _______; (name of company) supports the ten principles of the Global Compact with respect to human rights, labour standards, the protection of the environment and anti-corruption. We express our intent to support and advance those principles within our company and entities controlled by it. We undertake to make a clear statement of our support of the Global Compact in our annual report or other public documents.
It is our understanding that the Global Compact reflects shared values and principles between the United Nations and businesses such as our company, but that the Global Compact is not a grading or enforcement mechanism nor does it involve any concepts of profit or technology transfers. Moreover, our participation in the Global Compact does not limit our freedom as permitted by law to oppose public or private sector activities which we do not believe are in the best interests of our company. We note that the general intentions behind the Global Compact may be implemented differently in different countries, in keeping with local laws and customs.
[Page 278]Please find enclosed some general information regarding our company, as well as the contact details of the person responsible for contacts with the UN Office of the Global Compact.
(title* CEO/Managing Director)
Company Information to the Global Compact
Please Type or Use Print Capitals
*The letter must be signed by the highest executive in the company.
[Page 279]Name and title of contact person
[Page 280]In accordance with the initiative's Integrity Measures, any company that has missed two consecutive annual deadlines to submit a Communication on progress (COP) will be regarded ‘inactive’ and marked accordingly on the Global Compact website. More specifically, these companies have either (i) failed to submit a COP within three years of joining the Global Compact or (ii) failed to submit a COP within two years of submitting their last communication on progress. Companies listed inactive are not permitted to participate in Global Compact events, and are barred from using the Global Compact name or logo. Companies that are labeled ‘inactive’ can regain their status as active participants by submitting a COP.
Appendix 6: India Global Compact Organisations as on 15 January 2007*[Page 281]
*More than 40 organisations which have been labeled ‘inactive’ and hence delisted are not included here.
Appendix 7: July 2006 The “Equator Principles”[Page 287]
A financial industry benchmark for determining, assessing and managing social and environmental risk in project financing
Project financing, a method of funding in which the lender looks primarily to the revenues generated by a single project both as the source of repayment and as security for the exposure, plays an important role in financing development throughout the world.1 Project financiers may encounter social and environmental issues that are both complex and challenging, particularly with respect to projects in the emerging markets.
The Equator Principles Financial Institutions (EPFIs) have consequently adopted these principles in order to ensure that the projects we finance are developed in a manner that is socially responsible and reflect sound environmental management practices. By doing so, negative impacts on project-affected ecosystems and communities should be avoided where possible, and if these impacts are unavoidable, they should be reduced, mitigated and/or compensated for, appropriately. We believe that adoption of and adherence to these principles [Page 288]offer significant benefits to ourselves, our borrowers and local stakeholders through our borrowers' engagement with locally affected communities. We, therefore recognise that our role as financiers affords us opportunities to promote responsible environmental stewardship and socially responsible development. As such, EPFIs will consider reviewing these principles from time-to-time based on implementation experience, and in order to reflect ongoing learning and emerging good practice.
These principles are intended to serve as a common baseline and framework for the implementation by each EPFI of its own internal social and environmental policies, procedures and standards related to its project financing activities. We will not provide loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles.Scope
The Principles apply to all new project financing globally with total project capital costs of USD 10 million or more, and across all industry sectors. In addition, while the principles are not intended to be applied retroactively, we will apply them to all project financing covering expansion or upgrade of an existing facility where changes in scale or scope may create significant environmental and/or social impacts, or significantly change the nature or degree of an existing impact.
The principles also extend to project finance advisory activities. In these cases, EPFIs commit to make the client aware of the content, application and benefits of applying the principles to the anticipated project, and request that the client communicate to the EPFI its intention to adhere to the requirements of the Principles when subsequently seeking finances.Statement of Principles
EPFIs will only provide loans to projects that conform to the following principles:[Page 289]Principle 1: Review and Categorisation
When a project is proposed for financing, the EPFI will, as part of its internal social and environmental review and due diligence, categorise such project based on the magnitude of its potential impacts and risks in accordance with the environmental and social screening criteria of the International Finance Corporation (IFC) (Exhibit I).Principle 2: Social and Environmental Assessment
For each project assessed as being either Category A or Category B, the borrower has conducted a Social and Environmental Assessment (‘Assessment’) process2 to address, as appropriate and to the EPFI's satisfaction, the relevant social and environmental impacts and risks of the proposed project (which may include, if relevant, the illustrative list of issues as found in Exhibit II). The assessment should also propose mitigation and management measures relevant and appropriate to the nature and scale of the proposed project.Principle 3: Applicable Social and Environmental Standards
For projects located in non-OECD countries, and those located in OECD countries not designated as high-income, as defined by the World Bank Development Indicators Database, the assessment will refer to the then applicable IFC performance standards (Exhibit III) and the then applicable Industry Specific Environmental, Health and Safety (EHS) Guidelines (‘EHS Guidelines’) (Exhibit IV). The assessment will establish to a participating EPFI's satisfaction the project's overall compliance with, or justified deviation from, the respective performance standards and EHS guidelines.
The regulatory, permitting and public comment process requirements in High-Income OECD countries, as defined by the World Bank Development Indicators Database, generally meet or exceed the requirements of the IFC performance standards (Exhibit III) and EHS Guidelines (Exhibit IV). Consequently, to avoid duplication and streamline EPFI's review of these projects, successful completion of an assessment (or its equivalent) process under and in compliance with local or national law in high-income OECD countries is [Page 290]considered to be an acceptable substitute for the IFC performance standards, EHS guidelines and further requirements as detailed in principles 4, 5 and 6 that follow. For these projects, however, the EPFI still categorises and reviews the project in accordance with principles 1 and 2 above.
The assessment process in both cases should address compliance with relevant host country laws, regulations and permits that pertain to social and environmental matters.Principle 4: Action Plan and Management System
For all Category A and Category B projects located in non-OECD countries, and those located in OECD countries not designated as high-income, as defined by the World Bank Development Indicators Database, the borrower has prepared an Action Plan (AP)3 which addresses the relevant findings, and draws on the conclusions of the assessment. The AP will describe and prioritise the actions needed to implement mitigation measures, corrective actions and monitoring measures necessary to manage the impacts and risks identified in the assessment. Borrowers will build on, maintain or establish a Social and Environmental Management System that addresses the management of these impacts, risks and corrective actions required to comply with applicable host-country social and environmental laws and regulations, and requirements of the applicable performance standards and EHS guidelines, as defined in the AP.
For projects located in high-income OECD countries, EPFIs may require development of an AP based on relevant permitting and regulatory requirements, and as defined by host-country law.Principle 5: Consultation and Disclosure
For all Category A and, as appropriate, Category B projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, the government, borrower or third party expert has consulted with project affected communities in a structured and culturally appropriate manner.4 For projects with significant adverse impacts on affected communities, the process will ensure their [Page 291]free, prior and informed consultation and facilitate their informed participation as a means to establish, to the satisfaction of the EPFI, whether a project has adequately incorporated affected communities' concerns.5
In order to accomplish this, the assessment documentation and AP, or non-technical summaries thereof, will be made available to the public by the borrower for a reasonable minimum period in the relevant local language and in a culturally appropriate manner. The borrower will take account of and document the process and results of the consultation, including any actions agreed resulting from the consultation. For projects with adverse social or environmental impacts, disclosure should occur early in the assessment process and in any event before the project construction commences, and on an ongoing basis.Principle 6: Grievance Mechanism
For all Category A and, as appropriate, Category B projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, to ensure that consultation, disclosure and community engagement continues throughout construction and operation of the project, the borrower will, scaled to the risks and adverse impacts of the project, establish a grievance mechanism as part of the management system. This will allow the borrower to receive and facilitate resolution of concerns and grievances about the project's social and environmental performance raised by individuals or groups from among project-affected communities. The borrower will inform the affected communities about the mechanism in the course of its community engagement process and ensure that the mechanism addresses concerns promptly and transparently, in a culturally appropriate manner, and is readily accessible to all segments of the affected communities.Principle 7: Independent Review
For all Category A projects and, as appropriate, for Category B projects, an independent social or environmental expert not [Page 292]directly associated with the borrower will review the assessment, AP and consultation process documentation in order to assist EPFI's due diligence, and assess Equator Principles compliance.Principle 8: Covenants
An important strength of the principles is the incorporation of covenants linked to compliance. For Category A and B projects, the borrower will covenant in financing documentation:
- to comply with all relevant host country social and environmental laws, regulations and permits in all material respects;
- to comply with the AP (where applicable) during the construction and operation of the project in all material respects;
- to provide periodic reports in a format agreed with EPFIs (with the frequency of these reports proportionate to the severity of impacts, or as required by law, but not less than annually), prepared by in-house staff or third party experts, that (i) document compliance with the AP (where applicable), and (ii) provide representation of compliance with relevant local, state and host-country social and environmental laws, regulations and permits; and
- to decommission the facilities, where applicable and appropriate, in accordance with an agreed decommissioning plan.
Where a borrower is not in compliance with its social and environmental covenants, EPFIs will work with the borrower to bring it back into compliance to the extent feasible, and if the borrower fails to re-establish compliance within an agreed grace period, EPFIs reserve the right to exercise remedies, as they consider appropriate.Principle 9: Independent Monitoring and Reporting
To ensure ongoing monitoring and reporting over the life of the loan, EPFIs will, for all Category A projects, and as [Page 293]appropriate, for Category B projects, require appointment of an independent environmental and/or social expert, or require that the borrower retain qualified and experienced external experts to verify its monitoring information which would be shared with EPFIs.Principle 10: EPFI Reporting
Each EPFI adopting the Equator Principles commits to report publicly at least annually about its Equator Principles implementation processes and experience, taking into account appropriate confidentiality considerations.6Disclaimer
The adopting EPFIs view these principles as a financial industry benchmark for developing individual, internal social and environmental policies, procedures and practices. As with all internal policies, these principles do not create any rights in, or liability to, any person, public or private. Institutions are adopting and implementing these principles voluntarily and independently, without reliance on or recourse to IFC or the World Bank.Exhibit I: Categorisation of Projects
As part of their review of a project's expected social and environmental impacts, EPFIs use a system of social and environmental categorisation, based on IFC's environmental and social screening criteria, to reflect the magnitude of impacts understood as a result of assessment. These categories are:
Exhibit II: Illustrative List of Potential Social and Environmental Issues to be Addressed in the Social and Environmental Assessment Documentation
- Category A—Projects with potential significant adverse social or environmental impacts that are diverse, irreversible or unprecedented;
- Category B—Projects with potential limited adverse social or environmental impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures; and [Page 294]
- Category C—Projects with minimal or no social or environmental impacts.
In the context of the business of the project, the assessment documentation will address, where applicable, the following issues:
- assessment of the baseline social and environmental conditions;
- consideration of feasible environmentally and socially preferable alternatives;
- requirements under host-country laws and regulations, applicable international treaties and agreements;
- protection of human rights and community health, safety and security (including risks, impacts and management of project's use of security personnel);
- protection of cultural property and heritage;
- protection and conservation of biodiversity, including endangered species and sensitive ecosystems in modified, natural and critical habitats, and identification of legally protected areas;
- sustainable management and use of renewable natural resources (including sustainable resource management through appropriate independent certification systems);
- use and management of dangerous substances;
- major hazards assessment and management;
- labour issues (including the four core labour standards), and occupational health and safety;
- fire prevention and life safety;
- socio-economic impacts;
- land acquisition and involuntary resettlement; (n) impacts on affected communities, and disadvantaged or vulnerable groups;
- impacts on indigenous peoples, and their unique cultural systems and values;[Page 295]
- cumulative impacts of existing projects, the proposed project, and anticipated future projects;
- consultation and participation of affected parties in the design, review and implementation of the project;
- efficient production, delivery and use of energy; and
- pollution prevention and waste minimisation, pollution controls (liquid effluents and air emissions) and solid and chemical waste management.
Note: The above list is for illustrative purposes only. The social and environmental assessment process of each project may or may not identify all issues noted above, or be relevant to every project.Exhibit III: IFC Performance Standards on Social and Environmental Sustainability
As of 30 April 2006, the following list of IFC performance standards were applicable:
- Performance Standard 1: Social and Environmental Assessment and Management System.
- Performance Standard 2: Labour and Working Conditions.
- Performance Standard 3: Pollution Prevention and Abatement.
- Performance Standard 4: Community Health, Safety and Security.
- Performance Standard 5: Land Acquisition and Involuntary Resettlement.
- Performance Standard 6: Biodiversity Conservation and Sustainable Natural Resource Management.
- Performance Standard 7: Indigenous Peoples.
- Performance Standard 8: Cultural Heritage.
Note: The IFC has developed a set of guidance notes to accompany each performance standard. While not formally adopting the Guidance Notes, EPFIs or borrowers may use the Guidance Notes as useful points of reference when seeking further guidance on or interpretation of the performance Standards. The IFC performance standards, guidance notes [Page 296]and Industry Sector EHS Guidelines can be found at http://www.ifc.org/enviro.Exhibit IV: Industry-Specific Environmental, Health and Safety (EHS) Guidelines
EPFIs will utilise the appropriate EHS guidelines used by IFC which are now in place, and as may be amended from time-to-time.
IFC is using two complementary sets of EHS Guidelines available at the IFC website (http://www.ifc.org/enviro). These sets consist of all the environmental guidelines contained in Part III of the World Bank's Pollution Prevention and Abatement Handbook (PPAH) which went into official use on 1 July 1998 and a series of environmental, health and safety guidelines published on the IFC website between 1991 and 2003. Ultimately new guidelines, incorporating the concepts of cleaner production and environmental management systems, will be written to replace this series of industry sector, PPAH and IFC guidelines.
Where no sector specific guideline exists for a particular project, then the PPAH's General Environmental Guidelines and the IFC Occupational Health and Safety Guidelines (2003) are applied, with modifications as necessary to suit the project.
The table below lists both the World Bank Guidelines and the IFC Guidelines as of 1 March 2006.
Industry Specific EHS Guidelines*:
World Bank Guidelines (PPAH) IFC Guidelines 1. Aluminum Manufacturing 1. Airports 2. Base Metal and Iron Ore Mining 2. Ceramic Tile Manufacturing 3. Breweries 3. Construction Materials Plants 4. Cement Manufacturing 4. Electric Power Transmission and Distribution 5. Chlor-Alkali Plants 5. Fish Processing 6. Coal Mining and Production 6. Food and Beverage Processing 7. Coke Manufacturing 7. Forestry Operations: Logging 8. Copper Smelting 8. Gas Terminal Systems [Page 297] 9. Dairy Industry 9. Geothermal Projects 10. Dye Manufacturing 10. Hazardous Materials Management 11. Electronics Manufacturing 11. Health Care 12. Electroplating Industry 12. Life and Fire Safety 13. Foundries 13. Occupational Health and Safety 14. Fruit and Vegetable Processing 14. Office Buildings 15. General Environmental Guidelines 15. Offshore Oil and Gas 16. Glass Manufacturing 16. Polychlorinated Biphenyls (PCBs) 17. Industrial Estates 17. Pesticide Handling and Application 18. Iron and Steel Manufacturing 18. Plantations 19. Lead and Zinc Smelting 19. Port and Harbour Facilities 20. Meat Processing and Rendering 20. Rail Transit Systems 21. Mini Steel Mills 21. Roads and Highways 22. Mixed Fertiliser Plants 22. Telecommunications 23. Monitoring 23. Tourism and Hospitality Development 24. Nickel Smelting and Refining 24. Waste Management Facilities 25. Nitrogenous Fertiliser Plants 25. Wastewater Reuse 26. Oil and Gas Development (Onshore) 26. Wildland Management 27. Pesticides Formulation 27. Wind Energy Conversion Systems 28. Pesticides Manufacturing 28. Wood Products Industries 29. Petrochemicals Manufacturing 30. Petroleum Refining 31. Pharmaceutical Manufacturing 32. Phosphate Fertiliser Plants 33. Printing Industry 34. Pulp and Paper Mills 35. Sugar Manufacturing 36. Tanning and Leather Finishing 37. Textiles Industry 38. Thermal Power Guidelines for New Plants 39. Thermal Power Rehabilitation of Existing Plants 40. Vegetable Oil Processing 41. Wood Preserving Industry
*Exception (the following are World Bank Guidelines not contained in the PPAH and currently in use).
Mining and Milling -Underground
Mining and Milling -Open Pit[Page 298]Notes
1. Project finance is ‘a method of funding in which the lender looks primarily to the revenues generated by a single project, both as the source of repayment and as security for the exposure. This type of financing is usually for large, complex and expensive installations that might include, e.g., power plants, chemical processing plants, mines, transportation infrastructure, environment, and telecommunications infrastructure. Project finance may take the form of financing of the construction of a new capital installation, or refinancing of an existing installation, with or without improvements. In such transactions, the lender is usually paid solely or almost exclusively out of the money generated by the contracts for the facility's output, such as the electricity sold by a power plant. The borrower is usually an SPE (Special Purpose Entity) that is not permitted to perform any function other than developing, owning, and operating the installation. The consequence is that repayment depends primarily on the project's cash flow and on the collateral value of the project's assets’. Source: Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards (‘Basel II’), November 2005. http://www.bis.org/pub1/bcbs118.pdf.
2. Social and Environmental Assessment is a process that determines the social and environmental impacts and risks (including labour, health and safety) of a proposed project in its area of influence. For the purposes of Equator Principles' compliance, this will be an adequate, accurate and objective evaluation and presentation of the issues, whether prepared by the borrower, consultants or external experts. Depending on the nature and scale of the project, the assessment document may comprise a full-scale social and environmental impact assessment, a limited or focused environmental or social assessment (e.g. audit), or straight-forward application of environmental siting, pollution standards, design criteria, or construction standards. One or more specialised studies may also need to be undertaken.
3. The AP may range from a brief description of routine mitigation measures to a series of documents (e.g., resettlement action plan, indigenous peoples plan, emergency preparedness and response plan, decommissioning plan, etc.). The level of detail and complexity of the AP and the priority of the identified measures and actions will be commensurate with the project's potential impacts and risks. Consistent with Performance Standard 1, the internal Social and Environmental Management System will incorporate the following elements: (i) Social and Environmental Assessment; (ii) Management Programme; (iii) Organisational Capacity; (iv) Training; (v) Community Engagement; (vi) Monitoring; and (vii) Reporting.
[Page 299]4. Affected communities are communities of the local population within the project's area of influence who are likely to be adversely affected by the project. Where such consultation needs to be undertaken in a structured manner, EPFIs may require the preparation of a Public Consultation and Disclosure Plan (PCDP).
5. Consultation should be ‘free’ (free of external manipulation, interference or coercion and intimidation), ‘prior’ (timely disclosure of information) and ‘informed’ (relevant, understandable and accessible information), and apply to the entire project process and not to the early stages of the project alone. The borrower will tailor its consultation process to the language preferences of the affected communities, their decision-making processes, and the needs of disadvantaged or vulnerable groups. Consultation with indigenous peoples must conform to specific and detailed requirements as found in Performance Standard 7. Furthermore, the special rights of indigenous people as recognised by host-country legislation will need to be addressed.
6. Such reporting should at a minimum include the number of transactions screened by each EPFI, including the categorisation accorded to transactions (and may include a breakdown by sector or region), and information regarding implementation.
Appendix 8: Gap Inc. Code of Vendor Conduct[Page 300]
This Code of Vendor Conduct applies to all factories that produce goods for Gap Inc. or any of its subsidiaries, divisions, affiliates or agents (‘Gap Inc.’).
While Gap Inc. recognises that there are different legal and cultural environments in which factories operate throughout the world, this code sets forth the basic requirements that all factories must meet in order to do business with Gap Inc. The code also provides the foundation for Gap Inc.'s ongoing evaluation of a factory's employment practices and environmental compliance.General Principle
Factories that produce goods for Gap Inc. shall operate in full compliance with the laws of their respective countries and with all other applicable laws, rules and regulations.
- The factory operates in full compliance with all applicable laws, rules and regulations, including those relating to labour, worker health and safety, and the environment.
- The factory allows Gap Inc. and/or any of its representatives or agents unrestricted access to its facilities and to all relevant records at all times, whether or not notice is provided in advance.
Factories must comply with all applicable environmental laws and regulations. Where such requirements are less stringent than Gap Inc.'s own, factories are encouraged to meet the standards outlined in Gap Inc.'s statement of environmental principles.
- The factory has an environmental management system or plan.
- The factory has procedures for notifying local community authorities in case of accidental discharge or release or any other environmental emergency.
Factories shall employ workers on the basis of their ability to do the job, not on the basis of their personal characteristics or beliefs.
- The factory employs workers without regard to race, colour, gender, nationality, religion, age, maternity or marital status.
- The factory pays workers wages and provides benefits without regard to race, colour, gender, nationality, religion, age, maternity or marital status.
Factories shall not use any prison, indentured or forced labour.
- The factory does not use involuntary labour of any kind, including prison labour, debt bondage or forced labour by governments.
- If the factory recruits foreign contract workers, the factory pays agency recruitment commissions and does not require any worker to remain in employment for any period of time against his or her will.
Factories shall employ only workers who meet the applicable minimum legal age requirement or are at least 14 years of age, whichever is greater. Factories must also [Page 302]comply with all other applicable child labour laws. Factories are encouraged to develop lawful workplace apprenticeship programmes for the educational benefit of their workers, provided that all participants meet both Gap Inc.'s minimum age standard of 14 and the minimum legal age requirement.
Wages and Hours
- Every worker employed by the factory is at least 14 years of age and meets the applicable minimum legal age requirement.
- The factory complies with all applicable child labour laws, including those related to hiring, wages, hours worked, overtime and working conditions.
- The factory encourages and allows eligible workers, especially younger workers, to attend night classes and participate in work-study programmes and other government-sponsored educational programmes.
- The factory maintains official documentation for every worker that verifies the worker's date of birth. In those countries where official documents are not available to confirm exact date of birth, the factory confirms age using an appropriate and reliable assessment method.
Factories shall set working hours, wages and overtime pay in compliance with all applicable laws. Workers shall be paid at least the minimum legal wage or a wage that meets local industry standards, whichever is greater. While it is understood that overtime is often required in garment production, factories shall carry out operations in ways that limit overtime to a level that ensures humane and productive working conditions.
- Workers are paid at least the minimum legal wage or the local industry standard, whichever is greater.
- The factory pays overtime and any incentive (or piece) rates that meet all legal requirements or the local industry standard, whichever is greater. Hourly wage rates for overtime must be higher than the rates for the regular work shift.[Page 303]
- The factory does not require, on a regularly scheduled basis, a work week in excess of 60 hours.
- Workers may refuse overtime without any threat of penalty, punishment or dismissal.
- Workers have at least one day off in seven days.
- The factory provides paid annual leave and holidays as required by law or which meet the local industry standard, whichever is greater.
- For each pay period, the factory provides workers an understandable wage statement which includes days worked, wage or piece rate earned per day, hours of overtime at each specified rate, bonuses, allowances and legal or contractual deductions.
Factories must treat all workers with respect and dignity and provide them with a safe and healthy environment. Factories shall comply with all applicable laws and regulations regarding working conditions. Factories shall not use corporal punishment or any other form of physical or psychological coercion. Factories must be sufficiently lighted and ventilated, aisles accessible, machinery maintained, and hazardous materials sensibly stored and disposed of. Factories providing housing for workers must keep these facilities clean and safe.Factory
Housing (if Applicable)
- The factory does not engage in or permit physical acts to punish or coerce workers.
- The factory does not engage in or permit psychological coercion or any other form of non-physical abuse, including threats of violence, sexual harassment, screaming or other verbal abuse.
- The factory complies with all applicable laws regarding working conditions, including worker health and safety, sanitation, fire safety, risk protection, and electrical, mechanical and structural safety.
- Work surface lighting in production areas—such as sewing, knitting, pressing and cutting—is sufficient for the safe performance of production activities.[Page 304]
- The factory is well ventilated. There are windows, fans, air conditioners or heaters in all work areas for adequate circulation, ventilation and temperature control.
- There are sufficient, clearly marked exits allowing for the orderly evacuation of workers in case of fire or other emergencies. Emergency exit routes are posted and clearly marked in all sections of the factory.
- Aisles, exits and stairwells are kept clear at all times of work in process, finished garments, bolts of fabric, boxes and all other objects that could obstruct the orderly evacuation of workers in case of fire or other emergencies. The factory indicates with a ‘yellow box’ or other markings that the areas in front of exits, fire fighting equipment, control panels and potential fire sources are to be kept clear.
- Doors and other exits are kept accessible and unlocked during all working hours for orderly evacuation in case of fire or other emergencies. All main exit doors open to the outside.
- Fire extinguishers are appropriate to the types of possible fires in the various areas of the factory, are regularly maintained and charged, display the date of their last inspection, and are mounted on walls and columns throughout the factory so they are visible and accessible to workers in all areas.
- Fire alarms are on each floor and emergency lights are placed above exits and on stairwells.
- Evacuation drills are conducted at least annually.
- Machinery is equipped with operational safety devices and is inspected and serviced on a regular basis.
- Appropriate personal protective equipment—such as masks, gloves, goggles, ear plugs and rubber boots—is made available at no cost to all workers and instruction in its use is provided.
- The factory provides potable water for all workers and allows reasonable access to it throughout the working day.
- The factory places at least one well-stocked first aid kit on every factory floor and trains specific staff in basic first aid. The factory has procedures for [Page 305]dealing with serious injuries that require medical treatment outside the factory.
- The factory maintains throughout working hours clean and sanitary toilet areas and places no unreasonable restrictions on their use.
- The factory stores hazardous and combustible materials in secure and ventilated areas and disposes them in a safe and legal manner.
Freedom of Association
- Dormitory facilities meet all applicable laws and regulations related to health and safety including fire safety sanitation, risk protection, and electrical, mechanical and structural safety.
- Sleeping quarters for men and women are separate.
- The living space per worker in the sleeping quarters meets both the minimum legal requirement and the local industry standard.
- Workers are provided their own individual mats or beds.
- Dormitory facilities are well ventilated. There are windows to the outside or fans and/or air conditioners and/or heaters in all sleeping areas for adequate circulation, ventilation and temperature control.
- Workers are provided personal storage space for their clothes and personal possessions.
- There are at least two clearly marked exits on each floor, and emergency lighting is installed in halls, stairwells and above each exit.
- Halls and exits are kept clear of obstructions for safe and rapid evacuation in case of fire or other emergencies.
- Directions for evacuation in case of fire or other emergencies are posted in all sleeping quarters.
- Fire extinguishers are placed in or accessible to all sleeping quarters.
- Hazardous and combustible materials used in the production process are not stored in the dormitory or in buildings connected to sleeping quarters.[Page 306]
- Fire drills are conducted at least every six months.
- Sleeping quarters have adequate lighting.
- Sufficient toilets and showers or mandis are provided separately for men and women and provided in safe, sanitary accessible and private areas.
- Potable water or facilities to boil water are available to dormitory residents.
- Dormitory residents are free to come and go during their off-hours under reasonable limitations imposed for their safety and comfort.
Workers are free to join associations of their own choice. Factories must not interfere with workers who wish to lawfully and peacefully associate, organise or bargain collectively. The decision whether or not to do so should be made solely by the workers.
Monitoring and Enforcement
- Workers are free to choose whether or not to lawfully organise and join associations.
- The factory does not threaten, penalise, restrict or interfere with workers' lawful efforts to join associations of their choice.
As a condition of doing business with Gap Inc., each and every factory must comply with this Code of Vendor Conduct. Gap Inc. will continue to develop monitoring systems to assess and ensure compliance.
If Gap Inc. determines that any factory has violated this Code, Gap Inc. may either terminate its business relationship or require the factory to implement a corrective action plan. If corrective action is advised but not taken, Gap Inc. will suspend placement of future orders and may terminate current production.
Appendix 9: Overview of G3 Guidelines[Page 307]
GRI-3 reporting guidelines are available in two parts. Part 1 contains Reporting Principles and Guidance whereas part 2 contains Standard Disclosures.
[Page 308]In addition to standard principles, guidance and performance indicators, GRI-3 guidelines consist of indicator protocols, technical protocols and sector supplements.
Indicator Protocols exist for each of the performance indicators contained in the guidelines. These protocols provide definitions, compilation guidance and other information to assist report preparers and to ensure consistency in the interpretation of the performance indicators.
Technical Protocols are created to provide guidance on issues in reporting, such as, setting the report boundary. They are designed to be used in conjunction with the guidelines and Sector Supplements and cover issues most organisations face during the reporting process.
Sector supplements complement the guidelines with interpretations and guidance on how to apply the guidelines in a given sector, and include sector-specific performance indicators. Applicable sector supplements are to be used in addition to the guidelines rather than in place of guidelines. Sector supplements respond to the limitations of a ‘one size fits all’ approach.
Following are available sector supplements:
- Financial Services
- Logistics and Transportation
- Mining and Metals
- Public Agency
- Tour Operators
Following are the supplements in some active stage of development:
- Apparel and Footwear
- Energy Utilities
- Financial Services
GRI-3 has introduced concept of self-assessment by reporters about the level to which they have applied the GRI Reporting [Page 309]Framework. There are three levels in the system. They are titled C, B and A. If organisation gets external assurance report it can use C+, B+ or A+ declaration.
Performance indicators in G3 guidelines have been reduced to 79 from 97 in 2002 guidelines. GRI website carries a spreadsheet detailing the changes from G2 to G3 for every indicator.
Appendix 10: The Amsterdam Global Conference on Sustainability and Reporting, 4–6 October 2006[Page 310]
Countrywise Number of Participants SI No. Country No. of participants 1. Argentina 1 2. Australia 20 3. Austria 5 4. Belgium 22 5. Bolivia 3 6. Brazil 37 7. Cambodia 2 8. Canada 22 9. Chile 9 10. China 1 11. Columbia 1 12. Costa Rica 1 13. Croatia 1 14. Czech Republic 3 15. Denmark 11 16. Ecuador 1 17. Finland 11 18. France 34 [Page 311] 19. Germany 51 20. Ghana 4 21. Greece 19 22. Guinea 2 23. Hong Kong 9 24. Hungary 1 25. India 17 26. Indonesia 3 27. Ireland 1 28. Israel 4 29. Italy 3 30. Japan 19 31. Kenya 3 32. Korea, Republic of 8 33. Luxembourg 2 34. Mexico 4 35. Mongolia 1 36. Netherlands 254 37. New Zealand 1 38. Nicaragua 2 39. Nigeria 2 40. Norway 9 41. Pakistan 2 42. Poland 1 43. Portugal 8 44. Republic of Korea 9 45. Russian Federation 17 46. South Africa 19 47. Spain 55 48. Sweden 17 49. Switzerland 19 50. Tanzania, United Republic oí 2 51. Thailand 9 52. Turkey 1 53. Uganda 1 54. Ukraine 1 55. United Arab Emirates 2 56. United Kingdom 110 57. United States 87 58. Venezuela 1 59. Zimbabwe 1 Total 966 Participants from India 1. Basix 1 2. Bhartiya Samruddhi Finance Limited 1 3. Cairn Energy India Pty Limited 1 4. Centre for Entrepreneurship 1 5. CII-ITC C.E.S.D. 1 6. Ernst and Young 1 7. ITC Limited 3 8. Reliance Industries Limited 2 9. Tata Chemicals Limited 2 10. Tata Motors Limited 1 11. TATA Steel Limited 1 12. The Indian Hotels Company Limited (Taj Group of Hotels) 1 13. Titan Industries Limited 1 Total 17
Appendix 11: Scheme of Reporting under GRI Guidelines (2002)[Page 313]
Appendix 12: Listing of Contents of Three Sustainability Reports*[Page 316]
Participants from India ITC Limited-2004 TATA Steel Limited-2005 British Petroleum p.l.c.-2005 Vision 2007 Achievements and Challenges Assurance Report Independent Assurance Statement Financial Highlights Industry in Context Section-I Vision, Mission and Core Values Vision and Strategy Chairman's Statement Statement from CEO Group Chief Executive's Introduction Introduction to GRI Approach to Sustainable Development Section-II Profile Profile of Organisation [Page 317] Fulfilling Stakeholder Expectations Report Scope BP at a Glance Scope and Profile of the Report Report Profile Energy for Tomorrow BP Worldwide Section-III Governance Structure and Management Systems Governance Structure and Management Systems Structure and Governance The Way We Work Stakeholder Engagement Dialogue and Engagement Overarching Policies and Management System Safety and Operational Integrity Section-IV Triple Bottom Line Economic Performance Economic Performance Customers Suppliers Employees Our People Providers of Capital Public Sector Indirect Economic Impact Section-V Environmental Performance Environmental Performance Environment Management Materials Energy Sustainability Energy Water Positive Water [Page 318] Bio-diversity Emissions Emissions, Effluents and Wastes Climate ChangeBP Alternative Energy Solid Waste Suppliers Products and Services Compliance Transport Sustainable Transportation Overall Section-VI Social Performance Social Performance Transforming Lives and Landscapes Employment Our Role in Development Uploading Human Dignity Labour/Management Relations Promoting Good Governance Labour Practices and Decent Work Health and Safety Enterprise Development Ensuring Occupational Training and Education Education Health and Safety Product Responsibility Diversity and Opportunity Access to Energy Strategy and Management Non-discrimination Freedom of Association and Collective Bargaining Child Labour Forced and Compulsory Labour Disciplinary Practices Security Practices Indigenous Rights Community Bribery and Corruption Political Contribution Competition and Pricing Customer Health and Safety Products and Services Advertising Respect for Privacy Annexures Awards and Certifications Global Compact UN Global Compact Memberships and Affiliations TATA Code Conduct Five-year Performance Data EHS Policy Core Charter Trends and Interpretation GRI Core Indicator Index Grievance Procedure Our Approach to Reporting Assurance Statement Abbreviations and Glossary Glossary of Key Terms and Acronyms Procedure for Estimation of Air Emissions from Stacks International Reporting Standards Gift Policy GRI and IPIECA/API Index Further Information
[Page 319]*Order of contents has been changed to facilitate comparison and understanding.
Appendix 13: HIV/AIDS Policy of ITC1[Page 320]
ITC is committed to providing a safe and healthy work environment to all its employees. These policy guidelines of HIV/AIDS are an endorsement of this resolve and, in particular, of the company's commitment to specific programmes and actions in response to the HIV epidemic.
The company's position is based on scientific and epidemiological evidence proving that people with HIV/AIDS do not pose a risk of transmission of the virus to co-workers by casual, non-sexual contact in the normal work setting.Policy GuidelinesCompliance
The company's policies on HIV/AIDS with regard to its employees will, at a minimum, comply with all relevant central and state legislations and the company will implement ALL POLICIES AND DIRECTIONS OF THE GOVERNMENT regarding HIV/AIDS whenever issued.Prevention through Awareness
The company will provide all its employees sensitive, accurate and latest information about risk reduction strategies in their personal lives, with the objectives of reducing the stigma of HIV/AIDS, encouraging safe behaviour and improving their understanding of its treatment.[Page 321]Safe and Healthy Workplace
The company is committed to providing a safe and healthy workplace to all its employees. It seeks to ensure that employees have access to health services to prevent and manage HIV/AIDS.Non-Discrimination
The company will not discriminate against any employee infected by HIV/AIDS with regard to promotions, training and other privileges, and benefits as applicable to all employees.
- An HIV positive employee will be allowed to continue at his/her job unless:
- Medical conditions interfere with the specific job being done, in which case reasonable alternative working arrangements will be made; or
- The employee is incapacitated to perform his/her duties and is declared medically unfit by a medical doctor, in which case the employee will be assisted to rehabilitate himself/herself outside the company.
- The company will not make pre-employment HIV/AIDS screening mandatory as part of its fitness to work assessment. Screening of this kind refers to direct methods (HIV testing), indirect methods (assessment or risk behaviour) and questions about HIV tests already taken.
- HIV/AIDS test will not be a part of the annual health check-ups unless specifically requested for by an employee.
- Voluntary testing for HIV/AIDS, when requested for by the employee, will be carried out by private or community health services, and not at the workplace.
- There will be no obligation on the part of the employees to inform the company about their clinical status in relation to HIV/AIDS.[Page 322]
- Information on clinical diagnosis of an employee in terms of his/her HIV/AIDS status, if advised to the company, will be kept strictly confidential.
1. Reproduced from Sustainability Report.
Appendix 14: Gift Policy1[Page 323]
Tata Steel recognises that exchange of gifts with our business associates is not unusual and is considered acceptable. The receipt and giving of gifts is part of normal social exchange. Such exchange is neither irregular nor is it unusual.
However, the need is recognised for a stated policy setting cap on the value of such gifts and for defining circumstances under which it would be acceptable or not acceptable to retain gifts. The cardinal principle would be that gifts should not be given or received either to obtain favours/preferential treatment or in return for favours/preferential treatment.
The policy will apply to all employees of TATA Steel as well as its subsidiary and associate companies.
- Gifts could be either solicited or unsolicited. The company, regardless of the circumstances, does not permit the soliciting of gifts. This policy defines the circumstances under which unsolicited gifts received either in India or abroad can be accepted and retained.
- The circumstances under which gifts might be received fall into various categories:
- Gifts on New Year and other festive occasions.
- Gifts received only on occasions of wedding of self or children.
- Gift vouchers/gift cheques received in recognition of a professional contribution made by the recipient, such as for making a presentation, conducting a training programme/workshop for a professional and academic institution etc.[Page 324]
- Gifts received on the occasion of a terminal event such as a transfer or on cessation of employment.
- Gifts of any value received for any other reason (not stated in 1 to 4, approval to be taken from the Ethics Counsellor or PEO.
- Declaration regarding receipt of gift:
In all instances, the recipient of a gift of more than a approved value, will make a declaration stating the description of the gift that has been received, the estimated value of the gift and the circumstances under which the gift was received and particulars of the donor. Such declaration should be submitted in the office of the Ethics Counsellor within 15 days of the receipt.
- Kind of gift:
List of the kinds of gifts that might be received is provided below:
- Articles of only an edible nature for festive occasions in item 2(i).
- Articles of use in an office such as table clocks, stationery, desk accessories on New Year only with company's logo in item 2[i].
- Gift worth up to Rs 1,000 for wedding only in item 2[ii].
- Gift vouchers/gift cheques only in the case of professional contribution in item 2[iii].
- Circumstances under which gifts can be accepted:
- Receipt of Cash Gift: Only in the case of retirement or cessation of employment. Cash gift of Rs 1,000 and more can be retained by employees.
- However, in the case of transfers, collective gift in kind can be received. The value limit is not applicable in such cases.
- Gift received in recognition of a professional contribution made by the recipient, such as for making a presentation, conducting a training programme/workshop for a professional and academic institution etc.
[Page 325]Where the receipt of gift is in gift vouchers and gift cheque not more than Rs 1,000 the recipient will be permitted to retain the full amount received, if prior permission is taken from the company. However, information to the Ethics Counsellor should be given. No cash to be received.
Where the company has borne expenses, such as travel or lodging, related to the event and such expenses are reimbursed by the organisers, all such reimbursements will be surrendered to the company.
- Receipt of gift from parties having business relationship with the company, including gifts from subordinates, gifts received from a donor where the donor has a business relationship with the company and could derive benefits from the recipient should only be of a value up to Rs 1,000. Illustrative categories of parties with business relationship with the company would be vendors, dealers, contractors, consultant and customers etc. However, all such gifts should have the donor company's logo or business identity.
- No gifts should be accepted from any person or party who is in default of the company in any manner. By way of illustration, parties in default would be parties from whom monies are overdue or parties with whom the company is engaged in litigation and parties against whom disciplinary action has been taken.
It is desirable that the recipient should check the status of the parties from Chief (Procurement) and Chief Financial Controller (Corporate) to make sure that the provisions of the above clause are not contravened.
- It is recognised that at times gifts exceeding the value caps contained in this policy are to be received as the return of these gifts may cause embarrassment. This situation may occur specially during overseas visit of our officers where sometimes expensive gifts are given by the overseas hosts. In this situation, the recipient should surrender the gift at the earliest. The company will decide the procedure for utilisation of such gifts.
- The company considers it a good practice to share gifts of a nature, which an employee is permitted to receive, [Page 326]such as gifts of an edible nature, with fellow employees. The nature of the gift permitting, it would also be good practice to use gifts in the office.
- Where an employee receives gifts exceeding the value caps contained in this policy, it would be advisable to return the gift to donor with a covering letter thanking the donor for the same and quoting the relevant provision of this policy. The draft of the letter as and when required may be obtained from the office of the Ethics Counsellor.
- In case of any clarification/interpretation of this policy the employee should contact the office of Ethics Counsellor.
- The policy will become effective with immediate effect.
1. Reproduced from TATA Steel's Corporate Sustainability Report 2004–05.
Appendix 15: Social Reporting under Belgium Laws[Page 327]
4. Social Report
[Page 328]2. As at the Closing Date of the Financial Period
[Page 329]B. Temporary Personnel and Persons Placed at the Disposal of the Enterprise
[Page 330]II. List of Personnel Movements during the Financial Period
[Page 332]III. Statement Concerning the Implementation of Measures Stimulating Employment during the Financial Period
IV. Information On Vocational Training For Employed Persons During The Financial Period
[Page 334]V. Information On Educational Or Tutorial Activities Of Employees In Compliance With The Law Of 5 September 2001 Concerning The Improvement Of Employment Rate
Appendix 16: Sample of Social Accounts[Page 335]Oil India LimitedSocial Accounts 2004–2005
In today's corporate world, no organisation can afford to ignore its responsibility to society. Corporate reporting can no longer confine itself to the conventional form of reporting. Society expects and in some countries the law recognises that corporate reporting should incorporate description of the employment policies (In Indian context its policy towards employment of SC/ST and handicapped personnel), action being taken for industrial health and safety of its personnel, policies towards environment and expenditure on pollution control, fulfilling community obligations, customer satisfaction fulfilling national priorities. In the case of Oil India Limited (OIL), being a public sector undertaking, fulfilment of social obligations assumes greater significance.
OIL does not lag behind its commitment to fulfil its social obligations and responsibilities. It recognises its responsibility towards community in and around its operational area and extends help towards community's requirements for education, medical, social, cultural sports and other community welfare measures such as family planning, immunisation against communicable diseases etc. OIL encourages indigenous industry by giving due attention to development of ancillary units making available its technical know-how to [Page 336]achieve better quality of indigenous production and giving price preference to indigenous suppliers on global tenders.
OIL recognises its basic responsibility to contribute towards national priority of self-sufficiency in production of crude oil. Success achieved by OIL in its exploratory and developmental efforts towards discovery of hydrocarbon reserves is explained in the Director's Report on current year's performance.
Social accounting is termed as a process by which an organisation's social performance is analysed and interpreted to produce a set of social accounts.
For a number of years, OIL has been incorporating in its Annual Reports, Social Accounts considered for evaluating the impact of OIL's activities on society.
Social accounts have been prepared based on ‘Abt Associates approach’ with such medications as to suit Indian conditions and make the statement meaningful in the context of OIL.
Some of the items incorporated in Social Accounts require special mention.Incremental Hydro-Carbon Reserves
Since 1996, OIL has decided to incorporate in social accounts, effect of its efforts towards increase in hydrocarbon reserves. As a measure of abundant caution, OIL has decided to restrict its reporting to increase in reserves of proved and developed properties only. Cost of production has been based on actual cost incurred during the current year.Flaring of Gas
In the past, flaring of gas has been reported by OIL as Social Cost to General Public. OIL has constantly been endeavouring to minimise the extent of gas flaring. Success achieved by OIL in its efforts is reflected hereunder:
Year Percentage of gas flare to total production 1998–99 11.90 1999–00 10.43 2000–01 9.60 [Page 337] 2001–02 8.35 2002–03 7.95 2003–04 7.96 2004–05 8.88
OIL experts consider that the extent of flaring has been brought down to a level which is now considered as unavoidable/inescapable. As there is no loss of natural resources, social accounts do not include flaring of gas as a social cost.Price Difference
If OIL had sold its production in the international market then not only it would have earned foreign exchange but would also have increased its profitability to the extent of difference between international price and the current price received by OIL for sale of its products. Such price difference has been exhibited as a benefit to general public in social accounts.Profits
Being a public sector undertaking, OIL has considered it appropriate that dividends paid and retained profits relating to government share holdings, should be incorporated as social benefit.Social Income Statement: 2004–05
[Page 338][Page 339]Notes
1. Increase in hydro-carbon reserves is restricted to proved and developed properties. Out of the value of such reserves at international price, deduction has been made for its cost of production estimated at current year's actual cost.
2. In addition to social benefits as above, OIL has further contributed towards saving in foreign exchange, to the extent of Rs 381374 lakhs (Previous year Rs 306430 lakhs) by producing Crude Oil, natural gas and liquefied petroleum gas.
3. Previous year (2003–04) figures have been regrouped and recasted wherever necessary.Human Resources Accounting 2004–2005
Strategic factor is MAN, considered central to productivity well above Money and Technology. Involvement of MAN in decisions pertaining to his spheres of activity assures commitment, leading to team work guaranteeing success.
OIL recognises necessity of developing its human resources. There are well-defined training programmes both for workmen and executives. Such programmes include in house training, training in institutions within India, training overseas and participation in management development programmes. OIL encourages workers participation in management at shop floor level and also at organisational level.
While recruiting, OIL recognises its responsibility to give due recognition to employment of SC/ST/handicapped personnel. As on 31 March 2005, strength of SC/ST/PH was 1456 representing 16.75 per cent of total strength. OIL also employed physically handicapped persons to the extent of 55 workers and 4 executives.
Regular training imparted by OIL and participative style of management had permitted OIL employees to achieve targeted results which can be considered excellent and very good.
HRA is a system of accounting considering employees as an organisational asset in as much the same way as physical and financial assets are accounted for in conventional financial statements.
[Page 340]Recognising the need to evaluate human resources, OIL has, as in the past, valued its human resources by adopting the Economic Valuation Method as conceived by Lev & Schewartz and incorporating therein refinements as suggested by Eric Flamholtz as also by Jaggi and Lau. The method has been modified in the context of OIL's requirements.
The valuation endeavours to equate an employee's expected value to his anticipated future earnings for the remaining active service period. Due consideration has been given to:
- Increment policy of the company.
- Career development path based on present promotion policy and anticipated pay revisions.
- Present employee compensation includes salary, cash allowances and fringe benefits.
- Possibility of early exit on account of resignation, termination, death etc.
- Weightage for efficiency due to age, experience and skills.
Future anticipated earnings are discounted to arrive at the present day value.
[Page 341]Human Resources Based on Identical Professional Profile as on 31 March 2005
[Page 342]Value of Human Resources Based on Identical Professional Profile as on 31 March 2005
Appendix 17: Extracts from British Petroleum (BP)'s Sustainability Report on Use of Solar Energy[Page 343]Rural Electrification Through Solar
Solar electricity is portable and simple. As such, it is a natural choice for bringing energy to rural communities, providing power for hospitals, schools and homes and enabling medicine to be refrigerated and fresh water pumped. We take a ‘whole system’ approach, by providing the pumps, fridges, lights as well as the solar panels. Rural electrification helps increase farm productivity, raise household income and improve the lives of people in the most isolated regions of the world.Solar Power Technology Support to Agrarian Reform Communities, the Philippines
In May 2005, BP Solar completed installation of more than 6,000 packaged solar systems under the first phase of the Solar Power Technology Support (SPOTS) project in the southern Philippines. Valued at USD 51 million, the two-phased SPOTS project is one of the largest rural solar initiatives in the world, in terms of funding and geographical coverage. SPOTS 1 benefited 40 communities in 16 provinces where 2,40,000 people live. Energy packages include home lighting, school and health facilities, barangay—or community—lighting, [Page 344]potable water and power blocks for farm businesses and farm water supply. Positive evaluation of BP Solar's performance during the first phase of the programme paved the way for a contract for the second phase signed with the Philippine Department of Agrarian Reform in May and the expansion of coverage to 44 more communities.Ladakh Solar Initiative, India
Our joint venture, Tata BP Solar, is bringing power to villages in the Himalayan region of Ladakh, one of the world's most inaccessible places. The area has high altitudes and temperatures that drop to −25°C. Tata BP Solar has installed 8,700 solar home lighting systems and delivered 6,000 solar lanterns to people living in 80 remote villages, more than 3,000 metres above mean sea level.SAWMP-Sri Lanka
The Sustainable Assistance Water Management Project (SAWMP) in Sri Lanka is a pioneering example of the use of solar power to drive large-scale irrigation facilities. The USD 16-million project began in March 2005 and 5,000 systems are expected to be installed by the end of 2006. The project will help 5,000 rural farming families boost productivity and raise income in the dry zones of Sri Lanka. These irrigation systems will help reduce use of fossil fuels, combat soil erosion associated with previous flood irrigation methods and avoid the dangers associated with transporting and running kerosene-fuelled pumps. One farmer said: T can now sow three crops a year as opposed to one or two, previously’.Low-Cost Electricity for Remote Desert Village
People are benefiting from a solar project that is providing reliable, low-cost electricity to the remote desert village of Iherir, close to BP's In Amenas project in south-east Algeria. Iherir is a joint venture between the Algerian Energy and Mines department of the Illizi Wilaya, the Algerian Red Crescent, BP and the inhabitants of Iherir. The project has installed a hybrid photovoltaic and diesel system to serve villagers who formerly had access to only two or three hours [Page 345]of diesel-generated electricity a day. The result is that some 2,000 villagers in 300 households are for the first time connected to a source of renewable, reliable electricity.
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