Corporate Social Responsibility And Environment Protection Of Reliance Industries Limited

Company Overview

Reliance Industries Limited is selected as a company for the preparation of this report. (hereinafter mentioned as “Reliance/RIL/company).  The company is incorporated in India and currently having it is a registered office in Mumbai, Maharashtra, (Brennan, 2010). The company have many business verticals that include telecommunication, energy, textiles, retail, petrochemicals, and natural resources. RIL has marked its place in one of the gainful companies of India as the same achieved $100 billion market capitalization in 2007 (Iyengar, 2018). Ambani family is the promoter group of Reliance, which holds most of the shares out of total 3.1 billion shares. Nearly 46.32 percent shares of the company are registered in the name of the promoters group and pubic holds the remaining 56.38 percent shares (Rungasamy, 2019).

Listing:- Bombay Stock Exchange Limited (BSE) (Josh, 2015) and National Stock Exchange of India Limited (NSE) are the major stock exchanges of the countries that have securities of RIL listed. Further, Reliance also issued and allotted the Global Depository Receipts (GDRs) and the same are listed on the Luxembourg Stock Exchange (Luxse).

Stakeholders:- Company has identified few stakeholders in the annual report published for the financial year 2017-18. The identified stakeholders are mentioned below:-

• Employees and workers: – Including all the employed personals of the company.
• Shareholders and Investors:- People who have securities of Reliance or invested money in the company in any other form
• Suppliers:- People who provide material and other support for the production or preparation of the final product
• Customers: Persons who buy the final products (including goods as well as services) provided by Reliance
• Trade Unions:- Association of workers in trade
• Government and  other Regulatory Authorities:- Government of India, State governments, Stock exchanges, Government departments, and another regulatory department
• Local Communities- Individuals or organizations that are part of the local environment

Non Profit organizations (NGOs): – The authorities which work for the social causes such as for the welfare of the woman, children, and other groups of society.

Reliance is actively considering the interest of all the stakeholders by adopting various practices. The objective behind this is to prevent any potential disputes with one or more stakeholders. In the sector of Corporate Social Responsibility, Reliance is doing well since years and implemented many models. If to talk about the environment, the company is doing sourcing of resources in a sustainable manner. The level of involvement of the company incorporate social activities can be assumed by the fact that the same spent an amount of 771 Crore Rupees on subjective activities (Ril.com, 2019a). After reviewing the bifurcation of this spent amount, this is to mention that the company is spending money on various sectors such as disaster response and management, education, arts and culture, sports, rural transformation, and many others. Kitchen garden model is one of the major initiatives taken by the company with the objective to improve the level of dietary outcomes in rural areas. Further, RIL is also contributing to the mission of village social transformation. In such a manner, this can be stated that the company is continuously focusing on the development of local as well as the national environment and is performing many corporate social activities expecting positive results.

Business Verticals of Reliance Industries Limited

Every organization is depended on the environment for natural resources, as the same is required in the process of production. In such a manner, it becomes the responsibility of the organization to protect the environment. In addition to every other stakeholder, an organization has an equal liability towards the environment. This responsibility can be better understood by looking after the definition of environmental responsibility. The definition says that it is the responsibility of every business to work in a manner that provides protection to the environment (Dictionary.cambridge.org, 2019). In general, the protection of the environment is not required under a commercial law but the same is part of corporate social responsibility. Study of the environmental performance of the company is necessary as the same is closely connected to the economic performance of the business. (Edwards, 2014). This is the reason that every organization needs to adopt environmental friendly approaches. Making the discussion more specific, this is to inform that RIL is using many natural resources in its working.  The company is active in the sector of energy and petroleum and therefore including the extraction of natural gas, many other activities are there which affect the environment in a negative manner. However, in addition to using natural resources, reliance also does the activities that reduce the negative impact.

In order to improve energy efficiency, the company is taking the necessary steps. The further company also have an environmental policy, according to the same environmental protection comes under the category of the primary objectives of the company (Ril.com, 2019b). In recent years, RIL has taken many steps for the environmental protection, which includes the installation of water conservation plant in Sendhwa. Further, reliance also started and joined some campaign out of which Swachhta hi seva campaign is the most significant project (Disha Experts, 2018). As the name implies the campaign is focused on the cleanliness in the society.

 In conjunction with above, reliance is using safe and clean energy. As mentioned above that the environmental performance of a company affect economic performance, the same proves true for RIL. In the last few years the company’s financial performances became better and one of the important reason behind the same is the positive environmental performance of the company. The concern of customers regarding environmental safety is increasing day by day. They want the products, which are naturally developed, and no harm has happened to the environment in the development of the same. Further, shareholders also want to take a minimum risk and therefore invest in the companies, which have a positive public image. Not in just the retail sectors but in almost every sector, reliance is reducing the use of plastic that is attracting customers.

Listing and Stock Exchanges

Reliance is complying with the provisions of all the environmental laws and chance of notices and penalties are very few. Hence, Reliance is one of the first choices of investors and shareholders. The company does not face the issue of lack of capital and is not required to pay the fines and penalties for the breach of laws. It strengthens the financial performance of the company. RIL is doing well and earning profits. Because of environmental friendly culture, goodwill of the company enhanced that make an indirectly impact on the financial/economic performance of the same.

While discussing the relation of the environment and economic performance of the company, the other side of the coin is also required to be check. It means the steps taken by the company to make the environmental performance better also do have certain negative impacts on the economic performance. RIL has selected the five major areas of environmental protection and the same are mentioned below:-

• Clean water
• Clean Air
• Preservation of Flora
• Prevention of soil contamination and
• diligent use of scarce resources

In order to achieve the above-mentioned targets, the company has made some changes in the present working structure. These changes attracted additional cost to the company. Nevertheless, in a conclusive way, this is to say that in long term, this change working structure is expected to bring the positive impact on the economic performance and hence the environmental and economic performance of RIL is connected with each other.

Not only the environmental but also the social performance of the company has an impact on the economic performance of the company. Social performance mean is activities taken by the company regarding its stakeholders such as labor, employees, and other social groups of stakeholders (Kurtz & Boone, 2008). Every company has different social performance, as the same is not mentioned in any law. This is the reason that some of the companies have positive social performance whereas some have the negative one. In order to get the commercial benefits, a company is required to be socially responsible. It means Company is required to be aware of the issues related to business such as environmental protection, product safety and so on and to resolve them. In the past, RIL has done many of the acts for the welfare of the society. It majorly includes the development of concrete road in Uttar Pradesh. These social steps affected the economic condition of the company in a negative manner at first instance. However, in the coming future, the same is expected to bring good results to the goodwill and overall value of the company. In the presented era, every stakeholder is smart and the same wants to be a part of the organization, which is socially responsible. RIL is donating money to the NGOs for years. Such steps are significant and for sure affect the economic performance of the company, which is negative in short, term, and positive in long term. After the study of the annual report of the company, this is clear that the amount spent on social performance has not an isolated presence but the same effect the economic performance in both positive and negative mode.

Stakeholders of Reliance Industries Limited

Alike the social as well as the environmental performance of the company, a company’s governance performance also put an impact on the financial performance of the same. (Tiwari, 2010). The governance performance of the company referees to the manner and approach of working by which a company is controlled and regulated. When it comes to an organization, governance is a broad term, which includes and considers the interest of all the stakeholders. Most of the economists think and believe that positive and good governance is an effective measure of quality management and bring the affirmative impact on the financial condition/performance of the business. If to talk about reliance, this is to mention that the same has taken many of the steps towards good governance and these practices affected the economic performance of the same in recent years. The company has its own ethical standards and the same is complying with these standards continuously in order to ensure the accountability, integrity, independence, and integrity. In addition to the ethical standards, the company has developed much codes of conduct related to different stakeholders. For instance, to protect the interest of suppliers, reliance has developed a supplier code of conduct. In addition to this, to prevent one of the major unfair practices that is insider trading, reliance developed Prohibition of insider trading code. Further, RIL has policies on other subjects such as the preservation of documents, determining material subsidiaries, whistleblowing, whistle blower protection and many more.

The good governance practices adopted by the company are developing the goodwill and market value of the same. Out of 13 directors of the company, 7 are independent one (Khan & Jain, 2017). These directors work in the best interest of the stakeholders and company. As a good governance practice, the company is developing such practices, which are able to increase the skills of employees. Nevertheless, employees are not the only focus of the company and the same is acting for the interest for all the stakeholders. Corporate Governance policy is an important document of RIL, which let all stakeholders, know about the vision and practices of the company. The activities mentioned under this policy are an indication that the company is really doing well for the governance. In addition, this is to mention that Reliance has a stakeholder relationship committee. As the name implies, the committee is responsible to check that whether the company is doing well and maintaining good governance by submitting the quarterly disclosures to stock exchanges or not (Indiainfoline.com, 2019). Such practice enhances the trust of shareholders. Further, in recent years, the company has not paid any significant penalties as the same always ensure the existence of good governance. In respect to the customers and suppliers too, reliance is performing good corporate governance practices. Because of this reason, the company has affirmative business relations, which are good for the economic performance of the company. In a similar manner, good governance practices increase the morale of the employees (Argenti, 2015). RIL has a high employee retention rate as most of the employees are satisfied with the approach that the organization adopts regarding them. In conjunction to this, there are very less cases of strike off in RIL, which further saves the cost. At last risk management is also a part of corporate governance procedure of the company and give the economic benefits to the company.

Reliance’s CSR Practices for Social and Environmental Welfare

Conclusion

In the above-mentioned discussion, the focus has been made on the social, governance and environmental performance of the company and this is to conclude that the same is performing well in the field of corporate governance. However, there is still scope for betterment. By the updation in current policy and practice structure, the company can become more sustainable in the coming future. For instance, the company can improve the waste management process and can adopt this practice for every sector. Employee involvement in the governance process is another option using which company can ensure better governance structure in the organization. The reasoning behind the same is that employees are an important part of every organization and understand the problems in actual. By taking ideas from them the company can initiate new practices. In such a manner employee seems to be an important opinion and advise providers. The company is advised to develop more focus towards re-cycling of its products. Further, as mentioned above that the company is active in various sectors hence the same should make a plan about the use of waste material of one sector in the different sector as raw material if possible. This idea will reduce the cost of overall organization and would set a positive sustainable image of the company in the coming future.

References

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