If Wishes Were Horses, The Membership of The Global Compact In India would Scale 1000
By Suresh Kr Pramar
R.S. Sharma, CMD ONGC and President, Global Compact Society India, speaking to the media at the end of the recent National Convention of the GCSI, boasted that the UNGC will have a membership of 1,000 members soon. Sharma knows, and so do most members of the Society, that he was playing to the gallery.
“Now, we have 238 corporates in our fold. Our vision is to attract at least 1,000 large corporates by 2015 to join this largest corporate citizenship campaign in the world,” he had said.
Sharma has been making such claims, without quoting the figures, ever since he took over as the President of the Society about four years ago. During this period there has been steady erosion, not additions, to the membership of the society. His tenure so far is marked more by failure than concrete achievements. In fact, the hold of the present coterie is detrimental to the health of the society, a fact that even the UNGC headquarter is well aware of.
To start at the very beginning, India’s Global Compact Society was set up in 2003. It was registered on 24th November 2003, with Registrar of Societies, NCT, Delhi, as a non-profit body and was named the Local Network by the UN Global Compact. The main objective of the Society, as set out in its memorandum, is to provide a forum to various Indian Companies / Organizations to exchange experiences, network, and work together on activities related to Corporate Social Responsibility (CSR). This is expected to promote sustainable growth besides encouraging good corporate citizenship. The Society acts as an Apex level nodal agency representing various Indian Corporate bodies/ Institutions/ NGOs/ SMEs, who are committed to UN’s Global Compact principles.
Fee for the membership of the Society was pegged at Rs 25,000 as admission fee and Rs 25,000 as annual subscription for business houses. In the initial flush of excitement, over eighty business houses joined the Society. A majority of these were Public Sector Undertakings. Seven original members have withdrawn and 12 others were de-listed by the UNGC. At the time of writing, the Society has about 50 members of which five are NGOs, one SME and eight institutional members. According to a UNGC Press Release, two years ago 39 companies were de-listed for non compliance with UNGC membership rules. These include several PSUs and large private companies.
As the Local Network, the Global Compact Society is responsible to fulfill several responsibilities. According to the UNGC Website, ‘The primary function of a Local Network is to promote the Global Compact principles and facilitate their Implementation by participants.’ It undertakes a variety of activities to do so, including identifying local priorities relating to responsible business, organising learning and dialogue events, mobilising collective action efforts and motivating participating companies to develop partnership projects to contribute to the UN Millennium Development Goals.
‘Additionally, networks increasingly serve as engagement platforms for participants, be it for moving innovative solutions upstream for global replication and multiplication, or be it for taking global dialogue issues down to the level of implementation. Local networks play an essential role in the initiative and are an integral part of the overall governance of the Compact.’
One of the objectives laid out by the UNGC is the creation of opportunities for multi-stakeholder engagement and collective action. This means that the Society needs to open its doors to all stakeholders, which include corporates, NGOs, SMEs and Labour organizations. In the initial years, because the Society was created by business organizations, the membership became an exclusive business club with its membership drawn mostly from PSUs.
Speaking at one of the recent meetings organized by the Society the Secretary, Public Enterprises, Government of Inda, Mr R Bandyopadhyay, lamented that the Society was heavily populated with PSUs and that very few private companies or civil society organizations were members. He has suggested that more private sector companies and NGOs be encouraged to join the movement
However, NGOs and SMEs are not encouraged to join. One obstacle to their membership is the fact that it is financially beyond the means of most NGOs and SMEs. Admission to the Club for NGOs and SMEs is Rs 5,000 and the annual fee is set at Rs 5,000. This is an amount which most NGOs and SMEs find hard to come by. The Society presently has only 5 NGOs and one SME as members. While the fees are high, NGOs and SMEs find that they have no role to play in the organization, and neither does the Society provide opportunity for the increase in knowledge or participation in the functioning of the organization.
The Society has not fulfilled any of its declared objectives. It has failed to promote the ideals of the Compact even amongst those who have signed their acceptance of the UNGC principles. Almost every year several companies are de-listed for not submitting the Communication on Progress document required for continuing membership. De-listed companies claim that they received no help from the Society in helping to prepare their COPs despite requests.
Worse still, year after year companies are withdrawing themselves from the Society because “there is nothing worthwhile in the membership of the Society.” Most members feel that membership of the Society has not provided their organisation any tangible benefits by way of enhanced knowledge or support for their CSR activities. There is a strong feeling that the avenues for participation in the organisational activities is restricted to a few of the bigger PSUs dominated by ONGC. Many want the organisational structure to be made more broad-based, and to include people with different points of view so that it can better represent all shades of the membership.
A major complaint is that the Society is dominated by a small coterie made up of the self-appointed Focal Point and is crowded with officials of the ONGC. Under the misguided direction of the self-appointed Focal Point, rules and regulations are being ignored. The Governing Body meetings are packed with officials from the ONGC, giving few others any voice in the running of the Society.
Meetings of the Governing Body are held infrequently and often last barely an hour. This provides members with little or no opportunity to initiate discussion on vital governance issues. At almost every meeting of the Board, non-members belonging to ONGC are present.
While debate and discussion are limited at these meetings, members do not receive minutes of meetings for several months. An NGO member of the Society, Mr Viraf Mehta, head of Partners in Change, gave vent to his annoyance about the lack of transparency in a mail he sent to the Secretary. Mehta, in his mail, pointed out that the GCSI office was not providing agenda papers in time and that the final copy of minutes was delayed for several weeks.
“I feel obliged to mention the need for sufficient advance notice, as is customary, and particularly when the agenda items require thoughtful preparation. Might I also mention that despite my previous requests for the minutes of the Governing Council meeting held on the 19th February, I have yet to receive the same. Nor have I received any material pertaining to the agenda of the meeting scheduled for tomorrow, both of which are surely common good practice. I would request that due consideration be given to these points.”
The Focal Point has been manipulating the meetings of the Governing council to enhance his importance by distorting the minutes of the meeting. He reviews the minutes of all such meeting, inserting issues which were not discussed in the actual meeting. There are several instances of this available. Copies of the Council meeting minutes are not made available to the members for their approval before they are passed.
Members of the Governing Body do not receive a copy of the final document until the next meeting. Since the time allotted for these meetings is short, the changed minutes get passed. Members, on several occasions, have drawn the attention of the insufficient notice given to members and the delays in providing agenda papers to enable proper discussion.
Since inception, there have been no elections for office-bearers, and additions are being made through nominations by a small, influential group. Election of the office-bearers and members of the Governing Council are required to be held every two years through a secret ballot in accordance with the Election Rules, which should be framed by the Governing Council from time to time. Elections rules have yet to be framed. To keep up pretenses, elections are announced every two years. In the absence of properly framed election rules, however, there have been no nominations.
This has enabled the ONGC to continue its hold on the Society. The result is that the staff members of the oil company have been able to run the Society according to their dictates. To run the office of the Society, two ex-officials of the ONGC were appointed as administrative heads at inflated salaries, on two different occasions. One of these was a retired Personal Assistant to the Petroleum Minister. The otherwas a Manager and a favourite of the senior officers of the organization.
Neither of these did any worthwhile service for the organization. Yet they were paid almost Rs 25,000 per month. In the case of one of the officials the minutes of the GB were manipulated to ensure that he received full payment. In the case of the ex-PA, the Governing Body decided to pay half the original amount. The official is using his clout in the Ministry to exert pressure on the CMD’s office for full payment. Senior officers of the ONGC are veering around the idea of making full payment, if only to pacify their bosses in the Ministry.
Even the appointment of a full time assistant secretary has failed to produce the desired results. It was expected that the young man would be able to bring about concrete changes in the web site, communication, and contacts with members, and to help to increase the membership. After almost a year in office, he has produced no improvement, although he added an additional staff member to the office. The official is spending more time pampering officers in the ONGC CMDs office than in fulfilling his responsibilities as an official of the Society.
The society has been indulging in wasteful, unauthorized expenditure over the past years. The more recent instances are the money spent on outsourcing a workshop on writing the COP and Reporting. A sum of Rs 2 lakhs was paid to a Gurgaon-based organization, STR Labs, for preparing the modules and conducting the programme. Though the Governing Body was informed that such a programme was being organized the amount involved or the source of finance was not revealed.
Enquiries failed to elicit a proper response. The first such workshop was organized in Mumbai. One of the Oil PSUs, not ONGC, was asked to sponsor the event It was revealed that in the event that this was not accepted by the PSU, ONGC would pick up the tab. The request was rejected by the PSU and even the ONGC has not paid the bill. This has ultimately fallen into the lap of the Society. A sum of Rs 2 lakhs has been paid out without proper sanction.
That many Indian companies were being de-listed by the UNGC was cause of concern of several members. At a monthly meeting held in the conference room of the Indian Oil Corporation, Viraf Mehta Partners in Change had volunteered the services of his organization to conduct a series of workshops on COP. Despite this offer, the Focal Point and staff members of the ONGC opted to outsource this at a substantial cost. Instances such as these are many. Because of the complete lack of transparency and the pall of secrecy a majority of the members of the Society are unaware of the actual happenings.
Over the past year the Executive Committee of the Society has become ineffective and a toy in the hands of Kohli. The Secretary and the Treasurer have been virtually stripped of their power and authority with the Focal Point operating through his henchmen and woman belonging to the ONGC. This small group of people has taken over the powers and responsibilities of the office bearers.
Examples of their operations are the selection of heads for chapters in Mumbai and Kolkata. No discussion or debates on the candidate to be appointed at these two important cities was taken. The decision was initiated by an ONGC staff with the help of Kohli. Unfortunately, though a person from an Oil PSU was identified, the office in Mumbai has not yet started operations because a wrong choice seems to have been made. In the case of Kolkata a Public sector executive was sounded but he has refused to bite.
Of the nearly 250 organizations from India, committed to UNGC programme, barely 20% are GCS members. UNGC members in India are unaware of the activities of the Society. The only major activity undertaken by the Society is the annual conventions. Year after year these conventions have attracted fewer and fewer companies and the audience is made up of mass attendance by a few captive companies like ONGC, IOCL, BHEL, NTPC and one or two others.
A research report put together by Tatjana Chahoud from the German Development Institute is of great interest. Tatjana’s survey of UNGC companies in India has revealed that awareness among the UNGC participants in India is poor… that GCS is a very business-centred network which has failed to open its doors to all stakeholders, as is the intent of the UNGC…One interviewee said, “They were collecting money without providing any service.”
The report recommends that to strengthen the role of the UNGC in India, the following activities are needed:
* the structure of the national UNGC network should be improved
* civil society organisations should be integrated. Specifically, the Global Compact Society (India) should become more active in implementing the multi-stakeholder approach
* the UNGC network should support awareness-raising and knowledge-sharing activities with respect to the major challenges facing CSR.
The present leadership of the Society has failed to live up to its responsibilities. With almost all office bearers of the Society failing to live up to their responsibility, either because of the lack of time or plain disinterest, the GCSI has become a handy play time of the Focal Point and his henchmen within the ONGC. Attempts to broaden the base of the society and attract the involvement of a wider interest group have been severely resisted by the people who matter in the ONGC.
The Tenth Global Compact Principles are essential for the long term survival of business and the development of sustainable enterprises. The GCSI was started on noble principles to bring about an increased awareness of the ten principles and to help responsible business. Unfortuntely it has become enmeshed in greed and stake self interest of a handful of individuals.
Various Minister of the Government of India has repeated expressed their support to the GC Principles. The Comptroller and Auditor General has in one of its reports called upon PSUs to adhere to the principles and report their CSR activities in line with the GRI Rules. These companies have been directed to submit the COP to the GC on a regular basis.
Companies Delisted by UNGC
1.Bharat Aluminium Company Ltd. 2 Bongaigaon Refinery and Petrochemicals Ltd..3 Cement Corporation of India, 4.Air India, 5 Dena Bank, 6 Central Cottage Industries, 7. Excel Industries Limited, 8. Hi-Tech Carbon. 9 Hindustan Organic Chemicals ltd., 10.Engineering Projects India Ltd. 11. Hindustan Aeronautics Ltd., 12 Apollo Hospitals 13. Mishra Dhatu Nigam Ltd. 14. Mineral Exploration Corporation, 15. Mazagon Dock Ltd, 16. Mahanagar Telephone Nigam Ltd.. 17. Kudremukh Iron Ore Company 18. Kolam Information Services PVT. Ltd, 19. Infrastructure Development Finance Company Ltd., 20. Hindustan Sanitaryware and Industries Ltd. 21. Hindustan Petroleum Corp. Ltd. 22. Semiconductor Complex Ltd. 23. Scooters India LTD, 24. Quadra Advisory Private Ltd. 25. Punjab National Bank, 26. PSi, 27.Priconser India Pvt. Ltd. 28. North Eastern Electric Power Corporation Ltd.. 29. National Textile Corporation Ltd., 30. MMTC, 31. Wadia Group, 32. Unit Trust of India, 33 Transnational Supply & Service, 34. The State Trading Corporation of India, 35. The Shipping Corporation of India Ltd., 36 Telco Construction Equipment Company Ltd., 37. Tata Tea, 38. Tata Industries Limited, 39. TAL Manufacturing Solutions Limited
Next What Needs To Be Done
The ten principles of the Global Compact are well documented and are essential. Companies that follow these principles sincerely would be able to establish themselves as true Corporate Citizens earning social and economic goodwill.
With its unique background for responsible business and the trusteeship principles set out by Mahatma Gandhi, Indian companies were among the first to sign up and accept the ten principles. Unfortunately due to the lack of adequate knowledge, awareness and support, the original signatories have either withdrawn or have been de-listed for lack of compliance or interest.
In recent months however there has been a regeneration of interest. There has been an increase in the number of Indian signatories for the Global Compact. A majority of these are small and medium-sized companies.
In a telephone survey, many new signatories revealed to me that, although they had signed up for the Compact they were ignorant about the significance of the ten principles. Asked why they had signed up, a majority said that they felt that it would help their business.
Most of the new signatories are small and medium-scale units which export much of their production to companies in the developed countries, particularly the US, United Kingdom, Canada, etc. where CSR is an important necessity. The new signatories pointed out that the membership of the Global Compact gave them a good image among their business partners abroad.
Several new signatories pointed out that their business partners were insisting on information about their CSR activities particularly in the areas of child labour, work environment, labour practices and human rights. Some of them had been directly advised to join any one of the CSR groups to keep themselves up-to-date.
There is an immense urge among the new signatories to learn more about the Global Compact and its ten principles. The local network has failed to provide knowledge about them. As Tatjana Chahoud’s research has shown, the Society and its activities is practically unknown to a majority of the signatories in India. The Society has made no effort to educate these new entrants about the significance of the principles and about the various compliance efforts needed for a continued membership.
So what is the solution?
- The present set-up of the Society needs to be overhauled. A new group of persons with the expertise and the time to contribute to the development of the Society and the promotion of Global Compact in India needs to be brought in. There is urgent need to get rid of the old boys’ bureaucratic club which presently controls the GCSI and to bring in persons who can rise above the arrogance of the parent office and who would willingly respond to the issues raised by members.
- The Governing Body needs to be revamped and restructured providing place for people from as many member companies, NGOs and SMEs as possible. The GB should be more broad-based with persons of diverse interests and ideas.
- The office of the Secretary of the Society must be provided with greater infrastructural support and more independence. The Secretary should be allowed to fulfill his or her responsibility as set out in the Memorandum of Articles of Association. All executive power should rest with the Secretary as has been laid out in the Articles of Association.
- The Focal Point should be elected by the members of the Society. His or her role, as also the role of the Advisors, should be restricted to that of an advisor without executive powers.
- The Society should move out of its present office in the ONGC premises and take up new accommodation accessible to all members. Since funds are not a major problem, hiring private accommodation should be feasible.
- Officials of the Society must be made accountable to the Secretary and not to persons who do not hold authority in the Society.
- An election manual with the correct Electoral College should be prepared at the earliest. Members should be asked to submit the names, designation, emails and contact numbers, preferably mobile numbers.
- Admission and annual fees for other than Corporates should be reduced substantially, by at least 50 percent, to enable more NGOs, SMEs, Labour Union and others interested in the Global Compact.◊
A Study undertaken by Suresh Kr Pramar, Managing Trustee Global Gandhian Trusteeship & Corporate Responsibility Foundation and Editor, CRBiz (Corporate Responsibility in Business).
