Angela K. Chitkara 01 Dec 2021 // 12:55PM GMT
Corporations are becoming proactive in the communities in which they operate, underscoring the urgency for an increasing number of public-private partnerships to better address future risks, such as the new Covid-19 variant, Omicron.
But how do multinationals take into consideration a country’s risk profile to address gaps in policy and stakeholder engagement in protecting its interests and upholding its License to Operate? And how much of that is reliant on effective communications strategies?
Currently, corporations are not required to issue sustainability disclosures or develop frameworks based on existing standards such as the Sustainability Accounting Standards Board (SASB) on what is considered material for investors. At COP26 in Glasgow, however, the International Financial Reporting Standards (IRFS) announced the creation of the International Sustainability Standards Board (ISSB) tasked to develop a “comprehensive global baseline of sustainability-related disclosure standards to meet investors’ information needs” by June 2022.
It's a beginning.
However, it won’t be long until shareholders and stakeholders demand more detail relative to long-term sustainability growth indicators, such as Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DEI), and the risks these present.
Gaps in policy and stakeholder engagement are obstacles to governmental, corporate, NGO, and non-profit innovation and advancement. If business and governmental leaders are to pursue a shared function as problem-solvers, they must work together.
For many multinationals, a good percentage of its employees reside outside of their home markets, in countries like India. One of the “ah-ha” moments of the global pandemic has been the realization that multinationals need close relationships and engagement outside of their home base, and more specifically with their other key geographical hubs.
For instance, Deloitte Global CEO Punit Renjen hails from Rohtak, an Indian city just 40 miles northwest of New Delhi. About 15 percent of Deloitte’s workforce calls India home.
“The pandemic has been a powerful reminder of the inextricable link between business and society,” Renjen says. “There is a more acute understanding now that one cannot succeed if the other fails.” Business, he says, must do its part to help - especially when it comes to addressing today’s emerging risks in areas like pandemic, climate and geopolitical matters in places other than their global headquarters. All of these areas are foundational to ESG and DEI principles.
At the height of India’s coronavirus emergency last spring, more than 400,000 cases were reported daily. According to the World Health Organization (WHO), the new variant Omicron poses a “very high” risk globally. India’s emergency last spring is an example of how interdependent and interconnected the world is, and how this dynamic is changing how companies view the complexity and impact of risk. U.S. multinationals with a presence in India are well-represented from consultancy firms and big tech to back-office IT support and innovation and research and development.
Multinationals have bought into India’s more open economy, investing in human as well as other forms of capital. In turn, the government has promised basic infrastructure improvements - including healthcare. But buying into the economy also means understanding the societal obligations that come with it. The pandemic has shown the significance of that gap in understanding.
With no comprehensive social welfare system established in India, multinationals operating there must largely take care of their employees through programs of their own making. More than 60% of the population lacks health insurance, according to India’s Ministry of Health. Costs are rising because of a growing dependence on private hospitals and clinics.
Several multinationals have leveraged the expertise of their foundation arms, their informal and formal networks, and local NGO partners, in sourcing, storing, transporting and distributing medical supplies in India. Others are covering the costs of vaccination and testing, and instituting a 24/7 helpline for medical and wellness support; cash donations were disbursed to families of employees and NGOs directly.
For example, medical device-maker Medtronic manufactured ventilators and handled shipping, installation and training. FedEx has committed to delivering 25,000 oxygen concentrators. Even disinformation is being addressed: the tech giant Google is working to ensure that Indians have access to accurate healthcare information during what the World Health Organization (WHO) has called an “infodemic” for the false and misleading information circulating during India’s second surge. Sundar Pichai, CEO of Google-parent Alphabet, says he has been struck by the unprecedented collaboration between the Biden Administration, the Business Roundtable and industry bodies such as the US-India Strategic Partnership Forum and the US-India Business Council in providing a coordinated response to the coronavirus’ resurgence in India.
In addition, a newly formed Chief Human Resources Officer (CHRO) India Action Group has been created as part of the Global Task Force on Pandemic Response, a U.S. based public-private partnership organized by the U.S. Chamber of Commerce, in providing a unified platform for businesses to mobilize and deliver resources to assist Covid-19 efforts in areas of the highest need around the world.
In The World in 2020: Age of Transparency and Accountability. Doing What We Say Matters, I interviewed 45 senior executives across an array of industries and sectors about their experience with ESG principles. There was a consensus that a lack of understanding of an organization’s stakeholders and their priorities will pose environmental and social risks to an organization. And that was before the pandemic.
“Companies that have a robust ESG framework in place will recover faster if they are resilient and are seen as good employers in these times of crisis,“ says Roma Balwani, senior advisor, Vedanta Group, a UK-based mining and non-ferrous metals company with offices in India.
David Good, the former chief North American representative for Indian conglomerate Tata Sons, says many multinationals present in India have shifted their mindsets from a narrower focus on profitability to one of investing in the communities in which they operate, and becoming part of the fabric of Indian society.
To mitigate risks successfully in the future - in India as well as elsewhere - multinationals will need to move from being reactive to being proactive about a host of factors including global cooperation in establishing measures of environmental and social issues wherever they operate. It will require a better understanding of the risks and more active policy input between multinationals and policy makers to ensure transparency and accountability.
The bottom line: shareholder and stakeholder value are more linked than ever in a world where risk is everywhere and constant. Companies that acknowledge and act accordingly – statistics clearly show – survive, and even thrive. Those that do not, pay for it – reputationally, financially and perhaps with their own survival.
Counter disinformation. Work collaboratively toward solving problems and finding solutions. Foundation arms of organizations can support your efforts in strengthening stakeholder engagement in local communities through public-private engagement.
Bridge the gaps. Update your country risk profile in markets that you serve and operate in to include stakeholder engagement with government, NGOs/NPOs and the U.S. State Department in the formal and informal economies.
Adopt ESG principles. Define what is considered material for an organization’s shareholders, such as inclusion as we move toward the global standardization of ESG principles.
Understand the issues. Engage in policy discussions on a state and federal level. Be an advocate and problem solver in the communities you serve and operate in.
Update your intelligence. Share your insights and findings with country heads, ESG and DEI leaders across your organization in developing best business practices, identifying emerging trends and exposures to risk.
Angela K. Chitkara explores intersections between Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DEI) through her strategic communications consulting work as founder & CEO of US India Corridor and Founder of the World in 2020+ Project. She is currently working on a book project, Proving Relevance, and serves on the faculty at Columbia University. Follow her @AngelaChitkara
The author would like to thank Michael V. Marinello for contributing. He is an editor and communications expert on the environment, sustainability and ESG. He currently works at AON. Follow him @mvmarinello