His mantra is that through strategic CSR, companies can create win-win situations for one and all. However, L.N.Mittal reiterates that the company’s main responsibility is towards its shareholders; as told to B&E’s Ruchika Chawla
Lakshmi Niwas Mittal, aka one of the “100 Most Influential People” (Time magazine 2007) and the richest Indian in the world, according to Forbes in March 2008, is known as the man behind ArcelorMittal, the world’s largest steel company; which he has built step by step, acquisition after acquisition, with an exceptional entrepreneurial zeal.
The pinnacle of Mittal’s achievements thus far has been the merger of Mittal Steel with Arcelor S.A. to form ArcelorMittal, which, besides enhancing steel production capacities, enabled the two companies to leverage on their largely complementary strengths in terms of steel products. Yet this is not another chronicle on the way ArcelorMittal dominates the global steel industry. In this exclusive one on one with B&E, Mittal discusses a more delicate issue, which should ideally be on the agenda of every billionaire in the world. Corporate Social Responsibility seemed to be a ‘fad’ in its earlier times, but has begun to mature and take precedence, as more prominent and world renowned figures play a major role in it; and not just for the “tax-break” but also for the betterment of the world we live in.
For Mittal, good CSR is always strategic, and he believes that a business has to create a win-win situation for all its stakeholders. A few excerpts... B&E: What is your opinion on the concept of Creative Capitalism, which is being mooted by Bill Gates? Do you agree that CSR only makes sense when it is strategic in nature? LNM: I like Bill Gates’ concept of Creative Capitalism. The reality is that capitalism has positively impacted the lives of hundreds of millions of people. But many more have not been included. We should look at ways in which we can take the benefits of capitalism and extend them to the benefit of those who have missed out. Good corporate responsibility is always strategic. For me it is implicit in the phrase. As opposed to charitable contributions which are not necessarily strategic. There is a place for both in modern society.
B&E: Isn’t it the Government’s responsibility to provide “public goods” and words towards social welfare? Why should it be that big/rich companies are being “pressurised” to undertake CSR?
LNM: In today’s society, business has an influential role to play in the world. Of course our first responsibility is towards our shareholders and to create value. But we also have a responsibility to our stakeholders – whether employees, customers, governments or communities. And this is what good corporate responsibility is about. At ArcelorMittal, we don’t feel that this is something we are pressured into doing. Rather it is an integral part of our approach to doing business that we believe is an important component of enabling us to perform to the best of our abilities. The best example I can give of this is in Kazakhstan. We own and operate the steel plant, but we also renewed the tramways, the power plants, the hotels, the stadiums, and developed social activities such as children’s camps. If we had not done this when we acquired the plant, the town would not have the correct infrastructure to support the steel plant. It’s a win-win situation for everyone concerned. Today, the steel plant runs efficiently and we are able to positively impact the livelihood of the community more broadly while continuing to improve the plant’s efficiency. This is what good Corporate Responsibility is all about.
B&E: There is a theory that the only objective of companies is to generate profits and maximise shareholders’ wealth. Do you agree with this?
LNM: Fundamentally businesses exist to make profits. And rightly so, because without profits you have no business and no economic growth and development. If you are a public listed company, your shareholders expect you to deliver strong returns on their investment. But simultaneously we work to ensure that our approach never compromises long-term sustainability for short-term profitability. At ArcelorMittal we take the long view espouses in our brand promise of “Transforming Tomorrow” – of thinking not only of today but also the generations to come. This means taking into consideration areas such as corporate responsibility, health and safety, the environment, human resources and research and development. All of these areas are critical in ensuring not only a profitable company that benefits our shareholders but a sustainable company that also benefits our stakeholders.
The pinnacle of Mittal’s achievements thus far has been the merger of Mittal Steel with Arcelor S.A. to form ArcelorMittal, which, besides enhancing steel production capacities, enabled the two companies to leverage on their largely complementary strengths in terms of steel products. Yet this is not another chronicle on the way ArcelorMittal dominates the global steel industry. In this exclusive one on one with B&E, Mittal discusses a more delicate issue, which should ideally be on the agenda of every billionaire in the world. Corporate Social Responsibility seemed to be a ‘fad’ in its earlier times, but has begun to mature and take precedence, as more prominent and world renowned figures play a major role in it; and not just for the “tax-break” but also for the betterment of the world we live in.
For Mittal, good CSR is always strategic, and he believes that a business has to create a win-win situation for all its stakeholders. A few excerpts... B&E: What is your opinion on the concept of Creative Capitalism, which is being mooted by Bill Gates? Do you agree that CSR only makes sense when it is strategic in nature? LNM: I like Bill Gates’ concept of Creative Capitalism. The reality is that capitalism has positively impacted the lives of hundreds of millions of people. But many more have not been included. We should look at ways in which we can take the benefits of capitalism and extend them to the benefit of those who have missed out. Good corporate responsibility is always strategic. For me it is implicit in the phrase. As opposed to charitable contributions which are not necessarily strategic. There is a place for both in modern society.
B&E: Isn’t it the Government’s responsibility to provide “public goods” and words towards social welfare? Why should it be that big/rich companies are being “pressurised” to undertake CSR?
LNM: In today’s society, business has an influential role to play in the world. Of course our first responsibility is towards our shareholders and to create value. But we also have a responsibility to our stakeholders – whether employees, customers, governments or communities. And this is what good corporate responsibility is about. At ArcelorMittal, we don’t feel that this is something we are pressured into doing. Rather it is an integral part of our approach to doing business that we believe is an important component of enabling us to perform to the best of our abilities. The best example I can give of this is in Kazakhstan. We own and operate the steel plant, but we also renewed the tramways, the power plants, the hotels, the stadiums, and developed social activities such as children’s camps. If we had not done this when we acquired the plant, the town would not have the correct infrastructure to support the steel plant. It’s a win-win situation for everyone concerned. Today, the steel plant runs efficiently and we are able to positively impact the livelihood of the community more broadly while continuing to improve the plant’s efficiency. This is what good Corporate Responsibility is all about.
B&E: There is a theory that the only objective of companies is to generate profits and maximise shareholders’ wealth. Do you agree with this?
LNM: Fundamentally businesses exist to make profits. And rightly so, because without profits you have no business and no economic growth and development. If you are a public listed company, your shareholders expect you to deliver strong returns on their investment. But simultaneously we work to ensure that our approach never compromises long-term sustainability for short-term profitability. At ArcelorMittal we take the long view espouses in our brand promise of “Transforming Tomorrow” – of thinking not only of today but also the generations to come. This means taking into consideration areas such as corporate responsibility, health and safety, the environment, human resources and research and development. All of these areas are critical in ensuring not only a profitable company that benefits our shareholders but a sustainable company that also benefits our stakeholders.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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