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Posco pushes goodwill to clinch local support

Posco pushes goodwill to clinch local support
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First Published: Thu, Jun 14 2007. 01 02 AM IST
Updated: Thu, Jun 14 2007. 01 02 AM IST
In May, a handful of POSCO-India Pvt. Ltd’s executives were dragged from a car by a mob wielding bamboo poles and held overnight.
Before release, they were made to sign a pledge vowing not to return to the village of Dhinkia, which lies in the path of the company’s proposed 12-million-tonne steel plant in Orissa. Still, the South Korea-based steel giant is trying to win over rural India.
Since the announcement of its $12 billion (Rs49,200 crore) proposed facility—which represents the single largest foreign investment in India—the company has tried to ramp up social initiatives in the areas where it still needs to acquire land. Though the walls haven’t been erected yet (the company has vowed to start construction in October), Posco has begun operating in the area—in activities unrelated to steel.
A mobile health van goes to some villages at least one day a week, young women have trained as beauticians, doctors have flown in from Korea to fix the cleft palates of local children, scholarships for study have been awarded and street lights have been erected.
On an international level, corporate social responsibility (CSR) has been a major focus for Posco, the only major steel company listed in the Dow Jones Sustainability Indexes, which track the performance of leading companies deemed to operate in a socially responsible manner. Its efforts in India coincide with increased attention to the subject.
Last month, Prime Minister Manmohan Singh urged business leaders to give back more; on Thursday, the Confederation of Indian Industry begins the first national conference on CSR in Chennai.
Posco’s initiatives are more than just an extension of the parent company’s focus on corporate social responsibility and philanthropy. They represent an attempt to set the tone for the company’s image in India and turn local sceptics in the affected region of Orissa into supporters of the project. “The idea behind doing all this CSR is to earn the goodwill of the community and grow along with them,” says Posco spokesman Shashanka Pattnaik.
Though the company calls their push at fostering “goodwill” a success—despite the detention of its employees and continuing local resistance—observers question the effectiveness of rolling out social initiatives in a place in which it doesn’t yet operate.
“What companies really need to make sure they do is to engage the community. You need to make sure that you truly understand what the issues are,” said Jane Fiona Cumming, director of London-based corporate social responsibility consultancy Article 13. “If, however, you’ve come in to buy the community, that as a strategy doesn’t work.”
She clarified that she spoke as a CSR strategist only familiar with the basic details of Posco’s case.
Posco says it has listened closely to the community in Orissa, developing a three-pronged strategy based around rural development, education and healthcare after canvassing the villages that lie in the path of its steel plant.
While it initially operated from the state capital in Bhubaneswar, the officials realized they needed to be closer to the plant site and opened a field office in the district to address the “image problem” it couldn’t shed—that of an outsider—according to Pattnaik.
Posco is hoping to use CSR to improve its brand image among the people.
Pattnaik says, Posco is formulating a 30-year plan for its social initiatives here on the basis of an analysis that it is conducting in the community—discussing plans with village leaders and often the women of the community.
As for Dhinkia, where resistance to the project has been strongest, the company has withdrawn its social initiatives, but remains in the two neighbouring panchayats.
The villagers in Dhinkia see their neighbours getting health care and many have begun asking questions and travelling to take advantage of Posco’s programmes, says Pattnaik.
“We’re hoping things fall into place there,” he adds.
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First Published: Thu, Jun 14 2007. 01 02 AM IST
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