CSR & Ethics: Act before it’s too late
In a free enterprise, the community is not just another stakeholder in business; it is in fact the very purpose of its existence. CSR professionals in the real estate sector have to understand the social and environmental impacts and come out with a detailed Social and Environmental Risk Materiality mapping.
Corporate Social Responsibility (CSR) in India came into limelight with the amendment in the Companies Act of 2013 which makes it mandatory for companies to spend two per cent of their three-year average annual net profits on CSR activities in each financial year. However, CSR as a concept is not new. It is as old as business itself. Responsible and socially-aware companies engaged in CSR projects even 50 years back. In India, this principle traces its roots to ancient history and dates back to the days of Chanakya. Real estate industry contributes about nine per cent to India’s GDP. In India, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The benefits of real estate sector are obvious. It provides employment to the local population, develops the infrastructure in the area, and gives boosts to connectivity. But this is just one side of the coin. There is always a debate on development and environment and how a right balance between the two has to be struck. Real estate industry impacts the society both negatively and positively. While development creates jobs and raises the standard of living, it also causes pollution, deforestation and increase in global warming. The real estate sector has to find a way to eradicate the “ecology or the economy” mindset and strive for an infrastructure that embraces both. When exploring new sites for development, it’s important for the industry to realise that there is a key linkage between ecosystems and human well-being.
Real estate development comes with its own set of problems. The most pressing issue is that of land acquisition. Land acquired by real estate developers has to take into consideration the effect of biocapacity and ecological footprint deficit and a mitigation strategy has to be developed especially if land was intended for agricultural use. Another issue faced by locals is pollution when the area is in the process of development. Since real estate construction requires long gestation period, the transitional phase to development is the most painful for the local population. This small village which was previously sleepy, non-descript, pollution free and without noise transforms into a hub of activity, with movement of construction material. Big infrastructure development projects in various ecosystems in coastal, mainland, desert or mountain areas generally come in close proximity of ecologically important areas. It is therefore very essential to assess the environmental and social impacts that these projects are going to have in the value chain since human survival depends on a complex chain of ecosystem processes and biodiversity. Unfortunately, some of the big-ticket developments are often environmentally and ecologically unsustainable, divorced from understanding and serving the needs of local population. While pursuing a real estate development, developers need to take into account the country’s social and business customs. They need to understand that the local population is an important stakeholder in the project among others and that the need of each stakeholder is different.
CSR professionals in the real estate sector have to understand the social and environmental impacts and come out with a detailed Social and Environmental Risk Materiality mapping so as to understand all the impacts and their consequences. Based on this appropriate mitigation plans for short-, mid- and long-terms have to be made. The complete CSR plan has to be strategic than responsive. It must have a proper stakeholders mapping done and develop strategies for the complete value chain. They have to develop indices for measuring the effectiveness, efficiency and satisfaction of the communities of their interventions. Real estate development agencies have also to understand that their business partners hail from these communities. They have to nurture these communities from the very beginning and not only when the project is being launched or being formulated. If entering the area on their own, they need to engage with the civil society to kick-start the dialogue with the communities. If entering an area along with an existing enterprise, they need to build on the social capital that already exists. They have to believe in and practise a ‘partnership’ approach that values skill sets, including those of the civil society. CSR of real estate companies should have proper community engagement policy and manuals that lists the principles and processes of community engagement. They should have processes for establishing various development committees (Area Development Committee/Rehabilitation & Resettlement Committee) with adequate representation from all communities. They have to regularly hold meetings with these committees to discuss plans and their implementation and understand their activities they could potentially generate within the community. Real estate industry has to also integrate its CSR processes with their business processes.
In a free enterprise, the community is not just another stakeholder in business; it is in fact the very purpose of its existence. We feel that no success or achievement in material terms is worthwhile unless it serves the needs or interests of the country and its people. While this thought anchors our operations, it embraces societal interest at a macro level. We try to live this at a micro level as well. Our company inculcates the culture of preservation of nature and natural resources. This is done in collaboration with the people, local governments and NGOs residing in our areas through CSR activities such as afforestation, arboriculture, biodiversity conservation, etc. Gurgaon Rejuvenation Project is one of the new CSR initiatives which the DLF Foundation is launching. Gurgaon was a barren land over two decades ago following which it has undergone unprecedented growth and transformation so massive that it has got the tag as the Millennium City post 2000. The city has witnessed unparallel fast track urbanization, driven by a group of well-intentioned entrepreneurial organizations in the realty sector. They have contributed immensely to the sudden growth of an ultra-modern city. While the city has witnessed exponential growth, it is also plagued by many serious civic problems, such as poorly maintained roads, encroachments, frequent traffic jams, water-logging due to lack of adequate drainage systems, mushrooming of slums, safety and security, etc to name a few. In the Gurgaon Rejuvenation Project, DLF Foundation is planning to take up the role of a catalyst by demonstrating few CSR model projects which could be replicated or upscaled. This will ensure that relevant stakeholders are brought around to discuss and actively pursue for solutions to problems like water-logging, waste management, transport and traffic, health care services, safety and security, etc. The programme will be a model of convergence of stakeholders to take specific actions towards mitigating the issues faced and problem areas of Gurgaon district.
By and large, the action plan revolves around: Identifying gaps in infrastructure and governance, environment and social development of the city; creating awareness amongst the residents on the role and responsibilities of various stakeholders in developing the city; and focusing and aligning all stakeholders towards a common vision for the city. An innovative way to address the problem is to initiate a dialogue with the entire public and all key stakeholders on the lines of developed nations such as Singapore. One needs to take lessons from nations like Denmark, Dongtan (China), Rio de Janeiro where development has entailed a harmonious balance between local population and environment needs. The city of Dongtan which seeks to become world’s purposebuilt eco-city, for example, has developed sustainable transportation, efficient water systems, green spaces and carbon neutrality. Once developed, the city is expected to consume 64 per cent less energy as compared to a traditional city of the same size. DLF Foundation intends to develop a similar partnership with various stakeholders for mitigating the problems being faced by the residents of Gurgaon. One best example is “Green Horizon”, IBM’s partnership with Beijing Municipal Corporation. IBM announced a 10-year initiative to support China in transforming its national energy systems and protecting the health of its citizens. Dubbed Green Horizon, the project sets out to leap beyond current global practices in three areas critical to China’s sustainable growth: air quality management, renewable energy forecasting and energy optimization for industry.
One of the first partners to sign on was the Beijing Municipal Government, which has agreed to work with IBM to leverage some of the computer giant’s most advanced technologies such as cognitive computing, optical sensors and the Internet of things, all based on a big data and analytics platform and drawing on IBM’s experience in weather prediction and climate modelling – to develop solutions to help tackle Beijing’s intense air-pollution challenges. If the real estate sector can do this, then it will become a neighbour of choice and the value of its estate will also increase. It will be able to create smart, green and compact cities with adequate interventions for restoration, conservation, protection of natural resources and the ecosystems. The moral purpose of any business is to contribute to economic prosperity and social integration of the nation and resonate with the needs of local populations and other key stakeholders. It is time to act now before it is too late!