Arcelor Mittal in India : A Partnership Model for Corporate Responsibility

Date – April 13, 2014

To: Ritesh Sinha

From: xyz

Subject: Future course of action for Paryavaran Mitra, and Arcelor Mittal’s role in the project.

With reference to your request for a report on the possible course of action concerning Paryavaran Mitra, I have attached an analysis of the current situation along with the possible courses of action. I have also recommended a decision with an action plan to implement the same.

Keeping in mind the objectives of Paryavaran Mitra, company’s relationship with partners and the brand image of the company, I recommend that Paryavaran Mitra’s timeline should be extended by another two years, in order to carry out impact assessment and make alterations if required.

EXECUTIVE SUMMARY:
With three months away from completion of the project, and the impact of the program still looming at large, the company has to take a decision regarding the future course of action for Paryavaran Mitra and its role in the project.
It is important for ArcelorMittal to maintain the brand image of the company and also maintain a good relationship with its partners. It can either choose to close the project as per the scheduled date and reallocated the remaining budget, or to extend the timeline of the project by another two years to carry out impact assessment and make alterations to the project if required. However, by extending the project, ArcelorMittal can evaluate the fulfillment of the objectives of the program and is also important in terms of the image of the company.
It is recommended that ArcelorMittal should extended the project’s timeline by two years and use this for the evaluation of the impact and if required make alterations to the project.
[Word Count: 164]

TABLE OF CONTENTS:

Situational Analysis…………………………………...……….…………..…4-5 The Problem Statement………………………..…………….…………………6

The Options……………………………………...……………….…………….6

Criteria for evaluation………………………...……………….……………….6

Evaluation of options………………………………………..…...…………..6-7

The Recommendation…………………………………………...………….....8

Action Plan……………………………………………………...……..………8

Exhibits……………………………………………………………………..9-11

SITUATION ANALYSIS:
MoEF has been working on introducing programs for formation of ecoclubs in schools and providing training to teachers. CEE’s primary focus is on increasing public awareness on environmental issues. MoEF and CEE started Paryavran Mitra to fulfill these aims with the help of ArcelorMittal, which will effectively manage the project through its well-structured systems and programs for environment commitments. They have also partnered with 157 other government and non-government entities to extend their reach. Thus MoEF, CEE and ArcelorMittal are the most important stakeholders in this project and their concerns and aspirations (See Exhibit 2) along with those of the other partners need to be kept in mind before taking the decision regarding the future of Paryavran Mitra.
ArcelorMittal’s aim behind undertaking Prayavran Mitra was to demonstrate its sensitivity to society and environment by setting up an environmental footprint in India. It wants to improve its visibility in the country and be acknowledged for its contribution to community development. It also aims to build a good relationship with the government by working with the Ministry of Environment & Forests (MoEF) and Centre for Environment and Education (CEE). Thus Paryavran Mitra is a very crucial project for Arcelor Mittal and its success is essential in fulfilling these aims.
Paryavran Mitra’s paramount aim is to sensitize students to environmental concerns through a multi-pronged environment education campaign. With only three months left for its completion, the project has accomplished its goal in terms of reach by enrolling 219,888 schools rather than the targeted 2,00,000. It has realized 80% of the planned project input with less than 50% of the project cost and thus the project is working well within the budget limits. But the results are not completely visible. Only 90,000 schools were actively involved in ecoclubs and there is no evidence to suggest whether the objective of creating 20 million societal green leaders has been fulfilled or not. Impact assessment of the project against the Key Performance Indicators (See Exhibit 3), to ascertain whether the program has achieved its objectives or not, is yet to be conducted.
Paryavran Mitra has been experiencing a series of operational problems since its inception. The training material was not created and delivered on time. Budget allocated to certain essential activities such as training, resource development and distribution has been highly underutilized and expenditure has exceeded the allotted amount in translation (See Exhibit 1). With the presence of as many as 160 partners, concerns are being raised with respect to partners’ level of interests, differences of opinion on content and delays in meetings to assess the progress of the program. In the last three years, only one national steering committee meeting and one program management committee meeting. Impact assessment data is not received in time and meetings to assess progress are often delayed. Even the collected anecdotal data has not been converted to numbers to measure the impact. Hence, it can be concluded that if the project is to be extended for a period of two years, then there is a need to improve operational efficiency and redefine the role of the partners. Transforming the hierarchical organizational structure into horizontal connects with schools is also essential for obtaining feedback for impact assessment (See Exhibit 4). It is important to restructure the budget to allocate funds towards new activities such as impact assessment.
Paryavran Mitra has been allotted 50% of Arcelor Mittal’s CSR budget and extending the project will accompany high management costs. Moreover, Arcelor Mittal will also have to provide evidence to all the stakeholders regarding the work that has been completed so far and will have to convince them, with a legible plan of action, that what hasn’t been achieved so far can be done in the next two years. Amidst these daunting challenges, Arcelor Mittal might also consider shutting down Paryavran Mitra according to the original timeline as the project has already achieved its objectives in terms of reach. The money left from the project could then be spent on other CSR activities such as tribal community development projects which have already shown positive results.

THE PROBLEM STATEMENT:
Taking a decision regarding the future course of action for Paryavaran Mitra and Arcelor Mittal’s role in the project.

THE OPTIONS: 1. Extend Paryavaran Mitra’s timeline by another two years in order to carry out impact assessment and make alterations if required. 2. Close Paryavaran Mitra as per the scheduled date and utilize the remaining budget for some other CR project.

CRITERIA FOR EVALUATION (in decreasing order of importance): 1. Setting up an environmental footprint for Arcelor Mittal in India to establish a good brand image for the company. 2. Fulfilling the objectives of Paryavran Mitra in terms of program impact on the community. 3. Maintaining relationships with the partners.

EVALUATION OF OPTIONS: 1. Extend Paryavaran Mitra’s timeline by another two years in order to carry out impact assessment and make alterations if required.

It will enable Arcelor Mittal to measure the success of the project in terms of fulfilling its primary objective of sensitizing students to environmental concerns. Once the impact is measured, it could initiate changes in order to address the elements which have been lagging so far. If the partners complete what they set out for, Arcelor Mittal and the other partners will be highly acknowledged for their contribution to the society. This will work wonders for the brand image of Arcelor Mittal.
The qualitative impact of the project is uncertain as of now. This option will provide the time and money required to evaluate the impact of the project along Key Performance Indicators (See Exhibit 3). It will also give time to start ecoclub activities in 59% of the enrolled schools which haven’t started them so far. The aim of the project is not just to reach out to 2,00,000 schools but also to create a measurable impact in terms of increased awareness, better teaching facilities and ecoclub activities. All of this will take more time to establish and hence it is in the best interest of the project to finish the tasks over the next two years.
This option will lessen the financial burden on the partners by utilising the left over money for some of the activities in the next two years and by staggering total expenses over a period of five years. Also, the partners could be convinced to extend the programme as they are all concerned about the impact it has on the community, which could only be measured if more time is given for its evaluation. Thus, taking the project to its logical conclusion by fulfilling all the aims will establish good long-term relationships with the partners.

2. Close Paryavaran Mitra as per the scheduled date and utilize the remaining budget for some other CR project.

Closing the project before taking it to its logical conclusion might affect the brand image of the company as it would suggest that Arcelor Mittal undertook this project to fulfil its CSR obligations and improving visibility rather than making a significant positive impact on the community.
Impact assessment of the project hasn’t been performed so far. Hence, it cannot be concluded whether the project has fulfilled its objectives or not. Thus, shutting down the project at this juncture is not aligned with the aims and aspirations of Paryavran Mitra.
Only 41% of the schools enrolled in Paryavran Mitra are actively involved in ecoclubs and hence one of the major aims of MoEF hasn’t been achieved. There is also no data to suggest that the quality of teaching has been improved through teacher training, which is another important goal of MoEF. Similarly, CEE’s primary objective to increase public awareness on environmental issues is also left unaddressed because only material has been distributed, but its usage and impact hasn’t been measured. This might affect the relationship of Arcelor Mittal with these two entities and the government, which could hamper its progress in terms of expanding its business in India

THE RECOMMENDATION:
Based on the aforementioned analysis, it is recommended to extend Paryavaran Mitra’s timeline by another two years in order to carry out impact assessment and make alterations if required.

ACTION PLAN: * Defining KPIs and Assessment of the impact of the “Paryavaran Mitra” program based on them. * No. Of schools enrolled in the program. * No. Of sessions conducted on environmental education. * Increase in the No. Of schools having eco clubs. * Increase in the number of teachers trained under the program. * Result of surveys to measure the environmental awareness amongst students. * Conducting tests for assessing teacher's performance * Redefine the roles of the partners by assigning different departments to different organizations: material distribution to state level and local NGOs, training of teachers to organizations with teaching experience, event organization to entities with national reaches. * Refining the organizational structure to set up horizontal connects with schools (See exhibit 1) and establishes direct contact with the schools to obtain feedback and improve visibility. * Increase budget allocated to translation because it has overshot its allotted amount. * Increase focus on material development, training of teachers and distribution of materials for more utilization of the allotted budget amount.

[Word count=1517]

EXHIBIT 1: S.No. | Budget head | Original Budget | Revised Budget | % Adjustments | Budget used(%) | 1 | Material Development | 12478600 | 25877928 | 107.38 | 21.13 | 2 | Translation | 351000 | 281846 | -19.70 | 112.50 | 3 | Training | 12500000 | 9853675 | -21.17 | 40.14 | 4 | Event cost | 16300000 | 11704548 | -28.19 | 44.96 | 5 | Support Agency Cost | 24712600 | 13628664 | -44.85 | 31.23 | 6 | Distribution | 4380000 | 4550034 | 3.88 | 19.78 | 7 | CEE Cost | 11197200 | 12537645 | 11.97 | 97.37 | 8 | Paryavaran Abmassador Costs | 1350000 | 400000 | -70.37 | 0.00 | 9 | Media Costs | 2800000 | 2874293 | 2.65 | 67.97 | 10 | Others | 3930600 | 8291367 | 110.94 | 51.75 | | Total | 90000000 | 90000000 | | 42.90260444 |

EXHIBIT 2: Priority | Stakeholders | ArcelorMittal | Intersection | 1 | Employability & employment Oppurtunities to local communities | Access to Land | Access to Land | 2 | Human rights | Mandatory clearances for environment | Employability & employment Oppurtunities to local communities | 3 | Business Development | Workplace health & safety | Human rights | 4 | Biodiversity | Corporate governance/business conduct | Biodiversity | 5 | Education of local communites | Biodiversity | Mandatory clearances for environment | 6 | Access to land | Human rights | Business Development | 7 | Climate Change | Employability & employment Oppurtunities to local communities | Education of local communites | 8 | Mandatory clearances for environment | Education of local communites | Workplace health & safety | 9 | Health care for communites | Climate Change | Climate Change | 10 | Workplace health & safety | Health care for communites | Corporate governance/business conduct | 11 | Supply chain | Business Development | Health care for communites | 12 | Corporate governance/business conduct | Supply chain | Supply chain |

EXHIBIT 3: Factors(Input) | KPI | Cost | No. Of Schools Enrolled in the programme | Time | No. Children participating in eco club activities | | Result of surveys to measure improvement in environmental awareness amongst students. | | No. Of Schools having eco club. | | No. Of teachers trained. | | No. Of students involved in eco-club activities | | No. Of Sessions conducted on environmental education | | Recruitment of environmental education teachers | | Conducting tests for assessing teacher's performance |

EXHIBIT 4: National steering committee
National steering committee

Feedback Mechanism
Feedback Mechanism
State Office
State Office
Schools
Schools
NGOS

NGOS

Government Department

Government Department

NGO/partners
NGO/partners
Secretariat
Secretariat
Programme management committee
Programme management committee

Stakeholders at national level

Stakeholders at national level