Ethical Performance
inside intelligence for responsible business


How hard times have proved a boon for CSR

June 2010

Financial woes can help firms focus on what’s really important if they are to have a bright future. EP looks at the experiences of one company that’s been up against it

When worldwide recession arrived at the doors of the steel giant ArcelorMittal, Charlotte Wolff, its group corporate responsibility manager, might well have been fearing not only for the future of her department but also her employment.

Eighteen months later, however, she is still proudly in possession not only of her job but a slightly expanded four-person section in London, plus a network of 90 corporate responsibility champions across various units throughout the world.

During the recessionary period, ArcelorMittal has been severely hit by a downturn which at one point led to a 50 per cent cut in demand for steel. Yet the CSR function at the world’s largest steel producer has emerged, if anything, fitter and healthier.

The reason, says Wolff, is that responsible business behaviour has provided a valuable framework within which to manage the difficult decisions that have needed to be made as orders have fallen.

‘A year and four months ago things were pretty challenging,’ she tells EP. ‘It was a really tough situation to be in. If at any time we were going to lose CSR then it was going to be then. But I’m pleased to say that I’m still here and my team is larger than before. CSR is alive and kicking within the company and, in some ways, the recessionary period has been a good one for our team because it has strengthened the notion of what is really important for a properly functioning business. At no point has it been more crucial for us to support the communities around our plants and to look at how to achieve sustainability.’

Wolff, who has just emerged from the rigorous process of helping to produce ArcelorMittal’s newly-published Global Corporate Responsibility Report, says the key to that outlook has been the way the multinational has tried to avoid job cuts. Thanks to carefully nurtured and friendly relationships with trade unions, it has, at various points, been able to reach agreement with its employees to temporarily cut pay and hours where needed, obviating the need for enforced redundancies.

‘The idea is that everybody has a cut so that you don’t have to take people off the payroll,’ says Wolff, who herself has accepted a ten per cent drop in salary. ‘In many areas of the world, especially in central Asia, we employ significant numbers of people in the area around a plant, so we want to make sure that not only the plants, but the societies around them, can survive. And of course when we can again increase production levels we still have the people there, and they can be brought back into full-time work.’

At a green field site in Liberia, where work had to be suspended for a year, the company made sure to withdraw almost all expatriates but to keep many of its Liberian employees on the payroll. And in the minority of instances where voluntary redundancies have been agreed, it has teamed up with regional and local authorities, occasionally using European Union financial support, to retrain employees who have left work or been reduced to working only a few hours a week.

As a result, says Wolff, there has been very little union disruption. ‘It’s shown the benefit of having good union relations,’ she says. ‘We feel [the recession] has actually improved our relationship with the unions. In Europe we've got to the point where we’ve signed a management and anticipation of change agreement  with the European Metalworkers Federation, which will allow us to work together on managing change to the benefit of all.’

The hiatus caused by the recession has also been beneficial in other ways. With less operational work to do, formerly hard-pressed staff have been spared the time and space to think more strategically, and to give more of their attention to relationships with local communities. Among other things, the board felt able to ask all units to draw up community and NGO engagement plans.

‘We’ve actually strengthened our community engagement efforts because we’ve had the time and opportunity to reflect on those issues,’ says Wolff. ‘Social and environmental needs are rarely progressed as quickly as immediate operational needs, so this has allowed us to do some catching up.’

Even a general squeeze on money has had its upside. While spending on health and safety has been preserved, and many environmental measures have been kept up on the basis that they provide financial returns greater than the initial costs, Wolff’s departmental budget needed to be reduced substantially, and she has therefore had to stop the use of  consultants.

But that has forced her to fall back on ArcelorMittal’s own resources. ‘We have a lot of expertise in the company and when you employ almost 300,000 people its amazing what you can find,’ she says. ‘That in turn has helped to engage more people on CSR issues, which is something that’s always useful. I think it’s safe to say that the troubles of the past year have really made the value of corporate responsibility clear to everyone. So if there’s one good thing to come out of the hard times then it’s that.’

ArcelorMittal | Global | Financial Crisis

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