23 Pages Posted: 12 Dec 2011
Date Written: December 12, 2011
ARCELOR MITTAL (AM) is the world’s largest steel producer with a combined capacity of over a hundred million tons. Steel is a basic commodity for any country – for its infrastructure, for its construction, automobile, and a host of downstream industries. Yet, the production of steel is steeped in a dilemma between the need for development and the need for preservation. The latter relates to natural resources and the environment as much as it relates to the resettlement and rehabilitation of thousands of poor people who are invariably affected whenever major projects in steel or other metals are undertaken. The issue assumes highly complex proportions in the case of organizations like AM. Operating in over 60 countries with differences in culture, administration, geography and stage of economic development, AM cannot have a 'one size fits all' approach to the problem. The regulatory mechanisms are different as are the expectations of the local people. Nature has a fascinating sense of balance. With some exceptions, natural resources are found in abundance in the least developed and developing countries.
Technologies to harness the resources into a form that humanity can use to advantage emanate from the developed world. The agenda for economic development of the two sets of countries is not the same. Countries endowed with natural resources are also home to some of the poorest people in the world – those earning less than US$ 2 per day. In this scenario, how do large corporations ensure that economic development occurs wherever they operate? Further, how do they ensure that such development has a human face – factoring the needs and aspirations of the local communities and delivering inclusive growth? It is a challenge as well as an opportunity. Through their Corporate Social Responsibility initiatives, corporations can demonstrate that they care. They can show the world that one can do well by doing good and that the creation of long-term shareholder value and sensitivity to pressing problems of local communities are not mutually exclusive. Rather, they are complementary.
The present case examines AM’s initiatives in CSR and the impact thereof on the communities in which the Company operates. The case has some unique characteristics. AM is a Company formed largely through the acquisition route. Thus, there is a basic question of integrating the internal culture of the organization itself. Then there is the need to take local communities into confidence and reassure them that the well-being of the organization would not be at the cost of the well-being of the affected communities. At a macro level, AM also needs to put in place initiatives that impact the whole world and convey a message that it is a responsible and responsive Corporate Citizen.
Suggested Citation: Suggested Citation
Krishnamurthy, Baragur Venkateshiah and Jalnawalla, Dilshad D., ARCELORMITTAL and Corporate Social Responsibility (December 12, 2011). Available at SSRN: https://ssrn.com/abstract=1971092 or http://dx.doi.org/10.2139/ssrn.1971092