NGRBC and its business principles
Published: Apr 18, 2019
Every business is set up with a motive of earning profit. But apart from earning profit, every business should contribute for betterment of the society. No business runs in isolation. It takes resources from society and after processing those resources, creates new goods and services. These new goods and services are supplied in society for consumption by others and for earning profit. In this way business is interlinked and connected with society in which it exists. There are many issues and challenges before the Country. The Businesses can help in furtherance of objectives like no poverty, zero hunger, quality education, gender equality, clean water and sanitation etc.
Our Prime Minister Shri Narendra Modi righty said that "Responsible Business Conduct is a globally recognized concept founded on the idea that businesses can perform better when engaged in re-vitalizing the society from which they extract resources for production."
With an idea to insist businessmen to contribute towards development of society National Voluntary Guidelines on Social, Environmental & Economic Responsibilities of Business, 2011 was formed. Later on National Guidelines on Responsible Business Conduct, 2018 (NGRBC) was formed in replacement of guidelines 2011. These guidelines are to be followed by all the types of businesses irrespective of their sector, size, location etc. It is expected that even foreign multinational corporations (MNCs) who are operating in India should follow these guidelines.
In case of companies, the board of directors is responsible for ensuring compliance with NGRBC and in case of firms, proprietorship and other types of business their owners are responsible for ensuring compliance. NGRBC is designed in such a way that it consists of two chapters with an expanded set of annexures. The annexures provide a detailed practical guidance to businesses for implementation of these guidelines.
Guidance for adoption and implementation of the Principles is given in Annexure 1 of the Guidelines. As Micro, Small and Medium Enterprises (MSMEs) plays a very important role, the business case for adoption of NGRBC by the MSMEs is given in Annexure 2. For reporting of actions taken by businesses vis-à-vis the Principles, an updated Business Responsibility Reporting Framework (BRRF) is given in NGRBC. NGRBC also have useful references and resources to assist businessmen in their implementation efforts.
Lets us elaborate the principles discussed in NGRBC-
Principle 1 - Govern business with integrity and in ethical manner.
This principle believes that since businesses are integral part of society, they should hold themselves accountable for actions and works done by them and make disclosures of their performance.
The Governance Structure of any business entity should be such that it enables access to information about the policies, procedures, performance (financial and non-financial) to those who are directly and indirectly affected by it.
The governance structure should meet all statutory obligations in accordance with the law. All stakeholders should be treated in an equitable manner. It must enable fair competition. The governance structure should work in such manner that it avoids illegal and abusive practices and should ensure timely and fair action in case any loophole is detected. Business must make timely payment of all applicable taxes and fees.
Principle 2 - Goods and services provided should be sustainable and safe
The business entities must give importance to safety of product and resource-efficiency in the design and manufacture of product and should try to reduce its adverse impact on the environment and society. It is also duty of business entities to provide adequate information about environmental and social issues linked with business and their impact across product life cycle from design to disposal.
Principle 3 - Well - being of employees working with organization
Well-being of an employee includes the well being of his/her family also. The governance structure should ensure timely compliance with all regulatory and statutory requirements related with employees. It can be pertaining to timely payment of group medical insurance premium or employer contribution towards provident fund etc. Businesses must pay fair wages to meet basic needs and economic security of all employees, including casual and contract labour. Workplace should be friendly, safe and hygienic. Businesses should provide equal and non-discriminatory access to learning opportunities to all its employees. All the employees should get equal growth opportunities.
Principle 4 - Respect for and responsiveness to all stakeholders involved with organization as supplier, creditor, shareholder, consumer etc
Businesses should take care of the interests of all Stakeholders. Their interest should be protected. Businesses should develop a mechanism and commit to resolve differences and redressing grievances in a just, fair and constructive manner with stakeholders.
Principle 5 - Respect and Promote Human Rights at all level
Human rights are inherent to all human beings. Constitution of India also talks about human rights. Business structure should be such that it makes employees aware of human rights.
Business policies and procedures should demonstrate respect for the human rights of all stakeholders connected with business. The business should ensure timely corrective actions if any human right of any stakeholder is at risk or is adversely affected.
Principle 6 - Protection of Environment
For sustainable economic growth and for the well-being of society, it is important to protect our environment from all kinds of pollution and hazardous products. Issues of pollution, bio diversity conservation,sustainable use of natural resources and climate change, should be dealt by businesses in a comprehensive and systematic manner.
Businesses should always try to minimize and mitigate its adverse impacts on environment. Businesses should encourage reuse, recycling and recovery of material and resources.
Principle 7 - Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent
Business policy should promote fair competition and respect for human rights. The Principle recognizes the legitimacy of businesses to engage with governments for redressal of a grievance or for influencing public policy.
Principle 8: Businesses should promote inclusive growth and equitable development.
The Principle encourages businesses to innovate and contribute to the overall development of the country. Businesses should take appropriate action to minimize and mitigate its negative impacts on society. While designing and implementing CSR Programmes, businesses should consider national and local development priorities and understand the needs and concerns of local communities,particularly vulnerable and marginalized groups.
Principle 9: Businesses should engage with and provide value to their consumersin a responsible manner.
Every business entity should try to minimize adverse impact of its goods and services, if any, on consumers, environment and society. Businesses should not restrict the freedom of choice and free competition. Businesses should disclose all important information regarding products accurately. Businesses should manage consumer data in away that does not infringe upon their right to privacy.
Adoption Process
The ideal process that businesses may follow to adopt the NGRBC and integrate them with the core business is as follows:
The business must identify Core Elements that are a priority keeping in mind its own mission and values. Businesses should analyse external and internal factors to determine the environment and social issues that are of high concern to its stakeholders. The Core Elements that align with these issues must be treated as high priority. Business should know the specific laws applicable to it. All the prioritized Core Elements must then be integrated into core business strategy, while complying with the law of the country.
Conclusion:
Each Principle given in NGRBC is accompanied by a set of requirements and actions that are essential to the operationalization of the Principle and are referred as the Core Elements. The Principles are interrelated, non-divisible and interdependent and businesses are expected to address them holistically.
(The views expressed are strictly personal.)
