Business: Ethics, Governance & Risk

Solution: - 1
❖ Executive Summary: Tata Steel's Commitment to Sustainable and Safe Provision of
Goods and Services: -
BRSR: -https://www.tatasteel.com/media/18371/brsr.pdf
Company Name: - TATA STEEL LIMITED -- Tata Steel Limited, one of the leading steel
manufacturing companies in India, has demonstrated a robust commitment to Principle 2 of
the National Guidelines on Responsible Business Conduct (NGRBC). This principle emphasizes
providing goods and services in a manner that is both sustainable and safe. The Business
Responsibility & Sustainability Report (BRSR) for the financial year 2022-23 highlights
several initiatives and practices by Tata Steel that align with this principle.

➢ Sustainable Production Practices: -

A. Carbon Reduction Goals: Tata Steel aims to achieve carbon neutrality by 2045,
with interim targets to reduce CO2 emissions by 20% by 2025.

https://www.business-standard.com/companies/news/will-not-reach-emissions-goal-with-
current-technologies-says-tata-steel-123062300183_1.html
 1

B. Energy Efficiency: Investments in energy-efficient technologies and processes, such

as using high-efficiency boilers and waste heat recovery systems, are pivotal to their
strategy.

So, High- Efficiency Boilers convert more fuel into usable heat compared to traditional boilers.
Modern high-efficiency boilers can achieve efficiencies up to 98% due to advanced features
such as condensing technology, which captures and uses the latent heat from exhaust gases
that would otherwise be wasted. This high conversion rate means less fuel is needed to
produce the same amount of heat, leading to significant energy savings and reduced utility
bills.

❖ Environment Impact: - By using fuel more efficiently, high-efficiency boilers

significantly reduce greenhouse gas emissions. This not only helps in complying with
stricter environmental regulations but also contributes to the global effort to mitigate
climate change
❖ Improved Performance: - High-efficiency boilers provide more consistent and
even heat distribution, improving overall comfort levels. They also feature modern
controls like programmable thermostats, which allow for better temperature
management and further energy savings.
C. Renewable Energy: The company has significantly increased its use of renewable
energy sources, including solar and wind power, to reduce dependency on fossil fuels.

Safety Measures: - Ensuring the safety of employees, customers, and communities is

paramount at Tata Steel. The company has implemented comprehensive safety management
systems that cover all aspects of their operations.

• Occupational Health and Safety: Tata Steel adheres to the highest standards of
occupational health and safety. Regular training and safety drills are conducted to
ensure employees are well-prepared to handle any potential hazards.
• Product Safety: The company ensures that all products meet rigorous safety and
quality standards. This includes compliance with national and international
regulations regarding product safety.
Responsible Sourcing & Waste Management: -

Tata Steel practices responsible sourcing and waste management to minimize environmental
impact.
 2

1. Sustainable Sourcing: The company prioritizes sourcing raw materials from

environmentally responsible suppliers. They engage in sustainable mining practices
and ensure that suppliers adhere to environmental and social standards.
2. Waste Management: - Tata Steel has implemented extensive waste management
programs, including recycling and reusing by-products. The company’s zero-waste policy aims
to minimize waste sent to landfills.

Community Engagement & Development: -

Tata Steel is committed to contributing positively to the communities in which it

operates.

• Community Projects: The company invests in various community development

projects focusing on health, education, and infrastructure. These initiatives aim to
improve the quality of life for local populations.
• Stakeholder Engagement: Regular engagement with stakeholders, including local
communities, ensures that their concerns and needs are addressed effectively
Transparency and Reporting
Tata Steel’s transparent reporting practices provide stakeholders with comprehensive
information on their sustainability efforts:
Sustainability Reporting: The company publishes detailed sustainability reports annually,
providing insights into their environmental, social, and governance (ESG) performance. This
includes metrics and progress on sustainability goals.
In conclusion, Tata Steel’s initiatives and practices as detailed in their BRSR 2022-23 illustrate
a strong commitment to delivering goods and services in a sustainable and safe manner.
Through continuous improvement and adherence to high standards, Tata Steel not only
meets but often exceeds the expectations set out in Principle 2 of the NGRBC.

Solution: - 2
Tata Steel's Corporate Governance Analysis (FY2022-23)
Corporate Governance Philosophy
Tata Steel’s corporate governance philosophy is rooted in ethical business practices,
transparency, and accountability. The company emphasizes creating long-term value for its
stakeholders, including shareholders, customers, employees, and the broader community.
Tata Steel's governance framework is designed to foster trust and integrity in its operations,
ensuring sustainable growth and adherence to legal and regulatory requirements.
(https://www.tatasteel.com/investors/integrated-report-2022-23/tata-steel-ir-2022-23.pdf)

Board of Directors Profile Analysis :-

N. Chandrasekaran - Chairman (Non-Executive, Non-Independent)
 3

➢ Skills/Competencies: Strategic leadership, technology, business transformation.

➢ Committees: Chairman of the Nomination and Remuneration Committee.
➢ Other Board Positions: Chairman of Tata Sons, Tata Motors, Tata Power, and Tata
Consultancy Services (TCS).
T. V. Narendra - CEO & Managing Director (Executive)
➢ Skills/Competencies: Extensive experience in the steel industry, global business
operations, strategic planning.
➢ Committees: Member of the Corporate Social Responsibility and Sustainability
Committee.
➢ Other Board Positions: Chairman of Tata Steel Europe and Tata Steel BSL.

Koushik Chatterjee - Executive Director & CFO (Executive)

➢ Skills/Competencies: Finance, risk management, mergers and acquisitions.
➢ Committees: Member of the Risk Management Committee.
➢ Other Board Positions: Director at Tata Steel Europe, Tata Metallics.
Deepak Kapoor - Independent Director (Non-Executive, Independent)
➢ Skills/Competencies: Finance, auditing, corporate governance.
➢ Committees: Chairman of the Audit Committee, member of the Risk Management
Committee.
➢ Other Board Positions: Director at Hero MotoCorp, HCL Technologies.
Mallika Srinivasan - Independent Director (Non-Executive, Independent)
➢ Skills/Competencies: Agricultural machinery, business strategy, innovation.
➢ Committees: Member of the Audit Committee, Corporate Social Responsibility and
Sustainability Committee.
➢ Other Board Positions: Chairman and Managing Director of TAFE, Director at AGCO
Corporation, USA.
Saurabh Agrawal - Non-Executive Director (Non-Executive, Non-Independent)
➢ Skills/Competencies: Finance, strategic planning, investment banking.
➢ Committees: Member of the Nomination and Remuneration Committee.
➢ Other Board Positions: Director at Tata Sons, Tata Power, Tata Capital.
H M Nerurkar - Independent Director (Non-Executive, Independent)
➢ Skills/Competencies: Steel industry expertise, operations, project management.
➢ Committees: Member of the Stakeholders Relationship Committee.
➢ Other Board Positions: Chairman of TRL Krosaki Refractories Ltd.
Bhaskar Bhat - Independent Director (Non-Executive, Independent)
➢ Skills/Competencies: Consumer goods, brand management, corporate strategy.
 4

➢ Committees: Member of the Nomination and Remuneration Committee.

➢ Other Board Positions: Chairman of Tata SIA Airlines Limited (Vistara), Director at
Titan Company Limited.
Committees :- The company has several key committees to ensure focused oversight and
effective governance:

➢ Audit Committee: Oversees financial reporting, internal controls, and audit processes.
Nomination and Remuneration Committee: Manages board nominations, executive
compensation, and performance evaluations.
➢ Risk Management Committee: Identifies and mitigates business risks.
➢ Corporate Social Responsibility and Sustainability Committee: Oversees CSR
initiatives and sustainability practices.
➢ Stakeholders Relationship Committee: Addresses shareholders' grievances and
issues related to investor relations (Tata Steel) (Tata Steel).
Contribution to Fiduciary Duty of Care and Diligence
Tata Steel’s board members bring a diverse range of skills and extensive experience,
contributing significantly to the company’s strategic direction and governance. The executive
directors ensure the implementation of strategic initiatives and operational excellence, while
the independent directors provide unbiased oversight and independent judgment. Their
participation in various committees facilitates meticulous attention to financial integrity, risk
management, and sustainability, reflecting their commitment to their fiduciary duties as
trustees of social wealth.
The board’s composition and the structured governance framework enable Tata Steel to
navigate complex business environments, uphold high ethical standards, and achieve
sustainable growth, reinforcing the company's stature as a responsible corporate citizen.

Solution: - 3(A) – Ethical Dilemmas

1. Conflict of Interest: The purchase manager’s request for a donation to a charity
managed by his wife creates a potential conflict of interest, as it may be perceived that
the order is contingent upon the donation.
2. Bribery and Corruption: The request could be seen as a form of bribery or unethical
inducement, where business decisions are influenced by personal gain rather than
merit or value.
3. Transparency and Fair Business Practices: Making a donation under these
circumstances could undermine principles of fairness and transparency in business
transactions, potentially leading to reputational damage and legal issues.

Solution (B) – Step-wise process to handle the situation: -

 5

1. Evaluate the Request Internally:

➢ Assess the legality and ethical implications of the donation request.
➢ Consult the company’s code of conduct and ethics policy to understand the guidelines
related to such situations.
➢ Seek advice from the legal or compliance department to ensure that any actions taken
are within legal boundaries.
2. Discuss Internally with Senior Management :-
➢ Present the situation to senior management, highlighting the potential ethical
dilemmas and legal risks involved.
➢ Gather input from various stakeholders within the company to understand the
potential impact on the company’s reputation and business practices.
3. Communicate with the Purchase Manager:

➢ Politely and professionally communicate with the purchase manager to seek

clarification on the request. Ensure that there is no misunderstanding about the terms
of the order and the donation.
➢ Emphasize the company’s commitment to ethical business practices and
transparency.
4. Propose an Alternative Solution:
➢ Suggest making a donation to the charity based on its own merits, independent of the
business transaction.
➢ Offer to review the NGO’s activities and consider supporting it as part of the
company’s corporate social responsibility (CSR) initiatives if it aligns with the
company’s CSR goals.
5. Document the Process:
➢ Keep detailed records of all communications and decisions related to this situation.
➢ Ensure transparency and accountability in all steps taken to address the issue.
6. Monitor and Review:
➢ After addressing the immediate issue, review and possibly strengthen the company’s
policies on handling similar requests in the future.
➢ Provide training to employees on how to handle ethical dilemmas and ensure they
understand the importance of maintaining integrity in business dealings.
7. Final Decision:
➢ Based on the outcomes of internal discussions and the response from the purchase
manager, make a final decision on how to proceed.
➢ If the purchase manager insists on the donation as a condition for the order, consider
declining the order to uphold ethical standards.

By following these steps, the company can navigate the ethical dilemma
responsibly, maintaining integrity and trust in its business practices