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Home / case studies / Case study: How KOEL promotes compliance and ethical business behaviour

Case study: How KOEL promotes compliance and ethical business behaviour

Kirloskar Oil Engines Limited (KOEL) is a leading Indian engineering conglomerate manufacturing internal combustion engines and generating sets and parts used for various applications, such as agriculture, industrial, stationery power plants and construction equipment. KOEL places huge emphasis on transparency, accountability and integrity  Tweet This!, as reflected in its corporate governance codes and ethics.

This case study is based on the 2017-18 Corporate Sustainability Report by KOEL published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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With integrity as a key value, KOEL constantly reviews its governance structure and code of business conduct and makes appropriate changes so as to earn and maintain the trust of investors, business partners, customers and the communities in which it operates. In order to promote compliance and ethical business behaviour KOEL took action to:

  • implement a Code of Conduct and Ethics
  • carry out audits

What are the material issues the company has identified?

In its 2017-18 Corporate Sustainability Report KOEL identified a range of material issues, such as human capital development, innovation management, product stewardship, operational eco-efficiency, climate stewardship. Among these, promoting compliance and ethical business behaviour stands out as a key material issue for KOEL.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups KOEL engages with:

To identify and prioritise material topics KOEL engaged with its stakeholders through the following channels:

Stakeholder Group                Method of engagement
Shareholders/ Investors and Equity Research Agency

 

·      Annual General Meetings

·      Analyst meets

·      Media Releases

·      Web Sites

Customers

 

·      One-to-one interaction

·      CSS (yearly)

·      Helpdesk

·      Customer events

·      Melas

·      Camps and Exhibitions

·      Meetings

·      Smart phones applications

·      Phones

·      Emails

·      Fax

·      Customer visits

·      Surveys both internal and external

Employees ·      Meetings

·      Seminars

·      News letters

Dealers and Distributors

 

·      One-to-one interaction

·      Monthly/ Quarterly reviews

·      Helpdesk

·      Dealer conferences and meets

Technical Collaborators ·      Yearly meetings
Banks ·      Consortium meetings

·      Mails

Suppliers and Vendors

 

·      One-to-one interaction (NB)

·      Supplier meets (yearly)

·      Quality audit, SQTF visit

·      Supplier ‘A’ Panel Meet

·      Technology Day

·      Meetings

·      Emails

·      Fax

·      Mutual visits

·      Surveys both internal and external

Society and Community, Professional Bodies ·      Social functions and welfare activities

·      Community meets on ongoing basis

·      Messages

Local statutory bodies

 

·      Meetings

·      Mails

What actions were taken by KOEL to promote compliance and ethical business behaviour?

In its 2017-18 Corporate Sustainability Report KOEL reports that it took the following actions for promoting compliance and ethical business behaviour:

  • Implementing a Code of Conduct and Ethics
  • KOEL has a robust Code of Conduct and Ethics for its Board of Directors, senior management and its other employees, based on the NVG (National Voluntary Guidelines) and makes sure the Code is strictly adhered to, by having an efficient vigil mechanism and a whistleblower policy in place. A senior company official is entrusted with the responsibility of hearing complaints regarding the Code and taking appropriate action, as required. Additionally, KOEL has a separate Code of Conduct for its suppliers, to ensure the delivery of safe and sustainable goods for employees. Every year, all directors and the senior management team reaffirm their commitment to the Code. New KOEL employees are also made aware of KOEL’s way of doing business and are inducted into KOEL’s culture of transparency, integrity and accountability, through sustained and sincere efforts in the initial phase of their career. This helps them discharge their duties professionally on lines of company values and vision. During the reporting period, there were no legal actions pending or completed regarding anti-competitive behaviour and violations of anti-trust and monopoly legislation by KOEL.
  • Carrying out audits
  • Adherence to statutory rules and regulations has always been given the utmost importance at KOEL, with continuous, sustained efforts by the management to identify possible gaps in its processes so that KOEL had to pay no fines or penalty for breaking rules concerning emissions and health and safety impacts of products and services during their life cycle. KOEL uses a work flow based legal compliance software tool that monitors and ensures compliance with all applicable regulations across all factories and offices. KOEL also has its own Internal Audit Department (IAD), which carries out periodic risk assessments. The internal audit procedure has been designed to cover various aspects of the business, and is commensurate with the size and complexity of KOEL’s operations. Accountability is established by identifying risk owners for every risk detected, who have to submit a detailed risk mitigation plan which is then implemented, after proper review. An IT system has been developed for the IAD, to not only help KOEL conduct audits but also track open issues and their closure. KOEL’s Audit Committee reviews the significant observations made by the IAD and the follow up actions taken thereon. Business risks are also managed through cross functional teams comprised of personnel from various domains and are reviewed by business heads at periodic intervals.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

2) Disclosure 307-1 Non-compliance with environmental laws and regulations

3) Disclosure 419-1 Non-compliance with laws and regulations in the social and economic area

 

Disclosure 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Compliance with laws and regulations

Disclosure 307-1 Non-compliance with environmental laws and regulations corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Compliance with laws and regulations

Disclosure 419-1 Non-compliance with laws and regulations in the social and economic area corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Compliance with laws and regulations

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



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By registering for the next 2-day FBRH GRI-Standards Certified and IEMA approved Course you will be taking the first step in gaining the many benefits of sustainability reporting.

 

References:

1) This case study is based on published information by KOEL, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to KOEL: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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