VEDANTA RESOURCES LIMITED: ISSUES OF SUSTAINABILITY
CASE STUDY SOLUTION
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SYNOPSIS
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In August 2020, the permanent shutdown of Sterlite Copper, an Indian copper manufacturing plant, was a
blow for Anil Agarwal, the executive chairman of the mine’s parent company, Vedanta Resources Limited
(VRL).1 Subsidiaries of VRL operated across the globe, both in developed and developing economies.
Although VRL had successfully completed mining operations in Ireland and Australia (both developed
n
economies) with almost no community protests, the company faced serious economic and reputational
losses in Zambia, Namibia, and India. Vedanta Group was a known advocate of investing in community
tio
relations and corporate social responsibility and had been recognized for its sustainability practices by
global institutions like the Dow Jones Sustainability Index, Frost & Sullivan Sustainability 4.0 Awards, and
so on. And yet, VRL continued to experience a lack of social consent from the communities surrounding
lu
its businesses in developing economies.
So
The delisting of VRL from the London Stock Exchange in 2018 coincided, coincidentally, with protests in
London against an accident at Sterlite Copper in India.
What could be the reasons for VRL’s failure in developing economies despite its profitable operations?
Was this difficulty in operations really a developing-economy dynamic? What could VRL do differently to
survive? Could there be cleaner and more efficient ways of extracting minerals to make VRL’s operations
more sustainable? Or were there other environmental, social, and governance (ESG) factors that made
mining difficult in developing economies?
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. Why is VRL more successful in developed economies than in developing economies?
2. What ethical and sustainability issues are faced by VRL in doing business globally? Was the company’s
performance in developing economies affected specifically by putting profit before people and the
environment?
3. What could VRL do to operate sustainably in developing economies?
4. How can mining companies incorporate sustainability and responsibility into their operations? Discuss
in light of the shared value framework.
5. Discuss the role of ESG in sustainability. How does it affect a firm’s financial performance?
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m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
,ANALYSIS
1. Why is VRL more successful in developed economies than in developing economies?
Vedanta Resources Limited exhibited a strong commitment to sustainable development and corporate social
responsibility. The company implemented various initiatives to ensure the well-being of local communities,
including education, health care, infrastructure development, and environmental conservation. However, it
also faced criticism and controversies related to its environmental impact, human rights violations, and land
acquisition issues in some of its operations in developing economies. VRL did not face these issues in
developed countries, where its positive outcomes could be attributed to the following reasons:
1. Strong governance and ethical practices: VRL’s adherence to corporate governance principles, ethical
conduct, and transparency in its operations helped build trust among investors and stakeholders. The
e
company’s commitment to good governance fostered investor confidence and enhanced its reputation
as a responsible business entity.3
pl
2. Technological expertise and innovation: VRL demonstrated technological expertise and innovation in
various sectors, including mining, oil and gas, and metals. The company’s ability to leverage advanced
m
technologies and implement efficient operational practices contributed to its competitiveness and
success in developed economies.4
3. Environmental and social responsibility:
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n
4.
tio
5.
lu
So
6.
The Case Solution Starts From page 6
, e
pl
m
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5. Discuss the role of ESG in sustainability. How does it affect a firm’s financial performance?
VRL’s environmental, social, and governance strategy, titled “Transforming for Good,” focuses on
n
embedding sustainability principles across all aspects of its business. The core of the company’s approach
tio
lies in transforming communities, the planet, and its workplace.33
Transforming the community focuses on social licence to operate, placing community well-being at the
lu
heart of business decisions. This includes aiming to empower over 2.5 million families with enhanced skill
sets and uplifting over 100 million women and children through initiatives in education, nutrition, health
care, and welfare. By fostering positive community outcomes, Vedanta aims to strengthen its social licence
So
to operate and build trust with local stakeholders.
Transforming the planet
The Case Solution Starts From page 6
, EXHIBIT -1: SHARED VALUE FRAMEWORK
Business Opportunities
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SHARED
VALUE
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m
Sa
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tio
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So
The Case Solution Starts From page 6
CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
In August 2020, the permanent shutdown of Sterlite Copper, an Indian copper manufacturing plant, was a
blow for Anil Agarwal, the executive chairman of the mine’s parent company, Vedanta Resources Limited
(VRL).1 Subsidiaries of VRL operated across the globe, both in developed and developing economies.
Although VRL had successfully completed mining operations in Ireland and Australia (both developed
n
economies) with almost no community protests, the company faced serious economic and reputational
losses in Zambia, Namibia, and India. Vedanta Group was a known advocate of investing in community
tio
relations and corporate social responsibility and had been recognized for its sustainability practices by
global institutions like the Dow Jones Sustainability Index, Frost & Sullivan Sustainability 4.0 Awards, and
so on. And yet, VRL continued to experience a lack of social consent from the communities surrounding
lu
its businesses in developing economies.
So
The delisting of VRL from the London Stock Exchange in 2018 coincided, coincidentally, with protests in
London against an accident at Sterlite Copper in India.
What could be the reasons for VRL’s failure in developing economies despite its profitable operations?
Was this difficulty in operations really a developing-economy dynamic? What could VRL do differently to
survive? Could there be cleaner and more efficient ways of extracting minerals to make VRL’s operations
more sustainable? Or were there other environmental, social, and governance (ESG) factors that made
mining difficult in developing economies?
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. Why is VRL more successful in developed economies than in developing economies?
2. What ethical and sustainability issues are faced by VRL in doing business globally? Was the company’s
performance in developing economies affected specifically by putting profit before people and the
environment?
3. What could VRL do to operate sustainably in developing economies?
4. How can mining companies incorporate sustainability and responsibility into their operations? Discuss
in light of the shared value framework.
5. Discuss the role of ESG in sustainability. How does it affect a firm’s financial performance?
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
,ANALYSIS
1. Why is VRL more successful in developed economies than in developing economies?
Vedanta Resources Limited exhibited a strong commitment to sustainable development and corporate social
responsibility. The company implemented various initiatives to ensure the well-being of local communities,
including education, health care, infrastructure development, and environmental conservation. However, it
also faced criticism and controversies related to its environmental impact, human rights violations, and land
acquisition issues in some of its operations in developing economies. VRL did not face these issues in
developed countries, where its positive outcomes could be attributed to the following reasons:
1. Strong governance and ethical practices: VRL’s adherence to corporate governance principles, ethical
conduct, and transparency in its operations helped build trust among investors and stakeholders. The
e
company’s commitment to good governance fostered investor confidence and enhanced its reputation
as a responsible business entity.3
pl
2. Technological expertise and innovation: VRL demonstrated technological expertise and innovation in
various sectors, including mining, oil and gas, and metals. The company’s ability to leverage advanced
m
technologies and implement efficient operational practices contributed to its competitiveness and
success in developed economies.4
3. Environmental and social responsibility:
Sa
n
4.
tio
5.
lu
So
6.
The Case Solution Starts From page 6
, e
pl
m
Sa
5. Discuss the role of ESG in sustainability. How does it affect a firm’s financial performance?
VRL’s environmental, social, and governance strategy, titled “Transforming for Good,” focuses on
n
embedding sustainability principles across all aspects of its business. The core of the company’s approach
tio
lies in transforming communities, the planet, and its workplace.33
Transforming the community focuses on social licence to operate, placing community well-being at the
lu
heart of business decisions. This includes aiming to empower over 2.5 million families with enhanced skill
sets and uplifting over 100 million women and children through initiatives in education, nutrition, health
care, and welfare. By fostering positive community outcomes, Vedanta aims to strengthen its social licence
So
to operate and build trust with local stakeholders.
Transforming the planet
The Case Solution Starts From page 6
, EXHIBIT -1: SHARED VALUE FRAMEWORK
Business Opportunities
e
SHARED
VALUE
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
