Vedanta Resources Limited: Issues of Sustainability

In August 2020, Sterlite Copper, a mining company in India, was shut down for good by the Madras High Court following a lengthy legal battle with the local Indian community, who accused the mine of environmental pollution. This verdict was a blow for Anil Agarwal, the executive chairman of the mine’s parent company, Vedanta Resources Limited (VRL), because the mine’s closing not only caused serious economic losses but also damaged VRL’s reputation around the world. Subsidiaries of VRL had successfully operated in Ireland and Australia—both developed economies—but had faced strong opposition in developing economies such as Zambia, Namibia, and India. Although VRL publicly advocated for corporate social responsibility and had received awards for its sustainability practices, the company continued to experience a lack of social consent from the local communities surrounding its operations in developing countries. Why was VRL failing in those countries despite its profitable operations? Were there cleaner and more efficient ways of extracting minerals to improve the company’s sustainability? Or were there other environmental, social, and governance factors that made mining difficult in developing economies?

This case is suitable for undergraduate- and graduate-level courses on ethics, sustainability, and responsible business and explores environmental, social, and governance (ESG) concepts in the context of developing economies. The case will help students become aware of the ethical responsibilities of an organization, understand the shared values framework, learn about the criticality of social consent to operate, and appreciate the business case for ESG in ensuring sustainability in developing economies. After working through the case and assignment questions, students will be able to do the following:<ul><li>Discuss how the dynamics of developing economies impact business operations.</li><li>Understand and appreciate the role of ethics and responsibility in organizations for environmental, social, and governance-related sustainability.</li><li>Discuss the reasons for differences in how an organization is perceived as a responsible organization and yet does not gain social consent to operate from the surrounding community.</li></ul>

• ESG
• Developing economies
• Responsible organisations
• Social consent to operate