‘Hands-on’ Hayleys boosts sustainability

Starting today the Daily FT in partnership with the Ceylon Chamber of Commerce will begin a fortnightly series of reviewing some of the best corporate citizens in Sri Lanka. The companies featured via this column are the 2010 winners of select awards of the Ceylon Chamber’s annual Best Corporate Citizen competition.

As a socially conscious corporate, Hayleys endorses the practice of ‘hands-on rather than handouts’ – an approach where interactions with its stakeholders promote valid discourse and give light to issues. Hayleys boasts the unique distinction of winning the Best Corporate Citizen Award, awarded by the Ceylon Chamber of Commerce, four times! (2004, 2005, 2006 and once again in 2010).

These efforts of the Group were holistically recognised by INSEAD – one of the world’s leading graduate business schools – which conducted an in-depth study of the Hayleys Group’s CSR practices and business strategies.

Now an EFMD (European Foundation for Management Development) award winning Case Study, it serves as reading and discussion material for students reading for Master’s degrees in Business Administration (MBAs).

It also serves as a boost for Sri Lanka’s corporate sector as a whole, as it highlights to a global audience that there are Sri Lankan companies that merit attention and even emulation in the spheres of CSR and sustainable business.

Being a diversified group of companies, there are several spheres of sustainability and a myriad of business activities that cover environment to community relations to their value and supply chain. Some of these projects relating to these areas are described below.

Biodiversity Project

Kelani Valley Plantations looks to conserve biodiversity, rich across all elevations of its 27 estates spanning 13,000 hectares of land (with a high proportion of endemic flora and fauna) spread over the three agro-climatic regions of Nuwara Eliya/Dickoya and Yatiyantota/Bulathkohupitiya, with almost equal extents of tea and rubber, through a range of agricultural practices and proactive collaboration with the IUCN.  Good agricultural practices are in place, which often exceed the stipulations of the Tea and Rubber Research Institutes. Employing buffer zones near waterways, avoiding the use of agro chemicals where possible, carrying out bush to bush fertilising systems to avoid washed off fertiliser acting adversely on the eutrophication of catchment areas, terracing, growing cover crops and employing field banks to prevent soil erosion are some of the many initiatives they take. This has helped the company gain GLOBAL GAP certification for all its estates.

Situated in the Yatiyantota area, Halgolle Estate grows tea and rubber and is home to exotic flora and fauna and its topography consists of natural hill crest formations within its 1,196 hectare extent, which have been preserved by the company in their natural state.

KVPL in collaboration with Deutsche Bank, Sri Lanka planted seven hectares of bare land in the Wewelthalawa Division of Halgolle Estate with indigenous forest flora under the Forest Replanting programme. Apart from the flora and fauna identification project that is conducted throughout all KVPL estates, the Company in collaboration with the International Union for Conservation of Nature (IUCN) has mounted a detailed biodiversity research project to identify and conserve rare and endangered species of flora and fauna. This team was led by the specialist in the field attached to the UN. KVPL is a signatory to CEO Water Mandate and Caring for Climate and these are examples of how that endorsement and relationship is translated into action.

Home for Every Plantation Worker

The programme is a story of meaningful and large scale impact – a crowning achievement, it is an on-going project designed to uplift the quality of life of the community within the plantations. This has been designed to improve worker welfare, housing and sanitation of the workforce. 

There are some housing projects involved in the construction of new houses for plantation employees, with five to seven perches of estate land being allocated per house. The upgrading and rehabilitation of traditional worker houses, provision of factory and field rest-rooms, and electrification of housing and living quarters are some of the major programmes that are followed by every plantation company. 

Upgrading existing water supply schemes, installing new delivery systems to improve road access, and establishing rural agency post offices within the plantation boundaries are some of the CSR programmes which are being carried out by the plantation companies. 

Preliminary work has commenced on 30 new housing units on Panawatte Estate which increased the number of new units to 1,341. The upgrading of 105 living units, construction of 766 toilets, provision of electricity to 232 houses and rehabilitation of a 34.25 km long road were carried out as well.

This programme has also positively affected the brand Mabroc Tea, which has been based on globally certified ethical growing and labour practices. It has been featured as a benchmark practice, in the booklet ‘Globally Positioning Sri Lanka’s Best,’ released by the Global Compact Sri Lanka Network at the UNGC International Network Conference in Mexico, in October ’07. 

Outgrower Programme

The range of farmers linked to Hayleys’ agri operations is 6,000. The Hayleys-USAID ‘Out Grower’ Programme assisted 160 farmers and this is being extended to other areas in the Eastern Province. It will ultimately link 2,500 farmers.

The introduction of cultivation, technology transfer and a guaranteed price buy back scheme to 160 farmers is a milestone in agricultural evolution, closing the gap of insecurity. Each of the 160 participating farmers earned an average of Rs. 45,000 per acre (approximately $ 400) as additional net income for the two-month crop cycle; a substantial supplement to subsistence farming. Knowledge transfer and creation of market linkages helped the farmers to increase their commercial farming income through better utilisation of their land resources.

The success of the pilot project led to a new alliance in 2009 between USAID, Hayleys and its subsidiaries. This Sustainable Agriculture through Commercialisation (SAC) Project links 3,600 conflict-affected farmers from different regions in the Eastern Province to a commercially viable and sustainable agricultural programme that ensures a substantial increase in farmer incomes.

The company works with 2,500 farmers in the Eastern Province in order to achieve the targeted gherkin production by 2011. The total income expected to be generated through this project is around Rs. 100 million. Hayleys Agro also plans to enlist 800 paddy farmers with access to 400 hectares of paddy for its seed paddy project which would earn about Rs. 75 million.

Success of the project led to USAID awarding Hayleys ‘2009 Global Development Alliance Award’. Hayleys Group was chosen from 700 such initiatives around the world to receive the prestigious award due to the company’s commitment to the sustainable development of rural farm communities and for the project success.

The US Government singled out this partnership as a model of how US Government foreign assistance can be maximised through greater engagement with the private sector.

First Light: Educate and Empower to Maximise Income

Due to the growth of cause related marketing (in line with Fair Trade principles) DPL wanted to position itself as a socially responsible hand protection provider.

Sri Lanka’s rubber trade is dominated by ‘middlemen’ who hold great power, sometimes exploiting farmers through loans. Thus Firstlight programme was designed to take care of small holder rubber farmers in remote villages of Sri Lanka. For example, without a secure supply of rubber, our primary contributor to bottom lines would grind to a stop. It was thus in our direct interest to ensure that rubber farmers regard us as an honest long-term collaborator.

This was done to increase their yield, income, and loyalty to the group.  The actions of the group made these farmers entrepreneurs – even if Hayleys were to move out or cease involvement with the farmers, they would be able to continue to sustain themselves. The programme itself has now gathered momentum and is disbursing meaningful benefits to their communities.

In certain markets, these same practices enabled DPL to obtain premium prices for its products and services, compared with the competition. Through this successful forward integration, consumers are willing to pay more for ethically sourced products. So far, this policy has enabled us to protect our core businesses and markets in the face of rising competition.

Relief Efforts Programme for Internally Displaced Sri Lankans

The Hayleys involvement began through immediate relief efforts through donations. A mobile water treatment plant, designed and custom built by Puritas, was deployed at Zone 5 of the Menik Farm welfare village complex. In keeping with the Hayleys’ CSR thrust on Education, they identified two Schools in the district of Kilinochchi which the fund could help uplift. Two IT centres with training rooms were donated to these schools. One focus area was to promote home growing/gardening at Zone 5, to not only provide the IDPs with produce they can be consumed, but also to occupy and prepare them to resume/start a livelihood once they relocated. Hayleys Agro has been donating a variety of seeds and fertilisers; while Hayleys Advantis donated agri equipment.

Other contributions from the group include a 20 foot container from Haycarb for storage of equipment, two water pumps and garbage bins from DPL, a load of coir twine by Hayleys/Volanka Exports, three flexi bags and contribution of employee time and energy by Logistics International (LIL) to build a tank to supply the water required for farming.  The team also donated a hay sprayer and solfac/baytex to Madu Church authorities to combat flies/ants in and around the church complex. Sports and recreation equipment were donated by Hayleys Exports, Export Shipping, MIT Cargo, Civaro and NYK Lines.

In addition to the above, an initiative of the Hayleys team resulted in mobilizing contributions from several external parties to help meet some of the requests of the camps. These included zigzag sewing machines for vocational training at Menik farm from the Rent A Car Association (RACA), a two wheeled tractor and other equipment by One Srilanka Foundation, sprayers/agri equipment and cooking utensils from Medical Aids to Sri Lanka by UK and Sri Lanka Medical Dental Association (SLMDA), school books and equipment from Eureka, lunch boxes from SLMDA and other volunteer contributions of over 200 sarees for the volunteer teachers at the Zone 5 temporary learning centre.