THE GREAT RUSSIAN EXPERIMENT

CORPORATE SOCIAL RESPONSIBILITY
Espen Røyseland

The post communism transition of the nineties, with its economical shock therapies and infamous loans-for-share schemes, has led Russia through massive changes in society and economy, all in a scale and pace unprecedented in the Western world.In what continues to be a great ongoing experiment, one of its aspects relates to the settling of the borders between private and public responsibility. This challenge is perhaps most evident in the former company towns of the Soviet Union. The state-owned companies that established these mono-programmatic towns were often the dominant service provider of their community. When privatized, these companies inherited the social responsibility. Now they are in a process of transferring social infrastructure from private ownership to the municipalities.

The mineral-rich cities of Nikel, Zapolyarny and Monchegorsk were all established as company towns during the Soviet era. Combined, these cities amount to over 80 000 inhabitants, still solely dependent of the activities of Kolskaya GMK, a subsidiary of the global mining giant Norilsk Nickel.

We met with Marina Voronkova, press secretary of Kolskaya GMK at their headquarters in Monchegorsk.
“There is a mutual interdependence between the company and its cities. This is reflected in our slogan: Our cities, our people. “ Kolskaya’s workforce counts approximately 11 000 people, but its activities employ many more through services provided by other companies. “It is, as you say, an ongoing experiment on settling the borders between the public and private responsibility in Russia. This experiment will probably take another ten years. There are some continuations of social traditions from the Soviet times, but social corporate responsibility cannot be dictated by law. We are engaging in this task by our own wish to have healthy workers.” Her point addresses what might be one of the core challenges in the process of settling these borders; the apparent emergence of a two-class society, consisting of the population employed by the company versus the rest. As the social programs are mainly directed towards company employees and their families, less consideration is given to other stakeholders.

“The wages may be lower than in Norway, “ Voronkova continues, “but our workers are offered a social package Norwegians workers can only dream of. “ The package she refers to contains amongst others a recuperation program offering subsidized holiday packages at health resorts by the Black Sea. Helping its staff to recover from the harsh, severely polluted reality of these industrial towns might indulge Kolskaya in keeping its employees alive and working a little bit longer, but little seems to be done to prevent the pollution itself. Driving up to the Kolskaya’s plant in Monchegorsk you are met by entire valleys and hillsides covered in grey dust, resembling landscapes of the moon. In Nikel the situation sometimes is critical to its citizens; “Last summer Nikel residents called us to complain that it was difficult to breathe and that the rain was burning holes in their umbrellas, “said Nina Lesikhina of Bellona, an environmental organization with a branch in Murmansk (Moscow Times, 25 July 2008.) “Is anything done to limit the pollution?” we ask.
“In 2001 we installed a Canadian gas filter mechanism that filters out dangerous particles from the plant emissions. Since these actions were taken, the leaf trees in the surrounding areas have had a 30% growth increase.”
Though some claim conditions have become better, others disagree. The Norwegian Institute for Air Research has been measuring air pollutants close to the border city of Nikel since 1974. According to their measurements, levels of SO2 concentration reached 7500 milligram sulphur per cubic meter during some summer hours of 2007, over 20 times the maximum levels set by the EU.

For the city of Nikel, the future looks rather pale as Kolskaya currently considers relocating its entire smelting plant to Monchegorsk, an operation that could prove fatal to the border town. When confronted with this, Voronkova claims that no decisions have been made, and that “Kolskaya GMK will not leave the people of Nikel without jobs, without an industry. A group of experts is looking into the situation right now, and is discussing a long-term social and economic development program for the town.”

In Monchegorsk the company’s presence in the city is well felt. Almost every façade in the city’s main street, Metallurg Avenue, has been renovated. According to Natalia Mishina, head of the City Planning department, Monchegorsk Municipality, Kolaskaya GMK is contributing to several healthcare and recreational facilities. “Some projects are carried out by the company alone, like the construction of the new ski stadium and the cathedral. Now they are contributing to the construction of a new graveyard, and the renovation of the central hospital.”
For the cities of Nikel and Zapolyarny, however, the situation seems to be the opposite. Curious about whether this might be the case; we ask Voronkova if any of the cities are being privileged. “The contributions from our company to the three cities are similar. Streets are being asphalted and facades are being painted. The cities just look different because they have different backgrounds. Monchegorsk is a mini version of St. Petersburg, while Nikel and Zapolyarni were built as industrial towns; it’s harder to see our contributions there.”

During the last years the company’s profits have sky-rocketed, as the price of metal has risen.
According to Kolskaya’s 2007 annual report, net profit amounted to 22.3 billion RUB. The same year 88.2 million RUB were spent on “improvement of the quality of medical, social, educational service; providing for security, law and order; environmental protection”, approximately 0.4% of net profit. How the company and its cities will respond to the economically turbulent years ahead is yet to see.

References:
www.kolagmk.ru
www.barentsobserver.no
www.nilu.no
www.nornik.ru

FOOTNOTE: Corporate Social Responsibility
The term Corporate Social Responsibility may be difficult to define, but relates mainly to the voluntary actions businesses can take to address both its own competitive interests and the interest of wider society. (Definition by Department for Business Enterprise & Regulatory Reform, UK)



Espen Røyseland is born in Stokmarknes, Norway. He is an architect and co-founder of 0047.
Røyseland is director of 0047 and secretary of Europan Norway. He lives and works in Oslo, Norway.