How would you judge what is ethical and what isn’t when you are doing business. Are there any set rules that can apply to Teejay Lanka?
When considering the Teejay Lanka, is the largest weft knitting fabric manufacturing mill in South Asia which the main plant in Avissawella and one other plant in India. They are doing a wide range of products related to weft knitting while doing the knitting, dyeing, finishing, and printing. They mainly doing business with Europe and the USA including the global recognition brands such as Tezenis, Calvin Klein, Victoria’s secret, Mark and Spencer, Intimisimi, Lidl, and Decathlon. And Teejay is PLC with 39% public ownership, 33% by Bradix, and other 28% ownership by Pacific Textiles.
As being a public listed company, need to obey the corporate governance which putting by the government or the stakeholders. But in the first stage need to identify the “What is the governance stand for?” In a simple word, the process which overlooking some working criteria is governance or we could say as ruling. According to all religions and also social believes says that doing the right thing in the right way is the main part of governing. It means good and bad or right and wrong come to the mind. And according to the load Buddha “Hiri Othap”.
When comes to governance, first it will start from the personal. We have to keep ourselves, our family, and the carrier well balancing with the governance framework.
When come to the corporate governance is consists of 4 main pillars.
• Accountability
• Fairness
• Transparency
• Independence
When considering about the Teejay Lanka,
According to the annual report (Teejay AR 2107), they are flowing below corporate governance policies to fulfill the above pillars. According to the annual report board of directors was responsible to follow the cooperate governess within the organization and the outside of the organization.
Acts
• Companies Act No 07 of 2007
• Shop and Office Employees Act No 15 of 1954
• Factories Ordinance
• Wages Board Ordinance Regulations
• BOI Regulations
• Continuous Listing Requirements of the Colombo Stock Exchange
Even though, any organization follows the corporate governance the ultimate objective is profit. By achieving this ultimate objective, they will do anything. When considering about the topic of this blog also talking about whether we could achieve the ultimate objective by ethical way. As per my understanding, we could not run the business in a purely ethical way. Before going to that need to be identify the ethics which related to the business world. According to the Carrol (1969) was introduced a criterion for evaluating the policies of the organizations running. According that it could be divide into 4 main parts.
• Economic responsibility
• Legal responsibility
• Ethical responsibility
• Discretionary responsibility
Being in a PLC sector, Teejay having a big responsible for capital which owns by the stake holders mainly by the public. So they have a great responsibility for generating good revenue for the stake holders. And according to their annual report, they are complying with the acts and regulations which I demonstrate in the above sentences. When comes to the ethical responsibility, being in the textile manufacturing there will be a lot of harmful chemicals are using in producing the fabric which required by the customers. And consider about the manufacturing process, the first step is the knitting. In the knitting operation yarn feed into machines that required electric consumption. Then that knitted fabric undergoing the process called pretreatment which cleaning the garage fabric before dyeing. In that process need chemicals and also more electricity for running the machines. Not only needed that huge amount of water also to the process. So you could identify, one process will destroy the environmental factors. Then the fabric goes to the dyeing process. In the dyeing process, a lot of harmful chemicals are using such as CU, Zn, Hg and etc. And a huge amount of water is consuming for that process. Then the last process is post-treatment, which also requires a lot of chemicals such as softeners and the water. In the total process, you could identify a lot of damage done to the environment and not doing that could not manufacture the fabric. In the fabric manufacturing process above all steps need to be complete to produce a good quality fabric. The only possible thing is reducing the harmful factors which done to the environment. According to the annual report of Teejay, it showing as below.
• Reduce electric consumption by 17%
• Reduce water consumption by 16%
• Reduce furnace oil consumption by 5%
So they are practicing the ethical practices in order to achieve and maintain the competitive advantage of producing good quality fabric at a low cost. In previous thoughts on the business models such as “Business of the business is business, only social responsibility is generating the profit by Friedman (1970)” could be pointed out. But the modern world moving to find new concepts such as regenerative leadership to maintain the ethics of the business world. By making the decisions on an ethical base need to consider both individual and organizational factors. When coming to my example company individually I believed if we can go for a green concept is better than the current manufacturing method. But as an organization needs to focus on more profit generation to fulfill stake holders believe. Then they came to the mid-point and reducing the damages which done to the environment by using some new methods and processes. And also they have an effluent plant to treat wastewater before releasing into the environment. Form that also they are following the ethics in the manufacturing process. But in the effluent treatment, sludge is forming in the last stage and that sludge could not be treated anymore. So that need to be land fell. But as per my knowing Teejay send that sludge to Holism to making blocks of cement. And also there are some innovations also ongoing to reusing that sludge for making new kinds of blocks.
When considering about the triple bottom line concept in the ethical business models, will include bellow 3 points
• People
• Plant
• Profit
When considering about that point human capital places a major role. To enhance the human capital performance Teejay investing as bellow table. (AR-2017)
And also they are conducting several human encouraging and rewording occasions to serve their people. Such as the annual Teejay awards ceremony, Long service recognition, AIM (All Ideas Matter), and etc.
Apart from that Teejay is doing a huge amount of CSR activities to enhance the outside human capital of the organization. Such as made donations to the near school children, provide financial support to the base hospital of Avissawella, renovated school buildings, construction of drinking water facilities could be pointed out.
By considering the above factors, they empowering the people factor. And also doing a lot of projects to overcome the damages which done for the environment. According to the annual report, they made a good amount of profit which related to the year of 2017. By considering all factors they maintain the triple bottom line concept of an ethical business model.
According to the concepts which related to the ethical way of business models are discussed under blog topic which I have done, summering to the Teejay Lanka is doing it in a good way with increasing the profitability also. Therefore my conclusion is, we could manage the business with the new concepts of ethics. But not in 100% achieving the all parameters. Sometimes need to tolerate some points which could not practical. But considering the world movement, I believe there will be more innovations that will come for the business to run in a very much sustainable manner. And also by looking at all aspects upcoming innovations will solve some problems which arise from the manufacturing of textiles. That is a good sign for everyone in the worldwide.
Ruwan Perera
References:
• Material of UOB Managing Ethics and CSR: Panopto video (Online)
• Materials of OCB given under “IMPORTANCE OF Corporate Governance FOR PUBLIC LISTED COMPANIES” by Lasantha Senaratne
• http://www.teejay.com/csr-project
• http://www.teejay.com/imgup/pdf/teejay-ar-2017-18.pdf
• https://www.investing.com/equities/textured
• https://www.investopedia.com/terms/d/domini_400.asp
• https://mgt.sjp.ac.lk/acc/wp-content/uploads/2018/12/a_Article-1.pdf
• https://cdn.cse.lk/pdf/press/SL-20-entrant-teejay-lanka-pls-opens-trading.pdf
• http://www.teejay.com