In India, over the past one year alone, we have witnessed multiple accidents at factories that resulted in loss of life and resources. There was the widely reported gas leak in Vishakapatnam from the LG Polymers facility which led to thousands being evacuated from neighbouring homes and hundreds hospitalised. Twelve people lost their lives. But this is just the tip of the iceberg. After the lockdown was lifted in 2020, just as the machinery began to creak back into action, there were other incidents of boilers bursting, fires breaking out, and heavy equipment falling and crushing workers. In fact, a Geneva-based group found that industrial accidents happened every other day in May 2020. Experts say most of these tragedies could have been averted, had the company taken a bit more care with its safety culture. At the Advantage India Chemical Summit, Outlook Business’ editor N Mahalakshmi talks to Joseph K Oomen, managing director India, DuPont Sustainable Solutions, about building that culture. The session was co-moderated by Hardik Joshipura, CEO, Innovassynth Technologies.
Joshipura: Dr Peter Drucker, a management guru, said culture eats strategy for breakfast. Perhaps, he was speaking of the software culture of organisations but I would like to add safety culture too, particularly when speaking of the speciality chemicals industry. What are your views?
Oomen: If you look at the last few months and the kind of incidents that have taken place in India, I would say all of that was preventable had the leadership behaved or provided the right infrastructure and engineering required for these facilities. It starts with the safety culture of the organisation. They (leadership) determine the end results — whether people are working safely and whether the plants are being operated safely. So, it starts with leadership commitment and owners or stakeholders valuing safety. They must provide the infrastructure, people, a management system, procedures and guidelines to operate their plants safely. Then comes training people for the right skill set. I use three parameters to gauge if a person is working safely, that is, if they are thinking, ‘I know, I can and I will’. It applies to all industries.
Typically, you find a reactive culture in our country, where we think ‘incidents will happen’ versus ‘yes, it is preventable and that we, as management, are going to work to prevent all injuries and incidents on this site’. That is important, to transform an organisation from a reactive one to a one confident about its safe operation.
Joshipura: How do Indian companies compare with those of rest of the world, say with American or European companies? Do you see a cultural shift or change in mindset here?
Oomen: Definitely. It depends on which companies you are comparing. We are fortunate to have good industrial houses that value safety and see it as a high priority. So, if you compare them with the companies in Europe or in North America, I would say they are similar because the management is committed to making a change. These large industrial houses are able to sustain the practices over time. We say an organisational culture has changed if the system has lived through three leadership changes. In North America and European countries, there is external pressure to keep the systems functioning since sustainability is a key part of a company profile. It’s not just environmental, health and safety, but long-term sustainability and social responsibility are also important in those regions. There is always the benchmarking one company against another and that drives companies to work proactively.
Mahalakshmi: In any economy, when you start small, you face the immediate and short-term pressure of building competitiveness. It is only when you grow that you improve compliance with safety standards and regulation. When you grow, there is more scrutiny, which forces companies to act. Also, there are costs associated with building this culture and companies find it hard to build in these costs upfront, when they have not achieved scale. So, what can smaller companies do to ensure this culture from day one so that they do not wake up to huge risks suddenly? How can this transition be achieved step by step?
Oomen: Cost is a factor, but small enterprises should also reconsider what is the cost of doing business and take into account business continuity. As the owner of the company, the person should be able to sleep in peace, and so they have to understand that they operate with volatile and toxic materials, and that they have to ensure that their plant does not blow up and their business is not jeopardised. Even if it is a small enterprise, it should start with this mindset about risk management. What we usually do is ask people to think about a risk-governance system. The leadership can look at their small operations and say where the highest risk in their particular process is, what the consequences of an incident taking place are, and then ask how they can mitigate the risk and what actions can be taken now. We recommend a prioritisation model for the small-scale industry. It is all based on the chances of an event happening and putting the company out of business.
Once this is done, people start taking note and the culture also starts shifting. So, it’s all about business continuity and cost of operations as disruption is expensive for any business.
Mahalakshmi: Entrepreneurs are biased towards the here and now. Also, they care about something if there is a tangible financial cost associated with it. Is there a framework you have developed to capture both, immediacy and cost?
Oomen: We do have a structured framework for gauging risks and consequences. We have developed predictive models to simulate hazardous scenarios, making their impact on business visible, and place it on a scale. It helps companies understand their risk profile and helps them through the transformation process.
Mahalakshmi: When you compare the Environment, Health and Safety (EHS) standards and Environmental, Social and Governance (ESG) standards, and compliance of India with China and the rest of the emerging world, how do we fare?
Oomen: In China, things have changed rapidly over the last five to six years. It is compliance driven now and they have the infrastructure to support this. Also, the government is strict and there is great emphasis on punitive measures, which are taken against the company and its compliance officer in case there is any incident. It is not just the owners who are held accountable but also the regulators associated with that area. With this process, they have rapidly moved up the ladder in terms of compliance. They have classified industries into three big buckets. First are those who simply cannot bridge the gap in compliance, so they have to shut down. Second are those who are allowed to operate conditionally, that is, provided the gaps are closed. The third is the majority of the multinationals such as DuPont who have invested in safety since the beginning, even 15 to 20 years back, taking into consideration the requirements ahead. They face no trouble and are encouraged to make more investments.
In India, there is basic compliance. For example, we require a firefighting system — fire hydrants and installation of sensors — so they are installed but they are never maintained. No one really thinks of using it one day. But, we also see industries who have taken pride in transforming themselves and are also at the leading edge of safety.
Mahalakshmi: How big a threat is this lackadaisical attitude towards safety and sustainability, especially to India’s growth and especially to speciality chemicals that’s really a booming segment right now?
Oomen: I would like to respond with two questions — why would somebody come to India and what would they look for? They would come to India looking for an alternate source of supplies, which provides speciality chemicals at a lower or competitive cost and a stable, sustainable supply. The most important considerations for a supply chain manager outside the country would be stable operations, a stable supply chain and a good-quality product at a competitive cost. Now, EHS, if not done properly, impacts everything. If I am the supply chain manager, the news about an incident would jolt me and I would worry about my supply chain’s stability and how any disruption could impact my business. For growth in India, it is crucial that we have safe operations that give confidence to potential buyers. EHS is fundamental and foundational for the growth of speciality chemicals or any export-oriented product in India.
Joshipura: When you look at pharma intermediate manufacturing, the talk is generally around supply-chain transparency and regulatory support for the documentation process. Most of the companies do not seem to have that formal documentation process. Any thoughts on that? If you look especially at the API and intermediate sector, a person in Europe looking to outsource might ask if you have the right flow diagram or if the batch processes are properly done or if the root of synthesis is established. There are no questions around the EHS. Do you think this should be included as well?
Oomen: That’s true. But in the pharma, API industry, they have Good Manufacturing Practices (GMP), right? And, they’re audited for it because you want to have a high level for quality. Then, why not for safety? It can be a risk to your people, asset and also business.
Joshipura: Any advice you would give to all the emerging companies or the established companies in India?
Oomen: It all starts with leadership. My advice is, as leaders of the companies with ambitions of becoming a global supplier, we need to put safety on priority. This is good business sense. It is not compliance but an investment for the future.
