Social responsibility of the investor

Posted: 27 September 2008 | | No comments yet

For over half a century, Corporate Social Responsibility (CSR) has been an element of strategy of each business entity who wishes to be perceived as a reliable and stable element of economy and society. PKP Polskie Linie Kolejowe SA, the administrator of the railway infrastructure in Poland, observes the CSR principles both in its current activities and strategic planning for coming stages.

For over half a century, Corporate Social Responsibility (CSR) has been an element of strategy of each business entity who wishes to be perceived as a reliable and stable element of economy and society. PKP Polskie Linie Kolejowe SA, the administrator of the railway infrastructure in Poland, observes the CSR principles both in its current activities and strategic planning for coming stages.

For over half a century, Corporate Social Responsibility (CSR) has been an element of strategy of each business entity who wishes to be perceived as a reliable and stable element of economy and society. PKP Polskie Linie Kolejowe SA, the administrator of the railway infrastructure in Poland, observes the CSR principles both in its current activities and strategic planning for coming stages.

There are several factors which are peculiar to PKP PLK SA’s activities and have a decisive effect on our economic behaviour, adhering to the law and ethical rules, and functioning in society which is to say on every element of CSR.

Firstly, we are a joint stock company and therefore we operate on a commercial basis. It means that our financial activity follows the rules of commercial law. This is a significant difference as compared with the period before 2000, when the railway transport in Poland was state-owned.

Secondly, the owners of PKP PLK SA, the State Treasury and PKP SA (the parent company, 100% owned by State Treasury), directly or indirectly represent the general public. This forms the group of stakeholders in a different way than in most commercial companies. It results from the servitude nature of national wealth with respect to its real owners – taxpayers – and consequently, the right of each of them to assess the way the wealth is managed. This also applies to the social groups which influence, to a different extent, the management of the company: mass media (being the exponent of general opinion) and for example environmental organisations that may affect investment processes.

Dialogue with trade unions is of great importance. To the stakeholders, one must obviously include our direct clients – passenger and freight railway carriers from PKP Group and private ones, but all of our activities are also to be evaluated by their clients: passengers and senders of cargo.

Thirdly, our activity is assessed on a permanent basis by the Ministry of Infrastructure, which means not only the Government of the Republic of Poland but the European Commission as well, since we use more and more of EU’s funds to modernise the railway system in this country, and the PKP PLK SA’s investment tasks mostly constitute a part of large programmes related to the all-European transport network.

Fourthly, both our activity and its planning are influenced by local self-governments who are responsible for organising public transport, as well as local authorities including provincial governors and state or municipal services of various kinds such as police, fire brigade, building supervision and so forth.

Fifthly, quality and promptness depends, to a large extent, on project designers and building contractors.

All these elements create the environment in which the administrator of the railway infrastructure is to act. Our behaviour with respect to this environment is determined by three aspects of responsibility: economic, legal and social responsibility, neither of which are distinguished between, as the relations among individual stakeholders are interdependent.

The idea to present the above discussion to the Readers of Global Railway Review came to my mind after an investment project significant for two agglomerations in Poland, Warsaw and Łódź, had been completed. It was Stage One of a modernisation project of the railway line connecting these two cities 137km apart from each other. Our proceedings, about which I am going to write further, represent a standard for all investment projects. Therefore, the comments on the work finished in June, which are to follow, should be treated as a case study.

Economic and social processes which took place in Poland after 1989 created a new situation where many inhabitants of Łódź decided to take up work or study in the capital city. Before modernisation the railway line Warsaw-Łódź (strictly speaking two lines, including the Warsaw-Vienna line, the oldest in Poland and over 100km long, and a shorter section from the Koluszki railway junction to Łódź) was in a bad state of repairs. This was the result of a lack of proper investment in the railway infrastructure in the last decade of the twentieth century. It took 135 minutes for a fast train to travel from the centres of Łódź and Warsaw. In the section between Skierniewice and Koluszki, it had been necessary to introduce some speed limits, locally even down to 40km/h. The same phenomena, as in the whole of Europe, can be found in the road transport in Poland: with traffic congestion, the journey time when travelling by car is difficult to predict. This problem could only be resolved effectively if the time of a ride on a train is reduced.

The sectorial operational programme ‘Transport’ (SPOT) for the years 2004-2006 came to our rescue. We seized an opportunity to co-finance the modernisation of the railway line Warsaw–Łódź, and strictly speaking its Stage One, including the section Skierniewice-Łódź, from the European Regional Development Fund and we submitted this project to be implemented as a part of SPOT.

What we undertook was a hard task due logistical problems. It was impossible to suspend railway traffic entirely so the work had to be organised in such a way as to keep one track operational at all times (short-duration traffic suspensions at night excepted). We conducted social consultations in all important towns along the entire modernised section, we presented the general concept of the investment project at many press conferences, and we modified the structure of the project management and cooperation with the contractors. Throughout all stages of preparation for the investment project we reported to the proper ministries and European Commission. To cut it short, we worked together with every stakeholder who could influence the progress of the project to any extent.

The investment plan was put into practice using the ‘project and construction’ system in which one contractor is entrusted with the task of performing both stages of the work, the section being divided into two investment tasks. As a result of tenders, we signed a contract with two consortia who guaranteed that they could provide all the necessary specialists for the work to be carried out.

However, some problems did arise. We had to cancel one of the tenders for the traffic steering system and put the contract out to tender again. Fortunately, it did not adversely affect the lead time of the entire investment project. Some operational problems also emerged, for instance the stoppage of a freight train on the only one working railway track during peak hours, together with having to replace the drivers by the carrier. The investment project met with a strong reaction of public opinion. The modernisation became a standby topic of choice for newspapers in Łódź and Warsaw. Lots of letters and e-mails were arriving at PKP PLK SA’s headquarters. Frequently there were signs of discontentment with the difficulties, but on the whole it was treated with understanding as a necessary sacrifice in order to be able to travel more comfortably in the future. The carrier – PKP Przewozy Regionalne (Regional Transport) – specially instructed conductors how to inform passengers. At railway stations and on trains, there were constantly updated leaflets available updating passengers about the progress of work and its effects in future.

Even a passenger social committee was spontaneously set up which rigorously asked us to account for the progress of the project and any incidents. We did not always accept the legitimacy of each issue raised, but we always approached them seriously.

We actively worked together with media. We informed them, in advance, about subsequent stages of work, we explained the reasons of some difficulties and more serious delays. When we were signing the first contracts with our contractors, we publicly declared the journey time planned after each of the two stages of modernisation were to be completed. The journalists assessed, with admirable determination, how we fulfilled our promises and we did honour them. Currently the journey time is 88 minutes, and when Stage Two is completed this will be reduced to 65 minutes. We have no doubts that in this case the media will not forget our declarations – this is right, they have their undeniable right to do so. Our duty is to keep our word – and this is exactly the ethical element of CSR with respect to such important groups as the society, passengers and mass media.

I would now like to give a further example of our initiative, which is not connected with investment projects, but related to the social responsibility of the administrator of a railway system. Like in many other countries, there is the problem of accidents at level crossings in Poland. We have been running the ‘Safe Crossing’ campaign for four years and our partners represent – besides the Police Chief Headquarters and the National Council for Road Traffic Safety – various all-Poland and regional media, eminent personalities, advertising agencies and social organisations. The campaign has been very well received. We also gained recognition of the circle of public relations, where it was put forward as a model of Corporate Social Responsibility.

We take our duties towards the Polish Government and the European Commission very seriously. PKP PLK SA is the ultimate beneficiary of the assets from the EU’s funds and the State’s budget. Therefore, they are public means and it is our obligation to account, systematically and clearly, for the money spent. We have special textbooks for our staff who work with investments with EU means. All the procedures – from applying for subsidies to final settlements – are scrupulously followed. They all concern each stage of spending amounts. Similarly, we meticulously observe all the regulations related to organising competitive tendering and selecting contractors, complying with the duties related to environmental protection, construction law and other both Polish and EU legal documents. This is how we understand our responsibility towards to the laws in force.

We follow similar principles in the sphere of business. We treat credibility towards our partners as a priority. They include financial institutions, building companies, suppliers of modern technologies (those related to railway traffic control in particular) and suppliers of equipment and materials. We really want the sector of Poland’s and EU’s economies relating to railway engineering to cooperate with us eagerly and develop to the mutual benefit of the railway, producers, contractors, design engineers and other branches connected with the railway engineering.

Administering the railway system is not simply a business where you only have to maintain the system within proper technical conditions and render it available to some carriers. Such understanding of the activity would mean that you do not understand the tasks you have been entrusted with. These are tasks of all-social meaning, which, in the era of progressing interoperability of railway engineering, and taking into consideration the fact that in the near future the railway lines in Poland will be made available, means that this applies to the whole EU.

With this text, I would like you to note that in the area of social responsibility, railway companies and in particular infrastructure administrators, execute their tasks within Corporate Social Responsibility that go beyond those characteristics of most commercial firms – which I do hope – I have successfully managed to prove.

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