Why is sustainability becoming an important component of your strategic planning for companies?
Niranjan Khatri, founder, iSambhav: There is enough evidence of ecological collapse and climate change and its consequent impact on several sectors such as fisheries, farming, dwindling water resources, the annihilation of 25 species per day due to rampant deforestation and unfettered consumption of resources. This is happening at the scale of 60 billion tonnes per annum for seven billion people. The key driver for change in adopting sustainable practices is primarily because of regulatory pressure — both national and international — through groups, civil society and, at times, individuals. Forward-looking organisations have adopted strategies that go beyond compliance. This has led to reduced unnoticed wastage or eliminated uses of certain resources, resulting in a cost advantage. More importantly, they are taking a leadership role and endearing the company to its customers, employees and other stakeholders.
M Selvararu, MD of LEAD Consultancy & Engineering Services (India): Sustainable development is defined as “meeting the needs of the present generation without compromising the ability of future generations to meet their needs” (Brundtland et al. 1987, 43). By adjusting this definition to the corporate world, Dyllick and Hockerts (2002) define corporate sustainability as the ability to meet the firm’s needs as well as the needs of direct and indirect stakeholders, both present and future. There are three major dimensions of sustainability — economic, social and environmental. The economic perspective focuses on the value created by the company and on long-term profits as well as the company’s approach to and impact on market functions. The social aspect of sustainability refers to social equality with regards to education and standard way of living, as well as fair business practices toward labour and the communities in which organisations conduct their business. Initially, eco concerns were the main driver, and social and economical aspects were addressed as they were perceived relevant for environmental concerns. However, the three aspects have evolved into equally important dimensions of sustainability. Increasingly, businesses are finding that embracing sustainable practices leads to better corporate culture, more reliable products and greater long term profitability. Growing pressure from different groups has forced business organisations to reconsider existing strategies of securing a competitive advantage through the exploitation of natural resources. Sustainability will become part and parcel of corporate DNA and will not be a choice in the future.
Do you see efficient and higher implementation of sustainable strategies?
NK: There is difference between using the buzzword and strategic green intent, plan and execution. Organisations with mainstream sustainability are disrupting their own systems that obviates the need to follow regulation. In my view, Unfortunately, most industries follow the compliance approach, and as we all know, laws are made for the lowest common denominator. To elaborate this point, if a water footprint calculation is mandated for all sectors with guidelines on how to reduce the its consumption, it will ensure that industry, agriculture and domestic sectors rethink their existing practices that could lead to a reduction in water usage by 50% in the next few years. The collateral benefit will lead to less pressure on our already overstretched ecosystem. This, in turn, can lead to a regenerative economy, as opposed to the current model of an extractive economy. Compliance mentality does not unleash creativity in organisations. Organisations following mainstream efficient sustainable practices will have several advantages — reduced cost and insurance cost, enhanced social goodwill, attracting investors looking for sustainable plans of organisations, and finally, their organisation will be resilient to future legislation.
MS: Only recently has attention been directed towards how sustainability can be integrated into an organisation’s strategy. With increasing awareness, corporates are willing to explore new and advanced technologies for achieving sustainable practices in building operations and also to improve their profitability by way of saving energy and water, coupled with improved productivity of occupants. Despite the fact that companies are adopting the WELL parameters (WELL is a rating system developed with the objective of improving the well-being of building occupants) into building design, currently no buildings in India are WELL certified successfully. This gives a brief idea about the stringency of the rating and innovation required from current practices followed in India. Additionally, companies are also proactively investing in renewable energy, green power, automation, indoor air quality purification systems, etc. Infosys, for example, is actively participating in converting all existing campuses to LEED certified ones. New and advanced building monitoring systems like IoT gives better access and control of systems to FMs. This is another area corporates are exploring to turn sustainable in the long run.
What are the key challenges you face in achieving them?
NK: Lack of education in sustainability at the higher echelons of organisations; plus, the regulatory architecture needs modification and sensitisation of the bureaucracy at multiple levels in order to bridge the gap or tensions between short-term and long-term. The threats have not been internalised by industries, since they are used to short-sighted planning – the next quarter, or at the most, a year’s timeline. Most banks have not internalised what will happen to their investment on account of climate change and how it will affect there NPAs. The banking sector by virtue of its financial strength can influence management behaviour by asking about sustainability plans, when and where loans are being given. In the housing sector, if the bank mandates green practices along with a housing loan, this condition itself can automatically incorporate sustainable structures, it will decode the green building concept currently confined to a niche set of builders. The mainstream MBA and engineering colleges are not inculcating new concepts, vocabulary and strategies of sustainability. It’s vital to educate the generation that will occupy key positions in different sectors. Business as usual norms have to be swept away with speed and mental agility.
MS: There are various challenges at various levels in the industry — investment, commitment to environment at large scale, partial involvement of top management, the project team’s willingness to go the extra mile, planning and budgeting issues, less focus on implementation and more focus given for just rating, no clear government policies to take this to higher level, and also several green rating programmes are not addressing many practical and current issues holistically. Several times, the goals of corporate sustainability and financial teams are not well aligned. As a result, Sustainability teams are brought into project planning too late to influence project design and cannot make an effective case to financial decision makers. Currently, though there is increased awareness about green practices in the market yet the industry knowledge is low among stakeholders. We are discussing the standards of indoor air quality but our outdoor air is, itself, polluted to such an extreme that is limits the scope of purification and the standards to be achieved. For example, PM10, PM2.5, CO2 content in the ambient air is continuously increasing with time and that too multi-fold. This is a real concern in the market place for many industries as they are not able to bring any major change their built space, Delhi and Bengaluru are examples of such a scenario. Secondly, though renewable energy cost has now come down within the budget, advanced technologies in the field as BIPV, organic solar film, flexible solar panels are still not explored or tested in India for large adoption. Lastly, the new rating systems, LEED V4, WELL demands, etc, require high-end technologies and certified green products. These are not readily available in the market, affecting sustainable growth. Also, our market and product suppliers are still getting acquainted with these terms. The market is evolving but at a very slow pace in India now.
The future will see increasingly tighter norms in the domain of environmental law. How are companies gearing up to address these?
NK: Few large industries have a game plan but several are yet to get a handle on the subject. This can be rectified if the government introduces a green procurement policy, since it is the biggest buyer of products and services. Ideally, if the GoI announces schemes like GST, it will bring big and small industries within the ambit of green practices/production. These should be implemented by giving a set timeline for all industries to adopt best practices, coupled with training people to assist organisations.
MS: While the importance of sustainability is acknowledged by corporates and manufacturers, the sooner they act, the better for their business growth in the future. Various product manufacturers and suppliers are now actively participating towards this direction. But they need to get more aggressive in their approach to sustain business growth. Manufacturing is the prime provider of new varieties and qualities of goods. Over time, industries tend to decrease the prices of those goods, making them more accessible. If industries are forced to adopt green measures in the future, it may be difficult to bring immediate changes to meet environment norms. This may affect profitability of corporates and may lead to closusre also due to lack of funds and complexity in adopting greener technologies.