Published on March 3, 2014
SUSTAINABILITY - THE ONLY WAY FORWARD Presentation By CA. Anil Sharma
Facets of governance • Fulfilling responsibilities (what) • Performance (how)
Facets of governance –What? • Economic returns, • Legal and regulatory compliance, • Business continuity, And • Protection of interest of all the stakeholders.
Facets of governance –How? • • • • • • Vision, Innovations and initiatives, Business policies and procedures, Business ethics and fairness, Transparency and disclosures, Accountability And • Maintaining balance between economic and social goals.
Sustainability defined “ The natural resources are not inexhaustible and the development process should be aimed to meet the needs of the present generation without compromising the ability of future generation to meet their own needs.” Report 1987. Brundtland Commission of UN
Sustainability defined “Economic development, social development and environmental protections are interdependent and mutually reinforcing pillars of sustainable development.” UN World Summit, 2005
Key Current Sustainability Issues • • • • • • Climate change Water availability/quality Sustainable consumption Consumer preferences Human rights Worker’s rights “Sustainability is not simply about green economy, it is about the whole economy.”
Goals of Sustainability Triple Bottom Line Approach – People – Planet – Profit
TBL Approach- People Fair and beneficial business practices towards: labour community Region HUMAN CAPITAL
TBL Approach- Planet • Sustainable environmental policies – Reduction of ecological footprint – Conducting life cycle assessment – No ecologically destructive practices • NATURAL CAPITAL
TBL Approach-Profit Economic value created by the organisation after deducting the cost of all inputs including the cost of the capital tied up. Real economic impact the organisation has on its economic environment. ECONOMIC CAPITAL
Entrepreneur vs. Social entrepreneur ENTERPRENEUR: • Engine of growth • Harnessing opportunities • Innovation to fuel economic SOCIAL ENTERPRENEUR: • tapping inspiration and creativity • Courage and fortitude • Seize opportunities that challenge and forever change established but fundamentally inequitable systems.
Social entrepreneurs • • • • • Maria Montessori. Muhammad Yunus – Grameen Bank. Green Hotel by ITC. E-Chopal by ITC. Waste management to power generation by A to Z Maintenance Co. • Azure Power project at Awan in Amritsar.
Standards for sustainability • ‘Good things to do’ vs. ‘Things to do’. • Regulatory mechanism provided minimum benchmark. • Corporate Social Responsibility or Corporate Social Requirement. • CSR as mission rather than as a challenge.
Emerging Corporate Leaders Driving Sustainability • A Survey conducted by Globe Scan and SustainAbility in March 2009 on 1600 experts. • A credible public commitment to sustainability grounded in the company’s core values is cited as a key factor behind experts’ choice.
Conclusions of the Survey 1. Sustainability strategies appear to be driving the necessary change. 2. Companies that integrate sustainability as a core value are also expected to follow through with more sustainable products and services.
New sustainability era on the horizon • Businesses will have to grapple with a new concept of value that – moves beyond a focus purely on profit, – incorporates non-financial metrics, putting a new onus on the ability to measure and communicate progress. • Businesses will need to – measure both positive and negative impacts of business on society, – track and manage sustainability’s impact on core business drivers and metrics and – embed sustainability in individual performance frameworks for managers across their organizations.
Sustainability- important for future success • Survey conducted by Accenture in 2010. • 766 UN Global Compact member CEOs plus more than 50 civil society leaders were interviewed. • Core issue was whether rising global competition, technological change and the most serious economic downturn in nearly a century has any impact on commitment to the principles of sustainability.
Findings of the Survey •93% CEOs see sustainability as important to their company’s future success. •72% of CEOs see education as the global development issue most critical to address for the future success of their business. Climate change is second with 66%. •91% of CEOs report that their companies will employ new technologies to address sustainability issues over the next five years. •58% of CEOs identify consumers as the most important stakeholder group that will impact the wy they manage societal expectation,
Findings of the Survey Broader set of issues are starting to appear on the corporate radar as of increasing concern: - Resources scarcity (water in particular). -Health - partnerships and collaboration are a critical element to sustainability issues, multistakeholder partnerships to address development goals.
Financing by Financial Institutions The Equator Principles: A financial industry benchmark for determining, assessing and managing social and environmental risk in project financing. The Equator Principles Financial Institutions (EPFI) have adopted these principles in order to ensure that the projects finance are developed in manner that is socially responsible and reflect sound environmental management practices.
The Equator Principles EPFIs will only provide loans to projects that conform to the following principles: 1.Review and Categorization 2.Social and Environmental Assessment 3.Applicable Social and Environmental Standards 4.Action plan and Management System 5.Consultation and Disclosure 6.Grievance Mechanism 7.Independent Review 8.Covenants 9.EPFI Reporting
Performance Standards of IFC •PSs define clients’ roles and responsibilities for managing their projects and the requirements for receiving and retaining IFC support: – – – – – – PS1- Social and Environment Assessment PS2- Labour and working conditions PS3- Pollution Prevention and Abatement PS4- Community Health, Safety and Security PS5- Land Acquisition and involuntary Resettlement PS6- Biodiversity Conservation and Sustainable Natural Management – PS7- Indigenous People – PS8- Cultural Heritage Resource
Green Consumer Behaviour • National Geographic’s 2009 GREENDEX Survey to monitor consumer behaviour that have an impact on the environment. • Consumers in 17 countries surveyed in 65 areas including: – Housing – Transportation – Food – Household goods
Findings of National Geographic’s 2009 GREENDEX Survey 1. Consumers recognise the connection between their actions and environment. 2. Increase in green consumer behaviour worldwide. 3. Consumers in India and Brazil top the Index.
Sustainability – an opportunity rather than a challenge • Finding of Survey “ The Sustainability Survey Poll on Climate Change” – Tremendous growth opportunities in the areas of renewable energy and low carbon products and services. – Ideal opportunity for businesses to carve out new sources of competitive advantage and market leadership.
Sustainable Growth Strategy AIM: to achieve top-line growth and bottom line results MEANS: • Durable corporate venture strategy, • Improving processes, • Continuous improvement culture and • Radical innovations.
Case Study- Tata Power • Sustainability Commitment: – Displacement, rehabilitation and sustainable development. • Project: – Community Engagement Strategy Development. • Approach: – Research and analysis on current regulatory environment around land acquisition and settlement in India, civil society positioning and global corporate best practices – Consultation with managers and key civil society stakeholders. • Results: – Development of actionable steps and guidance structures. – Decision to apply community engagement practices across all sites.
Case Study- DU PONT • Sustainability Commitment: – Commitment to achieve sustainable growth and top the ’Green companies” list. • Project: – Stakeholder engagement- testing the waters. • Approach: – Understanding current priorities of the company – Role of stakeholders in informing business decision making – To decide priority of chemicals, agriculture, biotechnology and nanotechnology. – Steps to be taken to embed stakeholders engagement in the business • Results: – Confirmation that market is already moving against hazardous chemicals – Opportunities in areas other than chemical with radically lower environmental footprints.
Case Study- HUL • Sustainability Commitment: – Meeting everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. • Project: – Identify and better understanding of expectations of stakeholders – Identify issues that are material to stakeholders – Benchmark its strategy. • Approach: – Desk research on issued for FMCG sector – Engagement of Internal management and external thought leaders. – Reporting strategy • Results: – Identified five key platforms: Health and nutrition, Empowerment of marginalised community through vocational education, Water conservation and reducing greenhouse gas emissions.
Sustainability- the only way forward Companies like any living organism, must become learning organisations that change and adopt to suit their changing environment. “If you don’t practice the change management that looks after the future, the future will not look after you.” Bill Gates
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