Ethical Corporation is now Reuters Events - LEARN MORE
Mahindra, Aditya Birla and Godrej are among the big Indian companies that have set out ambitious sustainability goals as part of their CSR strategies
India’s contradictions extend to corporate social responsibility, which has traditionally been focused on philanthropy. It is the first country in the world to enshrine corporate giving into law, passing legislation in April 2014 requiring businesses with annual revenues of more than 10bn rupees (£105m) to give away 2% of their net profit to a suite of good causes, and report publicly on how the money’s being used.
However, leading Indian corporates such as Mahindra, Aditya Birla, Godrej, and Infosys are going in a different direction, setting out some ambitious sustainability goals in a decisive shift away from philanthropy.
Some see the new Companies Law as potentially counter-productive, diverting attention, and resources, from the task of transforming their own business. “It’s a complete distraction,” says Anirban Ghosh, chief sustainability officer at Mahindra. Tony Henshaw, CSO at the Aditya Birla Group (ABG) agrees. “It would help if we could use the funds to improve our own performance, especially in those areas where paybacks are limited – such as investing in renewables or rainwater harvesting.”
All business leaders agree, however, that their future prosperity depends on taking a more sustainable path. As Henshaw puts it: “For businesses to survive, they must be capable of operating within the tightening legal and physical constraints of a sustainable world.”
Aditya Birla Group is working with the UK NGO Forum for the Future to identify key external factors that might impact on the health of the various group companies, helping them anticipate risks that will increasingly hit home a few years down the line. “How, for example, would the global apparel business cope with a collapse in cotton supplies due to prolonged drought, or will petroleum by-products be available if electric vehicles curtail the demand for gasoline and diesel?”
Like other huge Indian conglomerates, the $41bn ABG spans a vast range of activities, from pulp and paper to electronics, mining to retail, IT to financial services – which doesn’t make Henshaw’s job a straightforward one. Building sustainable businesses is a slow process, he says. “The first step is to help all the businesses focus on improving their operations to international standards rather than concentrating on simple compliance with local laws. Then we try to move to best practice, what we call responsible stewardship, in everything from energy to waste to water to air pollution to noise to human rights management – all the things that multinational multi-billion dollar businesses will need to promote.”
ABG is setting up a sustainable management system and encouraging managers to take responsibility for authentically assessing their own progress. “It's actually more motivating, and more educational, if we say: here are the standards to achieve and the questions you need to ask your team; you know your business, so please identify the gaps and make a plan to improve where needed.”
The approach has resulted in some quick wins, including a 30% reduction in energy consumption by the retail business in the last 18 months alone.
Ghosh of the Mahindra Group, sums up the company’s strategy as “building an enduring business by rejuvenating the environment and enabling communities to rise.” In practice, he says, that means looking for revenue opportunities from tackling climate change, while cutting pollution and the costs associated with cleaning it up and mitigating climate-related risks across the business, including in its supply chain. It’s experimenting with electric cars, in the form of the e2o saloon, and is drawing encouragement from the government’s target of 6-7 million electric vehicles on the road by 2020.
With its origins in steel trading and tractor manufacturing, Mahindra has followed the customary Indian conglomerate route of expanding into a massively diverse range of sectors, from aerospace and defence to construction, finance, IT and insurance. Last year, it became the first Indian company to set an internal carbon price. At $10 per tonne, says Ghosh, this will drive annual investment of up to 300 million rupees (US$4.5m) in energy-efficient technologies such as LED lighting. Last year Mahindra became the first Indian company to become part of EP100, the Climate Group initiative that asks members to commit to doubling their energy productivity.
Energy efficiency is a major focus for Infosys, too, which has cut per capita consumption by 50% compared to 2008.
This is one article in our in-depth India briefing. See also: India turns its face to the sun, Infosys's passively cooled campus sparks green building frenzy, and Circling back to India's make do and mend culture to cut emissions
CSR India renewable energy sustainability