Sustainability is key to inclusive development policies. (Credit: zlikovec/Bigstock)
Sustainability is key to inclusive development policies. (Credit: zlikovec/Bigstock) (via: bit.ly)

The practice of sustainability in India is not without challenges. According to the UNGC-Accenture-GCNI Report on Sustainability, each sector has its own sustainability challenges, with sector specific solutions. However, some of the most recurrent obstacles include:

· Complexity of existing regulatory policies, which do not incentivise sustainability;
· Lack of a skilled workforce to meet growing labour demand;
· Lack of an integrated reporting framework with unified and standard definitions;
· Inability to create the business case for sustainability; and
· Challenges in institutionalising sustainability within the DNA of organisations.

The challenges faced by companies in India create hurdles in accelerating sustainability within the workplace, marketplace, as well as the community. The UN Global Compact – Accenture CEO Study from 2013 includes data showing detailed perceptions of CEOs regarding the barriers of implementing an integrated business strategy aimed at sustainability. ‘Difficulty due to operating environment’ is the top concern, with 63 percent of respondents claiming this is the most significant obstacle. Thirty-eight percent said that competition with other strategic business priorities was the second most significant obstruction, and 34 percent of CEOs surveyed claimed difficulties in extending a sustainability strategy throughout the supply chain was also a major barrier in implementing sustainable practices.

Measuring performance to create value

The increasing awareness among various stakeholders on sustainable development is combined with the growing understanding that holistic disclosures and transparency are needed. There is a growing recognition that regular and clear sustainability reporting is in the interest of businesses, as it is powerful tool for decision-making and development of corporate policy and strategy. If a business implements its sustainability report accurately, completely, and in a timely manner, it may be able to increase its productivity and efficiency, which in turn may result in higher economic return and increased value of the firm.

In India, a sustainability reporting initiative was started in 2001, but has had a very slow pace of growth. In December 2007, the Reserve Bank of India drew the attention of banks to their role in Corporate Social Responsibility, Sustainable Development, and other non-financial issues. The Reserve Bank recognised the contribution of financial institutions in sustainable development, particularly the crucial role they can play in financing economic and development activities. By 2009, only a handful of companies registered in India – 25 out of over 7,000 – had voluntarily reported on sustainability strategy, vision, performance, or governance. These reports were mainly from oil & gas, mining, cement, steel, minerals, automotive, pharmaceuticals, and other such ‘industrial’ sectors. To address this issue, the Ministry of Corporate Affairs launched the 2009 Voluntary Guidelines on Corporate Social Responsibility, which was later replaced by the National Voluntary Guidelines on Social, Environmental, and Economic responsibilities of business (NVGs) in 2011.

The 2011 set of guidelines included principles relating to environmental and social sustainability. In the year 2012, the Securities and Exchange Board of India (SEBI) mandated the top 100 BSE/NSE (Bombay Stock Exchange/National Stock Exchange) listed companies by market cap to include a Business Responsibility (BR) Report in their Annual Reports, based on the NVGs. To bring the central public sector enterprises under the gambit of reporting, in April 2010 the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises also launched the comprehensive ‘Guidelines on Corporate Social Responsibility for Central Public Sector Enterprises’, which was later replaced by the ‘Guidelines on Corporate Social Responsibility and Sustainability for Central Public Sector Enterprises’, released in April 2013. These attempts were made to serve the dual purpose of setting internal controls of sustainability within an organisation and meeting the demands of stakeholders through a balanced disclosure on performance. These steps mark a definite shift from voluntary to mandatory sustainability reporting. The Companies Act 2013 further mandated companies with a net worth of Rs. 5 billion or more, a turnover of Rs. 10 billion or more, or net profit of Rs. 50 million or more to spend two percent of their annual profit on CSR activities, and report its progress on the activities in the Annual Report.

Apart from these national regulations and instruments, companies are also expected to report through international instruments such the Communication of Progress (CoP) of UNGC, GRI Reporting and Carbon Disclosure Project (CDP) Reporting. Indian companies have been reporting on sustainability since 2001 by using the GRI Framework, following the CDP, or by completing the UN CoP. These instruments promote the use of sustainability reporting as a way for organisations to become more sustainable, transparent, and contribute to sustainable development. The COP calls upon corporate signatories of UNGC to provide a public disclosure to stakeholders (e.g., investors, consumers, civil society, governments, etc.) on progress made in implementing the ten principles of the UN Global Compact, and in support of broader UN development goals. Reporting mechanisms are indicators of business’ performance in a holistic manner and demonstrates corporate citizenship through disclosure on responsible businesses.

There is enough evidence to suggest that the Indian companies are now paying increased attention to sustainability issues and the large companies have established a clear link between sustainability and risk management. Recently, In the recent times it has also been observed that companies are including sustainability elements as part of internal audits, so that the issues are discussed at the board level.

Key Emerging Trends in Sustainability beyond 2015

A 2015 GCNI study on sustainability titled ‘Sustainability Practices: Perspectives and Insights from Leading Indian and Global Businesses’ present the following sustainability trends that will define a new approach for businesses:

· Sustainability is not just change in the process, but also change in mindset;
· Sustainability is a good model for social value creation;
· Community participation is a key to drive the sustainability agenda;
· Voluntary sustainability policies and codes of conduct ensure greater transparency;
· Product responsibility makes a good business case;
· Leveraging technology and programme innovation for scale and efficiency;
· Extending sustainability to the supply chain is equal to a shared value approach;
· Global Compact’s Ten Universal Principles are driving the sustainability agenda globally;
· State incentives can help businesses escalate their sustainability initiatives;
· Adoption of bottom-up approaches will fast track social license to help facilitate operational advantage;
· Robust internal mechanisms are key to increase operational business efficiency; and
· Sustainability initiatives deepen business brand value and its reputation.

Beyond 2015, sustainability in India will blend the rapid growth of the sustainability agenda with the societal and economic imperatives presented in the Indian context. The companies need to tailor the global best practices to fit the unique diversity presented in India and carve out a complementary path towards achieving inclusive growth through sustainable development. In a departure from the past, businesses now need to increasingly collaborate and partner for scale up and innovation, deploy instruments of policy advocacy for influencing the policy climate around sustainability and its reporting, and develop strategic communication techniques that promote sustainability practices and create a winning proposition for all key stakeholders. All while ensuring that their operations are able to build long term values and also impact global challenges, going forward.

Conclusion

Businesses have a far greater role to play in the post 2015 SDGs, to both demonstrate involvement and leadership towards a greater public good and take tangible steps to ensure that their actions positively impact the concerns of the societies in which they operate. Global Compact’s role is growing in influencing businesses and plays a more meaningful role to uptake its key development agenda. SDGs provide an intra-governmental agreement for businesses and government to work towards more just, equal, and inclusive society that will be pivotal for global peace, safety, and security until 2030.
This approach presents business’ need to play a more meaningful role in post 2015, which assumes critical relevance in an age when governments continue to become more local and businesses march forward, growing more global and transnational.

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Pooran Chandra Pandey

Managing Project Director, DOC Research Institute, IN

Pooran Chandra Pandey is one of India’s leading experts on advocacy, economic and social development work, management and the voluntary sector. From 2011 to 2016, he served as Executive Director for UN Global Compact Network India. Prior to taking up that post, he was Director at the Times Foundation, one of India’s leading corporate foundations working in the areas of health, education, environment, women’s empowerment, and disaster management. From 2004 to 2007, he was CEO at Voluntary Action Network India, the country’s largest association of voluntary organizations, comprising 2,400 members within India. Credited with pioneering the notion of involving civil society, businesses and government through a consensus-building approach for inclusive social dividends, Pooran Chandra Pandey has led the launch of national public service campaigns within India such as Lead India, Teach India and the social impact awards. Specialising both in development and humanitarian assistance, he has also chaired and co-chaired a number of Indian Government task forces and committees developing national policy on the voluntary sector, implementing the UN Handbook, non-governmental charter of good governance, rationalisation of policies for NGOs, and the foreign contribution regulation act. Pooran Chandra Pandey holds a BA and MA from the University of Allahabad, an M.Phil in International Studies from Jawaharlal Nehru University in Delhi, and was also a Chevening Scholar in Leadership and Global Organization at the London School of Economics.