With the Millennium Development Goals (MDGs) having expired at the end of 2015, the consultation process among countries regarding the post-2015 development agenda, is finally shaping up. While the MDGs marked a turning point in history, as the first ever global agreement to address pressing developmental issues, mobilising governments and business leaders to invest billions of dollars promoting cross-sectoral collaboration. MDGs have been scrutinised over the years for not being drafted in an inclusive and participatory manner, as only a few key civil servants and development experts were involved in the process of drafting them (Honniball and Spijkers, 2014, pp. 251–256.). The process of drafting the SDGs, however, represented a new era of global participation in setting the development agenda, with multiple stakeholders, from civil society as well as the private sector, included in the process. The first draft of the SDGs, produced by an Open Working Group (OWG) of the United Nations, consists of 17 goals and 169 targets (United nations, 2014). The process of drafting the SDGs also provided a unique opportunity for stakeholders to influence the emerging development agenda. In a reaction to the Open Working Group’s ‘Focus Areas Document’, the organisation Beyond2015 wrote: “The opportunity to rethink and redefine our global development pathway comes once in a generation. This is our opportunity and we must seize it”. The post-2015 sustainable development agenda calls for action from businesses, and there is a need for corporations to take a proactive role in promoting sustainable development in tandem with their influence and sphere of operations.
Sustainability a pathway to value creation
In recent decades, organisations increasingly find that their profit and loss statements are influenced by parameters that do not feature on the balance sheet. In order to be sustainable, businesses the world over have realised the need to recognise and effectively address the complex relationship of good corporate performance, social development, and environmental protection. This paradigm shift in the global business environment has led to the Indian government promoting inclusive sustainable growth as a policy among the corporations in India. Responding to trends, the capital market also shows signs of the shift towards sustainability with investor’s increasing inclination to invest in responsible industries.
This shift has been witnessed through policy making mechanisms, with changes and amendments being made in legal documents that reinforce the policy and legal basis of sustainable development. In India, the pillars of sustainable development are embedded in the fundamental rights guaranteed by the Constitution, which lays down the framework for social justice, inclusion, and equity. India was one of the first few countries to enact a comprehensive Biological Diversity Act in 2002 to give effect to the provisions of the 1992 Convention on Biological Diversity. The National Environment Policy, adopted in 2006, has attempted to mainstream environmental concerns in all developmental activities. The Government of India, through its various policies, has been factoring ecological concerns into the development process, so that economic developments can be achieved without environment degradation.
Corporate India has responded well to the call of the times and some leading businesses have started initiating measures designed towards sustainable development. The UNGC – Accenture – GCNI report on sustainability, with over 33 CEOs from public and private sector companies and subsidiaries of multinational corporations (MNCs) in India, highlights that Indian companies have evolved from a philanthropic approach, and their priorities now reflect the lens of proximity, focusing on immediate concerns. Indian companies are increasingly taking into account the triple bottom line impact of their businesses while taking decisions and shifting away from operations aimed entirely on profit motive, and are striving to integrate social and environmental issues into business decisions, for achieving long term sustainability.
The UNGC, Accenture, and GCNI report highlights some of the unique and emerging themes that have enabled Indian companies to integrate sustainability for addressing global challenges and turn businesses as a force for good. These include:
- Realism & context:
Understanding and appreciation of the scale of global sustainability challenges and the opportunities they present.
- Growth & differentiation:
Sustainability as an opportunity to stand out to consumers and customers; to access new market segments with new products and services; and to grow into new markets.
- Value & performance:
Measurement, monitoring, and management of sustainability metrics; quantification of business value; and tracking of impact on sustainability outcomes.
- Technology & innovation:
Investing in technology and business model transformation leading solutions to sustainability challenges; generating competitive advantage through new technologies and innovation.
- Partnerships & collaboration:
Partnerships within and across industries and sectors to find new solutions for sustainability.
- Engagement & dialogue:
Listening to and understanding the needs and wants of all stakeholders; establishing constructive two-way dialogues to negotiate the role of business in sustainability.
- Advocacy & leadership:
Leadership in developing new systems and shaping the business contribution to global challenges; willingness to advocate for policy and market incentives that change the game.
Due to increased scrutiny on companies’ stewardship of environment, sustainability, and sustainable practices have become a key component of a company’s business strategy. Companies are accommodating to constraints on natural resources by developing innovative new products, services, and business models, thus bolstering their growth, profitability, and adding to societal values. From pollution control in operations, to innovating around green technologies, companies are taking proactive steps to reduce harmful impacts on the environment and society at large.
The change in consumer preferences towards green products, which saves on water usage, lessens GHG emissions, etc. has also pushed companies to develop green products using environmentally friendly technologies for gaining greater competitive advantage. Everyone involved in the lifespan of the product, is pressured to take up responsibility to reduce its environmental, health, and safety impacts. The companies have thus begun to integrate sustainability into their entire product cycle, to ensure that it meets the increased demand for sustainable products.
Moving beyond the factory gates and supply chain, sustainability for Indian companies resonates with their commitment towards community development and inclusion. According to a recent study, CEOs of top companies in India suggest that communities will have the greatest impact on the way in which companies manage their societal expectations. About 63 percent of the respondents to in the study believe that in the next few years communities will have the greatest impact on the way businesses manage societal expectations, as opposed to the 28 percent of CEOs globally.
Strategic integration of sustainability has thus become important, enabling companies to achieve better growth and cost savings, improve their brand and reputation, strengthen stakeholder relations, and boost their bottom line. It is through this integration that companies are aiming at sustainable value creation, which is essentially a business strategy recognising the opportunity of addressing societal issues and creating a competitive advantage that result in profits as well as a positive outcome for the community. According to a report by Accenture on value creation, “Sustainable Value Creation is, in many ways, an extension of the same capabilities at which leading businesses already excel: understanding consumer needs, investing in innovation, mobilising around change, creating markets, and managing a complex ecosystem of stakeholders”. Globally, the business landscape is constantly changing and companies are adapting their business models accordingly, so as to ensure that a company’s operations complement the triple-bottom line; People, planet, and profit that creates long term value for all stakeholders. Being referred to as ‘Value Based Businesses’, such businesses have placed profit alongside people and planet.
More and more businesses are assuming a more transformative role, to ensure a ‘win-win’ situation for all. The businesses are opening up to learn, innovate, and collaborate with key stakeholders including governments, civil society organisations, and the community. They feel that governments can ‘soft peddle’ situations where sustainability practices and initiatives need to be scaled up several notches from the current levels. Business leaders are unanimous in their view that governments at the regional and national levels can play a more decisive role in allowing them to grow faster and innovate on a bigger scale, by providing enabling policy support, a stable tax regime, and by incentivising good business practices with tax breaks and soft loans. This would also allow businesses to scale their initiatives and play a more vital role in growth and development of economies where they operate, yielding positive outcomes in the creation of capital, job opportunities, and development of infrastructure for more inclusive, sustainable, and justice driven societies. This also helps businesses build a sound ground on which they can operate, with economies of scale, and move the existing ‘business as usual’ model into a more ‘transformative business blueprint’ (GCNI, 2015).
Honniball, A. & O., Spijkers, O. (2014). MDGs and SDGs: Lessons Learnt from Global Public Participation in the Drafting of the UN Development Goals. VEREINTE NATIONEN – German Review on the United Nations, 62 (6), pp. 251–256.
UN Global Compact Network India. (2015). Sustainability Practices: Perspective and Insights from Leading Indian and Global Businesses.