In recent decades, with growing awareness of water and air pollution, and the impetus provided by tragedies like the Bhopal gas leak in 1984, a number of actions have been undertaken including the enactment of legislations like the Air and Water Acts and the Environment Protection Act, and the creation of the nodal Ministry of Environment and Forests to give better definition to India’s approach to sustainable development.
Laws and regulations are, however, no guarantee for protection of the environment, as we see creeping crises emerge in a range of areas, from water stress in rural areas and even major cities like Chennai, to air pollution in the national capital. A key requirement is more effective monitoring and policing of environmental compliance, where stakeholders from the media and the non-profit sector have an important role to play in assisting the government.
Aggravating the situation is the emergence of global environmental issues which present unique challenges. These issues, like global warming, ozone depletion and the loss of biodiversity, call for international cooperation; no one nation can solve these problems on its own, and the collaboration of all countries is required for their resolution.
We are beginning to experience the extremely grave threats posed by global environmental issues like global warming. The increased frequency of natural calamities like the Uttarakhand floods of 2013 which killed many thousands are a harbinger of things to come. As the third largest greenhouse gas emitter in the world, India will need to play a big role in resolving the issue of climate change. Already, under the framework of the Paris Climate Pact, the Indian government has undertaken to reduce the carbon intensity of its GDP by 33-35% over 2005 levels by 2030, and to produce 40% of its energy through renewables by 2030. More will progressively need to be done, as the world and India race to deal with the forecast of the Intergovernmental Panel on Climate Change (IPCC) late last year that global warming is happening now at a much faster pace than was projected earlier.
At a critical time like this, when there are high mutual interdependencies between the major economies of the world, the role of the United Nations also becomes very important. In 2015, its work led to the adoption of the United Nations Sustainable Development Goals or SDGs. The UN SDGs today offer the most comprehensive framework for the pursuit of sustainability, with 17 SDGs traversing issues ranging from poverty alleviation to enhancing gender equality, in turn translating into 169 targets the international community would like to see achieved by 2030.
The combination of domestic laws and regulations and international frameworks and treaties place many responsibilities on the shoulders of the largest contributors to the sustainability challenges we face, namely the corporate sector.
Indian corporates are being tasked to report and make better disclosures on sustainability. A number of Indian companies already use the Global Reporting Initiative (GRI) framework. Market regulator SEBI has also encouraged the adoption of Integrated Reporting. The government has also issued earlier this year new National Guidelines on Responsible Business Conduct, and these are expected to feed into the Business Responsibility Reports that the top 500 listed companies in India are required to file (likely to soon be extended to the top 1,000 companies).
Indian corporates are also beginning to embrace the concept of the “circular economy”, where resources are circulated within the system releasing minimal waste into the biosphere. A number of new enterprises are being created to retrieve what would earlier be considered “waste” and convert both wet and dry waste into usable products. New business models are springing up, in areas like the sharing economy (think Uber or Ola) or productivity enhancement (as offered by Philips when it prices luminosity as a service rather than as a set of light bulb products). Large companies, including some auto makers, are making big investments in design thinking, after undertaking full life-cycle assessments of their products. They are also beginning to value and report on the various forms of capital they manage, including natural capital and social capital.
Corporates see that by responding to the sustainability trends with agility, they can not only remain competitive, mitigate risks, and future proof their businesses, but also be well positioned to seize the business opportunities that get unlocked as a result. Significant market opportunities are being created in India in sectors ranging from solar power equipment to drip irrigation modules to electric vehicles, all a result of the new focus on sustainability.
Corporates are also being responsive to the increase in the numbers of consumers, especially millennials, who are more inclined to buy products or services that align with their own lifestyles and value systems. If businesses are willing to clarify the higher purpose they serve, customers are also willing to reward them with both mind-share and share of wallet.
The net impact of all of these trends – the quest for a circular economy, new protocols to value social and natural and other forms of capital, the thrust on innovation, and the growing consumer affinity for purpose-driven brands – is that in India, the most forward-looking corporates are beginning to place sustainability at the heart of their business strategies.
(The author is Chair, FICCI Environment Committee and Chairman, Q-ECube India ESG Fund)