Tag: Sustainability

Reimagine Sustainability : moving beyond tick-box compliance

The only thing sustainable about the brutal reality of the  normative paradigm of sustainability is the ‘green’ colour of cash sadly rather than the altruism of this -ism. Not all that bad as monetary valuations are usually taken more seriously. The philosophical underpinning of sustainability is about inter-generational transferability as per the 1987 Bruntdland Report. The short-termism of financial markets and financial global capitalism does not render sustainability sustainable.

Sustainability ultimately is about better communities and liveability. Sustainability is triple headed : Ecological, Economic and Social are the three strands of the triple helix.  Sustainability has transformed from its normative origins in to a platform for communicating the corporate brand. Activist investors do ask for the Social Return on Investment on their impact bonds but these folks are a trickle in the avalanche of asset classes that global capital changes hands in. Sustainability Reports are prepared as per the GRI Framework to demonstrate sustainability performance to ecologically aware Gen Y retail investors. It is not for the displaced community in Lanjigarh, Odisha but for the analysts at Citi. The pull is from the masters of the market.

The latest flavour of the season in sustainability and corporate citizenship circles is the circular economy & sharing economy. Good old human sharing values and Cradle to Cradle thinking synced to create the latest cool intellectual fad.

Majority of sustainability related investment by private sector companies is to meet the local environmental, health & safety and social sector legislative requirements of the land. Sometimes, even voluntary best practice is beyond the ambit of the C Suite Level executive as the Randian view of shareholder value capture dominates. Green field industrial projects often require IFC funding or any form of Institutional Lender Support such as JICA or any Exim Bank. These financial institutions need the project proponent to adhere to Equator Principles and IFC Performance Standards throughout the Project Lifecycle to address environmental and social concerns. The decision making prowess for a change is with the environmental and social expert panel at IFC offices at Delhi and DC rather than the CFO. EHSS has to move beyond the tick box due diligence check-list to a move term governance led mechanism. The Finance Teams have to get the nuance of the Economics of Environmentalism for them to be truly invested in the process.

Sustainability can only take root if this ethical paradigm can be understood by the CFO over a casual water-cooler chat. Its time for Sustainability to move beyond green washing and be a profit centre SBU from a cost centre. Locking value from Sustainability Initiatives can take place if triple bottom-line thinking could dominate the thinking in strategic planning of SME’s.

The Holy Grail of the Sustainability Discourse: Linking Financial and Environment & Social Performance tangibly

Sustainability has graduated from being a definition in the 1987 Brundtland Report to being one which is embedded in to mainstream corporate strategy. A ton of business literature has been dedicated to the ‘cause’ and some companies have truly derived value from being sustainable apart from the green washing aspect, which we all know is the principal driver in most cases. Sustainability has transitioned from a being a rhetorical vantage point to an implementable procedure which could extract some impact on the bottom-line.  Resource savings to better motivated employees, every possible trick in the book has been utilized to promote sustainability. Most of it has been driven from a piecemeal perspective.

Sustainability has grown in currency as often a safety related death, an oil spill or an industrial accident is terrible for the reputational capital of the firm, which is in turn bad for the face value of the stock if it is a publically listed company.  BP collapsed from an industry giant to a takeover target post the deep water horizon disaster. The Indian Multinational Group Mahindra & Mahindra, uses Sustainability as a governing ethos of the enterprise. It is the Harvard read Anand Mahindra’s leadership and foresight to utilize Sustainability as a compass to drive inclusive growth.  In developing nations such as India, sustainability often is a business pre-requisite as an unhappy community of stakeholders will douse the flames of any tentative project flaring up into a profitable venture. POSCO and Singur are a case in point where social inclusion which is critical component of a 360 degree sustainability strategy faltered terribly.

Social Satisfaction, Safety, Happy Employees are issues which are intangible positives which cannot be translated in to the financial bottomline. The triple bottomline is popular, but the only bottomline which matters is the ROI for the share holder.  The era of Sustainability is passé, Corporate Resilience is better paradigm in a discontinuous and networked world.  New indicators will have to be devised for that Environmental & Social Performance is better communicated to shareholders. Resource Extractive Industries are on the frontline of the Sustainability Battle.  Globalization in an uncertain world demands better parameters to generate insights. This is the Holy Grail. Someone needs to unlock it?

May be a PhD topic if a University funds me 🙂