ORGANISATIONAL SUSTAINABILTY THROUGH INCLUSIVE GROWTH

STRUCTURE OF PRESENTAION

EVOLUTION OF CONCEPT PRESENT STATUS FRAMEWORK FOR ACTION CASES

HARD FACTS
AVERAGE LIFE EXPECTANCY OF FORTUNE 500 OR ITS EQUIVALENT FIRMS VARY BETWEEN 40 50 YEARS A FULL ONE-THIRD OF COMPANIES LISTED IN 1970 FORTUNE 500 HAD VANISHED BY 1983 A VERY FEW COMPANIES ARE OLD AND SURVIVING THE STORA COMPANY OF SWEDEN, MANUFACTURER OF PAPER & PULP AND CHEMICALS IS IN EXISTENCE FOR MORE THAN 700 YEARS

HARD FACTS
SUMITOMO GROUP ESTABLISHED IN 1590 IS STILL IN EXISTENCE IN SOME COUNTIRES 40 % OF ALL NEWLY CREATED COMPANIES LAST THAN 10 YEARS A RECENT STUDY BY ELLEN de ROOJI OF THE STRATIX GROUP FOUND THAT FIRMS IN JAPAN AND MOST OF EUROPEAN COUNTRIES HAVE AVERAGE LIFE EXPECTANCY OF 12.5 YEARS

HARD FACTS

IN A PATH BREAKING STUDY CONDUCTED BY SHEEL, 40 BIG CORPORATIONS WERE ONLY IDENTIFIED HAVING LONG LIFE SPAN

FINDINGS OF STUDY
LONGLIVED COMPANIES WERE SENSITIVE TO THEIR ENVIRONMENT LONGLIVED COMPANIES WERE COHESIVE WITH A STRONG SENSE OF IDENTITY LONGLIVED COMPANIES WERE TOLERANT LONGLIVED COMPANIES WERE CONSERVATIVE IN FINANCING THE ABILITY TO RETURN INVESTMENT TO SHAREHOLDERS NOTHING TO DO WITH LONGEVITY

FINDINGS OF STUDY
LONGEVITY SEEMS TO HAVE ANYTHING TO DO WITH ITS MATERIAL ASSETS, ITS PARTICULAR INDUSTRY/PRODUCT LINE OR ITS COUNTRY OF ORIGIN

FINDINGS OF STUDY
ANOTHER STUDY WAS CONDUCTED BY STANFORD PROFESSORS COVERING 700 CEOs OF US COMPANIES TO NAME MOST ADMIRED COMPANIES THEY COMPILED A LIST OF 20 VISIONARY COMPANIES. INCIDENTALLY ,BARRING 2 COMPANIES, HAVE EXISTED FOR 60 YEARS OR LONGER THESE VISIONARY COMPANIES WERE PAIRED WITH THEIR COMPETITORS ( like Ford with General Motors)

FINDINGS OF STUDY

STUDY FOUND THAT THEIR MOST ADMIRED COMPANIES COMBINED SENSITIVITY TO THEIR ENVIRONMENT WITH A STRONG SENSE OF IDENTITY AND ALSO THEIR FINANCIAL PERFORMANCE WAS BETTER THAN COMPETITORS

EVOLUTION OF CONCEPT
FINDINGS OF THE SURVEY AND RESEARCH WERE NOT ANSWERS BUT CHARACTERISTICS OF LONGLIVED ORGANISATIONS SUCH INSIGHTS LEAD TO A FUNDAMENTAL ENQUIRY INTO THE NATURE AND SUCCESS OF COMMERCIAL ORGANISATIONS AND THEIR ROLE IN THE HUMAN COMMUNITY THE ABOVE LED TO A PARADIGM SHIFT AS TO RUNNING OF ORGANISATIONS AND THAT EMERGING AND ALSO DOMINANT CONCEPT IS CALLED CORPORATE / ORGANISATIONAL SUSTAINABILITY

EVOLUTION OF CONCEPT
ORGANISATIONAL SUSTAINABILITY ENCOMPASSES BUSINESS PRACTICES BUILD AROUND SOCIAL AND ENVIRONMENTAL PRACTICES. CORPORATE SUSTAINABILITY IS AN ALTERNATIVE TO THE TRADITIONAL GROWTH AND PROFIT-MAXIMATION MODEL FOUR PILLARS OF ORGANISATIONAL SUSTAINABILITY :
SUSTAINABLE DEVELOPMENT CORPORATE SOCIAL RESPONSIBILITY STAKEHOLDER THOERY ACCOUNTABILITY

EVOLUTION OF CONCEPT
ORGANISATIONAL SUSTAINABILITY IS NOW A MEGA TREND REASONS FOR CATEGORISING IT AS MEGA TREND
OVER THE PAST 10 YEARS , ENVIRONEMNTAL ISSUES HAVE STEADILY ENCROACHED ON BUSINESS CAPACITY TO CREATE VALUE FOR STAKEHOLDERS GLOBALISED WORKFORCE AND SUPPLY CHAINS HAVE CREATED ENVIRONMENTAL PRESSURES AND ATTENDENT BUSINESS LIABILITIES RISE OF NEW WORLD POWERS LIKE INDIA AND CHINA INTENSIFIED COMPETITION FOR NATURAL RESOURCES EXTERNALITIES LIKE CARBON EMISSIONS AND WATER USE ARE FAST BECOMING MATERIAL ESCALATING PUBLIC OPINION AND GOVERNMENTAL CONCERN ABOUT CLIMATE CHANGE, INDUSTRIAL POLLUTION, FOOD SAFETY,AND DEPLETION OF NATURAL RESOURCES

EVOLUTION OF CONCEPT
IN 1970, MILTON FRIEDMAN ; There is one and only corporate responsibility of business to use its resources and engage in activities designed to increase its profits. EX WORLD BANK PRESIDENT , James D. Wolfensohn ; Corporate responsibility is not philanthropy it is a good business CEO of task force of WEF : In todays world good corporate citizenship makes sound business sense

EVOLUTION OF CONCEPT
ATTITUDE OF MILLENNIALS
MILLENNIALS ARE MOST CIVIC-MINDED GENERATION SINCE WORLD WAR II 85% WILL TRUST A COMPANY MORE IF IT IS SOCIALLY/ENVIRONMENTALLY RESPONSIBLE 66 % WIL RECOMMEND PRODCUTS/SERVICES IF THE COMPANY IS SOCIALLY RESPONSIBLE 69 % CONSIDER A COMPANYS SCIAL AND ENVIRONMENTAL COMMITMENT WHEN SHOPPING
( survey done by Cone Inc.- a pioneer in cause branding)

AREAS OF DISCIPLINE
FOUR PILLARS OF ORGANISATIONAL SUSTAINABILITY SUSTAINABLE DEVELOPMENT CORPORATE SOCIAL RESPONSIBILITY STAKEHOLDER THEORY ACCOUNTABILITY

AREAS OF DISCIPLINE
SUSTAINABLE DEVELOPMENT
ITS DEFINITION IS COMPLEX AS IT CHALLENGES US TO HAVE 3 DIFFERENT WORLD VIEWS i.e. i) RATIONALISM ii) NATURALISM AND iii) HUMANISM RATIONALISM IS ABOUT EFFICIENCY NATURALISM PLACES HUMAN ACTIVITIES WITHIN LARGER NATURAL SYSTEMS HUMANISM IS ABOUT OUR NEED FOR MEANING AND PURPOSE

AREAS OF DISCIPLINE
SUSTAINABLE DEVELOPMENT
DEVELOPMENT THAT MEETS THE NEEDS OF THE PRESENT WITHOUT COMPROMISING THE ABILITY OF FUTURE GENAERATIONS TO MEET THEIR OWN NEEDS
( BRUNDTLAND WORLD COMMISSION FOR ENVIRONMENT & DEVELOPMENT)

SUSTAINABILITY REPRESENTS THE POSSIBILITY THAT HUMAN AND OTHER FORMS OF LIFE MAY FLOURISH ON EARTH FOREVER

AREAS OF DISCIPLINE
CORPORATE SOCIAL RESPONSIBILITY (CSR)
CSR IS A BROAD AND DIALECTICAL CONCEPT CSR DEALS WITH THE ROLE OF BUSINESS IN SOCIETY ITS BASIC PREMISE IS THAT CORPORATE MANAGERS HAVE AN ETHICAL OBLIGATION TO CONSIDER AND ADDRESS THE NEEDS OF THE SOCIETY, NOT TO JUST ACT SOLEY IN THE INTEREST OF SHAREHOLDERS OR THEIR OWN SELF INTEREST

AREAS OF DISCIPLINE
STAKEHOLDER THEORY
IT DEFINES STAKEHOLDERS AS ANY GROUP OR INDIVIDUAL WHO CAN AFFECT OR IS AFFECTED BY THE ACHIEVEMENT OF THE ORGANISATIONs OBJECTIVES AND ACTIONS

ITS GOAL IS TO HELP CORPORATES STRENGTHEN REALTIONSHIPS WITH EXTERNAL GROUPS IN ORDER TO DEVELOP A COMPETITIVE ADVANTAGE

AREAS OF DISCIPLINE
CORPORATE ACCOUNTABILITY
IT IS THE LEGAL OR ETHICAL RESPONSIBILITY TO PROVIDE AN ACCOUNT OF THE ACTIONS FOR WHICH ONE IS HELD RESPONSIBLE. IT REFERS TO ONEs DUTY TO EXPLAIN, JUSTIFY, OR REPORT ON HIS OR HER ACTIONS

The Evolution of Corporate Sustainability

STATUS OF CSR
INDIAN CONTEXT CSR IN DIFFERENT FORM HAS LONG HISTORY IN THE COUNTRY BIG INDUSTRIALIST LIKE TATA etc. WERE UNDERTAKING AND SUPPORTING ACTITIVITIES HAVING BEARING ON COMMUNITY AND SOCIETY INVOLVEMENT OF CORPORATE SECTOR IN CSR PICKED UP AFTER 1990 PRESENTLY, MOST OF THE CORPORATES ARE ENGAGED IN SOME KIND OF CSR ACTIVITIES

STATUS OF CSR
INDIAN CONTEXT PRIORITY AREAS COVERED UNDER CSR : EDUCATION, ENVIRONMENT, HEALTH, WOMEN EMPOWERMENT, LIVELIHOOD PROMOTION,SANITAION, MICROFINANCE, HIV/AIDS, CHILD CARE, SLUM IMPROVEMENT, DISASTER MANAGEMENT, AGRICULTURE DEVELOPMENT PSUs UNDER THE GUIDELINES ARE REQUIRED TO INVEST CERTAIN PERCENTAGE OF NET PROFIT FOR CSR ACTIVITIES THERE IS VOLUANTRY GUIDELINES FOR PRIVATE SECTOR

STATUS OF CSR
INDIAN CONTEXT LEADING PRIVATE SECTORS AND MNCs ARE VERY ACTIVE IN UNDERTAKING CSR ACTIVITIES AS A RESULT OF SOCIETAL PRESSURE , MANY COMPANIES ARE REGULARY PUBLISHING SUSTAINABILITY REPORTS CSR IS PART OF CURRICULAM IN B-SCHOOLS MANY PSUs AND PRIVATE CORORATES ARE HAVING CSR POLICY IN PLACE INTEGRATING CSR ACTIVITIES TO BUSINESS OPEARTIONS IS NEEDED FOR GAINING COMPETITIVE ADVANTAGE

STATUS OF CSR
GLOBAL CONTEXT Findings of Global Survey( The Economist Intelligence Unit covering
1254 executives all over the globe in October 2007)

53% of surveyed firms worldwide have a coherent sustainability policy Less than 10% respondents rated their efforts as Outstanding 22% respondents formally report on its environmental, social impact and performance as well as financial performance (i.e. Triple Bottom Line Reporting) Share price climbers put a greater emphasis on social and environmental considerations at board level

STATUS OF CSR
Findings of Global Survey( The Economist Intelligence Unit covering
1254 executives all over the globe in October 2007) Role of Stakeholders in influencing sustainability strategy : Government & Policy makers : 46 % Competitors : 40 % Customers : 36% Regulators : 31% Employees : 22% Shareholders : 22% Media : 20% Business associations : 15% Community leaders : 15% NGOs : 13% Other : 3 % Customers in developing world : 15%

STATUS OF CSR
Findings of Global Survey( The Economist Intelligence Unit covering
1254 executives all over the globe in October 2007) Nature of biggest benefits organisations going to derive : New customer base/retaining existing one : 37% Improved shareholder value : 34% Increased profitability : 31% Identify reputational risks : 29% Better quality products & processes : 28% Attract best quality employees : 26% Improved relations with regulators : 19% Attractiveness to investors : 17% Relationship with NGOs : 12% Reduced exposure to taxes/regulatory load : 10% Ability to be listed on ethical/low carbon indices : 3% No benefit expected : 6%

STATUS OF CSR
Findings of Global Survey( The Economist Intelligence Unit covering
1254 executives all over the globe in October 2007)

Impact on profitability over next 5 years

Increase profit substantially : 7% Increase profitability slightly : 28% No impact on profitability : 31% Reduce profitability slightly : 23% Reduce profitability substantially : 3%

STATUS OF CSR
Findings of Global Survey( The Economist Intelligence Unit covering
1254 executives all over the globe in October 2007)

General observations :
71% respondents view sustainability merely as Public Relation Tool 62% respondents feel that uncertainty over government policy make it difficult to plan strategies for corporate sustainability 57% respondents feel that benefits of investing in sustainability outweigh the costs 59% respondents view that investors will increasing award such companies on the basis of sustainable issues 44% view that companies that can demonstrate sustainability practices will become increasing uncompetitive

FRAMEWORK FOR ACTION

RATIONAL FOR FRAMEWORK
SUSTAINABILTY IS A MEGATREND; ANY COMPANY CAN IGNORE IT AT ITS OWN PERIL CORPORATE SUSTAINABILITY IS SYNONYMOUS WITH CORPORATE SURVIVAL MOST ACTIVITIES ARE HODGEPODGE, ADHOC WITHOUT OVERACHING VISION AND NOT ADDING TO COMPETITIVE ADVANTAGE RESPONSES TO SOCIETAL CHALLENGES ARE REACTIVE MOST OF THE ACTIVITIES ARE NOT INTEGRATED WITH CORE BUSINESS STRATEGY AND OPEARTIONS

FRAMEWORK FOR ACTION

PILLARS OF FRAMEWORK
BUSINESSES AND SOCIETY HAVE TO WORK IN TANDEM WITH EACH OTHER SHIFT FROM FRAGMENTED AND DEFENSIVE POSTURE TO INTEGRATED AND AFFIRMATIVE APPROACH FOCUS MUST MOVE AWAY FROM AN EMPHASIS ON IMAGE TO AN EMPHASIS ON SUBSTANCE INTEGRATION OF SOCIAL CONSIDERATIONS MORE EFFECTIVELY INTO CORE BUSINESS OPERATIONS AND STRATEGY INITIATIVES SHOULD ADD TO COMPETITIVE ADVANTAGES SHARED VALUE FOR COMMUNITY AND COMPANY

FRAMEWORK FOR ACTION

ROAD MAP FOR ACTION
(A) MAPPING SOCIAL OPPORTUNITIES LOOKING INSIDE-OUT : MAPPING THE SOCIAL IMPACT OF VALUE CHAIN LOOKING OUTSIDE IN : SOCIAL INFLUNCES ON COMPETITIVENESS PRIORITISING SOCIAL ISSUES GENERIC SOCIAL ISSUES VALUE CHAIN SOCIAL IMAPCTS SOCIAL DIMENSIONS OF COMPETITIVE CONTEXT

(B)

FRAMEWORK FOR ACTION

ROAD MAP FOR ACTION
(B) PRIORITISING SOCIAL ISSUES GENERIC SOCIAL ISSUES : SOCIAL ISSUES NOT SIGNIFICANTLY AFFECTED BY COMPANYS OPERATIONS NOR AFFECT ITS LONG-TERM COMPETITIVENESS VALUE CHAIN SOCIAL IMPACTS ISSUES THAT SIGNIFICANTLY AFFECTED BY COMPANYS ACTIVITIES IN DUE COURSE OF BUSINESS SOCIAL DIMENSIONS OF COMPETITIVE CONTEXT ISSUES IN EXTERNAL ENVIRONMENT THAT SIGNIFICANTLY AFFECT UNDERLYING DRIVERS OF COMPANYS COMPETITIVENESS

FRAMEWORK FOR ACTION

ROAD MAP FOR ACTION
(C) STRATEGIC FRAMEWORK AFTER IDENTIFYING CORE ELEMENTS, ADOPTING A STARTEGIC FRAMEWORK THAT MAKES SUSTAINABILITY THE CORE OF THE COMPANYS VISION AND VALUES EMBEDDING THOSE VALUES IN EVERY PART OF THE BUSINESS ADJUSTMENTS IN ORGANISATIONS, REPORTING REALTIONSHIPS AND INCENTIVES

Business Matrix
The Business Case Matrix Governance & Engagement Governance & Engagement Stakeholder Engagement Sustainability Factors Environmental Focus Environmental Process Improvement Environmental Products & Services Local Economic Growth Social-economics Development

Community Development

Human Resource Management

Business Success Factors

Revenue Growth & Market Access Cost Saving & Productivity

Access to Capital

Risk Management & License to Operate Human Capital

Brand Value & Reputation

No Evidence of Business Case

Some Evidence of a Business Case

Strong Evidence of a Business Case

CORPORATE SUSTAINABILITY IS ALL ABOUT ENSURING SURVIVAL IN AN INCREASINGLY UNCERTAIN WORLD

CONCLUSIONS & CASES

SUSTAINABILITY IS A PRAGMATIC PURSUIT, NOT AN IDEOLOGICAL EXERCISE SUSTAINABILITY IS ABOUT INCREASING OPPORTUNITIES, NOT LIMITING THEM WE ARE CONVINVED THAT CSR WILL BECOME INCREASINGLY IMPORTANT TO COMPETITIVE SUCCESS MICHAEL .E.PORTER

CONCLUSIONS & CASES

INTERNATIONAL FINANCE CORPORATION (IFC) ON THE BASIS OF ANALYSES OF 200 CASES COVERING 60 COUNTRIES FOUND LINKAGES OF SUSTAINABILITY AGENDA WITH FOLLOWING BUSINESS INDICATORS :

COST SAVINGS INCREASE IN REVENUES RISK REDUCTION REPUTAION BUILDING HUMAN CAPITAL DEVELOPMENT IMPROVED ACCESS TO CAPITAL OPPORTUNITIES FOR COMMUNITY DEVELOPMENT AND ENVIRONMENTAL PRODUCTS

CASES
1. CENTURY TEXTILES & INDUSRIES

A GERMAN BUYER , IN 1994, INSISTED ON COMPLIANCE OF Eco- Tex STANDARD AND THIS INVOLVED CHANGING DYESTUFFS INVITING MARGINAL COST INCREASE
HESISTANTLY, THEY OPTED FO IT AND THIS WITH OTHER QUALITY IMPROVEMENTS ENBALED THEM TO INCREASE PRICES BY 8-10 % AND SALES VOLUES ALSO INCREASED BY 10% IN FIRST YEAR

CASES
2. HINDUSTAN LEVER LIMITED (HLL)
IN EARLY 1970s, ITS DAIRY FACTORY IN ETAH DISTRICT WAS OPERATING AT 50% CAPACITY AND INCURRING LOSS BECAUSE OF INADEQUATE MILK SUPPLY HLL RESPONDED BY INVESTING IN EDUCATION OF FARMERS , DEVELOPMENT OF BASIC INFRASTRUTURE AND FORMATION OF VILLAGE COMMITTEES BEGINNING WITH 6 VILLAGES, NOW THEY ARE COVERING MORE THAN 400 VILLAGES AND THAT LED TO INCREASED MILK SUPPLY AND NOW IT IS ONE OF THE MOST PROFITABLE UNITS

CASES
3. SARSHATALI COAL MINING PROJECT
AS A RESULT OF DISAFFECTION AMONG COMMUNITY CAUSED BY THEIR LOSS OF INCOME, THEIR OPERATION WAS SUFFERING WORKING WITH NGOs, GOVERNMENT AND COMMUNITY PARTNERS, THEY ENTERED INTO A MoU WHICH PROVIDED INCOME OPPORTUNITES TO MEMBERS OF COMMUNITY AND ALSO RESTORED TRUST

CASES
4. NESTLE
IN 1962, NESTLE GOT PERMISSION TO OPEN A DAIRY IN MONGA DISTRICT OF PUNJAB THERE WAS ACUTE POVERTY IN THE DISTRICT; MANY KEPT A SINGLE BUFFALO THAT PRODUCED MILK FOR THEIR OWN CONSUMPTION ; 60% OF CALVES DIED NEW BORN NESTLE DID NOT COME TO MONGA FOR ANY CHARITABLE WORK BUT THEIR VALUE CHAIN DICTATED TO COLLECT MILK FROM DIVERSIFIED BASE OF SMALL FARMERS NESTLE BUILT REFRIGERTED DAIRIES AS COLELCTION POINTS FOR MILK IN SMALL TOWNS; SENT OUT ITS TRUCKS FOR COLELCTION ; MADE AVAILABLE MEDICINES AND NUTIRENTS TO FARMERS

CASES
4. NESTLE
AT THE TIME OF OPENING, 180 LOCAL FARMERS SUPPLIED MILK; TODAY NESTLE BUYS MILK FROM MORE THAN 75000 FARMERS COLECTING IT TWICE FROM 650 VILLAGE DAIRIES ; DEATH RATE OF CALVES HAS DROPPED BY 75 % ; MILK PRODUCTION HAS INCREASED 50 TIMES IN THIS SCENARIO , NESTLE AND COMMUNITY BOTH PROSPERED

CASES
5. ITC
ITC IS A DIVERSIFIED COMPANY AND ITS STRATEGY TO CREATE MULTIPLE DRIVERS OF GROWTH AND ALSO IN AGARBATTI SECTOR IN 2004,ITC STARTED MARKETING AGARBATTI UNDER ITS BRAND NAME MANGALDEEP AND ITS BUSINES MODEL IS TO OUTSOURCE MANUFACTURING TO POOR WOMEN OF BACKWARD REGIONS. ITC INVESTS HEAVILY IN CAPACITY BUILDING OF MEMBERS OF COMMUNITY AND THEIR SKILL DEVELOPMENT AND IN TURN HAS A GOOD MARKET PRESENCE IN TURN THEY HAVE ASSOCIATED MORE THAN 6000 WOMEN FROM BACKWARD REGIONS AND ENHANCED THEIR SUPPLEMENTARY LIVELIHOOD OPTIONS