Ramdas in conversation with Mr. Acharya and Ms. Anushka Chandrawat from the CS team at JSW Group
What is the difference between CSR and Corporate Sustainability(CS)?
CSR Corporate Social Responsibility (CSR) is broadly based on the presumption that a business can only thrive if it operates within a thriving society. The business depends on the community within which it operates, and hence has an ethical and moral responsibility towards that community. The Section 135 of The Companies Act 2013(India) lays down mandatory provisions for companies to fulfill their responsibility towards community and environment in which they operate by spending at least 2% of their total profits to make a positive difference in the society through employee engagement, financial support, and volunteerism.
Corporate sustainability, on the other hand, takes this a bit further into every aspect of the business that helps in building a sustainable world. The basic ideology behind corporate sustainability is that a business should operate in such a way that it optimally uses resources to meet its needs today without compromising the needs of the future. Therefore, corporate sustainability focuses on forward-thinking plans to sustain a business and at the same time supports a thriving world.
Whilst CSR is targeted at managing a business the reputation in the eye of the public and the stakeholders, corporate sustainability helps in building business strategy by way of managing the risks and opportunities. Another difference would be the target group. CSR initiatives are for external stakeholders while corporate sustainability initiatives can affect both external as well as internal stakeholders. Like a sustainable business initiative taken by JSW to eliminate plastic usage in its manufacturing units has the potential to positively impact the environment as well as modify the operations thus affecting its employees and vendors.
So if you consider sustainability as an overarching umbrella, CSR would be a part of it.
How important it is to have CS as an organization’s agenda?
Corporate Sustainability is essential to the long-term prosperity of any company. There is an urgent need for integrated corporate sustainability in order to address today’s pressing global issues such as resource scarcity, climate change, and inequality.
The businesses all around the globe are facing challenges at the hands of governments who are failing to provide a stable, secure environment for businesses to operate. Apart from this, the corporates are getting increasingly aware of the fact that their decisions and ways of working are on display thanks to the robust social media which enables news and information to travel around the world within seconds. Hence to address these challenges and safeguard the reputation of the organization, businesses are recognizing that they need to incorporate broader principles of sustainability in their everyday decisions.
Leading companies of the world are integrating sustainability into the organization’s agenda to maximize their opportunities and identify risks in order to minimize their negative impacts on the core operations and create more value for the business and its stakeholders. This is not simply a matter of doing the right thing, it’s smart business.
What are the steps to building a Corporate Sustainability model in the organization?
Some of the steps to build a CS model:
- In order to integrate sustainability into the core strategies and business models of a company the first and the most critical step is the commitment of senior leadership to make substantial progress. Without senior level buy-in, embedding sustainability deeply into the business model will be an uphill battle, if not impossible. Gaining the support of leadership often requires one of the most difficult kinds of change: a change in mindset. In order to effectively prioritize sustainability, a mindset that understands and appreciates the interconnected and interdependent nature of the environment, society and markets is needed.
- Employing business model thinking – Building an understanding of how the business creates value can help identify areas where sustainability can be further embedded in the company. The process of mapping the business model can help develop a deeper understanding of the business’ value proposition, purpose and also engage internal stakeholders. A visual illustration of the business model is often helpful to share both internally and externally.
- Putting materiality to use — A materiality assessment positions a company to align financial and sustainability materiality and incorporate sustainability issues into the core business strategy. By focusing on one or a select few issues, companies can identify how the issues impact the business, dedicate resources to establishing goals and metrics, and fully embed the issue into the business. Once the company has integrated one issue, it can then focus on embedding more issues into the core strategy.
- Applying a sustainability lens to products and services — Developing sustainable products and services can foster the integration of sustainability more deeply into business by engaging numerous departments. By applying a sustainability lens through scorecards, lifecycle analysis, and indices, companies can embed sustainability issues into the company’s operations and also engage customers.
- Tapping into culture — Corporate culture plays an important role in the integration of sustainability and is closely tied to a company’s leadership. While cultures that embrace innovation and collaboration can foster the integration of sustainability, cultures that are risk-averse and change-resistant can also be dramatically shifted or strategically leveraged to further embed sustainability into the core business.
- Leveraging transparency– Integrated reporting is one aspect of transparency that can be used to both drive and reflect a company’s integrated approach to sustainability. The process of creating an integrated report can bring together cross-functional teams, foster greater understanding about how the company creates value and spotlight areas ripe for further integration. Integrated reporting can also help companies communicate the integrated nature of their business model.
These pathways are not the only ways to integrate, nor is leadership the only critical support in the embedding process. The methods and means of embedding sustainability will be different for each company depending on its stage of integration, its culture, the issue being addressed and the external context.
How can one aspire to be a CS professional? Are there any official programs or universities that you would recommend to young students?
Any person who is passionate about driving sustainable change and yearns to make a positive and long-lasting impact in the world can become a corporate sustainability professional guiding organizations to build strategies with sustainability integrated into the core.
There is no specific degree required to be a sustainability professional but having done a course-specific to this field would be an advantage and additional education may assist in career growth. Having completed an initial educational program, aspiring sustainability professionals may either enter the workforce to develop relevant industry knowledge and then focus on getting sustainability-related roles or directly take up entry-level roles in the sustainability field.
Apart from educational qualification, a sustainability professional should have leadership skills and should be an effective communicator as one is likely to engage with different departments, sites, and stakeholders, and present to diverse audiences.
Students aspiring to be sustainability professionals can look at both MBA degree programs and Masters in Sustainability programs. These programs not only cover typical business degree courses like accounting, marketing, economics, and strategic management, but the curriculum also emphasizes systems thinking, ecology, natural resource management, and environmental science and policy.
Some university courses which come to my mind are Masters of Environmental Sustainability from University of Pennsylvania, Master of Science in Environment and Sustainability from University of Michigan, MBA from Center for Sustainable Global Enterprise – Cornell University, MPhil in Engineering for Sustainable Development from University of Cambridge and MBA as well as Master’s program from Columbia University. In India, both IIM Lucknow and XIM, Bhubaneswar provides MBA in sustainability.
For those working in the sustainability field, the International Society of Sustainability Professionals (ISSP) provides professional membership. Additionally, the International Society of Sustainability Professionals (ISSP) offers a certificate program for current and aspiring professionals.
How serious is the industry and government about the cleantech domain?
At least now industries and governments are talking on cleantech and started working on it. For example, see what is happening to solar energy in India. In fact, the steel industry and governments are partnering to come up with solutions for a sustainable future.
Steel, as you know, is the most important metal and is central to every economy’s growth. But due to its energy-intensive production route steel industry is also one of the most polluting industries in terms of greenhouse gas (GHG) emissions. But the steel industry has made significant reductions in greenhouse gas emissions in the past decades by improving energy efficiency and deploying new technologies and practices resulting in benefits to the environment and economies.
In order to uphold the Paris Agreement, governments around the world are introducing policies and sharing the financial burden of research and development for cleaner technologies because to drastically reduce the overall GHG emissions from the production of steel, the development of breakthrough technologies is crucial. Today, a large number of promising projects are ongoing in different parts of the world to incorporate cleantech in the crude steel production route. This could be via the use of green electricity or by changing the complete production route too. Some of these projects are in the early research stage while others are in the pilot or demonstration phase.
Though full-fledged efforts are being made to invent such technologies to cut GHG emissions and make steel production a cleaner process, their implementation at a larger scale, however, will take some time.
What are your views on profitability at the cost of exploitation of natural resources?
No one has the right to exploit. So when you say “exploiting” natural resources, that is fundamentally wrong. Business uses natural resources as raw material to make a product or deliver a service under license conditions that provide greater benefit to society. Say, for example, iron ore is mined out to be used for making steel. But the mining operations to be undertaken under certain conditions to ensure that the ecological balance is maintained and mines rehabilitation happens after all ores are mined out. In the process, jobs are created, steel is made that is used to build the modern society, rapid transport system, building climate-resilient structures, protection of coastal structures, building renewable energy generating structures, etc.
For a business to be sustainable, it is essential that it is profitable. But the profitability of the business to come from the overall business management and lawful usage of natural resources that takes account of its regeneration and availability for the next generation. At no point, the business should solely rely on its profitability( by exploitation). There is no profitability which will last long if it is at the cost of exploitation of the natural resources.