The term ‘sustainability’ has become an oft-repeated term nowadays. We also see much information, news, and trends across print and online media platforms about it. Over time, sustainability has evolved as a new approach to doing business. While the environment and society have always been one of the focus areas of business houses, the objective then was ‘something good to do’. This term has also matured over the past four to five decades from philanthropy, corporate responsibility, corporate accountability, sustainability, ESG (Environment, Social, Governance), etc. Fundamentally, in every stage, Corporates or business houses have increased their responsibility drastically towards the environment, climate change, and society.
In the recent decade, the non-financial performance of businesses is gaining almost similar importance as their financial performance. Investors seek to invest in more responsible businesses rather than only in the most profitable businesses. These expectations have brought the sustainability agenda into an organisation’s boardroom. We now see CXOs spending much time on the subject, initiatives, and their impact.
While multiple global frameworks provide opportunities for Corporates to pick and choose the most relevant, most significant, and most adaptable framework for their operations for reporting their financial and non-financial performance, it is also important to stitch together the contributions toward common global goals. This is achieved by United Nations Sustainable Development Goals (UN-SDGs).
The sustainability journey of a corporate begins with the identification of material issues for the company, i.e., answering basic questions such as ‘what matters for us?’ Materiality assessment represents an organisation’s most significant impact on the economy, environment, and people or society. Answers to the questions are evaluated, analysed, and prioritised at the highest level. To meet the mitigation plans for the above impacts, a corporate derives sustainability goals, initiates multiple initiatives and programmes and implements them year-round. To provide a structured approach and reporting mechanism, we also have many globally accepted frameworks which can be adopted by the organisation for understanding and reporting the organisation’s performance towards sustainable development. Some of the most used frameworks include Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Integrated Reporting (IR), Science-Based Targets, Net Zero, Circularity, etc.
While multiple global frameworks provide opportunities for Corporates to pick and choose the most relevant, most significant, and most adaptable framework for their operations for reporting their financial and non-financial performance, it is also important to stitch together the contributions toward common global goals. This is achieved by United Nations Sustainable Development Goals (UN-SDGs).
There are 17 identified and focused Sustainable Development Goals that are shared by corporate houses, and multiple initiatives are implemented to contribute to them. These SDGs are No Poverty; Zero Hunger; Good Health and Well-Being; Quality Education; Gender Equality; Clean Water and Sanitation; Affordable and Clean Energy; Decent Work and Economic Growth; Industry, Innovation and Infrastructure; Reduced Inequalities, Sustainable Cities and Communities; Responsible Consumption and Production; Climate Action; Life Below Water; Life on Land; Peace, Justice, and Strong Institutions; Partnerships for the Goals.
To strengthen contributions towards SDGs, we also have laws and regulations on Corporate Social Responsibility (CSR) in India. India became the first country to bring government regulations on corporate expenditures that help a company be socially accountable to itself, its stakeholders, and society.
While the trends in the regulatory amendments in the past three to five years show increased accountability towards Corporates, it also provides an opportunity for them to create long-term, sustainable programmes and reporting standards which attract investors’ and stakeholders’ attention and ultimately help businesses grow. Analysing some of the reports and information, we see that Corporates are adopting sustainability focus areas basis their areas of expertise and experience, giving them the best opportunity to leverage their strengths for solving environmental and societal issues.
The Companies Act 2013 provides comprehensive guidelines, do’s and don’ts for eligible Corporates on their CSR endeavours. It provides an opportunity to steer the spending of funds in areas of national priority, identified and amended regularly as part of Scheduled VII Focus Areas. These focus areas cover a wide spectrum of issues such as health, poverty, education, gender equality, sports, culture, technology incubation, rural development, disaster relief, etc. Some of the other significant aspects of the laws and regulations include the formation of the Company’s CSR Policy, creating a CXO/Board-level Committee, providing guidelines on minimum funds to be spent, monitoring and reporting the financials and impacts of the CSR programmes, etc. While the trends in the regulatory amendments in the past three to five years show increased accountability towards Corporates, it also provides an opportunity for them to create long-term, sustainable programmes and reporting standards which attract investors’ and stakeholders’ attention and ultimately help businesses grow.
Analysing some of the reports and information, we see that Corporates are adopting sustainability focus areas basis their areas of expertise and experience, giving them the best opportunity to leverage their strengths for solving environmental and societal issues. Some of the most adopted sustainability trends under the environment domain include energy efficiency, energy conservation, emission reduction, environmental compliances, water conservation, water recycling, waste reduction, and recycling methods, etc. Adopting newer technologies, renewable energy mix, and reducing fossil fuel-based energy utilisation are the most prevalent trends.
Further, as part of the social domain, education is the most common focus area where multiple initiatives such as digitisation of classrooms and educational content, promotion of STEM education, mobile science labs, tinkering and robotics labs, computer science and coding training, etc., are implemented. Women’s empowerment is another focus area under which scholarships are provided for meritorious girls from low-income families for school education, graduation, and post-graduation education purposes. Corporations also provide training and skill development in many areas to enable women to generate or seek employment or start their businesses. They also take up holistic rural development projects addressing long-standing issues of rural India, such as education, health, agricultural yield, water conservation/harvesting, and livelihood initiatives.
Corporates are introducing innovative ways of implementing sustainability projects like creating collaborations with like-minded organisations, leveraging their expertise and experience, and designing a comprehensive programme by addressing the problem statements wherein an industrial approach of high efficiency is brought in the social projects, identifying exact problem statements by doing deep research, adoption of technologies in implementation, e.g. digital, remote engagement, etc., real stakeholder consultation on the ground, creating innovative and out-of-the-box projects, and bringing an overall fresh approach in initiatives and projects which eventually become self-sustainable and scalable, creating multifold and systemic impacts.
In an age of quick turnarounds in global sustainability trends, investor and stakeholder expectations, regulations, voluntary mechanisms, and national commitments, Corporates also encounter challenges in implementing their sustainability strategies and plans. To mention a few, the recent regulations in the CSR domain bring in increased compliances that require strict adherence, improvement in reporting standards from project implementation partners, e.g., working on social return on investment (SRoI), impact matrix, outputs vs outcomes, etc., need and lack of experienced and expert resources at the Corporates and NGOs with knowledge on global trends, meeting management expectations at Corporates vis-à-vis low-success rate in social projects, and ensuring project sustainability post-withdrawal of Corporates from the social projects.
To meet these challenges, Corporates are introducing innovative ways of implementing sustainability projects like creating collaborations with like-minded organisations, leveraging their expertise and experience, and designing a comprehensive programme by addressing the problem statements wherein an industrial approach of high efficiency is brought in the social projects, identifying exact problem statements by doing deep research, adoption of technologies in implementation, e.g. digital, remote engagement, etc., real stakeholder consultation on the ground, creating innovative and out-of-the-box projects, and bringing an overall fresh approach in initiatives and projects which eventually become self-sustainable and scalable, creating multifold and systemic impacts.