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India’s third liberation

India hopes to build an economy that benefits the poor while protecting the environment, reflecting an important shift in the business landscape, writes John Elkington. Can China join them in an “axis of business sustainability”?
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On August 16, the day after India celebrated the sixtieth anniversary of its Independence, I found myself standing alongside Niraj Bajaj as we watched the figures on the electronic displays at Mumbai-based National Stock Exchange go from bad to worse—and playfully calculate how much poorer he was as the head of one of India’s largest business houses as the global market correction roared through. Later the same day, on the other side of town, he chaired a session hosted by the Indian Merchants’ Chamber—of which he is president—at which I gave the keynote speech. My simple message was not entirely comfortable: India faces a far bigger market convulsion before the country reaches its centenary.

In his introduction, Bajaj noted that the Triple Bottom Line (TBL) concept, which I launched in 1994, now offers a means of helping “India, Inc.” to come up with answers to the challenges that prime minister Manmohan Singh had raised in his Independence Day speech. Before explaining how the TBL approach can help, however, I stressed that the world’s second most populous country has now embarked on its third great liberation process since the end of the Second World War. And the third is likely to be greater than either the first and second taken together.

The first was the process of achieving liberation from British rule, finally achieved at horrendous cost in 1947 as the Partition process literally tore the country apart, the seismic aftershocks of which will probably still be shaping our world in 2047.

The second liberation saw the iron grip of the state gradually prized away from the levers of economic power, as India struggled to catch up with the processes of liberalisation, privatisation and globalisation from 1991. Again, the shockwaves are still working their way through the country’s economy, but among the beneficiaries of the new order have been some of the leading business people I met during my week in Agra, Delhi and Mumbai.

And the third liberation? Well, if the first broke the stranglehold of the British and the second that of the state, the third will have to simultaneously achieve a “triple-whammy”—breaking the stranglehold of poverty by bringing the benefits of a modern economy to the more than 250 million of India’s billion people trapped below the poverty line, while protecting the country’s natural environment. 

Changing landscapes

Apart from the pollution and natural resource degradation that are such a striking feature of today’s India, there is also now the growing threat of climate change. This was underscored by the prime minister’s speech, in which he argued that economic, social, political and educational forms of empowerment are crucial to the nation’s future—alongside effective efforts to tackle the growing range of environmental issues, notably global warming.

Like China, however, Indian leaders have often argued that global warming is not India’s problem, given that it “only” contributes a few percentage points of global greenhouse-gas emissions. Indeed, I heard a senior retired environmental official make exactly that point in Agra earlier in the week, at a business leaders programme organised by the Confederation of Indian Industry (CII).

There I found the mood among the business leaders taking part was distinctly more engaged than it would have been a few short years back, which is just as well, since the country’s “second liberation” means that a growing share of the responsibility for tackling India’s sustainability (or rather unsustainability) issues will devolve to business. And one key factor in that changing mood has been the work of the CII-ITC Centre of Excellence on Sustainable Development.

ITC, which originally stood for the Imperial Tobacco Company, is a company that splits me down the middle. On the one hand, it is like an Indian version of the tobacco company Phillip Morris, though the proportion of its revenues derived from the sale of tobacco products has fallen to around 47%. On the other, ITC is increasingly well known for its extraordinary successes in such areas as social forestry. 

In his speech at the CII event, its chairman Y.C. Deveshwar accepted that the company’s profile put it in a difficult place, but he stressed that ITC’s commitment to “achieving Triple Bottom Line benchmarks is key to our resolve to contribute to the national goal of sustainable and inclusive growth.” Among the achievements he reported were the facts that ITC has been a “water positive” company for five years in a row and “carbon positive” for the last two years. It also aims to achieve “zero solid waste,” having recycled over 90% of its solid waste during the past year.

Civil society

Although such statements are encouraging, it is very clear that—despite a profusion of NGOs—India still has some way to go in developing the sort of civil society organisations that play such a key role in monitoring and challenging business in the developed world. WWF, which also took part in the CII event, is now calling for a Sino-India “axis for business sustainability,” to ensure that the transformation of the global economy proceeds on increasingly sustainable lines. Certainly there is growing awareness that this will be one of the defining issues of the twenty-first century, a point underscored forcefully during last year’s World Economic Forum summit in Davos.

If such countries fail to get their act together in time, we are likely to see the mother of all market corrections. While I was in India, the news broke that the boss of a Chinese factory supplying toys to Mattel had hanged himself as the US company was forced into a massive product recall, following the discovery of unacceptably high lead levels in the paint used in some toys. Such problems, though, are likely to pale into insignificance if and when problems like global warming go into overdrive—and the business community is seen to have dragged its feet as other parts of society tried to mount an effective response.  

One of the questions at the IMC event in Mumbai asked what I felt about the 1984 Bhopal disaster. Although I believe that Union Carbide was initially culpable, and that Dow Chemical—which bought Union Carbide’s Bhopal assets in 2001—failed to fully grasp the way that legal, financial moral liability regimes are morphing around the world, I also conclude that various levels of Indian government were to blame for the totally shambolic handling of the aftermath of the tragedy. 

The changing agenda is easily illustrated by the shift in the work SustainAbility itself has been doing in India. To begin with, the clients were non-Indian companies (like Ford of India) wanting to test their local policies and operations against emerging local concerns, or companies that have been offshoring call-centre and other operations to India, wanting to assess the responsibility of the relevant operations and relationships. Increasingly, however, there is a sense that Indian companies themselves will be in the market for help in shaping their strategies, performance and accountability mechanisms in areas covered by the Triple Bottom Line agenda. 

As one result, we are planning to establish our first emerging economy market in India next year. That said, my experience in the country as it embarked on its seventh decade of independence leaves me in no doubt that if we are to succeed, we will need to mutate our own business model. A daunting challenge, true, but one that growing numbers of businesses will need to tackle as the impact of the emerging economies increasingly determines the shape and direction of the global economy. 

And this time the judgment on how we performed will not be made just by the investors and shareholders who have been closely monitoring recent market corrections but by the hundreds of millions of people still excluded from today’s mainstream economy—and, most fundamentally of all, by future generations of Indians and non-Indians alike. So, can China join India in a new axis of sustainability? The evidence to date suggests little ground for optimism, but it will be worth watching what happens at the first World Economic Forum ‘New Champions’ summit in Dalian in September, where I am due to facilitate four separate sessions—ranging from “managing regulatory risk” through “new trends in philanthropy” to trends in “green technology.” I, at least, travel in hope.

 

John Elkington is founder & chief entrepreneur of SustainAbility; he blogs at http://www.johnelkington.com.

Homepage photo by Felix Francis via Flickr

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