Business innovation, and digital transformation are the two roads that will define the growth of business and thus the economy – not only for 2023 but for the next five years . Added to these two main agendas of growth is the ‘Sustainability’ notion. Business Sustainability will not only mean adhering to justifiable cost components which impact the environment or overhead cost, but will also require constant planning to build up a resilient process toward carbon-free manufacturing.
An integrated business sustainability assessment will go beyond technology integration, data-interpolation, workplace flexibility, and compliance into a sustainability-focused socio-economic fabric that will differentiate between GDP growth and the decisive element of inclusive growth. While businesses and entrepreneurs are making changes to incorporate the ethos of responsible business, the policy-makers of the land also recognises this as an opportunity for enforcing equitable growth.
Current Growth Trajectory
The United Nations’ Brundtland Report defined sustainable development as a process that “fulfills the needs of the present without compromising the ability of future generations to meet their own needs” in 1987. Currently the economic growth rate is neither fulfilling the needs of 700 million of its people who live on under $2 a day nor is it setting up a system that would benefit future generations. This is leading to an unstable process, which is bringing about high inflation, growing disparity, inequality and widening social and digital gaps.
Current research shows that despite the growth rates, India’s growth will not be socially, economically, or environmentally sustainable without major changes implemented by the government in all three areas. The 2022 SDG Index is topped by three Nordic countries – Finland, Denmark and Sweden – and all top 10 countries are European countries. India is ranked at 121.
India needs a socially inclusive and ecologically sustainable model for development that will further nurture human capital of people from all classes of society. Sustainable growth requires the conservation of non-renewable resources such as land, water, and atmosphere and minimal environmental damage should be caused as a result of pollution and natural phenomena. In order for India’s growth to be sustainable, the new policies will have to serve the ultimate goal of human well-being for all as well as facilitate economic activity.
The Government of India’s also realises this challenge and has undertaken the net zero emission target by 2070 requiring the phasing-off of all Internal Combustion Engine (ICE) vehicles by then. The planned launch of National Mission in hybrid and electric vehicles, has now seen allocations of US$ 89.41 million from National Clean Energy fund for speeding up the National Mission for a Green India. The budget of the Environment Ministry itself has increased by around US$ 67.1 million.
How is the Private Sector looking at the Challenge?
As iterated, the actions for the next phase of growth are pretty clear—India will have to aim for 1) Human sustainability leading to building the human capital in society 2) Social sustainability 3) Economic sustainability and 4) Environmental sustainability. Anything that India has to achieve will need a sustained effort from both the private and the public sectors. While the government has come around to making sustainability a part of all policies, the private sector has upped the game by making investment a function of the sustainability quotient.
According to Deloitte’s CXO Sustainability Survey 2023, about 81% of Indian CxOs say they have increased sustainability investments from last year, with 27% saying that investments have risen ‘significantly,’.
‘ESG Radar: ESG Redefined: From Compliance to Value Creation’ report brought out by Infosys, after surveying 2,500 business executives across industries in Australia-New Zealand, China, France, Germany, India, Nordics, North America, and the UK has shown that a 10% point increase in Environmental, Social, and Governance (ESG) spending correlates with a 1% point increase in profit growth and most companies have actually realised positive financial returns from their ESG efforts.
In line with global sentiments, Indian CxOs also see a significant improvement in brand reputation, addressing climate change, and innovation around offerings and operations. However, challenges are being felt in toeing the insufficient supply chain of sustainable or low-emissions inputs, lack of talent, expertise, and difficulty in measuring environmental impact. The supply chain is the biggest concern. Even as most of the companies are interested in aligning their ESG goals with their supply chain, less than one-third share ESG expectations or requirements for suppliers.
According to Infosys analysis, only 16% of executives admitted to renegotiating contracts based on ESG data from those in the supply chain — indicating a clear need for more leadership in the supply chain and incentives to share ESG data, whether it’s meeting new contract requirements or making themselves more appealing to others in the supply chain.
Need for Policy Push & Leadership to turn the tide in time
The ecological disaster of Joshimath, and before the flash flood of Uttarkhand, the temperature changes affecting agriculture are all directing India to focus on sustainability even as it pursues development and economic growth before it is too late or turns out to be too expensive a price to pay. While the significance of sustainability is well acknowledged, it will need both the ‘carrot and the stick’ to ensure sustainability ambition translates into action. As green energy investments, digital inclusion, and electric mobility is expected to become the fulcrum of Indian manufacturing sector in 2023, it is pertinent that leadership of both government and private sector take a mutually beneficial view on policy and prescriptions for the next decade towards Sustainability.
(This article is written by Mr. Gaurav Bawa, Senior Vice President, WIKA India, and the views expressed in this article are his own)
