Pursue Sustainability As A Strategic Choice To Future-Proof Business Models

In recent years, sustainability has transformed from a mere buzzword into a tangible force driving change across the corporate landscape in India. The adoption of Environmental, Societal, and Governance (ESG) practises has become a strategic imperative for corporates and governments alike, signalling the beginning of what can be termed as a 'purposeful transformation.' 

This shift, from a singular focus on expansion and growth to a holistic approach encompassing people, planet, and profit, has been further accelerated by the global pandemic and is gradually becoming ingrained in the cultural fabric of corporate entities, regardless of their scale.

Sustainability: The New Business Imperative

With countries turbocharging their sustainability commitments and goals, organisations across the world are operating in a sustainability-focused business environment with a strong sense of purpose. The choice is to either comply with minimal regulatory standards or pursue sustainability as a strategic choice to future-proof their business models.

Companies in the latter group follow a future-back approach and a robust ESG framework to constantly innovate and re-evaluate their goals to ensure that purpose and profitability go hand-in-hand.

In fact, market trends also demonstrate that consumers, particularly Generation Z and millennials, prefer buying products from companies that prioritise mindful production, customer delivery cycles, and ethical practises. Investors and stakeholders are increasingly discerning, demanding that companies act swiftly and seize opportunities across various fronts, from energy transition to sustainable finance and innovative technology, to accelerate their ESG goals.

Therefore, future business leaders must approach their sustainability strategy from a 360-degree, holistic viewpoint—not only from a customer, product, or competitive standpoint but also with an awareness of their organisation's impact on society and the environment.

Strategic Foresight can fast-track India Inc's Strides Towards Sustainability

India Inc’s journey towards sustainability is continually evolving, requiring organisations to adopt a strategic foresight approach.

Strategic foresight must consider an outside-in perspective and look into the future while adapting to the complex, challenging, and dynamic sustainability-driven business environment. Embracing the strategic foresight approach is critical given the push towards decarbonisation, economic transformations, geo-political crises, or supply chain disruptions. This will help companies complement their strategy, mitigate risks, and seize opportunities.

For instance, with water stress being an ongoing issue, any organisation that uses excessive water as a raw material must incorporate water replenishment as a key agenda in its sustainability plan. Organisations with water-intensive manufacturing processes can play a significant role in minimising impact by promoting water-use efficiency, replenishing more water than consumed, and investing in creating water-harvesting structures, especially in water-stressed areas.

An Integrated Approach Towards Societal and Governance Aspects of ESG

While most businesses often focus on environmental considerations, it is vital for businesses to focus on the societal and governance aspects of ESG. Inclusive growth, particularly addressing women's empowerment and gender parity, is a pressing challenge for India in its pursuit of becoming a $5 trillion economy. It is critical to tap into the existing vast talent pool and bridge the gender gap.

In terms of governance, sustained, meaningful change requires executive commitment. Be it by establishing a dedicated board committee that monitors the company’s ESG performance or by directly linking the achievement of their ESG goals to a long-term incentive plan paid to top executives.

Mapping Progress: The ESG Roadmap

Measuring progress against set goals is the most challenging yet crucial aspect of India Inc.'s ESG roadmap. Accurate ESG reporting, mandated for the top 1000 listed companies through Business Responsibility and Sustainability Reporting (BRSR), is essential.

Global companies present in India can go beyond BRSR by aligning their disclosures with international standards such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and United Nations Global Compact (UNGC) principles. Regular engagement with investors and stakeholders through events and partnerships led by industry bodies fosters a collective commitment to sustainable practises.

Adopting a strategic foresight approach, scaling circular solutions with an enhanced focus on societal and governance aspects, and establishing a robust framework to measure impact against goals will catalyse India Inc.'s sustainability journey.

It is important for organisations to overcome barriers by adopting a sustainability mindset from leadership to production, marketing, and hiring inclusive and diverse talent, ensuring a promising and sustainable future. The transformation towards purposeful business is not just an obligation but an opportunity to thrive in a world that increasingly values purpose alongside profit.

(Jitendra Mahajan, Chief Supply & Sustainability Officer, Diageo India.)