Sustainability is no longer a business practice but an imperative and consumers are leading this transition and evolution
At the G20 Environment and Climate Sustainability Ministerial Meeting last year, Prime Minister Narendra Modi quoted lines from Thirukural, written about two thousand years ago, which meant “even the oceans will shrink if the cloud that has drawn its waters up does not give it back in the form of rain."
Sustainability is not just for businesses, economies, and governments; it is an imperative for the survival of individuals. We are already seeing regulators take the necessary measures and bring forth regulations that make sustainability and its reporting mandatory. For example, the corporate sustainability reporting directive is aimed at drawing a parallel to financial reporting and enabling similar status for sustainability reporting.
Similarly, the Sustainability Accounting Standards Board (SASB) is becoming integral for businesses to communicate their impact transparently. It’s not just from a reporting and transparency perspective; we are seeing increased investor interest in sustainable-first organisations and increased confidence in businesses that have stringent and fundamental reporting mechanisms in place.
Case in point: a McKinsey survey points out that about 85 percent of the chief investment officers surveyed stated that ESG is an important factor in their investment decisions.
It is truly now a business imperative rather than a check-in-the-box practice. In 2024, sustainability is going to seep into boardroom conversations, further materialising into the chief sustainability officer role.
Why is this happening? Focus on supply chain and its transparency
The COVID-19 pandemic has pushed businesses across industries to re-evaluate the supply chain and the need for increased transparency. While businesses are evaluating multiple technologies, especially blockchain, to address transparency challenges in the supply chain, I believe supply chain transparency can determine the future of sustainability.
First and foremost, transparency increases accountability. If we can create supply chain mechanisms that are transparent, organisations will be better equipped to understand, thereby mitigating environmental risks. Secondly, it enables organisations to focus on ethical sourcing, raw materials, and organisations that focus on reducing their carbon footprints and making better and more informed decisions.
Last but not least, regulators are doubling down on this. Organization’s efforts to increase transparency and improve resilience are a major focus area for regulators.
Why is this happening? Increased consumer demand
Gen Z and millennial consumers are playing a pivotal role in driving sustainability evolution. A recent survey done by Bain & Company revealed that over 60 percent of Indian consumers are willing to pay a premium for sustainable products.
For example, Amazon has been working closely with brands to eliminate supply chain waste. They have been able to redesign packaging for multiple customers to be more sustainable while ensuring these packages reach consumers unharmed. One of the biggest successes to come from this programme is Tide’s new “eco-box,” which uses 60 percent less plastic than their traditional packaging.
I reiterate that sustainability is no longer a business practice but an imperative, and consumers are leading this transition and evolution.
How will it happen? The role of technology
Technology has played a significant role in transforming our lives, starting from how we consume content to how we book travel to how we order food. Sustainability is no different. And technology is already making an impact.
If I look at it just from a manufacturing industry lens, the use of IoT, data analytics, and advanced sensors significantly helps lessen machine downtime, facilitate transparency across the ecosystem and organisational levels, and offer the ability to make sustainable decision-making.
Similarly, the role of technology in facilitating a circular economy is immense. Identifying product innovation and fine-tuning the value chain are two big examples of organisations using technology to adopt circular economy models.
Last, there is a lot of work happening to reduce the carbon footprint of AI and LLM, which by itself will have a significant impact on the carbon neutrality goals of Bharat.
How will it happen? Upskilling the workforce for a sustainable future
As businesses evolve, so must their workforce. Education and skill development tailored towards sustainability practices are becoming imperative for workforce readiness. To set things in perspective, the World Economic Forum’s Youth Recovery Plan 2021 states that almost half of young individuals believe they don’t have the right skill set to guarantee them an adequate job over the next decade.
Sustainability needs to be imbibed within the workforce, first from a mindset perspective, and then from a skill set perspective.
Last but not least, a top-down approach to looking at sustainability as a core business fundamental is needed for it to be adopted and recognised organization-wide. I have written about this before, but this is a fundamental that is essential for sustainability to succeed. Skilling, as I often hear my peers say, is not limited to middle and lower management; the top management should also upskill and adopt a sustainable first mindset and practices.
During my childhood, I grew up seeing my mom and grandmother storing plastic bags and bottles to use until they got worn out. The idea of multi-use and recycling is deeply ingrained in Indian culture and traditions. I will end my thoughts with a line from Howard Zinn: “We don’t have to engage in grand, heroic actions to participate in change. Small acts, when multiplied by millions of people, can transform the world.”
(Annanya Agarwal, Co-founder, Runaya.)