Trustees of the Earth

Business responsibility is not a new phrase. Everything that needed to be said about it has possibly already been said in many forums, several times over. Still, there is a gap between intent and action. CEOs say the right things all the time, yet companies continue to bypass every single responsibility paradigm. Why? What stops them from doing the right thing?

Responsibility is an abstract term. So are sustainability, ethics, CSR and values. Embracing responsibility means bringing change in the organisation. And change is never easy. It brings pain. It brings resistance. Change is also not a single event. It is a series of events, involving several things and the biggest of them involves emotions and the inherent human resistance to change. What will bridge this gap between intent and action? Do corporate incentives need to change? Do processes need to change? Do we need more transparency?

Given the scenario that we face, we need new ways of looking at things. One such lens is the concept of trusteeship proposed by Mahatma Gandhi. It specifies that everything we do must be economically viable as well as ethical—at the same time making sure we build sustainable livelihoods for all. When applied to the world of today, it defines the core values of a business which run through how the business needs to conduct itself. Perhaps we need to look back so that we can move forward. Some extensions of it’s core beliefs can be:

Leadership for the fourth industrial revolution has to be about mindfulness. It has to be about people. A new kind of leadership is needed that builds trust, is driven by values and is open to change. The leader has to be a trustee to all the stakeholders, rising above the stereotypes to decide what she will and will not do. As a trustee to the organisation, there is no exit strategy. The leader is responsible for the impact of her decisions. This could be food for thought for venture funded companies that are currently destroying business models without taking responsibility for the damages caused. Their current philosophy is: if we don’t do it someone else will. Perhaps it could it change to, ‘If it can be done, let’s do it right and take people along.’

There are no outsiders anymore. New ways of thinking and acting are required from all stakeholders, including individuals, business executives, social influencers and policy-makers. Deep, meaningful conversations and not just excel sheets hold the key to responsibility. This means thinking not just about what new perspectives might be needed, but finding entirely new ways to create and update our thinking over time in collaboration with other people in the industry, policy makers and customers themselves. The corporate brand needs to move from product attributes, smart logos and great TV advertisements into being more human, responsive and above all trustworthy.

Pro-active responsibility for an accelerating world. Current models of responsibility are mostly reactive. They seek to rectify damage to the environment and social systems. In a data-driven world, there is the potential to cause massive damage with far-reaching consequences. In the next few years existing systems and value chains will need a reboot not just in terms of finding newer markets and growth avenues, they will come under increasing regulatory and public pressure for transparency, trustworthiness and public good. We can’t any longer say, ‘Hey this is a new innovative product that will be loved by millions but there will be a few downstream issues. But, we needn’t look at them now, let’s cross that bridge when we get to it.’ Companies, reputations and lives will get destroyed with such short-term thinking. Trusteeship is about taking the higher ground, about getting the design right in the first place. Proactive is the default norm.

Business responsibility therefore needs a modern context. It needs to bring in the many connections and technology interchanges that really define the twenty-first century, as well as build frameworks that reflect the changing realities. If done right, responsibility for the modern world can define the boundaries of the corporation—and its very soul!

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IFC set to catalyse the Impact Investing market

Impact investing focuses on investing with the goal of environmental and social impact in addition to financial return. It has grown significantly over the years and the International Finance Corporation (IFC) estimates that investor demand for impact investing could be $26 trillion.

Despite the scale and scope of investments, impact investing is neither clearly defined nor does it have clearly defined principles. IFC therefore has set out to remedy this and catalyse the impact investing market in reaching its potential size. The IFC spent about 18 months collaborating with key stakeholders — leading asset managers, asset owners, development banks and other financial institutions. This led to the development of the Operating Principles for Impact Management which offer investors clarity and consistency on what constitutes impact investing.

The Principles
The voluntary principles, released recently,  aim to guide investors toward building impact into their investments at all stages of the investment lifecycle, including monitoring and reporting. However, they stop short of dictating which impacts should be targeted or how they should be measured and reported.

The nine principles are grouped into the five stages of impact management system (strategy, origination and structuring, portfolio management, exit, and independent verification). The Principles aim to ensure that impact considerations are integrated into investment decisions at all points of the investment lifecycle.

Strategic Intent
1. Define strategic impact objective(s), consistent with the investment strategy: The Manager shall define strategic impact objectives for the portfolio or fund to achieve positive and measurable social or environmental effects. These goals are aligned with the Sustainable Development Goals (SDGs), or other widely accepted goals.

2. Manage strategic impact on a portfolio basis: The Manager shall have a process to manage impact achievement on a portfolio basis.

Origination and Structuring
3. Establish the Manager’s contribution to the achievement of impact: The Manager shall seek to establish and document a credible narrative on its contribution to the achievement of impact for each investment.

4. Assess the expected impact of each investment, based on a systematic approach: For each investment the Manager shall assess, in advance and, where possible, quantify the concrete, positive impact potential deriving from the investment.

5. Assess, address, monitor, and manage potential negative impacts of each investment: For each investment the Manager shall seek, as part of a systematic and documented process, to identify and avoid, and if avoidance is not possible, mitigate and manage Environmental, Social and Governance (ESG) risks.

Portfolio Management
6. Monitor the progress of each investment in achieving impact against expectations and respond appropriately:
The Manager shall use the results framework (based on Principle 4) to monitor progress toward the achievement of positive impacts in comparison to the expected impact for each investment.

Impact at Risk
7. Conduct exits considering the effect on sustained impact: When conducting an exit, the Manager shall, in good faith and consistent with its fiduciary concerns, consider the effect which the timing, structure, and process of its exit will have on the sustainability of the impact.

8. Review, document, and improve decisions and processes based on the achievement of impact and lessons learned: The Manager shall review and document the impact performance of each investment, compare the expected and actual impact, and other positive and negative impacts, and use these findings to improve operational and strategic investment decisions, as well as management processes.

Independent Verification
9. Publicly disclose alignment with the Principles and provide regular independent verification of the alignment.

Implications of the Principles
Sixty companies have also committed to adopt the principles. With more impact investors joining the fray, stakeholders are likely to guaranteed that a recognised process is being followed and there is a verification to reduce possibility of adverse events.

The Principles for Impact Management  provides clear a common market standard for what constitutes an impact investment. A common language will help accelerate the deployment of capital seeking impact that is currently sitting on the fence. A likely impact of the clarifications is that it will help fill up the funding gap for SDG projects. This will help accelerate the achievement of SDG goals. The release of the Principles is just a start because the social challenges that the world faces are enormous and seemingly impossible. Investors and institutions need to come together to make investing for impact a success.

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Can companies stand up for Mental Health?

According to the World Health Organization, health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity. Most of the focus in India is around disease management and cure. Mental health, on the other hand, is mostly ignored because it has no real physical manifestation. Around 20% of the world’s children and adolescents have mental disorders or problems and mental health is now reaching epidemic levels in most countries across the world. Described as a ‘silent killer,’ stress has been reported to be the root cause of various illnesses and conditions, with depression and anxiety rates in India among children and adults reaching high numbers. About 9.8 million Indian teenagers need active interventions to treat anxiety and depression related issues. Recognizing this global crisis, the UN SDG’s contain goals and targets around mental health in Goal 3 which covers Good Health and Wellbeing.

However, no one seems to be talking about it!

Possibly because, mental health is mostly seen as a taboo subject in India. Misunderstanding and stigma surrounding mental health are widespread leading to exclusion from the healthcare system. Additionally, private and public sector hospitals don’t consider this an important area of intervention, which is possibly why it is impossible to find good psychiatrists and counsellors in big cities, let alone small towns. Mental health is mostly ignored by large Indian companies too. About 80% of India’s top 200 companies invest their CSR funds in health or education or both. However, with the exception of a handful of initiatives around wellness CSR funds are largely deployed for disease prevention and management only.

But companies can do much more than deploying funds. “Awareness building and conversations around mental health issues are half the battle”, says Neerja Birla, Founder and Chairperson, Mpower, a social enterprise that helps address mental health issues. Companies can take a strategic approach to mental health and wellbeing of employees and their families by making mental health training an integral part of onboarding employees. Further companies that are already investing in health and education as part of CSR can insist that schools should employ counsellors for students and hospitals create mental health departments. More so, most companies have a large footprint, extending to thousands of employees and millions of consumers. This large network can be used effectively by companies in building conversational platforms around mental health to remove the stigma it currently has.

Mpower under Mrs Birla’s leadership is working in three broad areas to address mental health issues – awareness-building campaigns, clinical services as well as awareness building workshops. Mpower is a social enterprise registered under The Aditya Birla Education Trust. “Many mental health issues are a result of loneliness,” says Mrs Birla, “and technology while connecting people is also creating islands of loneliness, anxiety, and stress. To help each other we need to start the process of listening to and talking with people in need of our help. As more and more technology permeates our lives, the always on, always connected lifestyle builds stress and a constant desire for more. Mental health needs to be addressed with a sense of urgency. We need to act now, and we need to act together”.

Based on a conversation with Neerja Birla, Founder and Chairperson, Mpower

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Zebra’s fix the world

The new world driven by technological changes is seeing a proliferation of startups who are questioning the status quo and disrupting industries. The sectors that are being disrupted are many. 3D printing is disrupting manufacturing, transportation is seeing cab aggregators shake up the industry and the energy sector is seeing a radical shift with renewables and battery solutions. The list of industries that will change or are changing is rapidly increasing. The ones that are facing the brunt of these changes have business models that were created some time back and are faced with significant challenges of scale and people when it comes to being more agile. Newer companies armed with new technologies, a radical new way of looking at things and agile low-cost business structures are threatening their very existence. Most primary focus is on gaining more customers, which in turn drives venture capital funding. In most of these business models, sustainability or social responsibility is an afterthought. This primacy of quantity over quality in the start-up world is creating business models where sustainability and being socially responsible is an afterthought, something to be considered once you start to make a profit.

It is perhaps time to deeply introspect about what all this means in a world where civil society is being weaponised to believe in fake news, where social platforms are having a negative impact on the mental well-being of kids and data on consumers is being collected without consent. In the start-up world where companies are typically asked to ‘move fast, break things” a lot seems to be getting broken. Inequality is at an all-time high, democracy is believed to be under threat and people are many times forced to live without basic necessities.

As opposed to this, a new type of start-up is being discussed these days, called Zebra Start-ups. Sahil Agarwal of IIMAGES, a pan IIM alumni community organised a panel discussion to focus on “We need more Zebra start-ups”. Salil says, “In today’s world where every startup wants to become a unicorn there is room for those that do not wish to break their back and are happy to create sustainable businesses that witness reasonable growth. These are businesses that do not necessarily disrupt the eco system, are usually boot strapped and allow the entrepreneur to create a balance between life and business. The term Zebra Start-ups was coined to connote companies that serve a dual purpose. They are both black and white, for profit and for a cause, also they fix things rather than break them.” Zebra start-ups are designed from the ground up to help rather than exploit, to make a profit and yet solve the problems of society. Pradeep Gupta, Chairman CyberMedia says, “Unicorns are based on extremely disruptive models and the idea is to scale up at any cost. Quite often unicorns may not really be making money. Zebra’s are not social start-ups but socially responsible companies who make money.”

The race to become a unicorn is not just of the founders but also that of the people who fund the startups – the venture capitalists who want accelerated growth and increased market valuation. Accelerated growth requirements lead to an unnecessary focus on adopting questionable business practices. In the long-run, artificially inflated stock prices will correct and impact felt by all – shareholders, employees, creditors etc. Venture capitalists who guide these ventures also put social responsiveness on the back burner. Social responsibility should be a fiduciary duty for the venture capitalists. As much as they are responsible to the shareholders they have a responsibility to the stakeholders. Growth and social responsibility are not binary choices but complement each other. Venture capitalists need to understand this and guide founders  to marry the growth and social responsibility.

Dinesh Agarwal, CEO Indiamart, “We bootstrapped for the first 15 years of our journey. In terms of size we have raised only 32 million dollars twice. Today, after 23 years since we started every 20th person in India uses Indiamart.” Sanjay Agarwala, MD Eastern Software Systems says, “We are happy to grow slowly and responsibly and work with partners.”

However, it’s not been easy for most Zebra start-ups who have to constantly fight against perceptions. Take the case of Nasofilters, a company started by a team of engineers from IIT Delhi. They created a respiratory nasal filter that sticks to your nose and prevents entry of harmful air pollutants (PM2.5). Prateek Sharma, CEO Nasofilters says, “The general trend is that people rate our success on the basis of total amounts of funds raised. They don’t take into consideration the number of lives we have saved, the repeat customers who are delighted with our products and the profits we make.” This story is repeated often by other companies who are in the Zebra start-up space. Despite these adverse perceptions by peers, these journeys do have a silver lining. Indiamart despite being slow to raise funds is now being listed on the stock market with a possibly 1 billion-dollar valuation.

M P Jaiswal, Director IIM Sambalpur says that Zebra start-ups promote a culture for inclusiveness. “Cultures, values and business models are often ignored by the start-up culture. The Zebra movement is based on the ground realities that people need to be part of the process of making profits. A culture that promotes wellbeing is perhaps what is needed in the India of the twenty first century.”

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Marico’s Sustainability Journey is driven by innovation, says Saugata Gupta

Marico Limited is one of India’s leading consumer products companies operating in the beauty and wellness space. Agricultural commodities form the base of all Marico products ranging from coconut oil, flax seeds, rice bran oil and many more. One out of every 10 coconut grown in India is used by Marico. It is therefore no surprise that sustainable procurement has become a critical area for the business. Additionally, reduction in waste, water and energy management are also important areas. The business responsibility program covers climate change, product responsibility and community development. The business sustainability program has also been aligned to Sustainable Development Goals (SDGs)

MD and CEO Saugata Gupta, says, “Our journey towards sustainability is driven by innovation at its core. In 2003, the Marico Innovation Foundation was formed to support innovative products and techniques from entrepreneurs from all walks of life. Over time, innovation became part and parcel for everyday activities. This culture also became embedded in our sustainability approach and we drive all our efforts with a single-minded focus where we ensure value for all stakeholders while we grow responsibly.”

The company buys coconuts directly from farmers so that they receive the best price for their produce. This was an uphill task in the initial days, as the coconut trade was largely controlled by intermediaries. However, the company persevered and built direct relationships with the farmers. Today, an important part of the business responsibility program is “Kalpavriksha” or The Wishing Tree. This program partners with coconut farmers in enhancing farm productivity, giving inputs regarding better farming techniques and overall helping them achieve higher income. Marico deploys agronomists who reach out to farmers in close by areas. To scale up these interventions, the company has also deployed a mobile app and a toll free line so that more farmers can benefit from this knowledge base. Since its inception, two years ago, the program has reached over 1.3 lakh farmers through direct and digital interventions.

While the initial numbers were good and so was the uptake from farmers, the company realised that the agriculture sector needed innovation and scale to improve quality and productivity. While traditional methods of farming were quite popular, farmers were slowly realising the need for innovation to increase yield and productivity. New-age farmers wanted solutions to augment traditional methods but there was a gap between innovation in labs and cultivation practices on ground. This gap arose because of various factors including lack of awareness of innovative practices, archaic farming practices, and rigid mindsets. Marico Innovation Foundation stepped in at this juncture. Their agriculture focussed program has a cohort of 37 start-ups with unique solutions to farmer issues; of these the Foundation will be taking 12 solutions to farms for testing over the next few months. The aim is to nurture innovation in agriculture to eventually impact the framer’s income by reducing inputs and/or improving productivity or yield. Marico Innovation Foundation thus plays a catalytic role to bridge the gaps in the agriculture ecosystem to benefit all stakeholders.

Marico has prioritised the creation of a sustainable supply chain across all its product categories. Various centre of excellence and partnerships have been created to facilitate a seamless exchange of ideas. Suppliers and energy conservation platforms, skill development and warehouse programs have been set up.

Says Saugata Gupta, “Sustainability is a journey, but we are committed to being responsible corporate citizens and staying true to our corporate purpose of making a difference in everything we do, every day. Our aim is to impact 20 lakh coconut farmers and make a difference in their lives by enhancing their income.”

Based on a conversation with Marico MD and CEO Saugata Gupta

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