The current industrial model of growth developed when water, land and energy were plenty. Today, water is scarce, land increasingly under pressure and energy increasingly expensive. Making in In-dia, is not exactly a cakewalk even if Government regulations and approvals become easier.
Even if manufacturing does speed up, the ills of unfettered manufacturing are equally well known. China, the manufacturing hub of the world has seen increasing water and air pollution, unmanagea-ble urbanisation and civil unrest.
At the same time we need to ask ourselves if there is stress on the environment should we abandon a model that promotes manufacturing ? There is no doubt that manufacturing is essential for growth and an increase in jobs, at the same time manufacturing with responsibility is more the need of the hour.
Indias top companies for CSR study looked at CSR and Sustainability data of 214 companies. It covers industries as varied as automobiles, banks, diversified, FMCG, infrastructure, information technology, metals and mining, oil, power, steel, pharmaceuticals, telecommunications and others.
We also looked at the breakup of companies by type. We found that manufacturing companies, on average, score far better than service companies. This is difference is attributable to higher sustain-ability scores indicating that these issues are more important for the manufacturing sector.
Another interesting piece of result is performance by industry.
The chart above shows that Energy and Capital goods are top performers while Financials, Other Industrials, diversified and consumer discretionary are laggards.
But manufacturing with responsibility can’t just be a slogan. The business model needs to integrate responsibility in its DNA. For that we need to look at a 21st century model of manufacturing.
1. Small is beautiful
Companies and businesses that are small, agile and robust. A model that focuses not on aggregation and economies of scale but on swiftness and innovation and perhaps in India’s context is more local. Many small local manufacturing plants with a zero environmental footprint.
Local partnerships where resources are shared and rejuvenated and not exploited. A basis for new responsible growth and employment.
3. Promoting Green Business Models
Increase growth and competitiveness by promoting businesses that build on sharing, dematerialisa-tion, reuse and recycling of resources and clean energy. Green logistics too need to emphasised which most Indian companies don’t seem to pay heed to.
3. Responsible Finance
This includes environmentally responsible lending as well as aware-ness of social issues can drive responsible growth.
4. Using the public sector to promote responsible sourcing
The Public sector is a large consumer of resources. Efficiency and regard for resources in govern-ment functioning would indeed set a high standard. Also setting standards for suppliers would have a ripple down effect for downstream companies.
5. Strengthening the framework for corporate disclosure
Our current laws make CSR investments mandatory but disclosure guidelines leave more to be de-sired. GRI is a globally accepted standard for sustainability reporting and has several parameters that are far in excess of what the Indian Companies Act prescribes. A move towards such globally accepted standards of CSR and Sustainability disclosure will help in adding the requisite checks and balances for responsible growth.
Written by – Namrata Rana and Utkarsh Majmudar