2016 began with tremendous anticipation as the Paris agreement had been signed. While 2017 has not started with that much of a big bang there is hope that the landmark event of India ratifying the Paris accord in 2016 will bring in the much needed acceleration to Indias sustainability journey.
The trend of investors, consumers and governments requiring greater transparency from the private sector is nothing new, but today, business are becoming proactive and trying to de-risk themselves from charges of negligence. Threats to companies are coming from all directions. On one side are environmental factors such as absence of water or key materials that affect production. On the other side social factors such as human rights, liveable wages, working conditions, economic inequality and other issues are raising their head. As a result, social and environmental issues, once seen as separate, are coming together inside some companies.
The coming year will present an opportunity for companies to align efforts around intergovernmental initiatives such as COP21. Additionally, frameworks such as the Sustainable Development Goals (SDGs) will put increasing pressure around very specific targets.
Here are some sustainability trends to look out for in 2017.
1. The Push for a Cleaner Environment
When the Swachh Bharat Abhiyaan was launched 3 years back, many viewed it with skepticism. Whether it can be deemed a success or not, no one really knows at the moment, but one thing is for sure, it has brought the discourse on cleanliness to the mainstream. 39% of companies we studied have allocated funds to this campaign and built toilets or helped in cleaning up of public spaces. Major newspapers now allocate space to the need to build public toilets, garbage burning, littered roads and even large public events that cause environmental damage and filth. In part, this has also been led by larger public awareness due to health hazards of water and air pollution.
2017 will see companies launching customer facing initiatives, as well as products and services that fulfil the promise of cleanliness and environmental friendliness.
2. CSR as Strategy and Not Charity
Corporate India is finally realising that the short term approach of writing a cheque for the CEO’s favourite charity is not prudent any more. Since CSR investments need appropriate disclosure and need to be done every year 2016 saw many companies holding back CSR funds if they didn’t find appropriate projects. Less than 4% of CSR funds spent by top Indian corporates was given as charity as per our study. Companies are now looking at methods to add strategic brand value through these investments even if these are not directly related to the business they are in, as required by law.
2017 will see companies asking NGOs for stringent reporting on existing projects and pooling of resources amongst top corporates to build greater impact.
3. ZERO IMPACT moves to NET POSITIVE
Most companies are moving towards creating sustainable growth models in different ways. As manufacturing companies explore the interlinkages of supply chains it is evident that waste, water, energy and materials are closely linked to business continuity. There is a growing realization that growth without adversely impacting the environment is now an expected goal. Forward looking companies like Ambuja Cement, ITC, Dalmia Bharat , etc., are talking of being water positive several times over.
2017 will see more companies building deeper corporate sustainability strategies which will seek to external impacts and not just mitigate internal impacts.
4. Water begins to take Centre Stage
Droughts and water shortages in one area and extreme floods in other parts were part of the ongoing discourse around Indian cities and villages in 2016. Companies have had to increasingly gear up to the challenges this has posed. From stopping operations and facing large scale damage in flooded areas to sourcing water trucks for employees and regular manufacturing operations, water is now becoming a significant risk factor. Water is now one of the highest global risks, according to the ninth edition of the Global Risk Report, released in early 2014 by the World Economic Forum. Corporate sustainability reports, are now speaking of water at two levels – as part of CSR initiatives for communities and as part of company operations.
2017 will bring more discussions and corporate initiatives around water management, measurement and above all water valuation.
5. Renewables Gather Momentum
With the Paris accord in play, companies will need to pitch in, in a significant manner for India to achieve the NDC (nationally determined commitment) of emission cuts by 33-35%. Hence it is expected that companies would focus more and more on renewables with a strong focus on solar, biofuels and wind. Off the grid energy systems are likely to provide succour to remote areas, which remain deprived of electricity supply. This is likely to gain strength with developments in energy storage. Improved storage will also help corporations move towards renewable energy for their own consumption. Corporations will increasingly engage with the government in policy making and contribute towards an effective public-private partnership on renewables.
2017 will see integration of renewable energy in corporate portfolio gaining greater traction.