The Real Estate Sector has a Critical Role in Ensuring Carbon Footprint is Minimised

India is the seventh largest energy consumer in the world. Rapid urban transformation and development in recent times have meant that 33% of the nation’s energy usage goes towards building blocks for commercial and residential purposes. Moreover, this is growing 8% each year. Studies have also revealed that almost 5% of humanity’s total carbon footprint is a result of activities in the construction industry. This is unlikely to come down as demand for residential and commercial properties continues to rise unabated. The real estate sector has a critical role in ensuring that the carbon footprint is minimised.

Adarsh Developers, a real estate company in Bangalore has started utilising their sustainability practice to support and create a green environment. According to Rajagopalan TS, Vice President, Projects, “We are committed to making our construction process and our buildings sustainable. This is something we incorporate in our thought process right from the design stage.”

Adarsh’s interest in sustainability started many years ago when it was installing an STP (sewage treatment plant) for one of their projects and using the treated water for landscaping and in toilets for flushing. They also diverted stormwater to a nearby lake thus replenishing water in the lake and increasing groundwater. From then onwards, Adarsh has taken many initiatives to be sustainable. Their newer projects  follow the IGBC (Indian Green Building Council) parameters and are pre-certified.

The company undertakes many actions that make their buildings sustainable, many of which are around water use as Bangalore invariably suffers from water shortages. By substituting traditional flush equipment with modern ones, the water requirement is reduced from 20 litres in traditional flushes to about 3 litres at a minimum. By installing smart meters, quantification of water usage helps homeowners to conserve water. Also, a dual piping system ensures that treatable water can be used for non-potable purposes like bathing and kitchen. The provision of aerators in water fixtures also helps reduce water usage. Rainwater harvesting systems with recharge pits are created and roof rainwater used to reduce consumption of freshwater. Stormwater ponds are designed to collect overflow from rainwater harvesting pumps. Underground recharge wells are provided below the rainwater harvesting pump to raise groundwater levels. Instead of using interlocking or rigid pavers, Adarsh has started using flexible pavers for internal paths. This promotes water percolation leading to recharging of groundwater. By substituting Ordinary Portland Cement (OPC) with blended cement, both water usage and carbon footprint is reduced. The company known for its landscaping uses drought resistant plants so as to reduce water consumption.

Although water tends to be the focus for Adarsh, it pays attention to other areas as well. To reduce timber usage, it is replacing woodenwindows with recyclable UPVC material. Wooden doors are replacing engineered doors – instead of sold blocks of wood waste thus reducing dependence on timber. Use of variable concrete cast bricks minimises the weight of the building improves thermal insulation and reduces carbon footprint. Use of clay tile for roofing provides thermal comfort to the residents. The use of GGBS (Ground-granulated blast-furnace slag) concrete reduces its carbon footprint. Home automation provides both safety as well as promotes the conservation of resources. Rajagopalan TS says “Our actions are not governed by regulations alone. We believe that we need to do something for the environment.”

The construction industry contributes to increased suspended particulate matter levels in cities leading to poor air quality, “We take this very seriously and take numerous measures to combat this” says Rajagopalan TS. Vehicles carrying materials are covered with tarpaulin to avoid dust generation. The approach road to the projects is either asphalted or paved to ensure that fugitive emissions are reduced. Barricades of sufficient height are provided to prevent construction dust from travelling outside the site area. Regular sprinkling is undertaken on open grounds to ensure that dust remains settled.

With the growing importance of sustainable living, the focus is squarely on the construction industry to provide buildings that have a long service life and promote high performance by minimising environmental impact and maximising recycling of materials. Although the real estate industry has read the signs of the times and is changing course, the pace of change is far slower than desired.

(Based on a conversation with Rajagopalan TS, Vice President, Projects, Adarsh Developers. For the Responsible Futurescape Blog

So, what is the social responsibility of an alcohol company – or is it even possible for an alcohol company to be socially responsible?

Movies in the 60s and 70s invariably distinguished between the hero and the villain based on their alcohol habits. The hero abstained and the villain mostly drank too much and misbehaved. Today though, things are different, as alcohol has been given social legitimacy in many segments of society. Alcoholic beverages are now part of weddings, company events and family celebrations. But, even while social drinking has gained acceptance, our society is also grappling with alcohol misuse. People who drink excessively can become a public nuisance and incite domestic violence. Underage drinking is unhealthy for young children. Drinking and driving leads to accidents and loss of lives. The problems are many and multifaceted.

So, what is the social responsibility of an alcohol company – or is it even possible for an alcohol company to be socially responsible? Abanti Sankaranarayanan – Chief Strategy & Corporate Affairs Officer Diageo India and a member of its Executive Committee, says, “Our ambition is to be the best performing, most trusted and respected consumer products companies in India. Playing a positive role in society is at the heart of this.” The company focuses on three key areas globally – reducing environmental impact, building thriving communities and leadership for alcohol in society.

As an industry frontrunner, reducing alcohol misuse and championing moderation in alcohol consumption, is a boardroom conversation and not a peripheral activity for the ‘CSR Department’. Diageo plc Chairman Javier Ferran, is also Chairman of the CEO Group at the International Alliance for Responsible Drinking (IARD), which brings together the 11 largest alcohol producers in the world to encourage moderation and tackle harm.
Abanti says, “Our view of ‘Alcohol in Society’ starts with recognizing that alcohol when consumed excessively or harmfully, can cause problems for individuals, communities, and society. Even when consumed moderately and responsibly by adults who choose to drink, alcohol can be part of a balanced lifestyle, Diageo plays a constructive and significant role in reducing alcohol harm, working in partnership with governments, NGO’s and civil society. The company focuses on reducing alcohol-related harm through programmatic interventions and also seeks to provide consumers with the information and tools they need to make informed choices about drinking or not drinking, what to drink and how much to drink. This year, IARD members have committed to address the use of technology and data in digital marketing, to ensure that they are targeting adult consumers in a responsible way.

As part of the strategy for reducing alcohol-related harm, Diageo has set 20 ambitious targets to achieve the UN’s Global Goals and support WHO programmes on health, such as the Global Action Plan for the Prevention and Control of Non-Communicable Diseases.

Beyond addressing alcohol misuse, Road Safety is an area of focus in India. Diageo’s ‘Road to Safety’ in its 5th year running, is based on four ‘Es’ — Education, Enforcement (of rules and regulations), Emergency (Services) and Engineering . The program is implemented through a host of partners such as police departments, universities, state and central governments and more.

And this is not all – Diageo’s community investment and programmes promote skills and employability, empowers women and increases access to clean water. The company is working with women in local communities around the company’s over 50 bottling plants in semi-urban and rural areas of the country. Abanti talks about how important it is to find the right interventions to help rural women find sustainable livelihoods. She says, “We want to help people not just for their immediate needs, but for the long term. For instance, in Alwar a self-help group (SHG) of 20 women has been trained and supported to set up a micro enterprise to produce low cost sanitary napkins. They are producing and marketing their products to more than 20 villages now. We have worked with them through skilling, helping then set up the SHG and then supporting them in this initiative.”

Diageo’s Water of Life programme has reached over 10 million people in 21 countries since 2006, making a real impact on vulnerable communities. In India, the company has setup water ATM’s in Nagpur and Bhopal. Apart from making much needed clean drinking water available to people, the water ATMs also provide employment to many women.

Over the last decade, Diageo worldwide has reduced carbon emissions from direct operations by 41% and from the entire supply chain by 23%. Diageo is now focusing on investments in renewable energy and water efficiency, as well as reducing and recycling plastics.

Diageo takes its responsibility towards the society seriously. Not only does it work to mitigate the negative aspects of alcohol by promoting responsible consumption but makes a genuine contribution to the society through its work on water, uplifting women entrepreneurship and environmental stewardship. By working alone and in partnership with companies in the industry, Diageo sticks to its credo of being the most trusted and respected company.

In conversation with Abanti Sankaranarayanan – Chief Strategy & Corporate Affairs Officer Diageo India and a member of its Executive Committee. For the Responsible Future blog

Can LNG play a role in India’s path to clean energy?

The link between rising prosperity and increasing climate change is a real one. This is because increasing living standards for expanding populations worldwide means dependence on reliable modern energy for lighting homes, making new things, e-commerce and more, which in turn leads to carbon emissions. By 2040, global GDP will likely double, and world population is expected to reach 9.2 billion people, up from 7.4 billion today. Asia will add the most people with a significant number moving out of poverty and therefore adding to additional energy demand.

India’s growth and energy story is also likely to follow a similar path. The big question is, “How can India grow and at the same time protect the environment?” says Bill Davis CEO South Asia of ExxonMobil.   As per ExxonMobil’s own Energy Outlook India’s current energy mix is approximately 46% coal, 23% oil, 1% nuclear energy, 1% wind and solar, 23% other renewables (including traditional bio-mass) and 6% natural gas. India is expected to follow the worldwide trend of increasing energy efficiency and a move towards renewables to help manage emissions. As electricity use rises, the types of fuels used to generate electricity will include growing contributions from wind, solar, and natural gas.”

ExxonMobil forecasts global energy-related CO2 emissions are likely to peak by 2040 at about 10 percent above 2016 levels. Among the most rapidly expanding energy supplies will be electricity from solar and wind together growing about 400 per cent. The combined share of solar and wind to global electricity supplies is likely to triple by 2040, helping the CO2 intensity of delivered electricity to fall more than 30 per cent. What’s worth noting is that the shift in sources of energy is expected to be aided not just by renewables, but also by natural gas. Globally natural gas, which is cleaner than coal or oil, is expected to be used increasingly more than any other energy source, with about half its growth for electricity generation. Natural gas, when it’s cooled to -260°F, condenses and is referred to as liquefied natural gas, or LNG. In the form of LNG, natural gas can be efficiently transported over great distances to places like India, where a significant part of the gas consumption is expected to be imported to supplement limited local production.

Bill believes that to combat climate change, India needs a balanced blend of growth with low emissions. He says, “We look at India and its goal to double GDP and also to drive manufacturing through its “Make in India” program as an opportunity to drive growth through clean energy. We believe that natural gas can be an important part of driving this ambition. Clean energy is the need of the hour for the industry, for transportation for the residential sector and most importantly for the power sector for three main reasons. Firstly, natural gas resources are geographically and geologically diverse, abundant, reliable and versatile in use (power generation; residential, commercial, industrial heating and cooking; and even transportation). That makes natural gas both reliable and scalable. Scalability is key in India — a nation with rapidly rising energy demand. Secondly, as renewable power continues to grow as a source of electricity, natural gas-fired power generation stands out as a strong complement to renewables to ensure a reliable and resilient power grid. This efficient, flexible power source is ready to supplement dips in renewable energy at night and on cloudy and windless days. Thirdly, and most importantly, natural gas emits significantly fewer pollutants than coal power generation, including NOx, SOx, particulates, mercury, and up to 60 percent fewer GHGs.”

Bill says that decision making around energy needs to factor in long term gains which can only be achieved by doing the “hard math”.  That means sitting down and counting all things that happen when you choose a particular energy source. It’s not just the cost per unit of energy – it’s about the value created in terms of a cleaner environment, more reliable power, and a strengthened economy. “Because at the end of the day what really matters is how this improves the lives of Indians,” he added. He further adds, “For this to work, it’s going to take a long-term view, investment in infrastructure, regulatory stability and sound policies to get gas to consumers in a cost-effective and timely way.  Now is the time for India to shape its own energy  and what’s clear is that natural gas can be part of the solution.”

(Based on a conversation with Bill Davis, Chief Executive Officer and Lead Country Manager, South Asia for ExxonMobil Gas India Pvt. Ltd.)

Read it at the Responsible Future blog

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.

(Original Post)

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.”

(Original Post)