Businesses must take care of the communities in which they operate, addressing both social and environmental concerns, says S. Padmanabhan, executive chairman of Tata Business Excellence Group and head of Tata Sustainability and Ethics. Having worked with the Tata group for over 35 years, Padmanabhan has been the group chief human resources officer at Tata Sons and was responsible for enabling key HR policies and initiatives. He believes the role of sustainability officers will become obsolete once the concept becomes embedded in business practices. “A chief sustainability officer’s (CSO’s) role at some point will go away as soon as it becomes a way of life. At some point, the role will move away from advocacy, guideline setting, policy procedure, to measurements and improvements. Also, the way this works is a virtual cycle, i.e. you observe best practices in one place and you share it with others. So there is knowledge-equality creation and practice-equality creation," he says.
What is sustainability? Sustainability defines how businesses can survive long-term. It is this which is critical. The three important markers of businesses are profitability, continuous growth, and survival in the long term. Survival depends on how a company is able to respond to the environmental impact, and take care of all stakeholders—employees, customers, and the community and society in which it operates.
The biggest challenge: Companies have traditionally been trained in revenue growth and profit maximization. Over the years, therefore, leaders have focused on these two aspects. But in the last 10-15 years, that has not been sufficient. You can have revenue growth and growth in profits only in the context of how you engage and take care of society. It cannot be uni-dimensional growth. Therefore, the challenges for firms are embedding concepts of how to balance multiple stakeholder expectations.
The business case: When we make investments, says Padmanabhan, we look at financial investment and the time value of money, and reach conclusions based on the returns on invested capital. That’s why every company will have its threshold cut-off, and only returns crossing that threshold would render the investment worthy. But, he says, they have also started evaluating societal and environmental impact. So, if they build a power plant, they evaluate these costs over and above the technical cost. More investors are choosing companies which would be more sensitive to such costs.
Making sustainability sexy: In the larger context, more and more awareness creation is needed. Our experience shows that the workforce that has joined us in the last five-six years understands sustainability. In fact, among employees in the age group of 23-32, there is a natural understanding of how to take care of the environment, because the way they see the world is very different from people who are in their 50s and above.
CEO and sustainability: I think it is there in the DNA and culture of the group. Some companies have a certain inbuilt culture and value system. And one of the key values is contribution to society. That’s why, says Padmanabhan, I quote what Jamsetji Tata said over 100 years ago: “In a free enterprise, a community is not just another stakeholder in business but the community is in fact the very purpose of its existence." We must take care of the societies in which we are operating and improve the quality of life in the locations that we serve, for long-term stakeholder value creation. When employees grow in such leadership systems, commitment to society comes naturally.
Are SDGs realistic? The Tata group is linking all its activities to the sustainable development goals. It critically examines emissions, energy and water consumption, solid waste disposal, the way it addresses and impacts communities and societies, and deals with employees, suppliers and distributors. At a group level, there is a commitment to not harming society and the environment. It is the intent that is important, and, within the group, there is commitment.
In-house initiative: Within the Tata system, the response to societal changes at a macro level is embedded deeply. When you have natural disasters like the floods in Uttarakhand and Kashmir, the earthquakes in Nepal and Gujarat, etc., what you need first and foremost is a relief mechanism. For disaster relief, they have trained project managers across the company. Over the last three-four years, says Padmanabhan, they have clocked a million hours of volunteering every year.
Sense and Sustainability is a series where chief sustainability officers talk about SDGs, and the challenges in making sustainability appealing to businesses and employees.