building sustainable enterprise

7/30/2019 Building sustainable enterprise

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Building Sustainable

enterprises: a reviewand the road ahead

By Dr Suresh


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Agenda

Why sustainable enterprises?

Concept of the Bottom of Pyramid

Definition of sustainable enterprises Quick review of sustainable enterprises

Examples of sustainable enterprises

Examples of sustainable enterprisesIndia Road ahead


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Why sustainable enterprises?

Who wants a thousand rupee house? A management case

Global capitalism at the crossroads. Negative impacts of globalizationhas lead to dislocation in many societies

Proponents of sustainable enterprises argue in favour of globalenterprises to create a new framework for environmentally sustainablecapitalism

Big business should work on big problems. The biggest problem ispoverty reduction in the world

Need to develop a new approach that focuses on innovative partnershipbetween corporate sector, public sector, civil society organizations,R& D labs and the poor, in such a manner that the poor are included inthe business model and there is no negative environmental impact.


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Why sustainable enterprises?-contd.

Protests against globalization in many places, some open, some subtle.For instance, many poor communities are not in favour of IT or Retailbusiness expansion as they get nothing out of it. In addition they facethe negative consequences of environmental degradation.

Some studies have shown that poor respond to markets as consumers-breaks the myth that poor do not participate in markets. In addition, anearly study by a former Professor at IIMA indicates that market drivenrural development programmes seem to have survived and done better.

TERIs initial work in Haryana gave an indication that there is a linkbetween farmers responses to adopting RETs, agroforestry etc if thereis a market link.

Early insight by Prof VKRV Rao while addressing a group of students atIRMA


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The concept of Bottom ofPyramid (BoP)

Pioneering work by Late Prof C K Prahalad. He said the followingin a nutshell:

Firstly, by ignoring poor the global enterprises have done greatharm. Poor need to participate in the benefits of globalization and

their access to modern product and services have to be designedand ensured. Poor are latent big consumer groups. Hence thiscan become a large business development task

Secondly, new opportunities for innovation for the private sector,as poor consumer pose a lot of challenges

Thirdly, BoP markets would become core businesses in manyareas

Finally, BoP consumers would become co-creators of value


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Definition of sustainable enterprise

Sustainable business, or green business, is enterprise that has no negative impact

on the global or local environment, community, society, or economya businessthat strives to meet the triple bottom line. Often, sustainable businesses haveprogressive environmental and human rights policies. In general, business isdescribed as green if it matches the following four criteria:

It incorporates principles of sustainability into each of its business decisions.

It supplies environmentally friendly products or services that replaces demand fornon green products and/or services.

It is greener than traditional competition.

It has made an enduring commitment to environmental principles in its businessoperations

Another definition

It is a business that meets the needs of the present world without compromising

the ability of the future generations to meet their own needs

A more complete definition:

A sustainable enterprise is one that contributes to sustainable development

by delivering simultaneously economic, social, and environmental benefitsthe

so-called triple bottom line.


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Sustainable enterprises- a quick review

Pro-state interventionists argue for the strong hand of government in setting and maintainingstandards of capitalist practice (Stiglitz 2002)

a Third Way (Giddens, 2001) has become the most widely adopted response amongst policy-makers to the challenge of uneven, environmentally degrading globalization.

Approach entails the preservation of the free market, with a stronger commitment tounderstanding and ameliorating the negative social and environmental impacts of the system.

the sheer size and power of business organizations to determine the structures of social,economic and political activity has grown to such enormous proportions that industry, both

individually and through markets, now possess the most resources needed to create more efficientcoordinating mechanisms (A. J. Hoffman & Bazerman, 2005)

current CSR efforts are as effective as putting a band-aid on the foot of someone who ishemorrhaging from a head-wound (Jeremy Moon)

stress the business opportunities revealed by re-casting sustainability as a strategic driver of valuecreation (Hart 2005, Prahalad 2004)

Thomas Friedman in his popular book The Lexus and the Olive Tree (Friedman, 2000). Friedmanmade two conceptual assertions about how to respond to the new global reality of increasinguncertainty, complexity and paradox caused by the twin effects of globalization and technologicalchange. Emphasized PEST analysis. He recommended a integrationist approach to globalizationand inclusive approach


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Examples of international sustainable enterprises

Darfour project: For the more than 2 million in Darfur is currently living in

displacement camps, finding wood is a daily struggle.. Outside the relative safety ofthe camps, they are vulnerable to acts of violence and sexual assault. They also losemore than a thousand hours of time each year that they could spend learning ormaking money. In order to avoid leaving the camp, many women pay for fuel byselling the very food they hoped to cook.

After the stove design is finalized at the Lawrence Berkeley National Laboratory,

they are sent to an engineering parts manufacturer with in Mumbai called Sri HariIndustries. From Mumbai it is sent to Sudan for assembly by Oxfam at therehabilitation centres.

Whole Foods Markets: A large retailing enterprise that markets organic foods andnatural groceries, 300 stores, Whole foods, whole people and whole planet

E+Co; venture fund that supports renewable energy initiatives in Nicaragua throughTechnosol

Jami Boraa: Affordable and sustainable housing for urban slum dwellers (some werebeggars and thieves)Kaputei Town, Kenya. 8 neighbourhoods, 250 families each.Ecofriendly housing.


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Building tomorrows Opportunity

Many faces of shareholder (Sustainable) Value

Growth path

trajectory

New skills

repositioning

Engaging

external

constituencies

Cost &

risk reduction

Nurturing of

internal

capabilities

Reputationlegitimacy

Managing todays business


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Building tomorrows Opportunity

Many faces of shareholder (Sustainable) value

Clean technology

Develop new competencies

Pursue/leap frog innovation

Engaging

external

constituencies

Nurturing of

internal

capabilities

Managing todays business

BoP

Meet unmet needs

Link BoP

Pollution prevention

Reduce process waste Enhance resource productivity

Product stewardship

reduce negative impact of products increase transparency


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The Worlds Largest Organic Foods Retailer


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Growth ThroughDifferentiation

WFMs unique value proposition - Friendly Operating practices

Whole Foods motto is Whole Foods, Whole People, Whole Planet.

Quality standards

Sustainability

Animal and Poultry standards


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Sustainability

Encouraged production of organically and biodynamically grown produce

Promoted soil conservation

Sold only bird friendly coffee and Sustainable seafood

Usage of natural materials for construction and renewable sources of power

Encouraged recyclable packaging, energy & water conservation

Spoiled produce and biodegradable waste was converted in compost

Store maintenance and cleaning programs were environment friendly

Companies vehicles ran on bio-fuels

Visitors were educated about use of renewable energy and

water conservation through brochures and placards


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A few basic assumptions

Large firms have ignore poor. The poor

represent a latent market

New growth opportunity for the private sector

BoP markets must become an integral part of

the work of private sector


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Influence of dominant logic

Enterprises/ organisations are prisoners of

socialisation

Poor cannot afford our products

BoP markets do not appreciate tech

innovations

Very difficult to get professionals to work for

BoP markets


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Nature of BoP markets and market developmentimperative

There is purchasing power in BoP markets

Access to BOP markets is difficult. Yes and No.

BoP consumers accept technology

Market Development imperative

Create the capacity to consume (affordability,

access and availability)

Development new goods and services

Dignity and choice to consumers

Customer relationship approach


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Examples of sustainable enterprises-India

SELCO India

GMCL /FRLHT initiatives

Mother Earth- industree KMF

SDM Temple trust

ITC Waterhealth


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Road ahead

Understand CSR issues in India

Document Cases (Accenture initiative could

well be one)

Form an interdisciplinary interest group (in

some form)

BCSD

Need to form alliances to work in the third

stage

building sustainable enterprise

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