With US President Donald Trump's walkout of the Paris Deal, the agreement that aims to keep planetary warming by 2030 below the 2°C rise ceiling, the debate about sustainable development has gained increased traction, with advocates directly contradicting the president and saying it could generate millions of jobs. In this new development model, the United States, by hewing to outdated legacy technologies, risks being left behind.
What has also come to dominate the public discourse now is the role companies are playing to build sustainable businesses in the face of depleting natural resources, global warming and exponentially growing populations. A pioneering report issued this week – Better Business, Better World – by the Business & Sustainable Development Commission (BSDC), points out that business leaders and entrepreneurs can unlock market opportunities worth US$5 trillion and generate 230 million jobs in Asia by 2030 by following sustainable business models.
The report elaborates how the private sector could apply innovative solutions to social and environmental challenges, achieve inclusive growth and create 72 million jobs in India alone. Instead of decelerating growth, as is the common perception, environmentally-friendly corporate strategies aligned with the United Nations Sustainable Development Goals could open economic opportunities across 60 “hot spots” worth up to US$12 trillion and increase employment by up to 380 million jobs globally by 2030, according to the report.
These 17 Global Goals and their 169 component targets – formulated through collaboration with governments, businesses, and civil society – aim to deliver the practical solutions needed to protect the planet’s resources and leave no one behind.
The report offers a compelling alternative growth model for Asia based on pursuing strategies in line with the United Nations Goals. Achieving sustainable development goals in just four sectors—food and agriculture, cities, energy and materials, and health and well-being—would create US$12 trillion of new market opportunities by 2030, the report says. Further, savings from reduced carbon emissions, water use and other resource consumption and overall profits could be as high as $17 trillion. The prize is not just for companies; it’s for people, too. As a domino effect, these markets will create millions of new jobs, particularly in developing countries.
While India has lifted a staggering number of people out of poverty in the past two decades since it abandoned the License Raj, an iniquitous distribution of resources between the rich and poor are impacting people's health, education and access to sustainable energy, bottlenecking economic and development progress. “Better Business, Better World" shows that instead of being burdens, these challenges can be turned into economic boons to business, offering companies a pathway for achieving a new growth model.
Indian companies concur that with India’s 2016 ratification of the Paris accord, the country's sustainability journey has been accelerated.
"Today, businesses are trying to change the narrative from environmental negligence to embracing sustainable development as there's pressure on them from all directions,” said Anil Saxena, the CEO of Wireworks, a New Delhi-based IT company. “Social and environmental issues, once peripheral have now become concomitant. Environmental factors such as water and resources crunch that affect production are having a direct bearing on the way businesses are conducted. Additionally, social factors such as human rights, working conditions and economic inequality are also coming into play."
Many companies have scaled up and prioritized CSR operations, are going beyond regulatory compliance and government mandates to look at inventive ways to become a force for good. Growth without adversely impacting the environment is the new mantra. Forward-looking Indian conglomerates like Mahindra & Mahindra, Ambuja Cement and ITC, for instance, are particularly embracing sustainable methods to conduct businesses.
According to Anirban Ghosh, Chief Sustainability Officer, Mahindra Group, one of the leaders in CSR and sustainability, doing business responsibly is imperative.
"As a company, we're focused on building an enduring business while rejuvenating the environment and enabling stakeholders to rise,” he said in an interview. “This has led to a rich body of work that encompasses energy efficiency, renewable energy, water conservation, embracing the circular economy, mitigating climate risk, and fostering inclusive development. We're also very active in the social sphere by investing in electric cars, solar power, micro-irrigation and green building technologies amongst others."
Indian analysts feel that with the Paris accord in full 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 percent. They will need to focus more on renewables with a strong emphasis on solar, biofuels and wind. These practices, add policy makers, will 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.
Ecologists assert the situation is especially dire in India and China where over 40 percent of arable land has been degraded due to climate change, local pollution or topsoil erosion. "Overall, large swathes of Asia are profoundly impacted by environmental trends that are challenging resource productivity, particularly climate change, loss of biodiversity, and changes in land use," said Shahsank Shekhar of the Department of Geology at Delhi University. "If all stakeholders – individuals, government, companies – don't come together on a war footing, consequences can be severe."
Water is now one of the highest global risks, according to the ninth edition of the Global Risk Report, 2014. Corporate sustainability reports, are now speaking of water at two levels – as part of CSR initiatives for communities and as part of company operations.
According to the Confederation of Indian Industry (CII), across sectors, many companies have commitments to reducing their overall eco-footprint, whittle down emissions, energy usage and waste management while also integrating climate change risks into multidisciplinary company-wide risk management processes.
A study from Harvard Business School found that "high sustainability" companies from 1992 to 2010 did better in terms of profitability and stock-market performance than the rest. The common misconception that companies that invest heavily in sustainability might incur higher costs and become less profitable is being debunked by modern by studies.
The Global 100’s stock returns suggest that if you had invested US$100 in Global 100 companies in 2005, it would have been worth US$232 at the end of 2016. If you did the same for the ACWI (All Country World Index, a market capitalisation weighted index designed to provide a broad measure of equity-market performance throughout the world.) you’d have US$208. In other words, the Global 100’s cumulative return is 24 percentage points higher than the ACWI benchmark.
As the BSDC report warns: Asia's future economic growth, stability, and shared prosperity are all under threat from the impact of environmental and social factors. So if businesses do not choose to embrace the Global Goals, the costs of the global burdens will continue to grow. This will result in less stable and less equitable societies, an irreversibly damaged environment, and higher political risk.
Neeta Lal is a Delhi-based editor & journalist