Uncommon Ground | YC Deveshwar and Sunita Narain on Sustainable Development

This is an edited version of Rohini Nilekani’s Uncommon Ground, where she brings together titans of industry and leaders of civil society to explore eight themes that are highly relevant for our future development. In this episode, she moderates a discussion on business and sustainability with Yogesh Deveshwar, the chairman of ITC, and Sunita Narain, the director of the Centre for Science and Environment.

These conversations explore the middle ground between the ideological divisions that often polarise the business and voluntary sectors. In course of these rare dialogues between leaders who have sometimes been adversaries, a number of common concerns emerge.

Rohini Nilekani: What do we actually mean when we say business and sustainability?

Yogesh Deveshwar: Sustainability means the sustainability of society and the challenges that we are confronted with. These days, we’re confronted with two major challenges. One is that the nature of economic development that we’ve embarked on so far has been of a kind that has degraded natural resources. It has depleted the assets of nature and its life-sustaining capacity has been emasculated. The second challenge is that although there has been a huge amount of growth which has been measured in financial terms, a large section of global population is in poverty. If we continue on this path, it is unlikely that we will achieve a sustainable society. A sustainable business is one that conducts business in a manner that can contribute to the alleviation of these two challenges and actually overcome them.

Sunita Narain: I think it’s very clear that in India, the environment is a survival base of a large number of people, which differentiates us from many other countries where you can degrade the environment and still believe that you could have growth. But in a country like India where people live off the environment, if any industry was to pollute rivers or damage forests, it affects people’s lives and livelihoods. The challenge is to ensure that you do not damage the environment, and more importantly that you benefit local communities. It is this deepening of relationship between industry and local communities, in a manner that benefits the environment, that serves as an indicator of sustainability. However, in practice we are still very far away from what we are both defining as sustainable business.

RN: Is it possible for businesses that cater to high consumption lifestyles to move towards more sustainable practices? 

YD: Yes, it is possible to do that. But sustainability is not only a goal for businesses to achieve, it needs to be a part of all sectors of our economy, all organs of our society. They have to work together and align in this particular direction. Starting with political parties, NGOs and civil society, media, businesses, etc. — everybody has to put their shoulders together to get a new paradigm for our society that enables growth in a sustainable manner. So it is not the responsibility of only one organ of society. I think we need to reexamine the definition of value. At the moment, the value, what is it? SEBI only protects the shareholder. But SEBI does not say that in protecting the shareholder, what should you do? What is the impact on social capital, what is impact on natural capital? So if we redefine the value that business has to now produce and develop a new way of measuring this, then people will begin to be focused in that direction.

SN: I think this is an issue because business is very powerful, it is a driver of economic growth and it is also a user of natural resources. So there should be no surprise that we focus on business. But of course, every part of society has to have that certain value. I also agree that we have to change the indicators by which we measure progress. People are talking about a happiness indicator for instance, they’re saying, “Happiness does not always go with wealth.” We need to have those indicators, and I think it will happen through societal pressure. Democracy in India is possibly our biggest saving grace. There is often tension between industry and activists, so we need space for new dialogue. There should be less distrust between industry and people outside industry who are protesting. I went to Kalinganagar recently to try and understand why people are so angry about the coming up of a plant. It’s important to listen to those voices, because it’s only when we listen to those voices that we will be able to find a new way ahead. That paradigm change that you’re talking about will not come out of the air. It will come out of experimenting, learning, and actually being driven to do something different.

RN: In today’s environment, businesses have a significant economic advantage if they are not actually practicing sustainable practices. Given that our laws are somewhat lax and we don’t have a great regulatory environment, you can get away with a lot. How do we challenge that? Does it have to be consumers who will then give the strong signals or is civil society to ramp up much more?

YD: Despite there being no pressure, no laws, and no direct impact on them, there are people who have taken a more holistic view of what the business can do. That springs from values and visions of leadership, and the capacity of the organisation. At the end of the day, nobody is going to do something that is gonna injure them in terms of their financial returns, but what is more important is how we create a market, so that everybody is compelled to get financial returns, you will have to make a triple bottom line contribution. Ultimately a country’s citizens decide what kind of society and governance they want. So, the idea is how to accelerate this? How do we create new institutions, and new measurements? For example, shouldn’t every business be able to transparently disclose what is the impact on this triple bottom line and what is the impact of that business, making it available, not only for shareholders but society that are major stakeholders in that business?

SN: The more I travel in India, the more voices I’m hearing agitating about this. It’s not civil society in the NGO sense, but it’s civil society in terms of people who have been directly affected by this. I just went to Goa and saw the public hearings against mining projects. The anger and anguish of the people there was not because they were against mining or against industrialisation, but because in the name of sustainable mining, they have destroyed water sources and forests, dumped large amounts of waste in the fields, and essentially destroyed livelihoods.

RN: Millions of families want secure homes, reliable energy so that their children can read and study and get good jobs, safe transport, etc, but all of that is also going to come at a huge environmental cost because of the sheer numbers. How can we strike a balance?

YD: For example in our paper business, we had the option to import pulp because you know that there is a shortage of fibre in India. We could have gone and acquired forests outside, say in Malaysia or in Indonesia, and then we’d have brought the pulp from there. But we took a long-term view that creating livelihoods doesn’t stem so much from factory employment. 300,000 tons of paper can be manufactured by about 600 people employed in a plant, but if you were to produce or grow the trees that are required for pulp, then you can create employment for 300,000 people. We took an approach that we knew would help the tribals with their private wasteland, creating social farm forestry programs and helping them by providing saplings and silvicultural practices so that they could begin to grow trees. We also did an R&D program that would shrink the time it takes to harvest. What it meant was that we created livelihood opportunities. We also planted trees that have a very environmental, positive benefit and also made a sustainable source of supply of fibre for the paper business.

SN: Well, everything has an environmental cost. The very fact that we exist has an environmental cost. The thing we are realising on a global scale is that even small populations like the United States and Australia, not comparable to our numbers, can create such massive destruction. So then the question becomes, how do you reinvent what you mean by growth for large numbers of people, not just for the poor in the world, but also the rich in the world? Yogesh’s model is one that, as an environmentalist, I’m very excited by. We could say that paper is environmentally unfriendly, let’s get rid of it. But in a society like India, where we need even more paper because literacy must increase, we need more paper to be produced. There are two ways of doing it — one is cutting down a forest and making the paper; the other is growing our trees and then making the paper. And in this model, we actually create an integrated supply chain in which we have huge shareholders. The shareholders are the farmers who are growing the trees for us.

RN: What are the incentives and drawbacks for businesses to be sustainable? How can we transition to a different model that works for everyone? 

YD: As of now, our paper business gains no special advantage as a result of being environmentally friendly, and in fact there’s a cost. We don’t get tax benefits of any kind, nor any other benefits other than a good reputation. Perhaps if there was some incentive, like if the government bought their paper from us because it was most environmentally friendly and creates more jobs, then you will begin to see competitors adopting those methods. Every business is under intense pressure to be able to compete internationally. Indian businesses cannot do anything that stymies their growth or makes them uncompetitive in the international arena. But I have the firm conviction that it is possible to create business models that synergise these three dimensions and actually make you even more competitive. Ultimately, it must begin with the political part of our society. We must create a system of incentives in society, so you’re recognised and the consumer recognises for you. If you create value for corporate conduct and create a market for it, it will automatically happen.

SN: I don’t think there are any easy answers. We’re in an economic system that we can’t dismantle in a day, even if we wanted to. But society is going to demand clean air and water, and the issue of climate change is going to force us to re-invent what we do. Right now though, industries are still looking for small solutions, and small answers. It is unfortunate that when push comes to shove, we still do things in exactly the wrong way. What we are suggesting here is that we need to reinvent growth by making sure that you can also take people from the bottom to the top. I’m optimistic that this can be achieved, if we keep India’s democracy alive. If we make sure that local communities who have been affected by environmental degradation can take industries to court and make sure their environment is protected, then I believe all of us can find a new way ahead.