Dear Student,
This is the moment you have been waiting for. All those years invested in getting into a decent management education and then those spent in endless case studies, projects, internships, lectures etc. will now be put to the ultimate test – finding that dream job!
But is the dream job that one that pays you the most? Is it the one that gives you a global exposure? Is it one that promises to put you on the fast track? Or – to strike a different note – is it a company that is committed to sustainability and being a good corporate citizen?
In this economic climate, perhaps finding any decent job will be good enough. Then, why am I writing about sustainability issues in making your choice? Of course, a good question and let me take that first.
What is “sustainability” anyway?
You would have been taught in business school that a successful company is one that is profitable and growing. You would have also perhaps been taught that being “sustainable” is both these and longevity – to continue to remain in business forever. You may have been even taught the Milton Friedman formulation of a business’s responsibility being to maximise profits for its shareholders, though this belief is being held by fewer and fewer CEOs, at least publicly!
That, indeed, is “sustainability”. And what you were taught in business school – market shares, branding, raising capital, supply chains – are all important to ensure sustainability. But that is not all! Why not?
Catastrophic climate change and depleting natural resources combined with increasing inequity that reduces access to food, water, healthcare and education to a few seem to suggest that the old economic paradigms need a serious review. The recognition that we live in a one-planet world and an increasingly aware and vocal population (read customers) are placing constraints on the old paradigm of business. The answer, clearly, lies in creating a system that looks at and rewards the triple bottom line – financial, social and environment performance of companies.
So, while “business sustainability” may still mean Profitability, Growth and Longevity, this cannot be ensured without proactively building triple bottom line thinking into its DNA. The sustainable business of tomorrow will be one that is conscious of its carbon footprint from sourcing its raw material to how its product is finally disposed. It will ensure that not only just is water neutral but water positive in the very near future. It will ensure that if it displaces people to set up its factory, they are better off in every way. It will ensure that human rights considerations are central to its operations as well as its value chain. And all this while creating value to all its shareholders – not just its investors. This is not idealism – such companies already exist and many are rebuilding themselves in this mould, simply because it makes long-term business sense to do so!
Choosing your company
So, as you start your corporate career, do you want to join a company that you will be proud of and is built to last? You could of course argue that you may not stick with the same one for ever and would go where opportunities take you. True, but if you are a person who takes every decision keeping the long-term in mind and are convinced that companies that embrace sustainability in their business are important to you, here are some things to keep in mind.
Climate change is a reality
The scientific evidence is irrefutable – an increase in global average temperature over preindustrial revolution of 2 degrees will be catastrophic and the current business model will get us there very soon. The immediate goal is the global greenhouse gas emissions must peak before 2030! Companies that do not proactively reduce their carbon footprints will find themselves out of business when legislation catches up with them or competition surges ahead or customers prefer their more responsible competitors. And, if that was not enough, So, there are several questions you can ask a company. What is its carbon footprint and how is does this compare with its peers? What is it planning in terms phasing out goods and services that are high carbon? What is its pathway to reduce its carbon footprint in its operations and supply chain?
Wars will be fought over water
Enough has been said about how the wars in this century would be over water. India’s water sources, which are dependent upon the snowfields in the Himalayas and the monsoon, are under severe threat thanks to global warming. It will not be long before water will either be highly priced or simply not be available, which will completely change the economics of companies who need water as a raw material or in their manufacturing processes or indeed for their products to be used by consumers! There are companies in India that have had to close down their operations in severe summer months because there is simply no water! In 2015, a provision of the Indian Penal
Code was enforced in parts of Maharashtra that prevents assembly of more than 4 people because there was an apprehension of fights over water! Again, the questions to the company are straightforward. What is the company doing about it? By when will the company become water neutral and water positive? If the company’s products need
water at the consumption end e.g. detergents and tea, what is the company doing to reduce the water required?
Communities are key There is little doubt that manufacturing is inherently a disruptive activity, right from the time land is acquired to build a factory (and displacing thousands from their lands and livelihoods) to when it is
operating (pollution, creation of “islands of prosperity”, incessant movement of trucks bringing in raw material and taking out produce).
For the enlightened company, Corporate Social Responsibility or CSR is not a result of the Companies Act of 2013 but a way of life – a recognition that it is communities (not governments) that provide the “license to operate”. And that CSR begins right from the time the companies decides to acquire land for building its factory and continues as long as the factory is in operation. Does the company you are looking at care? How has its history been on displacement, not just in India but globally (if relevant)? What has been the impact of the company’s plant on the
surrounding communities, their natural resources and their livelihoods? What does its CSR programme look like?
Value chains matter In an increasingly outsourced world, a company cannot call itself responsible if it only restricts itself to what happens within its four walls. Companies globally are recognising that they also have a role in helping and ensuring that their value chain – raw material suppliers, contract and casual labour and the product distributors – are also committed to sustainability. The apparel and footwear industries were one of the first to learn that not caring about how their outsourced suppliers dealtwith their workers could lead to protests about sweat-shops, resulting in product boycotts and significant losses in market share! Or the infamous Rana Plaza collapse in Bangladesh not only resulted in over 1000 lives lost but also disrupted the supplies to the companies sourcing from
there. So, how is the company dealing with its value chain? Does it ensure that they follow basic human rights and environmental standards? Does the company use the sustainability lens while selecting its suppliers and distributors?
Being hard-nosed about soft issues
Some less apparent questions provide some very interesting insights into how serious the company is about issues that some consider “soft”. For instance, a company’s safety record, gender ratios especially in senior management, policies towards people with disability or the ratio of full-time to contract labour will provide you insights on how employees are treated that salaries and career paths do not. Similarly, the nature of advertising may reveal how a company feels about the status of women or identities. These are all interesting ways to gauge how committed the company is to being a good corporate citizen.
Sourcing the information
A question you may well ask is how will you find this about a company? Typically, a company that is attempting to do some or all of this also believes in being accountable and discloses this. The traditional form of being accountable is of course through annual reports but increasingly companies are using their websites to make public their policies, values and practices. Though more common in the developed economies, companies are also putting out regular Sustainability Reports that detail their strategies and performance on these matters. In fact, there is a whole body of global standards of reporting that is available for companies for disclosure with the Global Reporting Initiative and Integrated Reporting being two of the best known.
So, when you research the company in the internet, also look at its “sustainability” channel in its website and read it up. You may find some of the answers and you certainly will find newer questions to ask.
Make informed choices
So, friends, scrounge the net, read newspapers, ask friends and, even more importantly, ask the company representatives themselves during pre-placement talks and interviews. Use your judgement – after all, that is what you have been trained to do! Remember, it is also your future that is at stake!
All the best
Shankar Venkateswaran