Strategic Corporate Sustainability-A Game Changer for Sustainable Business
Dr. Ravi Fernando
Executive in Residence
INSEAD Business School (Social Innovation Center), France
CEO, Global Strategic Corporate Sustainability (Pvt.) Ltd.
1 You have been an advocate for sustainability for some time. You make
a difference between CSR and sustainability. Can you explain?
In order to understand the difference it is important to trace the evolution of the concept of Sustainability. there are three pivotal periods to consider:
Phase 1 – Philanthropy – In the early 1960’s business began to engage in philanthropy to basically get tax breaks and win a little good will from the communities they operated in which was referred to as ‘DOING GOOD FAST’. Most times they would be done without much fanfare on a local or regional basis.
Phase 2 – CSR (Corporate Social responsibility ) was the 2nd phase in the 1990’s whereby Companies refined the Philanthropy and brought in Publicity and PR to communicate the investments being made to ensure it benefited the organization in terms of goodwill and benefits from the communities and decision makers they interacted with from a stakeholder perspective.
This was referred as ‘DOING GOOD TO LOOK GOOD’ and many organizations engaged in CSR to gain mileage and unfortunately the public realized before long that it was ‘Green washing’ in most cases.
Phase 3 – SUSTAINABILITY was the third phase which is the prevalent format which came to being as a result of two land mark publications. In 1987 ‘Our Common Future’ a report commissioned by the UN coined the term Sustainable Development and in 1997 John Elkington a British Economist published ‘Cannibals with Forks’ – The Triple Bottom line of the 21st Century which coined the term ‘Triple bottom line’ where today’s concept stems from. Sustainability is achieved when a Business embeds Sustainability in corporate strategy and develops a Business model where its Economic profit is achieved in a manner which does not ‘Harm the environment’, instead becomes a steward of environmental resources within its scope of influence and contributes to its protection, conservation and regeneration whilst also impacting Society positively within its sphere of influence in terms of employees, communities and society and contributes to social progress’. This Phase is referred to as ‘DOING GOOD AND DOING WELL’.
I have been an advocate of Sustainability and created the concept since 2003 and have been committed to showing business that the future business model which will be a game changer for both the business and planet as opposed to the current approach of ‘Profit at any cost’ by adopting a concept titled ‘STRATEGIC CORPORATE SUSTAINABILITY’ which I created in 2012 as part of my work at Cambridge University.
Sadly most companies in the world, over 90% are yet not past phase 2 and think that CSR = Sustainability. The major difference is that CSR focuses only on one of the 3 Triple bottom lines social sustainability and this whereas SUSTAINABILITY focuses on embedding the TRIPLE BOTTOM LINE where Environment and Societal impact of the business are given equal priority and focus and embedded in Corporate strategy.
2 How can a company embrace Strategic Corporate sustainability?
In order to embrace Strategic Corporate Sustainability my research conducted between 2011 to 2013 confirmed the following which are outlined in my publication titled ‘Strategic Corporate Sustainability-7 Imperatives for Sustainable business‘ (Partridge 2015 November) now available at Amazon.com.
STEP 1 – Is the Business ‘must’ have a Sustainability mind set’ leader at the helm, ideally the CEO/Managing Director and a Chairman of the Board who understands the concept to give it the Sustainability leadership the organization needs to pursue SUSTAINABILITY.
STEP 2 – The Business must mobilize STRATEGIC CORPORATE SUSTAINABILITY by;
First “EMBEDDING SUSTAINABILITY IN CORPORATE STRATEGY”, whereby every element of business strategy is approached from a sustainability perspective and embedded into the Corporate Strategy.
Secondly the Business needs to ‘DIFFERENTIATE ITSELF ON A PRIORITY SUSTAINABILITY INITIATIVE/PARADIGM which Sets it apart on the global /local/regional stage which is relevant to its Strategic success and can be consolidated through ‘Innovation and R&D’ and kept relevant.
Today the shining lights globally who conform to both the above steps are UNILEVER, IKEA, TESLA, PATAGONIA to name a few, In Sri Lanka the companies who come close to doing so and are moving towards this concept are DILMAH, JETWING, MAS to name a few.
3 What is meant by climate change?
CLIMATE CHANGE is a hot topic and will remain one for the next 100 years as it directly impacts all Nations, Business and every Organization and human being directly.
Since 1880 when the Industrial revolution commenced the World has begun to burn fossil fuels, which in turn had released GREEN HOUSE GASES (GHG), such as Carbon Dioxide (CO2), Methane, Nitrus Oxide to the earths atmosphere that in turn has contributed to Global warming as these gases are trapped in the earths atmosphere. This has led to an unprecedented increase in EXTREME WEATHER incidents from around 50-80 per annum 20-30 years back to between 350-400 incidents per annum, where DROUGHTS, EXTREME TEMPERATURES AND FLOODS are now every day occurrences which impact all Nations, Business supply chains and every single individual on the planet. This phenomenon is referred to as CLIMATE CHANGE. No Nation, business or individual is spared from the impacts of climate change and ADAPTATION to Climate change is the ONLY way forward.
4 How could Nations and business sustainability ADAPT to impacts of climate change?
The UNITED NATIONS has been talking about the impact of CLIMATE CHANGE on the ENVIRONMENT from 1987. In 1992 it launched the EARTH summit in Rio to bring attention to the impending crises and resolved to ensure Global temperature gains are not allowed to cross +2 Degrees Centigrade from the 1880 base level. However, we have already gained +1.12 Degrees centigrade which in turn has resulted in the Extreme weather incidents battering every nation. In just the last 2 months we have seen Extreme temperatures were recorded in Japan, Canada, Pakistan, India, Middle East where average temperature heat waves recorded were 42-54 Degrees centigrade which left over 400 dead. Drought affects India, many African Nations, California and Flooding is now rampant with Manila, Hong Kong, China and North and South Carolina recording unprecedented rain fall of over 6-8 months in 48 hours in September 2018.
We can no longer mitigate Climate change, this is because the major cause of it – Burning of Fossil fuels have increased and with it Green House Gases have increased in the Earth’s atmosphere from under 250ppm (part per million) in 1990’s to 411 ppm in 2018 which has resulted in the frequency of Extreme Temperature incidents rising to unprecedented levels.
Both Nations and Business needs to ADAPT to CLIMATE CHANGE and what activities should we adopt to sustain the environment.
4.1) Exiting Fossil Fuels and embracing RENEWABLE energy (i.e Solar, Wind and Wave energy) and MOVE to ELECTRIC transportation to be no longer a part of the problem
4.2) REFOREST the planet with urgency as we have destroyed over 70% of the Forest cover and with it 52% of species.
4.3) Protect ALL WATER RESOURCES as water scarcity is forecast is to impact almost all Southern Hemisphere nations by 2025
4.4) BUILD SUSTAINABLE CONSUMPTION into ALL the product and service offerings
5 Why aren’t companies and governments more into Strategic Corporate & National Sustainability and what policies should be in place for business to adopt Strategic Corporate/National Sustainability and a commitment to Environmental sustainability?
I referred to the fact that only 3-4% of all Listed and family companies pursue Strategic Corporate Sustainability and less than 20-30 Nations pursue Strategic National Sustainability by EMBEDDING SUSTAINABILITY IN CORPORATE/NATIONAL STRATEGY). The reason for this is two fold:
5.1) There is a lack of SUSTAINABLE MIND SET LEADERS at both the National level and Business level to give leadership
5.2) SUSTAINABILITY is a STRATEGIC CONCEPT, but most Leaders are steeped in SHORT-TERMISM
5.3) For Sustainability to be mobilzed and impactfull we need NATIONAL SUSTAINABILITY POLICIES > that lead to SUSTAINABLE BUSINESS STRATEGIES > That lead to SUSTAINABLE CONSUMPTION due to all Products and services being sustainable in terms of sourcing, manufacture and use!
5.4) ALL NEW PROJECTS must factor Climate change Impacts and likely impact in both National and Business infrastructure projects.
None of the above is in place for the above to happen with the exception of a handful of nations such as Costa Rica, Bhutan and Netherlands etc.
The policies need to encourage, incentivize and reward the four areas identified:
– Reward Exiting Fossil Fuels and embracing 100% RENEWABLE energy and MOVE to ELECTRIC transportation
– Reward Business conserving, protecting and REFORESTING the planet within its sphere of influence
– Reward Business which manage and Protect ALL WATER RESOURCES and Rain Water Harvest.
– Reward companies who launch product and services encouraging SUSTAINABLE CONSUMPTION following Life Cycle analysis and Circularity
6 What is the place technology plays in the process of adapting to CLIMATE CHANGE in this process & does Sri Lanka have the technology to do so?
Embracing NEW AND SUSTAINABLE TECHNOLOGIES AND STRATEGIES are essential as we ADAPT to Climate change.
Today we have 7 Key technologies and industry strategies that MUST be embraced by all Nations and Business as a strategy to better adapt to Climate change:
6.1) Nanotechnology-where Less material is used as we go to the Nano scale and more sustainable materials are created to deliver Renewable energy
6.2) Precision Agriculture-where we use 90% less water versus Mass agriculture
6.3) Artificial Intelligence for both National and Business decision making more precise
6.4) 3D Printing which significantly reduces and eliminates waste
6.5) Robotics-mobilizing advanced robots for all manufacture
6.6) Bio Technology and Nano Bio-To enable more precise treatment of health issues
7 How can a professional accounting body help?
Every Professional body must consider it a mandate to ensure that all its membership are ‘sustainable mind set’ leaders by ensuring they build it into their curriculum’s for ALL Professional qualifications. We already have a major deficit and this is key to developing a new cadre of sustainable mind set leaders in every sphere of commerce and govt.
Q8) CAN SRI LANKA APPLY “STRATEGIC CORPORATE SUSTAINABILITY” IN TERMS OF ECONOMIC, ENVIRONMENTAL AND SOCIAL DEVELOPMENT STRATEGY?
Yes, Sri Lanka can provided we have the following in place.
STEP 1 – Is that Sri Lanka needs to educate its National and Business leaders on the subject of “Sustainability, Climate change and the implications of the commitments Sri Lanka has made at the 2015 December Paris agreement” and the ‘Reality’ the nation is facing today. A review of a few key National policies versus action confirm this as the most pressing need of the nation.
If I were to share a few examples of where Sri Lanka seems to be ‘moving’ blindly regards the above and compromising the very commitments made:
1) ENERGY POLICY – The Government of Sri Lanka made a commitment to achieve 60% of its energy requirements from RENEWABLE ENERGY SOURCES by 2020 and 80% by 2030 at the Paris agreement to help achieve the global target of keeping GHG (Green House Gases) to a minimum to keep global temperature gain below a gain of +2 degrees centigrade.
The ‘REALITY’ – The Government of Sri Lanka is considering the CEB (Ceylon Electricity Board) Long Term Power Generation Plan (LTPGP), even rejecting the advice of the PUCSL (Public Utilities Commission) where from a 40% Renewable energy CEB are planning to move to 80% FOSSIL FUEL (COAL/LNG) driven power generation by 2037, which in reality is moving away from RENEWABLE ENERGY? Which means we will be increasing the GHG gas emissions versus reducing them. This is going in the OPPOSITE direction where China, EU Nations, Costa Rica, Sweden, Germany, Uruguay, Paraguay, Scotland, Bhutan, France, South Korea, Spain are going tom significantly increase RENEWABLE ENERGY TO 60-80%.
2) FOSSIL FUEL DRIVEN VERSUS ELECTRIC VEHICLE POLICY & REALITY – The Government of Sri Lanka made an announcement that it would BAN FOSSIL FUEL DRIVEN VEHICLES by 2045. Most of European Union Nations hope to do so by 2030. However the Nations has not put in place a Strategic Policy framework or strategic incentives to even remotely make it possible. (Ideally 1) It should have invested in an Electric Vehicle charging network (Sri Lanka needs only 30-40 Charging points to cover the nation) and had the incentives in place to encourage ALL to move to Electric Vehicles now as the European Union has done today. Instead the reality is we have high duties for Electric Vehicles and no attempt to set up the EV network?
3) CLIMATE CHANGE IMPACTS & REALITY – The Presidential web site SRI LANKA NEXT has clearly mapped out what areas of Sri Lanka will be affected by SEA LEVEL RISE when Temperatures cross the 2 Degree Centigrade and 4 Degree Centigrade barriers and most of Sri Lanka’s COASTAL BELT will be affected. But the Reality is that we are moving forward with many ‘development and infrastructure projects’ including road networks and hotels in the very areas that will be under water and affected by sea level rise. Landslides and massive flooding continues to affect Sri Lanka as we are ignoring these facts.
STEP 2 – To Develop a Strategic Corporate Sustainability led National strategy we need to mainstream and embed ‘Sustainability and climate change reality’ as the CENTRAL GUIDING PRINCIPLE in a National Sustainability Strategy. This will NOT happen until we first make STEP 1 happen. How can LEADERS who don’t understand SUSTAINABILITY embed it in NATIONAL STRATEGY?
Strategic Corporate Sustainability requires the Nation to FIRST EMBED SUSTAINABILITY in NATIONAL STRATEGY. SECOND DIFFERENTIATE & POSITION THE NATION on A SUSTAINABILITY PARADIGM.
THE OPPORTUNITIES FOR SRI LANKA TO EMBED STRATEGIC CORPORATE SUSTAINABILITY.
1) ENERGY – To embrace the new emerging SOLAR+BATTERY STORAGE technology developed by TESLA with its 1 Giga Watt Plants to strive to be 80% Driven by Renewable energy by 2030.
2) ELECTRIFICATION OF ITS TRANSPORT NETWORK – Set up a SUSTAINABLE TRANSPORTATION POLICY. Ban All imports of Diesel and Petroleum vehicles from 2020-25 and set up an ELECTRIC SOLAR CHARGING NETWORK in SRI LANKA in 2019 and make the vehicle Importation of EV’s duty free. This should include all heavy vehicles including Buses and public transport.
3) CLIMATE CHANGE IMPACTS – Ensure EVERY NEW PUBLIC SECTOR AND PRIVATE SECTOR INVESTMENT takes into consideration the impending CLIMATE CHANGE ADAPTATION needs and have a ‘NATIONAL STRATEGIC SUSTAINABILITY ADVISORY’ body to review and approve every investment.
– Develop a National WATER MANAGEMENT POLICY which includes ‘Rain water harvesting, precision agriculture (uses 10% of the water of Mass agriculture) and de-silt all the water bodies and tanks and REFOREST Sri Lanka to enable the ‘rain water cycle’.
4) LEVERAGE GLOBAL OPPORTUNITY TO ‘MAXIMIZE THE CHINA ONE BELT,ONE ROAD STRATEGY to BUILD SUSTAINABLE VALUE ADDED PRODUCTS’ by LEVERAGING the Nations NATURAL RESOURCES’ like TITANIUM, GRAPHITE, CINNAMON etc to attract Value adding plants to make Sri Lanka’s Hambantota FTZ to be a hub for exporting high tech products to EU, Africa and Latin America. I.e. Graphene drivin Solar panels, water desalination plants & High tech Batteries.
5) EMBRACE SUSTAINABLE TOURISM – The fastest growing and most lucrative segment in global tourism is the ‘SUSTAINABLE TOURISM” set to be 250 million by 2030. Sri Lanka should have a NATIONAL SUSTAINABLE TOURISM POLICY AND STRATEGY to attract this growing segment to SL. The benchmark nation for SL to follow is Costa Rica.
Every one of the above are examples of both ‘EMBEDDING SUSTAINABILITY and DIFFERENTIATING THE NATION’ on a STRATEGIC CORPORATE SUSTAINABILITY paradigm.
This is possible ONLY if we have cadre of futuristic sustainability mind set leaders in positions of influence and leadership.