Post on 13-Jan-2016
description
IntroductiontoSustainableDevelopment&CorporateSustainability
TataL.RaghuRam,XLRI
Why do we degrade the Environment?
Environmental resources are CPRNo well defined property rights
Belongs to all while using, to no-one while paying
Leads to The tragedy of Commons Results in Externalities
Impact on environment is external to the profit & loss calculations of the economic agent - eg. Car users (-ve), plantations (+ve)
Stakeholders polluters, affected, controllers etc..
Sustainable Development Environmental resources are to be
shared across generations Possible that future generations may
prefer natural capital over man made capital
Whydowedegradetheenvironment?
Policyfailure Institutionalfailure Marketfailure OveremphasisonGDP?
DevelopedVs.Developingdebate
Commonbutdifferentiatedresponsibility Technologytransfer?
EnvironmentalKuznetsCurve
PolicyoptionsforSD
Precautionaryprinciple
Command&ControlRegulations: EnvironmentalProtectionAct,1986 TheRighttoFairCompensationandTransparencyinLandAcquisition,RehabilitationandResettlementAct,2013 Indiahasover200SDrelatedregulationsinplace
Economic/marketbasedapproaches PolluterPays;Carboncess Netpresentvalueofforest,JointForestManagement Taxbreaks,accelerateddepreciationontechnology,Subsidies Carbontrading(Kyoto); Renewableenergycertificatestrading(India);Feedintariffs
SD is all about trade-offs
Strong SD Vs. Weak SD Inter & intra generational equity How much to consume? How much to Conserve? How much to pollute? How much to protect?
Savings is the Key to Sustainability
Human Knowledge
Man-made Capital
Natural CapitalSavings
> = Weak Sustainability requires the sum of all forms of capital to
be constant or increasing over time
Strong Sustainability requires each component to beconstant or increasing over time
Marginal abatement cost Vs. Marginal social cost
CORPORATESUSTAINABILITY
INITIATIVES
Stakeholders
Competitiverequirements
Social demand for SD
Changing Customerpreferences
Rejection/reaction toEnvironmental risks
New businessopportunities
International tradeagreements
InternationalVoluntary standardsSpread of
Quality managementprinciples
Regulatory
Stringent regulations
Increasing liabilities
Legal enforcementPIL /RTI / Judicial Activism
Cost factors
Increasing costsOf pollution control
New technologiesFor pollution prevention
Cost savings fromWaste reduction
DriversofCorporateSustainability
Cost of capital
MiltonFriedmansargument
TheNobelPrizewinningeconomistMiltonFriedmanargues:Fewtrendscouldsothoroughlyunderminetheveryfoundationsofourfreesocietyastheacceptancebycorporateofficialsofasocialresponsibilityotherthantomakeasmuchmoneyfortheirstockholdersaspossible
1962
Stakeholdertheory
Thebottomlineorprofitisnottheonlyconcernforthecompany.Stakeholdertheoryintegratesresourcebasedviews,marketbasedviews,politicalviews,andsocietalviews(Freeman,1986).
R.EdwardFreemanisanAmericanphilosopher
CreatingSharedvalueMichaelE.PorterandMarkR.Kramer
Societalneeds,notjustconventionaleconomicneeds,definemarkets,andsocialharmscancreateinternalcostsforfirms.
Companiescancreateeconomicvaluebycreatingsocietalvalue. byreconceivingproductsandmarkets redefiningproductivityinthevaluechain buildingsupportiveindustryclustersatthecompanyslocations
Mutualismisthewaytwoorganismsofdifferentspeciesexistinarelationshipinwhicheachindividualbenefitsfromtheactivityoftheother.
Stakeholders:WinWinoutcomes
Pleasemeetthemeanestshrewdeststrategistontheplanet
SHAREDVALUECREATION Porter&Kramer,2011
SUSTAINABLEDEVELOPMENTisparadoxical;paradoxisitsverycore.Itexiststhroughopposites,itisabalanceintheopposites.Andonewholearnshowtobalancebecomescapableofknowingwhatlifeis,whatexistenceis.Thesecret
keyisbalance."
Costreduction,Riskavoidance,Revenuegeneration,Innovation,ethicalbusiness
+SocialConsent+
TheartandscienceofManagementhastocatchupwithsustainability
Companies evolve in how they manage SD
Environmental Compliance
Risk Management
Sustainable Development
End-of-pipe
Limit impact of current activities
Pollution prevention;Management systems
Redesign to eliminate impacts of activities
Strategic integration
Change activities and design of industrial system
Friedman
Freeman
Porter&Kramer
Gandhian thoughts
Atimeiscomingwhenthosewhoareinmadrushtodayofmultiplyingtheirwants,will
retracetheirstepsandsay;Whathavewedone
IftherewerenoHimalayas,theentireplainlandofIndiawouldhavebeenadesertlike
Sahara
IfeveryIndianaspiresforalifestyleofanEuropean,thenIndiawillbecomethebiggest
LOCUSTonthisplanet
Arrogantassumptiontosaythathumanbeingarelordsandmastersoflowercreatures.Onthecontrary,beingendowedwithgreater
thingsinlife,theyarethetrusteesoftheloweranimalkingdom
Gandhian thoughts