Corporate Sustainability Past Present & Future

Wastech 2014

sunil r parekh

Associated with Vibrant Gujarat since 2003 and Founder - PanIIT Alumni- Gujarat.

Flow of thought

• The world of corporates

• Corporate Sustainability - short historical perspective.

• CS- Drivers

• Future Trends

World of Corporates

People

• Media, Print, TV.

• Social Media is king

• NGOs

• Investors, Bankers

• Staff

• Vendors

• Customers

• Government

• Regulators

• Service- eg • Lawyers, Accounts, Auditors,

Hotels, Telecom, IT, w/house, Advert

Planet

• Resources

• Elec, fuels

• Water, Air

• Land, Soil

• Transport

• Climate Change Consequences, mitigation

Profit

• Economic- 2008!

• Market Risks- free trade

• Political Risks-Mi India,

FDI, M&A

• Financial-ex, int, I Tax

• Operational Challen

• Environmental Risks

• Investor expectation

• Shareholders

• Civil Society Qs

• Consumer preferenc

• Technology, Innov

CS- Recent Developments India

• Facilitating Compliance with environmental

standards & safe guarding natural resources.

• Stand alone Philanthropy (India-Edu, Healthcare, community livelihood,

infrastructure projects).

• New environmentally & socially conscious CS approaches that

reduce multiple risks & deliver enhanced profitability.

• No more a moral act but an investment in the long term, mature

enlightened self interest of the company.

What has pushed this is

• Stronger regulation, Effective implementation

• Put operations at risk (closures, strikes)

• Social, Environmental issues hurt company value

• Reputation at stake

• Investors, FI, informed Shareholders ask a lot Qs.

• Framework of Elkinton’s Triple Bottom-line.

• CS as a way to convey that the future is secure.

Corporate-Drivers for investing in CS

1. Regulations.

2. Access to capital.

3. Expanded consumer base.

4. Social license to operate.

5. Innovation.

6. Brand and Reputation.

7. Operational Efficiency.

Regulations

Indian Regulation

Regulation

• Many legislations are post crises, post disaster

driven rather than long term & strategic.

• Many are copies of each other !!

• UN calls it an intellectual bankruptcy of

governments. Only 12/27 EU have CS Laws.

Awareness aspect often neglected. swatchch…

• Eg today there are 1700 regulations on Climate

Change world wide!

Access to Capital

• For safe guarding investments, the financial community has developed Responsible Investment Guidelines with a primary aim to minimise social & environmental impacts, now expectations are for a better RoI with CS.

• ESG(Environment, Social, Governance)-

– UN Principals for responsible Investment(UNPRI)

– Equator Principle

– IFC Performance Standards

– The Climate Principle

Dow Jones sustainability Index,

FTSE4Good Index, STOXX.

S&P BSE Greenex (EE) &

S&P BSE Carbonex (Mitigate CC)

Corporates- Balanced Score Card,

Study- 13-31% Earnings drop w/o Sust S chain.

Changing Consumer Preferences

• Ipsos survey in the US showed 25% prefer green products. Youth are more

green, cool!

• Indian youth are also more sensitive & prone to proactively lead a green

lifestyle. 2/3rd<65 year old.

Social License to operate

• Game changers Porter & Kramer say there are 4 justifications for corporate action for community development- moral obligation, sustainability, license to operate, reputation. Eg all extractive industry have to struggle for more land, air impact, water competition, movement.

• Companies therefore use social accountability standards to assess & benchmark performance using SA 8000 of CEPAA, UN Global Compact, ISO 26000.

Innovation

• 72% of corporates surveyed in 2013 (KPMG, E&Y) said that

Innovation is a key opportunity that emerges as their

companies focused on bringing change through social &

environmental engagements! ( more sustainable products, supply chains,

operations, new energy sourcing, better monitoring of operations, cost reduction).

• Far sighted governments lead this change for social

development by engaging attention of corporates thru

innovative programmes, schemes.

Priorities- CS

• Economic Growth & Sustainability is a must

even before we get into talking about Social &

Environmental concerns.

• Cannot be taken for granted eg Nokia, Sony->

Samsung, LG. Severe competition.

• First before CSR, we must CR!

• Public Trust for corporates is at its lowest.

Sensex at 100. 1979 Sensex at 10,000 Sensex at 20,000 Sensex Today: Preeminance-6.

ACC ACC ACC Bajaj Auto

Asian Cables Bajaj Auto Ambuja Cement BHEL

BallarpurI nd BHEL Bajaj Auto Bharti Airtel

Bombay Dyeing Bharti Tele BHEL Cipla

Bombay Burmah Cipla Bharti Airtel Coal India

Crompton Greaves Dr Reddy’s Cipla DLF

Ceat Tyres Grasim Dr Reddy HDFC

Century Textiles GujaratAmbuja Grasim HDFC Bank

Glaxo India HDFC HDFC Hero Motocorp

Grasim Industries HDFC Bank HDFC Bank Hindalco

GSFC Hero Honda Hindalco Hindustan Lever

Hind Motors Hindalco Hinduthan Lever ICICI Bank

Hindalco Hinduthan Lever ICICI Bank Infosys

Hind Lever ICICI Bank Infosys ITC

Indian Organic Infosys ITC Jaiprakash Associates

Indian Rayon ITC L&T Jindal Steel & Power

ITC Larsen & Toubro M&M L&T

Indian Hotels Maruti Maruti M&M

Kirloskar Cummins NTPC NTPC Maruti

Larsen & Turbo ONGC ONGC NTPC

Mukand Iron Ranbaxy Ranbaxy ONGC

M&M Reliance Energy Reliance Energy Reliance I nd

Nestle Reliance Ind Reliance Ind SBI

Reliance Ind SBI Reliance Comm SterliteInd

Scindia Steamship Satyam Computer SBI Sun Pharma

Siemens TCS Satyam Computer TCS

Tata Engineering Tata Motors TCS Tata Motors

Tata Power Tata Power Tata Motors Tata Power

Tata Steel Tata Steel Tata Steel Tata Steel

Zenith Wipro Wipro Wipro

India’s Top 100 most valuable Companies- NSE study

INDIA: Sectoral distribution of companies

reporting to

CDP 2013 Investor Information Request

FUTURE 1

• India- Water & Energy, climate events, availability, Prices.

• Trend- CS as a strategic investment (not a cost) for

competitive advantage thru differentiation, better RoI,

Innovation. Way beyond CSR.(P&G, CLP, UPS)

• CS Investments tied to operational strategy & budgets &

measured the same way as other regular investment

decisions eg expansion, new prod Dev, export dev..

• Realisation-CS as a Financial Solution that offer better

long term returns than various other high short term

payback projects.

FUTURE 2

• Need for common measure & systems that generate

credible information on the actual impact of CS

initiatives. Data, analysis & monitoring is key. retention

• Use of a robust & rigorous framework of regulation by

companies to plan with confidence.

• Good stable Govt sustainability regulation can actually

support Innovation & Growth & mobilise private

capital for CS projects in a big way. Eg Targets greening, Skilling

numbers then…

THANK YOU!

srparekh@gmail.com

Pharma Unit- Laws Manufacturing

1. Drug & Cosmetics Act, 1940 with Amendments

2. The Poisonous Act, 1919

3. The Dangerous Drugs Act, 1950

4. Drugs (Control) Act, 1950

5. Bombay Drug Control Act, 1959

6. Gujarat Drug Control Rules, 1961

7. Packaged Commodities (Regulation) Order, 1975

8. Standard Weights & Measures Rules

9. Standard Weights & Measures Act, 1976

10. Water (Prevention & Control of Pollution) Act, 1974

11. Air (Prevention & Control of Pollution) Act, 1981

12. Environment Protection Act, 1987

13. Prevention of Food Adulteration Act, 1954

14. Indian Electricity Act, 1910

15. Electricity Supply Act, 1948

16. Boiler Act, 1923

17. Indian Explosive Act, 1884

18. Gujarat Water & Air Pollution Control Act .

HR & CC 1. Factories Act, 1948

2. Provident Fund Act, 1952

3. Family Pension Scheme, 1971

4. Payment of Gratuity Act, 1972

5. Payment of Bonus Act, 1965

6. State Welfare Fund Act

7. Workmen’s Compensation Act, 1923

8. Employment Exchange Compulsory Notification of Vacancies Act, 59

9. Apprentice Act, 1961

10. Payment of Wages Act, 1936

11. Minimum Wages Act, 1948

12. Contract Labour (Regulation and Abolition) Act, 1970

13. Personal Injuries (Compensation Insurance) Act, 1963

14. Maternity Benefit Act, 1961

15. Indian Trade Union Act, 1926 and 1947

16. Bombay Industrial Employment Standing Orders Act, 1946

17. Employees State Insurance Act, 1948

18. Employers’ Liability Act, 1938

19. Employment of Children Act, 1938

20. Industrial Disputes Act, 1947

21. Sales Promotion Employees (Conditions and Services) Act, 1976

22. Arms Act, 1954

Finance

1. Maintenance of proper Books of Accounts as provided in section 209-210 & 11 in the Companies Act, 1956

2. Compliance under manufacturing & other companies (Auditors’ Report) Order 1975 under section 227(4)(A) of the Companies Act, 1956

3. Cost Accounting Records (Bulk Drugs) Rules, 1974

4. Asset Register – Maintenance

5. Payment of statutory dues before due dates like advance tax, Tax deducted at source, Term/Demand Loan repayments to Financial Institutions, Banks, etc.

6. Central Sales Tax Act, 1956

7. Gujarat Value Added Tax (VAT) Act, 2003

8. Gujarat State Tax on Professions Trade, Calling & Employment Act, 1948

9. Income Tax Act, 1961

10. Central Excise & Salt Act, 1944 and rules framed there under.

11. Medicinal & Toilet Preparation (Excise Duties) Act, 1955

12. Excise (Spirit) Act, 1863

13. Collection of Statistics Act, 1953

14. Drugs (Prices Control) Order 1995

15. Compliance of Accounting Standards

16. Foreign Exchange Management Act, 1999.

17. SEBI Act.

Company Affairs Dept

1. The Companies Act, 1956 / 2013

2. Securities Contracts (Regulation) Act,

1956

3. Industries (Development &

Regulation) Act, 1951

4. Listing Agreement

5. SEBI (SAST) Regulations, 1997 as

amended from time to time.

6. SEBI (Insider Trading) Regulations,’92.

Legal, Procurement, Supply Chain, Insurance- another 29 Laws, Acts, registrations, filings