Sustainability: Green or Mean?

What is sustainability? The first image that pops up in our head when we hear this question is that related to environmental and social compliance. Sustainable businesses are often defined as those that have a minimal negative impact on the global or local environment or society. While there is nothing wrong with having a minimal negative impact on the ecosystem, the definition fails to encompass the single most important entity we are talking about, which is "the business" itself.

Would a business that has its P&L getting into red look cool if it complies to all the environmental norms? More importantly, will the business be sustainable? Certainly not! The dictionary definition of sustainability is "the endurance of systems and processes". Applied to businesses in general, this would mean working towards a strategy to make it strong enough to weather the macro-economic storms.

Let us take the textile industry in Delhi as a case in point. Several units had to shut shop or migrate to the neighbouring regions of Noida and Gurgaon (now the NCR) owing to lack of proper water supply. A recent report by the World Bank warns that if the current trends continue, within 20 years, 60 per cent of all aquifers in India will be in critical condition. Yet we see that industries waste water ruthlessly without making even the smallest attempt to recycle it for use. Part of the reason in this example is that water is currently cheap. In fact, excluding the licensing cost for the bore well, the cost of water pumped from the ground comes out to be about one paisa to five paise per litre (including pumping cost).

What would, therefore, sustainability be seen as in this case? Is it merely an attempt to reduce an organisation's ecological footprint? Or is it nearly as essential as the core competency of the business? This is where most businesses fail to make their organisations future-proof.

Let's take the case of textile industry once again. Two textile units in Faridabad, operating at similar capacities, are located in a zone where the ground water levels have receded substantially (150 feet deep), and the water is becoming harder, making it difficult for use for the dyeing process. While one of these factories has invested in land a few kilometres away in a neighbouring district, the other has instead chosen to invest in water recycling technology, and recycles nearly 60 per cent of its water back into the process. By doing this, not only has the organisation made itself future-proof for the long term, but has also shielded itself from other short-term implications from the environmental regulations lurking around the corner.

The purpose of this piece is not to emphasise the importance of businesses for "going green", but to instead reposition sustainability as something that is quintessential to their survival. Sustainability as a concept is not only applicable to reducing the resource footprint, but in every aspect of business. Product innovation to keep the competitor out is an act of sustainability, and so is increasing your supplier pool to make sure that the business is not dependent on one supplier alone. Sustainability is as mean a decision as pricing the product to make sure that all the consumer surplus is captured, and should thus be adopted by each and every business.

Akshay Vohra is a student of Post Graduate Programme (PGP) Class of 2015 at the Indian School of Business. He holds an engineering degree and has had experience in the upstream oil and gas sector with Schlumberger, where he has worked in the field, and had a brief stint in managing field operations. He then moved on to sustainability advisory, where he worked with 35 textile units and three Swedish brands to project manage Program SWAR, which was recognised at the world water week in 2013.
(Views expressed are personal)