Turning Out ECO-MBAs

* B.Schools are teaching students about the Tripple Bottom

Line People, Planet and Project.
OR
* Economic, Social and Environmental
- Not Hierarchical
* Basic Philosophy Companies must factor environment into
their spreadsheets
Green Education Its Power

1. Paul Erlich Book population Bomb 1968
2. Population in 1970 3.6 billion
3. Planet supported this without grumble
4. Large population (China, India) Asset or Liability
5. Violation of Green Contract
6. PIL M.C. Mehta
7. Supreme Court Orders 1990s, What a pity?
8. Govt. Committee for B.Schools
9. IMI L setting up centre for Business for climate change.
10. Implementation at schools and universities
11. Failures at all levels schools, universities, UGC, AICTE and management schools.
12. What career young people take will be influenced by Business.
13. Therefore not Govt. only, but leadership from Private Sector may pave path for Eco-
Friendly Nation.

Environment

* Nobel Prize 2007
- Al Gore
- IPCC R.K.Pachuri
* Environment is not a free floating concept
* Environment also relates to people, organizations and
society.
Sustainable Development

* U.N. Report (1987) Our Common Future defined S.D.
as:
Development that meets the needs of the present generation
without compromising the ability of future generations to
meet their needs.
Sustainability principle is a larger concept and it means
(a) balance of economic, environmental and social
objectives.
(b) It is both a means and end.
Sustainable Development (contd.)

However, it is the economic objectives that have been of great
importance. Can the three objectives be integrated it is more
or less a political question and is not easy to resolve.
e.g. USA and Climate Change
High on Agenda of Sustainability of Our Planet

* Climate change and issues relating to it is now the central
theme.
* Sterns Review (2006):
(a) Global warming can lead to loss ranging from 5% to 20% of
GDP every year.
(b) Average 1% of current World GDP could help stabilise
Carbon Dioxide level at 450 ppm (1% = $600 billion today)
(c) Suggests emission quota
(Should quota be set at National or Per Capita Level)
(d) To enable the present generation to save the future
generation.
Economist and the Economy
* Science and its application Technology has a role in our lives and the
economic growth.
* We see cellphone and internet is now our daily activity. CT Scans, MRI,
pace makers all show how Science affects our lives. We run to science for
our problems. Science takes us to expanded understanding of Universe and planet
earth.
* Yet the voice of scientists does not capture attention until the Economist
endorses it.
* Economists provides us guidelines for development. Economist create
economic theory and economic indicators:-
Total value of goods produced and services provided within a country
during a year GDP.
- They create models that indicate market as the most powerful instrument
for driving development.
- The question is whether the market supports sustainable or unsustainable
form of development.
Market Economy (contd.)
* Many environment / ecological services do not move through market A
GDP perversion. (Services like pollination, Oxygen supply, nutrient cycling
/ conservation, soil erosion are examples of ecological services).
* Market does not take into account external costs like air, water, land
pollution and resource depletion. These external costs are not internalised.
* Further, the process of capitalism (USA is the leader of free market and
capitalism) organises the internal operations of a corporation resulting in
concentration of wealth and power at the apex.
* Arun Maira mentions that wealth of Americans Bill Gates and Warren
Buffet = combined wealth of 100 million poor Americans. Many Americans
criticize this form of capitalism.
* Will such process work in India?
* GDP is false:
Replace a power plant with a windmill farm (Earn Carbon Credits), it will
add to GDP, since building windmills is investment. However, the country
will have the same energy output.
Inclusive and Sustainable Business Enterprise

* Business corporations have a pivot role in society, being the engines of
creating wealth and capitalism.
* It is their function to take into account the footprint of their activities on the
planet, on its ecology.
* They must align capital markets to turn business towards sustainability,
where profit is equated with social and ecological gains.
* It is possible to tackle the missing markets such as unpriced assets like
biodiversity or risks from climate change. A pricing mechanism must be
devised. In Costa Rica eco services are priced.
* Dont forget (Oystein Dahle)
Socialism collapsed because it did not allow prices to tell the economic
truth. And capitalism may collapse because it does not allow prices to tell
the ecological truth.

Let Free Market Economy Proceed but with Caution

* Arun Maira says it is possible, Y.C.Deveshwar, Chairman, I.T.C. says it is
possible to have development that is sustainable as well as inclusive.
* There are cases of many corporations that are meeting at least two criteria of
Sustainable Development.
- Economic and environmental and few claim they are also moving
towards the third social equity.
* Companies are adopting strategic approach to climate-
Michael Porter (Oct. 2007 HBR)
- Selling Services
- Watching Supply Chain
issue of CSR
CSR and Sustainable Enterprise

Globalization
















Technology
Economic Stakeholder
Customers
Creditors
Distributors
Suppliers
Organizational
Stakeholders
Employees
Managers
Stockholders
Unions
Societal Stakeholders
Communities
Government and
Regulators
Nonprofits and NGOs
Environment
Pyramid of CSR
The Hierarchy of Corporate Social Responsibility

Discretionary
Responsibilities
Ethical
Responsibilities
Legal
Responsibilities
Economic
Responsibilities
CSR Ladder

* Becoming flat or levelled
* Social and economic benefits meet and stand at par with each other.
* Discretionary responsibility like environmental issues become important.
How far Companies can achieve CSR objectives

* Shareholders influence
* Average holding period for stocks has dropped from 5 years in 1970s to 6
months today
* People are not investing in your company. They are investing in your stocks.
* Share holders are owners. They are changing everyday. How could
Management balance competing interests.
Milton Friedmans Verdict

CSR is a distraction from the firms profit - seeking and wealth - creating functions.
As long as company can remain in business it should be entitled to do so because it
provides jobs to the society and a return on investment of share holders.
Charles Handys Verdict

The purpose of business is not only to make profit. It is to make profit to do
something more. That something is the real justification for business. It is a moral
issue. To mistake means for ends is not desired. Profit is a means to a larger end.
The Strategic Lens

In the past companies externalize some of their production costs to society by
polluting the environment. Because majority of the people desperately need jobs,
pollution seems of limited concern. CSR then seems a luxury. As societies become
more affluent, social issues grow as does the ability of the society to afford
solutions.
Environmental Sustainability and CSR

There is a theory that there are financial risks for any corporation for not
conducting business in what is considered appropriate by the society.
Further, it is believed that there are business and financial benefits to be had by the
company operating within social and sustainable policies.
A Case

Anheuser Busch, the brewing giants say it recycled more than 97% of solid waste
in 2003 and have become Worlds largest aluminium can recycler. They say they
saved 750 million pounds of al. in 2003 and same amount of paper board. They
were the recipient of keep America Beautiful Award in 2003.
Case of ITC
* First company in India to publish SR (Sustainability Report) annually
since 2004.
* Salient features of Sustainability Report is all about Triple Bottom Line
like full cost accounting i.e. internalization of externalities.
* Social reporting of Body Shop.
* ITCs Chaoupal Initiative compromises of 6400
Choupals 3.5 million farmers, 38,500 villages in 9 states
Social Forestry
Employment
Sequestration of 2000 kilotonnes of Carbon dioxide, water shed
development 27,000 Hectares