August 19, 2016

Tata Chemicals MD R Mukundan underscores the role of business in shaping and leading in sustainability

Delivering the DS Seth Memorial Lecture, Mr Mukundan emphasises the need for business leaders to focus on not just earning profits, but also play a significant role in shaping the society

It is indeed my privilege to speak today as part of the DS Seth Memorial Lecture. For Tata Chemicals he was a giant.

Let me first begin by thanking Dr Mathur for inviting me to share my thoughts.

It is indeed appropriate and fortuitous that Honourable Minister Jayant Sinha is amongst us today. It was he who flagged off the 75th year celebrations of Tata Chemicals last year by unveiling a book on the company titled ‘Salt of the Earth’ ─ that title would be apt to describe the man DS Seth.

At the outset before I dwell on the topic, I wish to read few excerpts from the book – Salt of the Earth. There is an episode in page 79 and it goes like this.

JRD had first encountered Darbari sometime in early 1950s at a company review meeting in Bombay and he was instantly impressed with his passion and force of personality. JRD perceived he just may be the person to get Mithapur operations moving. “He nearly demolished the place but things began to move,” he said.

Once, Darbari sent his designs to JRD who advised him to have Zola Deutsche, an American expert, to go through the same. A week later JRD was in New York and he got to hear the American’s views: “You must give this young man more self-confidence Mr Tata, because someone who can design like that does not need to consult me or anyone else. Such was the calibre of Darbari.

He was an exceptional chemical engineer but there was more to him. He was an inspirational leader, multifaceted problem solver. Adversity got the best out of him. One such incident also links to the title of my speech.

Tata Chemicals had to confront in 1960s the very real threat of running out of water. It was the toughest challenge the company faced since its inception. The situation turned into full-blown crisis when monsoon deserted Mithapur. Darbari moved fast and with his team implemented 200 schemes including conservation of fresh water, substituting it with sea water, production of fresh water from sea water, etc. The township and factory survived and today thanks to those efforts the plant, which now produces products in many multiples of those times, draws zero fresh water. Speaks volumes of Sustainability years before it became a fashionable word!

So going to the title of today’s talk!

What can businesses do shape and lead in sustainability. Firstly the fact that we need to be sustainable must come from one’s philosophy of business, from the core principles and values. For those businesses which think long-term rather than short-term, think in terms of stakeholder wellbeing as opposed to just shareholder wellbeing, shared value creation rather than value retention, think in terms of being a good corporate citizen; there is no choice. It is not sustainable for such businesses to be unsustainable.

In my view businesses must not only look at building sustainable operations but must move beyond. Let me highlight few areas where we must move beyond:

  1. Influencing consumer choices and behaviour: Businesses have a duty in my view to make available choices to consumer and also make them aware the impact of the choices they make. The very act of driving consumer behaviour then forces the entire competition also to move in that direction. Here are few examples:
    1. The star rating in air conditioners and appliances.
    2. Switch to LED bulbs
    3. SRI for less water usage in cultivation of rice
  2. Influencing supply chain: Business has to go beyond fence and ensure sustainability of the supply chain. Top 100 companies, especially trading firms, control disproportionate share of commodities. These firms can clearly influence sustainable production processes and in many cases can also brand them:
    1. Rainforest alliance for tea and coffee
    2. Ensuring best labour practices at vendor sites, etc.
    3. Making sustainability KPIs integral part of vendor rating.
  3. Transparency about performance and commitment to improve: Businesses have to take lead in reporting the sustainability of the firm through GRI, natural capital valuation, integrated reporting, etc. The key issue is not where one stands but the road map to improve.
  4. Outreach to community and schools: Businesses need to go beyond their boundaries and at least start to influence the immediate community towards sustainable practices:
    1. Pani Samitis.
    2. Gobar gas plants.
    3. Village-level entrepreneurship.
  5. Advocacy: Work with regulators to ensure sustainability includes adoption of best available techniques and technology.
    1. The voluntary shift from mercury to membrane in Indian chlor alkali industry
    2. Energy saving drives.

Companies today, stand at a vantage point, where they have to make tough business choices in order to stay relevant in the competitive market, and also to its consumers. While the bottom line of any business is to make profits and expand its market share, impact on society needs to be given serious consideration as well.

In my opinion, we are catalysts, who have the innate capacity to design development of the society. In a globalised world, businesses can’t function in silos. In the 21st century, a business house has to be vigilant not only about market fluctuations or the incessant change in consumer demand and demographic, but also about the society at large. Firms need to keep close tabs on the ramifications their business process and products or services have on the society. Building stronger communities and strengthening the environment, should become an integral part of an organisation’s reason to exist.

At Tata Chemicals, we are extremely serious about our impact on the larger good of society. When it comes to contributing to the society, we follow the ethos set by the $100 billion Tata group. This involves being committed to improving the quality of life of the communities we serve. All of the group companies strive for leadership and global competitiveness in the business sectors in which each of them operate. Our practice of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. We are committed to protecting this heritage of leadership with trust through the manner in which we conduct our business.

This is why Tata Chemicals has imbibed the mission, ‘serving society through science’. It is our commitment towards providing solutions to challenges faced by the society by harnessing the fruits of science for goals that go beyond business. As a result, our aim is to constantly endeavour to make the world safer, cleaner and greener for future generations through science. We have undertaken a number of steps to identify key sustainability challenges to address and help us achieve our vision of becoming an even more socially responsible corporate citizen. Safety, climate change and energy are common focus points across our organisation.

Our corporate social responsibility programmes engage with and support our key communities both directly and indirectly through the various organisations that we support. Key among them is Tata Chemicals Society for Rural Development, Uday Foundation, Okhai - Centre for Empowerment (a social enterprise promoting artisans), Tata Chemicals Golden Jubilee Foundation and Magadi Soda Foundation. It gives me immense pride to mention here that our employees are actively engaged in our CSR activities, through volunteering programmes such as Hope and Tata Engage.

With numerous social media forums at disposal, corporates are in a constant dialogue with society. These platforms are also an integral part of an organisation’s customer centricity approach. This exposure, at times makes companies susceptible to being judged for their actions. In a way, this complex web of social dialogue makes it essential for business leaders to develop a strong relationship with the society.

That is why I would like to state here the need to imbibe societal development in your business processes, an excellent way of building this relationship. To give you an example from the Tata Chemicals stable, each of our business unit has made efforts to identify issues specific to them through in-depth materiality studies. These include biodiversity, supply chain engagement, water, and promotion of livelihoods, skill development, diversity and inclusion. We shall continue with our efforts to sharpen the focus on each of these areas in the coming years. Additionally, we are also becoming increasingly sensitive to global concerns arising out of processes such as UN Development Goals and Commitments from COP 21, to name a few.

In conclusion, I would strongly emphasise that business leaders must focus on not just earning profits, but also play a significant role in shaping the society. It is important to comprehend that an increased focus on the larger good of society, is an enabler of sustainable profitable growth. Initiating community development and environment sustainability, shall enable companies to build a business-friendly society, one that is strengthened by their efforts, and also yields them a sustainable future.