The business sector is set to play an increasingly important role in the global quest for sustainable development. The key is for innovation to meet the goal of providing welfare without a high level of natural resource consumption.

There exists significant interest within the Indian business sector in sustainable development and innovative solutions that can be applied to achieve this goal. The approaches utilised in this regard by leaders in the Indian corporate sector are well ahead of many of their western counterparts, which are often, and often erroneously, viewed as leaders in the field of corporate social responsibility (CSR). A number of common denominators exist within the progressive approach of these Indian companies, and these have been collectively referred to by one Indian company as third generation CSR.

This third generation CSR is an approach where companies look to ensure that their core businesses deliver sustainable development results. This differs from the first generation of CSR, that looked at philanthropy as one way of using profits, and the second generation that was searching for ways of minimizing the negative impacts of the companies’ operations.

Third generation CSR means that environmental and social concerns are the starting point for the business activity, as opposed to being factored in at the end. This is a result of welfare contribution being a priority even when it does not translate into immediate returns.

Rather than compromising on profit, companies provide information that allows government to proactively change business regulations in order to reward companies which deliver on social and environmental objectives, such as reducing the use of natural resources.

In order to ensure that Indian companies can further develop this ‘third generation CSR’, it is vital that proactive leaders work together. The Indian business community must itself find ways to encourage this development, and the Indian government should ensure that leaders in the corporate sector are rewarded.

India historically possesses a tradition of innovation contributing to significant changes, not the least seen in the area of information technology. The country also possesses a young population capable of challenging existing ideas and participating in global discussions regarding sustainable development. English skills are in abundant supply, allowing the creation of companies in the growing service sector that cater to clients all over the world. Although a large proportion of the Indian population live in poverty, the country also possesses a rapidly growing middle class and a very influential group of wealthy industrialists. Taken together, this situation makes India’s domestic challenges very similar to global sustainability challenges, implying that business solutions which are successfully implemented in India, are also likely to be successful in other developing countries.

In a report I wrote with Rajesh Sehgal and Dennis Pamlin from the WWF, we outline initiatives to work with Indian companies to develop roadmaps which explore innovation that can move society to a point beyond incremental improvements in sustainability. The outcomes of the initiative should be practical tools that can be used both to develop new goods and services and to highlight the barriers that exist for companies to move towards sustainability. A particular focus will be on the means by which foreign companies and governments can support innovation in India that contribute to globally significant resource savings.

The Confederation of Indian Industry explains sustainability in the Indian context:

The current paradigm of rapid economic growth along with the need of conserving the natural and ecological resources, challenges the very foundation of the manner in which business is done today. It challenges the traditional business management theory, which echoes Milton Friedman’s famous statement that there is ‘only one responsibility of business: to use its resources and engage in activities designed to increase its profits.’

The fact that rapid economic growth is the only realistic means to lift the poor out of extreme poverty and the fact that most economic activities depend on product and services provided by the ecosystems, necessitates the ushering of a new business paradigm which enables rapid economic growth without compromising the capacity of the ecosystem to sustain, nurture and fuel economic development and human well-being.

How have Indian companies been doing thus far?

Even if the concept of considering CSR as part of core business is new on the international scene, it has deep roots in the Indian business community, where social conscience has been a part of business activities since long before the industrial revolution which occurred in India in the second half of the 20th Century. Although, the formal usage of the term ‘CSR’ is relatively new, major corporate houses in India, such as the Tatas, Birlas and Ambanis, have sought ways in which to address social needs, beyond the pursuit of short-term profits, as long as they have existed. As JRD Tata once remarked ‘No business is worthwhile unless it serves the needs of the country and its people’. This remark reflects an understanding of the role of business beyond the idea that ‘the business of business is business’ which dominated the developed economies for many decades.

However, most observers would seem to agree that the focus of CSR activities in India is still primarily on philanthropy. The most consistently quoted company with regards to CSR is the Tata Group (now comprising 91 different companies), the activities of which cover all aspects of CSR. It is therefore interesting to note that certain companies within the Group, such as TCS, are leaning towards a business approach where environmental and social concerns are taken into account during the inception of business activity.

Some of the newer, globally competitive IT companies such as Wipro and Infosys are also seen as possessing a sophisticated CSR approach to responsible business. The pharmaceutical company Dr. Reddy’s has produced two Sustainability Reports, the most recent in 2005. These reports integrate environmental management, health and safety, employee development, and community involvement. According to a CSR survey report from 2002, 76 per cent of Indian corporations have defined environmental requirements in their corporate policies.

See the full report: Indian companies in the 21st century – An opportunity for innovations that can save the planet.