India Inc. Sprints Towards The Green Line

MOVING BEYOND mere green washing in public to concrete action in private, India Inc. is stepping up its game on commitment to sustainability, with companies spotting the opportunity in being early adopters of sustainable development.

Nearly two decades ago, even before the 2% CSR mandate by the government (companies are required to spend a minimum of 2% of their net profit over the preceding three years as CSR), ITC Hotels was one of the first to embrace ‘sustainable luxury’. “At that point, we wanted to rebrand ourselves. In those days, it was a myth that luxury and sustainability cannot go hand in hand. We believed in the triple bottom line concept, and that is how the philosophy of the company came about,” says H.C. Vinayaka, vice president, technical, EHS & sustainability, ITC.

The result: ITC’s 12 ‘net-zero carbon’ and three ‘net-zero water’ hotels, a global first. In fact, the company has surpassed the U.N. 2030 sectoral targets for the third year in a row while recycling more than 99% of solid waste, and has successfully mitigated single-use plastic at nearly 150 touch-points, leading to a reduction of 2.5 lakh kgs of plastic waste annually!

India Inc. is increasingly embracing the view that sustainability and staying ahead of the curve makes businesses future-fit. A 2023 report by Deloitte shows 84% of business leaders agree global economic growth can be achieved while also reaching climate change goals, and 75% say their organisations have increased sustainability investments over the past year, indicating a likely groundswell of action within the industry.

Hyundai Motor India Ltd. (HMIL), present in the country for the last 27 years, has targeted being carbon neutral by 2045. That is more aggressive than India’s goal to achieve carbon neutrality by 2070.

“We don’t want to be considered only as a manufacturing giant but also as someone who is innovating in sustainability and governance. Our focus is towards sustainability and developing the new ecosystem for the future generation, and it’s percolating from the top down,” says Puneet Anand, associate vice president and vertical head, corporate affairs, HMIL.

With fresh investments worth ₹32,000 crore over 10 years beginning 2023 aligned with future technology, sustainability and corporate activities, Hyundai boasts of the greenest automobile factory in the country. The use of renewable energy (RE) in the factory in Chennai is close to 64% and the goal is to attain RE 100% benchmark by 2025, assisted by the installation of a 10MW solar power plant in the factory nearly three years ago. Furthermore, the Chennai plant is currently 80% water neutral and aims to be 100% by 2028.

“We have six ponds dug in our factory and they have the capacity to hold 3,50,000 tonnes of water. Even without rain and supply from the municipal corporation, we can sustain our operations for 120 days. Around 95% of the rainwater is fed back into our plant,” explains Anand.

Through sustainable operations, HMIL has saved 19,200 tonnes of oil equivalent energy, which has led to a reduction in its CO2 emission by 1,02,060 tonnes. The company aims to reduce it by 1,61,940 tonnes in the next five years.

The world is on a countdown with the climate clock ticking fast. According to the World Economic Forum’s Global Risks Report 2024, 1.5 degrees will be breached in less than six years and eight months, which means climate change is one of the greatest risks for the next decade.

“Sustainability has to be the centre of corporate strategy, be it decarbonisation, mobility, manufacturing process or green infrastructure. It is a case for survival and an existential crisis,” says Sanjiv Puri, chairman and MD, ITC, at a recent CII event.

The Green Credit Programme, unveiled at COP28 by Prime Minister Narendra Modi aims to incentivise environmentally friendly actions by the industry, individuals, village councils, and city authorities, which is expected to become an important tool in the fight against climate change.

FMCG giant Marico recently announced its Jalgaon facility has been certified water neutral with independent verification by DNV Business Assurance India. The facility has generated more than two times its water capacity in FY23, compared to its total consumption. The total water credited is more than the total water debited, showing positive water balance status.

With a goal to achieve net-zero emissions across its manufacturing facilities by 2040, Marico’s energy footprint in India includes 67% sourcing from solar, wind and biomass. The Perundurai facility has been certified as carbon neutral since FY20 and operates on 100% RE. It utilises smart energy installations to optimise operational efficiency.

“We have always viewed our business operations through the lens of sustainability, even before it became the norm in corporate India. There has been a growing awareness within the business ecosystem about the need for greater accountability as well as commitment beyond just maximising profits,” says Amit Bhasin, chief legal officer and group general counsel & secretary, CSR committee, Marico.

The avant-gardist of the industry, the Tata Group has never shied away from its responsibilities, be it towards the environment or people. Its auto arm, Tata Motors, the first in India to mainstream EVs for personal mobility, is as enthused about its sustainability goals. It is committed to achieve net-zero greenhouse gas emissions for its passenger and commercial vehicle businesses by 2040 and 2045, respectively. Tata Motors also plans to source 100% RE in operations by 2030 with a keen eye on interim science-based targets, ensuring a sustainable and low-carbon future.

“Sustainability is when you take ownership far beyond compliance. There is no conversation in Tata Motors where I don’t see an opportunity in renewable energy. When we began the journey, we thought we would lose money but when we did the math, we saw huge opportunities in India. The opportunity for wind and solar is a business positive proposition,” says Jyotin Kutty Sastabhavan, vice president and chief sustainability officer, Tata Motors.

Business Case

For most businesses, immediate needs and profit numbers tend to overshadow sustainability concerns. Ultimately it all boils down to — does it make financial sense to be sustainable? It is a quotidian belief that adopting sustainable practices leads to higher costs.

For ITC hotels, the challenge was to convert the already built hotels from the 1970s and 1980s. Every hotel is situated in a different state and in a diverse country such as India, regulations also vary significantly. Around 2010, from materials and equipment to infrastructure and logistics, hotels across the nation were modified to be more energy efficient.

“It will cost you money. But if you invest in this now, you are going to get a return on your investment in some years. That is the whole idea,” says Vinayaka.

Another approach is to look at sustainability like a portfolio, suggests Sastabhavan. For a large group, some aspects will make money, while some may be slightly expensive or cost neutral. “Overall, all of these put together will make you money,” he adds.

There is compelling evidence indicating that adopting a sense of purpose can significantly contribute to a company’s growth, while also positioning it as a sustainable business with forward-thinking strategies. A study by Kantar found businesses driven by purpose grew 175% from 2008 to 2020 globally, compared with 70% for brands with low levels of purpose.

“Some companies are far ahead. Some are joining the conversation relatively later. Some are grappling and some are still in the old world,” says Sastabhavan.

“If I don’t invest money in sustainable practices now, do you think we will be able to get access to any resources in the future? This is for the longevity of my business,” adds Anand.

Hyundai has invented a new technique, dry wash service, in its workshops, which uses an organic solvent to wash a vehicle rather than water. Over the last five years, the company has saved more than 650 million litres of water through this initiative. Most factories have also replaced incandescent lamps into LED lights in a bid to conserve electricity. All of these combined, along with the utilisation of RE in plants, help save costs.

There is also a growing awareness among businesses to look beyond just maximising profits. “The fact that consumers have also shifted their preferences towards more sustainable products and services reinforces the imperative for businesses to integrate sustainability into their operations,” says Bhasin.

Government Push

At the core of India’s vision to become a $26 trillion economy by 2048 lies the government’s strategy to chart the path for a sustainable business environment. The Centre has introduced various regulations and initiatives such as panchamrit, the five-fold strategy to fight climate change, and a target to achieve net-zero emissions by 2070.

However, in a multi-party democracy such as India, this does not seem enough. Industry leaders face the challenge of state regulations in contrast to Central policies. Operating in different states comes with its own set of problems.

Despite the India opportunity being huge for Pernod Ricard, the French spirits company, the Indian arm has a tough time operating in different states due to the federal structure. “The process in which alcohol is configured in India is not that efficient because of varying state excise and regulations. You end up having a footprint which is very diverse and complex. We’ve got 24 plants and it becomes very difficult at times,” says Gagandeep Sethi, head of sustainability and responsibility, Pernod Ricard.

Even in terms of logistics, Pernod is unable to decrease its carbon footprint as India is still nascent in terms of EV adoption from a commercial vehicle standpoint. “We are looking at CNG where we can explore short hauls in cities such as Delhi and other places, but it’s very small,” he adds.

On the packaging front, the company aims to remove 500 million pieces of permanent mono-cartons annually from the entire brand packaging across the portfolio in India. With this initiative, the spirits giant hopes to reduce packaging emissions equivalent to 30,000 tonnes by 2030.

But unless government policies are aligned with every department in every state, India’s sustainability vision may stay compromised. “Sustainability is not about glossy pictures or anecdotal stories. It’s about frameworks, about numbers that are embedded and based on science,” sums up Sastabhavan.