The facts speak for themselves. In the last 50 years, world GDP multiplied 60 times to reach a level of more than $60 trillion. Yet, two-thirds of the world lives in poverty, with more than a billion people in acute deprivation and hunger. It is obvious that something has gone terribly wrong in the way the world has chosen to pursue economic development and progress.
Indeed, the frenetic global economic race create material wealth, achieve faster and higher growth has fallen woefully short of creating equitable and inclusive societies. In its wake, it has left a trail of widespread poverty and environmental degradation. The somewhat wanton ways of the past have today created a fragile and vulnerable global society. Social unrest across the world including terrorism is a manifestation of this deep-rooted malaise.
At another level, the reckless exploitation of natural resources is also a cause for global warming and climate change. We are indeed living dangerously and the writing on the wall cannot be clearer. Economic value creation alone is not enough. A sustainable and stable future demands that societal value creation is an integral part of economic policies and strategies. The primary purpose of economic development is to enhance societal value. All economic activities need to be aligned to this super-ordinate goal.
India mirrors most of these challenges, albeit on a much larger scale. The latest UNDP Human Development Report places India 119th out of 169 countries.
Inequality in India has widened despite increases in per capita income, the report says, adding that around 55% of the population suffers from widespread deprivation. Around 421 million live in multidimensional poverty, a measure that indicates lack of access to healthcare, education and standard living conditions. In addition, with nearly 17% of the world's population, India has just 1% of global forest resources and 4% of water. Already, half of the country's arable land is water-stressed. Climate change for the predominantly agri-based rural population means future loss of livelihoods apart from escalating the problem of food security.
It will no longer be possible for any segment of industry to look at wealth creation in isolation from its impact on the environment and the society. So far, cost, quality and efficiency were the primary determinants of competitiveness. The rules of the game are now changing. Growing community activism and civil society reaction in the form of consumers and investors will increasingly exert pressure on businesses to adopt sustainable strategies.
Going forward, business competitiveness will dictate that sustainable practices are an integral part of the value proposition. This would mean not only embracing a larger respect for the environment and adopting low carbon growth strategies, but also innovation to create sustainable livelihoods.
Businesses can and must provide proactive leadership to creating an inclusive and sustainable future. Not only in enlightened self interest, but more so because of its numerous touch points in society that enable them to deliver socially relevant interventions efficiently and effectively.
The challenge for businesses is to innovate and craft strategies that not only deliver unique customer value propositions but also enable a twin impact — of ensuring a positive environmental footprint and creating sustainable livelihoods. Innovation that is inspired by a vision to sub-serve
larger societal needs is, to my mind, one of the most meaningful contributions that businesses can provide leadership to and also the most fulfilling.
Our own experience at ITC demonstrates that it is eminently possible to create larger societal value with business innovations that foster an inclusive and sustainable future. Amongst several initiatives, this commitment is manifest in the innovations the company fashioned in its agri-business as well as its paperboards and paper business.
Leveraging the power of the Internet and digital technology, ITC's e-Choupal has today become an internationally acknowledged model of rural transformation benefiting more than four million farmers. Similarly, a choice of strategy to source pulp from renewable plantations, in spite of cheaper imports, have led to creating livelihood opportunities for thousands of poor tribals and marginal farmers.
An intensive research and development programme at ITC developed high-yielding, disease-resistant clonal saplings, which are today grown by farmers, even on wastelands, providing a huge green cover through forests for more than 110,000 hectares. In the process, it has created 48 million person-days of employment opportunities.
The need of the hour is to encourage business models that enable companies to co-create, with local communities, opportunities for sustainable livelihoods as well as enrichment of natural capital. At the same time, civil society need to be made more aware of the tremendous change they can bring about by encouraging a preference for responsible companies.
A rating system needs to be devised that can provide credible information to civil society to enable them to make an informed choice.
Such innovations will spur the creation of a market for responsible sustainable practices. It will also make sustainability a value proposition that companies will embed in their offerings to civil society. That will indeed go a long way in creating a sustainable economy for future generations and a secure planet that will continue to nurture and nourish the billions of its inhabitants.
It is this larger purpose that businesses must provide leadership to and secure a promising tomorrow for the generations to come.
(YC Deveshwar is chairman, ITC Limited)