Seema Arora, Executive Director at the CII-ITC Centre of Excellence for Sustainable Development, is arguably one of those who have perhaps framed the dialogue of sustainability in India. Through almost two decades of work in the area, Arora has been helping corporate India understand the need for sustainability. In an interview with OneWorld South Asia, Arora talks about what she thinks of the Companies Bill, about her journey since the early talk of sustainability and her view of the future.
OneWorld South Asia: You have been working in the field of sustainability for a long time, almost 22 years. How has it been?
Seema Arora: We wanted to start with sustainable development around the time the Rio Summit was happening in 1992. I had just joined CII and the CII has had a focus on the issue through its National Committee on Environment. Under this, we started to work towards the Rio Summit, and also because at that time Ratan Tata who was a part of the BCSD was taking the lead in giving the south-east Asia and India perspective. That’s how we got involved in the wider issues of sustainable development.
At that time the subject of environment was also just starting out. Most work at that time was on the regulatory side of affairs. CII was helping members understand all this. But when we got involved in Rio and understood it at a larger level, we then realised environment is one part of the talk, it’s about sustainability too. The actual goal should be sustainable development.
Back then, business wasn’t ready. Environment for them was a regulatory issue and the thought was why should CII help us on something that is a tick box and a compliance issues. This was 22 years ago.
That’s why we started the environment division at CII, with the objective of making industry understand that environment was not just a compliance issue but a business issue, and it took us a long time to help industry make the transition. But once we got working on it there was a lot of interest, not only from the big organisations but also the medium ones too.
OWSA: How did the CII Environment division finally become the CII-ITC Centre of Excellence for Sustainable Development ?
Seema Arora: We started working on corporate sustainability in 2002. There was no holistic way of looking at business decisions, impact , triple bottom line etc. That’s when we started looking at corporate sustainability and developed a framework, and again went and told companies about the ‘ten steps towards corporate sustainability’. We convinced four companies to pilot it.
This pilot gave us a lot of insights on how companies are viewing this. From ten steps, we made it into four phases. We started looking at how strategy affects business systems, and how sustainability needs to be embedded into the business level. And how does innovation affect all this. At that time, Mr. Deveshwar was the head of CII, and ITC was a company who was doing a lot of work in the field.
We learnt a lot from this project. And we became a Centre through our insights and learnings from these projects. In all this, our focus still remains business, and how business should be done.
OWSA: With the coming of the Companies Bill especially, the focus seems to have changed to CSR more, and the focus on sustainability has been lost. What do you think about this?
Seema Arora: I don’t think it will get lost for people who understand it, these are the ‘self-enlightened’ companies, as I call them. They don’t really need a Companies Bill to tell them about sustainability. For the ones who were sitting on the fence, the Bill should be aimed at them. The problem is when you make a number, it’s easy to make a tick box out of it and just say I made it to the number. I don’t think the goal of CSR is different from sustainability, in a way they both merge. So if all our regulatory processes get aligned to a common goal, perhaps then it will make sense.
That’s why the ones who are sitting on the fence will find an easy way out. Just like 20 years ago environment was a compliance issue, likewise CSR has now become a mere compliance issue. We have to make that evolution and make it a business case.
OWSA: In that sense, do you think multinationals slack off when they come to India? And what about innovations which should be a major part of sustainability?
Seema Arora: Well, does our Companies Bill apply to MNCs? Do we ask them for disclosures? So it’s also about the kind of easy pathway and entry points we give them. I am not talking of ease of investment, but the disclosure par has to be there. They should be asked to make a disclosure about how they are using natural resources, or how their carbon footprint is. Why blame them when we ourselves have created this un-equal level playing field which has different rules.
The sustainability challenges in India are great. The challenges here are a huge opportunity for corporates to innovate. And that is where we see the link between innovation and sustainability. How can companies come up with sustainability and inclusive solutions through innovation is the question. MNCs are seeing these opportunities faster, as they’re used to these global operations; for them it is about new markets
Social entrepreneurs on the other hand, find it easier as they are in touch with the reality so it’s easier for them to find solutions. So perhaps we need a hybrid kind of enterprise. Conventional enterprises don’t have that quick thinking while social enterprises have a different way of thinking. So in our work we are trying to see if there can be a bridge between them and a synergy.
OWSA: You compare Indian companies with western multi nationals, how much disadvantage do Indian companies face if they are low on the sustainability index internationally?
Seema Arora: They definitely face disadvantages. Now there is a growing feeling in the western marketplace, and there is a huge understanding of these issues. So if you are not seen as a sustainable enterprise, who is not responsible it is difficult to get funds or mergers etc. So now a days, routinely investors ask for ESG ratings, which is all about telling the world what you are doing or what your disclosures tell.
Seeing that, we have also created a ‘Sustainable Plus’ label, the world’s only corporate sustainability label. We have been working at it for two years and it is also directed towards consumers as we believe consumers in India have not yet started recognising their right to ask companies to be sustainable.
This label is a company label, and companies can use it on all their products. Its back bone is the ESG ratings. So last year we took 100 companies, and we did their ESG ratings and gave them labels. But it wasn’t in the public domain. It was a mixed bag of results, many sectors didn’t get the top platinum rating, some had the gold and many the bronze. But it is good way to measure a company’s sustainability.
OWSA: Are you looking at the label becoming a Fair Trade-like label, where the consumers get knowledge about supply chains of their products etc?
Seema Arora: We are going to start an entire communication exercise next year around the label. We’ll have channel partners so people know about it. Corporates like Tata Power and Tata Chemicals are already using the label on their website, that too voluntarily.
This is not a product label, it is a company label. And being an annual thing we have given branding guidelines to the companies. But yes, the idea is that a consumer buys a product looking at the label, knowing it is a ‘platinum category’ sustainable company that they are choosing.
Till now, the response has been good. There is request from companies outside, and we want it to make it global as it is innovative; there is no company label anywhere yet. In the end, we need to look at a combination of systems to make sustainability work in India.
OWSA: How good is the disclosure done by companies in India?
Seema Arora: The quality of disclosures has improved but it still is a lot of story-telling. They need to be tighter and crisper. I find disclosures improve when the company understands how this disclosure is going to benefit them and how they can convert it into business. Disclosures out of mere compliance don’t work. Also, inherently companies don’t want to disclose, so the inherent mistrust has to change. In that sense, internal governance has to change and take the lead.