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June

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Why should you embrace Sustainability – Part 2 of 2

by Harsha Yadav

This blog post is a continuation from the post I had made previously here where I spoke about how the language of Sustainability is changing.

In this post, I focus on some cases where Sustainable practices followed by companies are putting them in good stead while in some cases, how lack of sustainability thinking and planning has risked their revenues and reputation.

First, we start with some positive stories.

CEMEX – The Patrimonio Hoy Program

So when you are a giant construction materials group with over $15 billion in revenues, but seeing a 50% drop in revenues, what do you do? Cemex went back to basics, understood that there is a large market at the bottom of the pyramid in poor people constructing their own homes, and decided to work this market. Integrating sustainability into their core business model, Cemex started a financing program called Patrimonio Hoy. It provided poor people access to building materials (not just cement), financing options to purchase material and technical help through CEMEX team comprising of an Engineer, Architect and a Manager. This way, poor people who cannot afford a home can self build their home through technical, financial and material support from CEMEX.

 

Cemex Sustainability

 

The impact of this program was huge – for both the families supported and CEMEX. This business model already been replicated successfully in Colombia, Costa Rica, Nicaragua and Dominican Republic and in total more than 380,000 families have benefited. Also, CEMEX gained:

1. New markets – only one player in this huge market

2. Reputation – of being supportive of helping people build their dream home

3. Revenues – in both short and long terms

So we can say that this is a program which has Sustainability embedded into its core. Full report can be read here.

 

Puma – Supply Chain Transparency & Other Programs

Another company that comes when we speak about Sustainable companies other than Unilever, IBM and Google is Puma.  Their CEO, Jochen Zeitz is a very vocal practitioner of Sustainability. So much so that he is on the B-Team of CEOs including Richard Branson, Muhammad Yunus and Ratan Tata whose objective is to lay down rules for Sustainable practices in business.

The entire organisation has been very active in incorporating sustainable business practices across their value chain. In-fact, it’s key suppliers have also been forced to form their own sustainability strategies and release a standard report on their practices. Puma not just measures its Carbon, Energy and Water impact, it has managed to put their impacts in exact $ terms through its Environmental Profit & Loss statement – first in the world and a very difficult achievement.

It also does extensive audits of its suppliers to make sure that the supplier’s employees are treated fairly and well. This has held them in good stead so far.

Puma Environmental Activities

My prediction is to keep looking and Puma will be the first template of how a company should approach Sustainability and how it should progress on this path, step by step.

The advantages Puma has now :

1. Quite shielded from controversies that it’s competitors faced on child labour in Pakistan, Bangladesh and China.

2. Huge respect from general public, academia, industry – within its sector and outside.

3. Supply chain resilience against and incidents.

Read about their full Sustainability program here.

 

Now coming to the negative consequences. While there are multiple ones, I’ll highlight only one for now.

Bangladesh Rana Plaza Building collapse – H&M, Primark, Walmart

There was a building – Rana Plaza, that collapsed on April 24th, killing 402 workers and injuring 2500.  All of them working for suppliers of large, global clothing companies such as H&M, Primark, Walmart, Benetton among others. Tragic as the incident was, even more tragic was the vehement denial of the brands that were paying the suppliers for the deliverables.

Bangladesh Building Collapse - Sustainability

At least Primark stepped up to take responsibility and subsequent clean-up, while most of the other brands completely denied their involvement in outsourcing to companies operating from that building. Though the companies are not directly responsible for this issue, it becomes an ethical or moral issue for the companies to make sure that their suppliers, among other things:

1. Do not harm the environment

2. Treat their employees right – with respect & dignity

3. Do not indulge in slavery or child labour and pay their employees well

4. Are ethical in their conduct with the local govt.s

If this evaluation can be done prior to awarding a supplier a contract, it would save the company a great deal of embarrassment, loss of resources in fire fighting and reduces their reputational risk.

 

All this comes from thinking through the Sustainability lens. And that is the key to building ethical, responsible and high performing organisations that will last and continue to grow.

 

Tailpiece

Do these images below look familiar?

Delhi Airport Flooding

Yes, they are from Delhi Airport flooding due to monsoons last week.

And here is the backlash against the company that build the airport on social media:

GMR Delhi Airport Flood CropperCapture[5]

 

Could this loss of brand image – something that took years to build upon – have been protected if there was some sustainable planning approach taken while designing and building? Let me know your thoughts.

This will be a more frequent occurrence everywhere else in future for a world ravaged by climate change.

 

Disclaimer: We have used a lot of images to which we don’t own the copyrights. If any of these images are yours and don’t want it here, please mail me on harsha[at]efficientcarbon[dot]com and we’ll remove the images.

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