Why sustainability standards are important for India’s growth

When Indian Prime Minister Narendra Modi came to power in 2014, he promised that ”good days are coming” for India’s 1.3 billion citizens, and unveiled big plans to deliver economic growth and prosperity, tackle corruption, and improve the country’s infrastructure.

A cornerstone of this strategy is the Make in India programme, a drive to get international companies across a range of sectors to manufacture their garments, automobile parts, electronics, and other products in India.

While the initiative has generally been regarded as a success , experts say India can only unlock the full potential of attracting international investment and business if it can prove that it is a leader in corporate sustainability and responsibility.

Roel Nieuwenkamp, chair of the Organisation for Economic Co-operation and Development (OECD) Working Party on Responsible Business Conduct, tells Eco-Business in a recent interview: “If the Make in India strategy is going to be successful, companies have to take into account corporate responsibility”.

“International companies will demand it, as they risk reputational damage, lawsuits, as well as pressure from investors and consumers if they fail to do so,” he explains.

Another reason for India to promote responsible business are the Sustainable Development Goals (SDGs), a set of 17 social, environmental, and economic targets that governments, businesses, and civil society organisations have agreed to meet by 2030.

The goals, which were adopted by the international community last September and officially came into effect at the beginning of this year, are an agreement by the global community—including India—to work towards ending poverty and hunger, achieving a sustainable economy and society, and forging stronger global partnerships by 2030, among other things.

Speaking at last year’s United Nations Sustainable Development Summit—where the SDGs were officially adopted—Modi welcomed the 15-year blueprint and noted that “much of India’s development agenda is mirrored in the Sustainable Development Goals”.

“The goals recognize that economic growth, industrialization, infrastructure, and access to energy provide the foundations of development,” said Modi, as he lauded the SDGs’ emphasis on environmental outcomes like climate change and sustainable consumption.

But while the goals are cause for global optimism, there is also broad consensus that governments alone will not be able to meet the targets; business support is essential.

As Rijit Sengupta, chief operating officer of the Delhi-based think tank Centre for Responsible Business (CRB), puts it: “Limited Government resources mean that integrating business and private finance into the road-map for achieving the SDGs will be crucial for progress.”

Founded in 2011, CRB works to mainstream responsible business practices in India through a combination of training and capacity building, advisory, research, and discussion forums.

The organization works with multinationals, small and medium enterprises, national and international organisations, and governments to tackle issues such as labour conditions, environmental impact, and human rights in India’s corporate sector.

Sustainability standards and the SDGs

One powerful strategy that can accelerate change across the value chain—globally and in India—is the use of sustainability standards, says Sengupta.

The standards—which are often accompanied by certification schemes—are usually established through cooperation between corporations, civil society actors, academia and even governments.  Examples include cruelty-free, fair trade, organic, energy efficient, or environmentally preferable.

Sengupta explains that “the collaborative nature of the standards creation process generates vital support from different stakeholders for their adoption and implementation”.

This support from multiple actors also makes the standards a critical tool for the achievement of the SDGs, Sengupta shares, adding that “standards also provide a framework for credibly assessing progress towards achieving these goals.”

In a bid to get more Indian companies and foreign companies doing business in India to adopt voluntary sustainability standards and collaborate closely with one another and other stakeholders to promote responsible business, CRB has set up an India based international multi-stakeholder platform on sustainability standards, which has emerged as an important platform for dialogues and engagement by global standard setters, businesses, policymakers, and other stakeholders.

What started out as a seminar in 2014 has since evolved into a three-day international dialogue and conference platform, titled ‘India & Sustainability Standards: International Dialogues & Conference’.

This year’s conference, which will be held from 16 to 18 November at the India Habitat Centre in New Delhi, will bring together more than 500 participants to discuss the importance of sustainability standards, and how they can help achieve the SDGs.

In addition to high-level plenary sessions by public and private sector leaders, the event will also feature 22 thematic parallel sessions covering issues such as human rights, water stewardship and finance, as well as sectors like tea, palm oil, cotton, tourism, and sandstone.

“In its third year as a conference, the ‘India and Sustainability Standards’ platform is focused on transgressing its status as an event, to produce tangible outcomes with long-lasting impacts,” says Sengupta.

Last year’s conference, for instance, led to the launch of partnership forums such as the India Water Stewardship Network (IWSN), which seeks to adapt global best practices for water stewardship and management to the Indian context.

It also led to the bilateral Indo-Dutch CSR and Sustainability Forum, which aims to promote dialogue on business approaches that prioritise the rights of individuals in both India and the Netherlands.

Gold standard for standards

As Indian firms and policymakers work to raise sustainability standards across multiple industries, a useful toolkit they can turn to is OECD’s Responsible Business Conduct Guidelines for Multinational Enterprises, says OECD’s Nieuwenkamp.

This is a multilateral agreement with a committee that Nieuwenkamp, who will be delivering a special address at CRB’s upcoming conference, has chaired since 2013. According to OECD, the guidelines are “the most comprehensive set of government-backed recommendations on responsible business conduct in existence today”.

Launched in 1976, the 95-page document recommends best business practices in areas such as the environment, employment and human rights, and taxation, among others.

All 34 OECD nations and 12 non-member states adhere to the guidelines which are now in their fifth edition. This means that companies operating in, or originating from these 46 nations are expected to uphold the standards. Violations are reported and investigated through specially established committees in each country.

Although the standards were launched some four decades before the SDGs were adopted, they have always had sustainable development as a core principle, says Nieuwenkamp, adding that there are numerous areas where the guidelines overlap with SDGs such as preserving life on land and water, clean energy, and achieving gender equality.

“If you look at the recommended standards, it all points to business contributing to the SDGs,” he notes.

And although only 46 countries adhere to them, they are globally applicable because the 2011 update of the guidelines introduced new standards for supply chain responsibility.

This is the main reason Indian companies and policymakers should take note of the OECD guidelines and use them for standard-setting, says Nieuwenkamp.

Sectors like garments, agriculture or minerals are heavily export oriented, and many of the customers in these industries are located in countries that adhere to the OECD guidelines, he explains.

“There is also growing pressure on financiers to invest more responsibly,” he adds.

But while multinational giants such as Tata, Nestle, and Unilever have the resources and clout to transform their operations and supply chains, smaller outfits may neither have the similar orientation or the resources.

These smaller enterprises can amplify their impact by joining existing industry coalitions on responsible business, Nieuwenkamp recommends.

“If you are in the palm oil industry, join the Roundtable on Sustainable Palm Oil; an electronics firm can join the Electronic Industry Citizenship Coalition; and for the mineral sector, there is the Conflict Free Smelter Programme“, he says.

Beyond knowing that they are operating in a responsible manner and helping India achieve the SDGs, companies can also reap tangible benefits from adopting sustainability standards, shares Nieuwenkamp.

These range from avoiding lawsuits, boycotts, and reputational damage to actively attracting conscious investors and customers.

“If a company is focused on short-term profits, they would think that investing in measures to meet these standards is a cost,” he notes. “But long-term thinking reveals that there is an obvious business case for adhering to these guidelines.”

Source: eco-business.com

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