Returning to the Society, the country, the World

I am reminded of my humble grand-parents whenever I come across the topics of sustainability, which to me simply meant ‘to live for giving’. With modest beginning in an Indian village, my grand-parents lived very long lives and helped their children and their greater families to seek growth in life in moderation, where the primary purpose was giving as much as consuming, learning and educating rather than benefitting from the education in the material satisfaction of wants.

But then, life is very different in the greater world. I am reminded of the story of the CEO who used to catch a bus to his home back from office. One day he missed the bus by a whisker and he started running after the bus. His home was nearby and he kept running and finally he reached home. When he told the story to his wife, “You know I today ran after the bus and reached home running and I saved a dollar”. The wife was less amused and quickly reminded him, “Why didn’t you run after a taxi, you could have saved twenty dollars?”

Today all of us, whether in industry or outside of industry, could be running after taxis, which do not seem to be there at the first glance; our pursuit for growth takes us to new frontiers where we look for Mines, New land for the Greenfield site, make way where a forest used to be there, or connect the mass of people in urban locations by infrastructure that is non-existent. All these put enormous pressures on the habitat. Without growth every corporation would die, and so will nations, as the removal of poverty paradigm rests on the premise that with growth comes mobility.

Before I delve into the question of how growth impacts us in many ways, I need to talk about innovation. Innovation is a mixed bag. On one hand we see around us things that have transformed us in so many ways, on the other if we look at the things in this room, apart from our mobile phones, almost everything is more than two decades old. To give the most bizarre example, just to put small wheels under our suitcases it took us two hundred years; that is the state of how un-intuitive innovation is.

The numbers are rather daunting, a billion people in India consuming anything from a coke can to driving in an automobile is almost close to creating consumption equivalence of the size of an African country every year. The Global Footprint Network recently in their report has mentioned:

  • India has the world’s 3rd largest ecological footprint, after the USA and China.
  • Indians are using almost two times the natural resources within the country that it can sustain or twice its ‘bio-capacity’
  • The capacity of nature to sustain Indians has declined sharply by almost half, in the last four decades or so.

The challenge therefore for the industry is how do we turn the tide and make way for an approach that is based on Triple Bottom Line or what in Hindalco we say 3P: People, Planet, Profit.

Let me spend a minute on the last P, which is profit. No one should under-estimate its importance. It is what drives growth and investment. To go a step further we can take cue from what Milton Freidman said, “The social responsibility of corporations is to make profits.” But we need to be careful about the larger responsibilities of business as well.

In business therefore, the linear model is not working any more. I remember the erstwhile models of business: start from an input to produce an output that gets consumed; full stop. The model today is circular, what we take we must give back; we must ensure that we have more left out for our children and the generations to come than what we enjoyed through our consumption.

In Hindalco-Novelis, we believe that the model of sustainability must start with our suppliers, go through the manufacturing process, lead us to our customers and then start afresh from the end consumers back to us, through a chain that is recyclable, as many times as possible.

Thankfully Aluminum is infinitely recyclable, every Aluminum Can that Novelis makes, gets recycled in 60 days, which saves 95% of energy that otherwise would have been spent to produce the same Can right from bauxite, to alumina, to aluminum. This is an enormous gift that technology, a sourcing strategy, manufacturing and working closely with customers and end-consumers have brought in.  This is indeed one of the finest example of a shared bottom-line.

In Hindalco the spirit of sustainability moves through every step of the value chain. When we start with a mine, at the very stage of inception, we aggressively pursue the goals of creating a superior livelihood model for the community who live in the vicinity of our project.

We believe that in a country which is endowed with minerals under-ground that is where wealth lies while poverty breeds in so many forms above. When we begin our mining, we ensure that we build colonies for people with civic amenities that befit a livelihood that every man in this country deserves. We make their livelihood be sustainable through innumerable programs, starting from self-help groups, to making them skilled in basic traits and crafts that could lead to job creation on a sustainable basis. Every member of the displaced family gets a job in the project or the Mine. The forest cover is never allowed to be depleted as we make plantations that are several times the original number of trees that got felled.

In manufacturing the challenges start with waste generation and we work on a scheme that is known as Value from Waste. In our Copper Smelters we convert every ton of waste to value; the by-product of the process becomes the value generator through subsidiary processes that reduces the content of the original waste by several factors finally leaving the residual waste which is a fraction. In the Power Plants in our Smelters every ton of waste in fly ash goes for Cement industry usage or to building industry or to the fertilizer industry as using fly ash as fertilizer in required dosage helps as a nutrient to the soil chemistry. To reduce our carbon footprint we have innumerable programs for reducing the energy consumption and we truly operate at the lowest quartile in terms of the carbon emissions in the industry.

The customers are more knowledgeable than we think and they are willing to pay more for a sustainable product, or if they know that it is coming from a company that follows sound principles of sustainability, they would. I remember a Lichtenstein diplomat telling me why all the high cost produce in their small country gets sold out in spite of no tariff barriers being there, “the people of the country have the willingness to pay more for something that is supremely sustainable”. Today our Ever-Can or Everlast are examples of such products.

India has many problems in the industrial land scape, the biggest one of all is creating a supply chain that would make goods possible to be moved efficiently and causing as less pollution as possible. In Hindalco we are embarking on an expansion which is three fold the size of the erstwhile Hindalco, but we want to do this by moving goods in a green manner, which is by trains and rakes rather than by trucks thus reducing our carbon footprint in the supply chain by almost one third.

The community around us in the interiors of our country, whether it is Renukoot or Mahan in U.P., Hirakud, Aditya or Utkal in Odisha, are our true stakeholders; our convergent destinies have only one single objective, how do we live in a framework of shared responsibility of the environment that would lead us to a shared prosperity for our children.

All of us in the Indian industry landscape do not have solutions for everything, we are also learning, assimilating, and rebuilding our business models; this to my mind raises the single biggest hope, as it makes us much better prepared for the future, which otherwise remains uncertain in so many ways.

Procyon Mukherjee
17th August 2014

Outlines of the talk given at the International Management Institute, New Delhi on 23rd August at the Convectus, the Operations Convention on Sustainability

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