‘Don’t blindly oppose progress. Oppose blind progress’

Adam Werbach, author of Strategy for Sustainability and Global CEO of Saatchi & Saatchi, is one of the foremost experts in sustainability strategy. Wearing torn jeans and a loosely tucked-in shirt, Werbach hardly seems an evangelist. In the book, he explains how sustainability moves beyond compliance-oriented green initiatives to become a key strategy for achieving both competitive advantage and meaningful change. He was recently on a tour to convert Indian CEOs to build more businesses with green initiatives. He met captains from as diverse fields as TCS, Asian Paints and the House of Godrej. Werbach says he hopes Indian companies will top the global list that are environmentally friendly some day. Today, none of the Indian companies have the attributes to be in that list. He’s hopeful though, as family businesses are “multi-generational” and therefore are more suited to build sustainable businesses that they can to leave behind for their heirs. Excerpts from an interview with DNA:

What have you learnt from your trip to India?
In many ways, this is a learning trip for me — the opportunities and unique perspectives of Indian businesses on sustainability. I found a tremendous thirst among Indian businesses to become more active in bringing sustainability into their businesses. My intent has been to meet with lot of Indian corporate leaders and to visit some small firms to see their work. (His visit included a trip to Dharavi to see the rag pickers and their business). I am doing a lot of training at the Saatchi office. Saatchi & Saatchi is launching a sustainability division.

When you talk about sustainability what does it mean? Going green?
Generally, when people say sustainability they mean protecting the environment. But sustainability has four unique streams. Social, economic, environmental and cultural and only when all four work together do you have true sustainability. In the business context, sustainability means long-term profitability. Companies can set themselves up to be profitable for the long term. Too often sustainability is confused with the word environmentalism or green and is all about protecting the environment — which is important — but is not the sole purpose of the businesses.

In India, many would argue that the carbon footprint of the Indian population and corporations is far less than that of their western counterparts. In that context, do you think sustainability should be an overriding concern for Indian companies to invest in such pursuits?
I think in the same way most Indians have never had landline phones but have a cell phone. They jumped over an old technology. Similarly Indians should jump over old style business management which doesn’t look at sustainability but looks at growth at all costs. The great challenge for India is how to maintain a 9% growth for the long term. The growth is already heating up in terms of development battles, social unrest and unless Indian businesses begin to proactively connect and deal with those issues, they will slow the growth.

To get environment clearance is very difficult in India. There are campaigns, lobbying and an indiscriminate way of taking decisions. It hampers development and is seen as a growth deterrent. What is your take on this?
There is a saying, you shouldn’t have blind opposition to progress, but you should have opposition to blind progress. When development isn’t in the best interest of the local people and that area, or the water resources of the area, that shouldn’t happen. Overall, if you have a broader picture and you look at India’s growth over a period of a decade or over 25 years, you tend to think about protecting your natural and human assets of India and not just corporate assets.

You’ve been meeting a lot of corporate bosses. What’s your takeaway? Have you done an audit of the work they have done on sustainability so far?
Typically, we look at businesses moving away from rejecting environment as not important and as an unfair cost burden. You can find flaws and eventually go the way to innovate and see it as not a burden but an opportunity. Most Indian businesses are at the compliance stage. They are seeking simply to comply with Indian or global standards. That’s no small feat. But the challenge would be taking them to where more developed economies have begun to take them.

What about China? For the government and companies in China such issues hardly matter. Would it cost them dear in the future?
It has already cost them damage. As I said, there are four elements — social, economic, environmental and cultural. My experience is that if you take one and just focus on the economic, others will slowly drown eventually. India will be much more resilient in future and has a better chance not because of its fiery growth, but because of its democratic society. Those democratic concerns will have to be taken into account.

But look at companies that trumpet sustainability. These are foreign oil companies and firms such as ITC. But can recycling paper alone make a businesses sustainable when their core businesses are not environment positive?
They cannot. Again, you can have a very environmentally correct cigarette. But, it will still kill you. It is not socially correct. I think more broadly, firms such as  ITC are looking to broadly diversify itself from cigarettes. It is a right decision strategically for them to look forward. Many cigarette companies just double down focusing on the same tobacco business.

Can you name some businesses that can do well or thrive on sustainability. Are there are business opportunities here?
Any business that has heavy water or energy or raw resource input has a huge opportunity to lower its base cost. Businesses in power generation, mining have extraordinary opportunities to shave costs. Consumer products and retail have significant opportunities to push costs out of the system in items such as packaging and transportation. In the digital world, there is huge digitalisation that will measure efficiency. So in the market of sustainability there are thriving markets for carbon trading and certifications of green standards.

Carbon trading has taken off. Good for Indian firms?
In Cancun, they are trying to get systems set up more effectively. It is a good opportunity. The inflow of dollars to leverage investments, capital investments for low-energy technology … I think it is a good opportunity for India.

Tell us a little bit about your early involvement in environmental issues…
I first got involved basically when the mountains behind my house (in southern Los Angeles) were being destroyed. They were building housing and I used to play in a place called Joshua Tree National Park. That was being destroyed by miners and sheep farmers. I started a student programme called the Sierra Club and went on to run that organisation. Overall, I became frustrated that although we could protect the Joshua Tree National Park we weren’t moving fast enough. You know the wealthy and developed countries have protected islands. But we are in this planet together. There is no way the US can survive if India doesn’t. If there are people hungry in India then the US is affected. We are intricately connected.

How did you succeed in making Joshua Tree a national park?
We actually started a student programme. We organised and drafted a piece of legislation called the California Desert Protection Act. We started by just educating. There is an  endangered species called the California desert tortoise. It is a very small slow-moving tortoise. We used to take these creatures to the offices of Congress members and let them go.
It created a ripple, and all of a sudden the people in the office will be down on the floor playing with them and the Congress representatives realised that they had to vote for it now by legislating to protect the tortoise. We used to do door-to-door campaigning, emails...

That’s more a Gandhian way of protesting..
I am a great fan of Gandhi and the kind of activism we practiced was similar. There are two options for people who wish to change corporations. One of them is to destroy them and the other is to change the way they think. I have actually spend most of my life trying to make them better. If you believe they are not just going to go away, it is going to be very important, we need more people involved to make them not just good but great.

How can CEOs be persuaded to invest a lot more than in pursuits when there are other stakeholders including shareholders and employees they are answerable to?
That’s what a CEO in a board does. He or she builds the company for the future. They look at where the world is going and try to focus and build the company for the future. In India, some of it is still at the compliance level. Indian businesses have to have low-pollution manufacturing, which means more costs. But it would also mean that they will be able to sell in foreign markets and their employees will be healthy and happy.
I know of one Indian business (Asian Paints) which made a pollution-control investment that cut 10% of its profits every year. It took three months for them to take the decision. They knew they had to do this. This is what CEOs are paid to do. Look into the future and say where we need to invest.

But paint companies still use a lot of toxic chemicals in their products…
I think over time, they’ll change. There are three factors working together. The vision of the CEO, the role of outside non-government organisations (NGOs) and the third is the role of the government through regulation. All these things work in concert. For instance, to move away from lead in making paints. There is a push from NGOs to use non-toxic chemicals. But if they have to sell in foreign markets they have to make no-lead paints.
Which are the other companies you met during your recent trip?
I met (senior officials) Godrej, TCS and Marico. One thing is that family-owned businesses possess one advantage. By nature they are multi-generational, think about the long term, because they know they will be around. They would leave it for their children. That is some advantage for family-owned businesses to make changes.

Are Indian businessmen different from the rest in the developed world?
They are smart, sophisticated. They care about their bottomline, their customers and their employees. I met a few market leaders. They are very proud to be Indians. The challenge is for India to invent ‘Indian business sustainability’. It is not how US did; it would be historical and must connect long-term with the Indian culture. An India of the future.

Can you elaborate?
China, for example, is solving environmental concerns through scale solutions. So very large dam projects, very large energy grid investments, very large new cities and roads. I think India will solve it with very small-scale solutions. I met with Navin Chandra, whose son is Vikram Chandra, the author. He’s got an apartment block that he’s been making green. Rainwater harvesting. They (the residents) also do solar power for all the lights in the building and they do composting of the waste. Many of the factories that I’ve been talking to are creating systems on their own. They are setting up systems to treat water and solid waste. Instead of saying we’re going to have massive systems in India, we are going to have local self-sufficiency. Gandhian self-sufficiency where each unit will be responsible for itself by solving the water crisis in their habitat.

Do you think desalination projects are the way out for India’s metros?
Basically, no. They can at best be a back-up plan. They are the last stage after all the other water-saving and water-efficiency efforts are done. I was a water commissioner in San Francisco in the Bay area where there was water shortages. We just did the cost analysis. It is so much cheaper to save water by a factor of ten to one. For every dollar invested, the saving was ten dollars. A city-wide water harvesting programme is messy because democracy is messy.

How can digital firms such as TCS contribute towards sustainability?
With a digital firm, the material contribution is going to be airplane flights, the buildings they put their people in … things like that. It is not a high-energy place. There are opportunities. Recruiting people and maintaining them, in measuring and refining sustainability information. It is more and more becoming a business-critical and auditable function for the US and European firms. For instance, every British company has to pay carbon tax if they employ more than 5,000 people. Digital work is going to be done by the TCSs of the world.

You have done a lot of work for Wal-Mart?
What Wal-Mart has done is to zero waste. Particularly, you see in the US, Europe and Canada their supply sourcing has changed dramatically in millions of pounds. They have prepared a 15 point questionnaire. This has changed the way Wal-Mart does business. The water footprint and carbon footprint of their employees and suppliers have reduced substantially.

Indian companies, especially the smokestacks, have found expansion a huge issue as environmental concerns and some purely political motives slowing down growth. Can this be sorted out amicably or should government use its heavy hand in favour of progress for the larger good?
Balance. Try to figure out the balance by using different models. Engage with the people and they have to agree. Enter into a dialogue with them. There is a Toyota plant where I lived. The Japanese carmaker took over the plant from GM. One day, there was a leak in the paint plant and they had to pay a heavy penalty. Later, with the work they did in the community when the time came to expand, they could do it easily as they had built so much goodwill with the people that the people supported them. When companies do good things and demonstrate it, they benefit in the long run.

In Australia the mining areas are not thickly populated as in India. Isn’t that a peculiar challenge?
Alaska shares its mineral wealth with the people of Alaska. The revenue went to a trust fund and every year the people of Alaska would get a cheque. That’s their royalty. If you are one of the tribes that was displaced then you need to be compensated. Significant amount of money was put in trust funds. This is not single-shot compensation but long-term payments.

What could be the agenda for your next trip?
I’ve been learning. The idea is to offer services to Indian companies to take sustainability into their work ethic. My goal and wish is that when people list the most important and greatest companies in the world, the Indian companies should top that list. Right now people won’t put Indian companies on that list.

Can you name the worst and best companies in terms of sustainability of their businesses?
In the US, Ebay as a company and their entire business model about reusing things is a great model. That’s a pretty good business from a sustainability standpoint. In cases of businesses that are bad, I obviously have a lot of antipathy towards oil companies. They spent a lot of time communicating about sustainable initiatives but it hardly amounts to anything.

In India?
I am not ready to comment on that.