Questions are from MIoD, answers from Sanju Deenapanray.
1. How would you define corporate sustainability?
There are several definitions of corporate sustainability. The fundamental issue to recognise is that corporate sustainability relates to what businesses have to do and orientations to take to support sustainable development at all levels – i.e. local, national, regional and international. Corporate sustainability, therefore, is a business strategy that creates long-term value to society by taking into consideration all aspects of a business operation, namely social, cultural, economic, and environmental dimension. We could very well summarize corporate sustainability in terms of the Vision 2050 of the World Business Council for Sustainable Development that is the responsiveness of business to support 9 billion people living well (i.e. human wellbeing), and within the limits of the planet. An important feature to note here is that ‘people living well’ and ‘within the limits of the planet’ are desirable ‘ends’.
2. According to you, what are the key sustainability issues in Mauritius?
The key sustainability issues in Mauritius are not different from the global ones. Obviously, the scale is different. To avoid going into complex analyses, the sustainability issues can be accurately filtered down to the increasing inequitable distribution of financial wealth, which itself is increasing, and living (on average) beyond the carrying capacity of the planet. For instance, the gini coefficient that can be used to measure the distribution of wealth has increased from 0.371 in 2001/02 to 0.413 in 2012. The coefficient can vary between 0 and 1, and a higher value implies more inequity in society. Using ecological footprint analysis, one sees that Mauritius has an ecological debt of around 3.99 ha per person. This is because our increasing consumption footprint (because of a consumption driven economic growth) is much higher than our dwindling biological capacity (~0.56 ha per person). The average Mauritian can live on ecological debt only by ‘borrowing’ biological capacity from other countries. On a finite planet, this is a zero sum game (and a paradox) meaning that some people must live in poverty for others to live affluently!
Both raise fundamental ethical questions and both ought to be seen as moral dilemmas since the two issues arise from human actions (or inactions) and have detrimental impacts on other sentient beings and ecosystems. The direct relationships between human wellbeing and the health of ecosystems have been unequivocally demonstrated in the 2005 Millennium Ecosystem Assessment.
While not pertinent to Mauritius alone, I would like to comment on the role of the conventional economy in light of these two sustainability issues. In market economies, our actions (or inactions – e.g. the act of buying and using the largest possible home entertainment system possible is an inaction as far as not buying and using a smaller and more resource efficient system) are revealed as preferences, and by getting the price right the market is supposed to achieve the efficient allocation of resources amongst alternative ends. First, markets are not designed to achieve equity. Worse still, the wrong combinations of political and economic institutions can lead to poverty and erode the substantive freedoms that people have all reasons to value – i.e. decrease human wellbeing. Second, ecosystem services are free and therefore not priced. So the market, in the absence of public policy, does not ‘care’ about the erosion of natural capital – this fundamental pillar that sustains all life (including economic activities) on our planet.
As observed by Einstein, what characterize our era are the perfection of means and the confusion of ends. This observation succinctly summarizes the problem of unsustainability at all levels.
3. The GRI G4 has recently been launched in Mauritius. From your perspective, what are some of the challenges in getting GRI adopted by companies in Mauritius, as well as how to prove the ROI of reporting
My sense is that we have to make a distinction between companies that have a regional and global reach and those that do not. Some companies in the first cohort have already taken the lead regarding corporate sustainability reporting. We have to recognize and give credit to these companies that are already subscribing to one or another framework for corporate sustainability reporting, and this prior to the launching of the GRI G4 in Mauritius. For instance, Rogers has been reporting under the UN Global Compact for several years; Omnicane Ltd and the MIoD already subscribe to the GRI G3.1; and I know of Terra and GML (LUX Resorts & Spa) that are also finalising their first GRI reports. These companies have already passed the threshold for making the business case for corporate sustainability reporting, and how transparency can add brand value. Foremost, they have been quick to recognize that the sustainability challenge is changing how business is (or should be) done, and rather than waiting for the change to be imposed on them. They have adopted a proactive and leadership stance.
Nevertheless, obstacles (non-exhaustive list) impede the further update of corporate sustainability reporting in Mauritius. Some of these obstacles are generic and applicable anywhere in the world.
- To date, there is no overarching framework (such as the Code of Corporate Governance) that makes sustainability reporting mandatory in Mauritius;
- There are many frameworks for reporting and this is usually a source of confusion for companies that are new to corporate sustainability;
- Internalizing corporate sustainability requires a new approach to business orientations and this can be accelerated by having a dedicated team working on sustainability issues, including reporting. A ‘catch 22’ situation arises wherein the lack of such a dedicated team results in an inability to make the business case for corporate sustainability, which reinforces the situation of not engaging or being able to engage with sustainability issues in a coherent way. This leads me to the next point;
- Companies perceive corporate sustainability as engendering an additional cost rather than being seen as an investment. Initially, companies may require technical assistance and capacity development. They should do so in a way that enhances the capacity of the company to learn for sustainability rather than outsourcing their reporting and/or strategic planning for sustainability;
- Companies that are not able to recognise the value of their brands may find it more difficult to engage with corporate sustainability, and perceive it as a cost. While corporate sustainability reporting can be used as an effective monitoring and evaluation process and tool to increase economic/financial, social and environmental performance (also governance structure), the value that it adds to brand image and company performance may be higher than short-to-medium changes in the balance sheet.
My experience with corporate sustainability reporting using the GRI framework shows that other challenges arise once companies adopt the reporting framework. The main ones are: (1) the lack of a coherent strategic vision for sustainability; (2) the low level of stakeholder engagement and dialogue for corporate sustainability; (3) the lack of capacity to determine materiality; and (4) the delays and inertia arising from the lack of a dedicated sustainability team.
4. Looking back at 2013 trends, what makes you optimistic about sustainability in 2014?
The changes that I have witnessed over the past three to four years give me all the reasons to be optimistic about corporate sustainability not just for 2014, but for the years to come. There are several mutually reinforcing factors that will play a catalytic role in advancing the case for corporate sustainability.
- First of all, sustainability is the only way forward. Further, 75-80% of GDP and investment is contributed by the private sector in Mauritius. Therefore, it is inconceivable that Mauritius can achieve any sort of sustainable development without the leadership role of the private sector. The leaders mentioned earlier have paved the way for others to follow;
- The MIoD is playing a leading role in building the capacity of companies to better engage with sustainability issues. In addition to providing an annual introductory course of Corporate Sustainability, the MIoD and ELIA are working towards a synergy for in-house capacity development of companies for sustainability;
- An initiative is underway for the setting up of a Regional Network of the World Business Council for Sustainable Development (WBCSD) in Mauritius that will provide an enabling platform for companies to engage with Vision 2050 and Action2020 of the WBCSD. The Regional Network will also be a platform for sharing of business cases, best practices and lessons learned on corporate sustainability between companies;
- The launching of a Sustainability Index in 2014 by the Stock Exchange of Mauritius will certainly make the need for corporate sustainability more visible, as well as steering publicly listed companies to engage with sustainability.