Download - Sustainability Driver Innovation
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Sachin Joshi
Seema Ar or a
Dennis Pamlin
Shir ish Sinha
I NDI AN
COMPANI ES
WI TH SOL UTI ONS
THAT THE
WORL D NEEDS
SUSTAI NABI L I TY
AS A DRI VER FOR
I NNOVATI ON
AND PROFI T
for a living planet
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I NDI ANCOMPANI ES
WITH
SOL UTI ONS
THAT THE
WORL D NEEDS
SUSTAI NABI L I TY AS A DRI VER
FOR I NNOVATI ON AND PROFI T
SACHI N JOSHI
SEEMA ARORA
DENNI S PAML I N
SHI RI SH SI NHA
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Ind ia n C om p a n ies w i th So lu ti o ns tha t the
W o r ld N eed s
SUSTA IN A BILITY AS A D RIVER FO R IN N O VATIO N A N D PRO FIT
Lea d Author : Sa chin Joshi , Depu ty Di rec tor , CII- ITC CESD
Co -a uthors : Seem a Arora , Hea d an d Pr inc ipa l Cou nse l lor , CII- ITC CESD
D e nn i s Pa m l in , G lob a l Po l ic y A d v is o r, W W F- S w e de n
S h ir is h S i nha , H e a d , C lim a te & E ne r gy , W W F- Ind ia
2 0 0 8 , W W F a n d C II- ITC C E SD
This repo r t is pa r t of a s e r i es of s tud ies by W W Fs Tra d e a nd Inves tme nt Poli cy
P rog r a m m e , w h ic h a im s t o i de n t ify a nd c oop e r a te w ith a c to r s i n the B RIC S g r oup o f
key emerging economies (Braz i l , Russ ia , India , China and South Afr i ca ) to
c ha m p i on in t e r na t iona l s u s ta ina b l e tr a de a nd i nve s tm e n t. The P r og r a m m e e xa m i ne s
the s c ope w h i c h e x i sts fo r t he s e c oun tr ie s t o be c om e le a d i ng e xp o r t e r s o f, a nd
inve s to r s i n , s u s ta ina b l e g oo ds a nd s e r v ic e s , w h i ls t e m e r g i ng a s ke y a c to r s i n
p r om ot i ng a p r oa c t i ve i n t e r na t i ona l s u s t a i na b l e de ve l opm e n t a ge nda .
Fo r m or e in f o r m a tion , s e e :
w w w .p a n d a . o rg / in ve s tm e n t
w w w . w w fin d i a . o r g / p u b lic a t io n s
Design & Printed a t: Impress , India
I NDI AN COMPANI ES WIT H SOL UTI ONS THAT THE WORLD NEEDS2
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CONTENTSFOREWORD by Mr Chandr ajit Baner jee, Dir ect or Gener al, CII
FOREWORD by Mr Ravi Singh, Secr et ar y Gener al and CEO, WWF I ndia
ACKNOWLEDGEMENTS
1. I NTRODUCTI ON 11
2 . SUSTAI NABI L I TY DRI VI NG I NNOVATI ON 17
3 . CASE STUDI ES 27
3 .1 BA SIX 2 8
3 .2 C o smo s Ig nite Inno va tions 3 6
3 .3 ITC 4 3
3 .4 L& T 5 3
3 .5 Ta ta C o nsulta ncy Services 6 4
4. SPECI FI C BUSINESS SOLUTIONS TO EMISSIONS REDUCTI ON 73
5 . ROAD TO SUSTAI NABI LI TY- DRI VEN I NNOVATI ON 77
6 . POSSI BLE WAYS FORWARD 89
ANNEX: List of C omp anies and Innovat ions 95
ENDNOTES 99
I N DI A N COM P ANI E S WI T H S OL U T I ONS T HA T T HE WORL D NE EDS 3
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I N DI A N COM P ANI E S WI T H S OL U T I ONS T HA T T HE WORL D NE EDS 5
FOREWORDI am pleased t hat CII -ITC Centr e of Excellence for Sustainable Development (the
Centr e) and WWF are jointly br inging out t he publication In dian Com panies with
the Solutions that the World Needs. Today, as we walk the t hin line of managing
climate change, along with continuing on the path of economic development, all of us
must play our part. Sustainable business and social entrepreneurship will shape
futur e economic growth for t he world.
F inding solutions for t he worlds most pr essing problems in part icular, pover ty and
climate change is no longer the exclusive domain of gover nment s, aid agencies and
NGOs. E ntr epreneur s and business leaders t oo are demonstr ating that almost no
problem is too big to be tackled through innovation.
Amidst t he emerging tr ends in process and product innovation, mainly in r esponse to
sustainability drivers, the Cent re and WWF came together to explore how
businesses can use dr ivers such as innovation and profits to t ackle t he t win
challenges of poverty and climate change. The resulting publication brings together
case studies of how businesses have t arget ed sust ainability without losing sight of
core business objectives. It reaches a number of broad conclusions that we believewill assist other companies to formulate their own roadmaps for sustainable growth.
The businesses featur ed in this report reflect t he incredible potent ial of the
alignment of sustainable development needs and business values. The cases outlined
are stories of great deter mination to achieve sustainable practices, but t hey also
showcase th e huge opportunities t hat emerge from such pr actices. Innovations in
these companies have driven down costs and have proved to be crucial to successful
corporate management.
Int erest ingly, India and other emerging regions are br eeding grounds for such
innovative businesses and enterprises. They have recognized the challenge early, andare responding creatively, thus pushing the envelope for t heir pr osperity. Local firms
and multinationals that have localized themselves are most likely to lead and master
the change.
Going forwar d, India and other developing economies need to addr ess povert y
alleviation as well as sustainab le routes to development . Resource-efficient solutions
will help companies cont ribut e to this task , as well as add t o their g lobal
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compet itiveness. E xploring th e conclusions in this repor t would allow
companies to work out st rat egies that make them winners in a low-carboneconomy.
This repor t is the first product of the Cent re-WWF part nership, and we hope
business leaders, change agent s and governments find it thought-provoking
and pr actical. CII believes that sustainable development is the futur e of
enter prise and that this report will act as a change agent to stimulate gr eater
efforts t owards this. We are delighted t o partner with WWF to explore t hese
opportunities.
Chandrajit BanerjeeDirector General
Confederat ion of Indian Industr y
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FOREWORDSust aining global economic development will demand a subst ant ial shift in
the role of industry by br inging innovation t o drive sust ainability and pr ofit.
Indias r apid emer gence as a global economic player is being propelled in
large substance by its business and industry sector, which is increasingly
contributing innovative solutions for integration of development and
environmental sustainability.
Through t his report we ar e att empting t o bring forwar d a special focus on
climate change and the need for rapid global emission reductions as the
driver for new t hinking wher e leading companies are integr ating low carbon
development into their st rat egies. India must ensure resource efficient
development in order to avoid an ecological crisis that would make the
curr ent financial cr isis look pale in compar ison.
This report is the first att empt t o explore how companies can use
sustainability as a dr iver for pr ofit and innovation. It is the fruit of a global
conser vat ion organ izat ion, WWF, working t ogether with one of Indias
leading indust ry associations, CI I , to seek solut ions to one of the mostimport ant challenges of our t ime. This report provides examples from Indian
companies that can be used both by indust ry and government s to make
st rategic decisions from an economic, social and environment al perspective.
Ravi Singh
Secretar y General & CE O
WWF-India
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I NDI AN COMPANI ES WIT H SOL UTI ONS THAT THE WORLD NEEDS8
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I NDI AN COMPANI ES WIT H SOL UTI ONS THAT THE WORLD NEEDS4
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1.I NTRODUCTI ON
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I N DI A N COM P ANI E S WI T H S OL U T I ONS T HA T T HE WORL D NE EDS 9
ACKNOWLEDGEMENTSThis report is a product of collective effor t of a group of except ional people in business. Content s of
the report built on their varied exper iences and their firm belief in doing business different ly. Our
grat itude goes to t hese individuals for sharing t heir exper iences and more important ly, to their
companies for leading change.
We would like t o thank t he following people for t heir gu idance and cont ribut ion to the r eport . Our
sincere thanks go to members of companies featur ed as case studies in the report . These include:Ms Kaushiki Rao, BASIX; Mr Amit Chugh, Cosmos I gnite I nnovations; Mr Subhash R ustagi and
his team at I TC; Mr Anand Kurien and Mr Bikramjit Ray Chaudhur i at L&T; and Mr Pankaj
Baliga and Mr Ant hony Lobo at TCS. We also thank their colleagues who have par ticipated in the
study wh ile being behind t he scenes.
This report is part of WWF s Trade & Investment Pr ogramme and has been made possible due to
its financial support . We would like to thank Mr R avi Singh, Dr Sejal Worah, Mr Alistair Schorn
and Ms Aart i Khosla from WWF for reviewing and providing advice and comments on t his report .
Our gr atitude to Mr Ar okia R aj for design and Ms Sharmila Chandra for editing. As always, all
err ors and unintended omission or misrepresent ation are ours alone.
F inally, we hope that for companies featur ed in t his report and many other s globally, this r eport
offers a validation of their approach and a starting point for new innovations in doing business.
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The fact that rapid economic growth is the only
realist ic means to lift t he poor out of extr eme
pover ty and the fact that most economic
activit ies depend on products and ser vices
provided by the ecosyst ems, necessitat es the
usher ing of a new business paradigm which
enables rapid economic growt h without
compr omising the capacity of the ecosyst em to
sust ain, nur tur e and fuel economic developmentand human well-being.
CII
In the 21st centur y, povert y and nat ural r esource constraints will be two of
the most import ant challenges humanity must come t o grips with. I nstead of
seeing this as a problem, a new gener at ion of companies across t he developed
and developing countries have already begun to tr ansform t hese needs into
opportunities. This report focuses on companies in India with innovative
solutions as dr ivers for sust ainability and pr ofit. With a t hird of the
population under the poverty line and nat ural r esources below the global
average, I ndia in many ways is not only a miniatur e ver sion of the global
economy, but is already in a situ at ion that the world will face in a not too
distant future. So solutions that can be used in a sust ainable way in India are
likely to be ext remely important for the world and also anticipated by it in
the year s to come.
The r eport acknowledges that while a number of interest ing initiatives
exist, but many of them focus on the short-t erm opport unities. Afterenjoying the benefits of low-hanging fruits - like switching t o energy-saving
light ing, buying recycled office supp lies, pr inting double-sided and p roviding
support t hrough philanthr opy- what is the next st ep? There is no doubt that
the low hanging fruits are a good star t, but more is needed to mainstr eam
these measures.
If we ar e to meet the p overty and environmental challenge, mere add-on
measures will not be enough, innovation r egarding both production and
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market s is r equired. Sustainability can, for example, drive cost savings
thr ough efficiencies, creat ing new market s and securing competitiveadvantage. H owever, companies must use t he limits of the planet and needs
of the people as the st art ing point to an even larger degree and ensur e that
the core business is deliver ing on these challenges. It is no longer only about
compliance with r egulations or securing positive pr ess coverage, the next
gerer ation companies th at ar e leaders in the ar ea of sustainability have
already r ealised t hat what is good for t he environment and the society, should
also be good for business. These are the companies that will remain relevant
for fut ure and t his report explores t he various strat egies such companies
could use.
This report also investigates what the steps beyond t he low-hanging
fruit s could be. Based on concrete examples, it outlines a var iety of actionableideas and some inspirations for more dramatic changes. In doing so, this
report hopes to contribut e to t he curr ent dynamic dialogue ar ound business
and sust ainability, part icularly the environment in a rapidly gr owing
economy that must reduce povert y. Above all, the conclusions ar e meant to
star t a pr ocess of bringing best pr actices to light so that they can spread
more rapidly.
The r eport is divided into five key par ts. F irst is t he goal and
methodology where t he scope and limits of the report are outlined. The
second part sets t he conceptual context. The third p art present s five case
studies and two special examples establishing the sustainability-innovation
interface. In t he fourt h par t, t he conclusions are present ed as a five step
circular outline for companies that want to explore ways t o use sust ainability
as driver for profit and innovation. Finally eight suggestions for possible
ways forward are presented.
Goal
The goal of this repor t is to present a r oadmap for how companies can use
sustainability as a dr iver for innovation and profit. I t does so by highlighting
some of the most promising t rends, best practices and innovative ideas that
are ready for wider adoption and, if taken t o scale, have t he potent ial togenerat e significant sustainability benefits.
The r oadmap provides a comprehensive framework to walk the
sustainable innovation path. However, it does not necessarily reflect any
specific company case pr esented in the r eport. The r oadmap is based on th e
experience of CII -ITC CE SD and WWF in helping companies in India and
the world t ransit t o sustainable businesses.
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Methodology
To ident ify poten t ial innovat ions for inclusion in this report , a wide range of
sustainability innovations across business t ypes, industries and corporat e
functional areas such as operations, manufacturing, marketing, IT, supply
chain management - were considered, and the t ypes of benefits gener ated
were looked at.
Over 50 companies (see A nn ex) were scanned through ext ensive
liter atur e sear ch covering bu siness and sust ainability press, published action
and academic resear ch, librar y at CII -ITC CE SD and relevant industry
report s. Pr actitioners and consultant s wer e also consulted for information.
This data collection was succeeded by a t wo-stage screening and
evaluation process. Both qualitat ive and quantitat ive data were used t oevaluate var ious innovations based on the criter ia established for this r eport.
St age 1: More than 100 innovations from 50 companies gat her ed thr ough
the data collection pr ocess wer e r eviewed for sustainability benefits,
business benefits and replicability. Those that failed to meet these basic
criteria did not move t o the next stage of final evaluation.
St age 2: More informat ion was collected on the innovations selected.
They were closely reviewed for their replication and applicability to other
companies and indust ries. More import ant ly, their innovativeness was
carefully studied.
F inally, 12 companies were identified to be appr oached, with a t arget to
develop eight case st udies in the specified time-line of the p roject . Ten
companies were studied in-depth and approached to develop detailed case
studies. F our more companies wer e found t o be unfit for inclusion on gr ounds
of benefits derived and their innovativeness. One company could not turn in
its r esponse within t he t ime-line of this pr oject due t o schedules that could
not mat ch. In order to include two exciting examples that did not fit within
the framework, the r eport added t hese as Specific Business Solutions t o
emissions reduction.
The new processes, products and t echnologies highlighted in t his report
were selected based on var ious criter ia - sustainability for business,
sustainability for t he environment and society, readiness t o be implemented,and innovat ion along t he four benefits of sustainable innovation
(see Box 1.1). In some cases, innovations wer e selected that have already
been fully test ed and put into commercial use; in other cases, they were
selected to highlight promising early-stage ideas.
The companies included in this r eport belong t o different industry areas
in which CII-ITC CE SD has significant exper tise or wher e ther e are
substant ial opport unities for innovation. However, case st udies featured here
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are only t o provide a convincing case and not necessarily to subst itute more
compelling cases of sustainability dr iving innovation.
Within these case studies, the r eport at tempt s to provide a range of
ideas: from incremental changes t o more r adical business-model innovat ions;
and from th ose that offer quick implementation and a short payback period to
longer-ter m ones.
It is import ant t o note t hat t his repor t is not an inventory of all worthy
innovations. There are simply too many good cases. Nor is it a portrayal of
top sustainable and innovative companies. Companies studied to develop this
report are coping with negat ive sustainability (including environment al)
footprints. It is also not a review of cutting-edge technologies. However, the
innovations they have developed repr esent a positive step in the r ightdirection.
Box 1 .1
Bene fi ts o f Sus ta ina b le Innova tionEnviron me nta l Bene fit s
G r e en h ou se g a s e m iss io n s r ed u ce d
En e r g y u s e r e d u c ed o r e ffic ie n c y in c re a s e d
H a z a r d o u s p o llu ta n ts r e le a s e d in a ir, w a t er
o r la n d r e d u c e d
S o lid w a s te re d u c tio n s , m a t e ria l s u s e
re du c e d o r e f fi ci e nc y inc re a se d
S u p p lie r b e h a v io u r in flu e n c e d , re s u ltin g i n
e nv i ronm e nt a l be ne f it s
N a tu ra l re so u rc es p r o te cte d o r r e sto r e d
So cia l Bene fits S ta k e h o ld e r c o ns ulta tio n
Live lih o o d c re a tio n
C o m m u n ity re la tio n e n h a n ce m e n t/ b e n e fit
S p e c ific im p a c t o n s o c ia l is su e s o f d i re c t
r e l e va nc e
Business Benefits
C o st sa vin g s
In cr ea s ed r e ve n ue s or e a rn in g s
Re d u ce d lia b i lity o r ris k
Re tu r n o n in ve stm e n t/ p a y b a c k p e r io d
N e w ma rke t c re a tio n
In ve stm e n t a ttr a c tive n e ss
Be n e fits fo r cu sto m e rs
Br a nd / r ep u ta tio n e nh a nce me nt
Innovat iveness
Is th e i n n o v a tio n o r i g in a l o r is it a s i g n ific a n t
i m prove m e nt ove r a n e x i sti ng so l u ti on?
Is it s till in s ca r c e u se ?
D o e s it o ffe r ec o no m ic , s o cia l a n d / o r
e nv i ronm e nt a l be ne f it s?
Is it a p p lic a b le to o th e r s e cto r s / a r e a s ?
Is it c o m m e r cia l ly v ia b l e ?
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2 .SUSTAI NABI L I TY
DRI VI NG
I NNOVATI ON
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This r eport , In dian Com panies with the Solutions t hat the World N eeds,
builds on the previous report In dian Com panies in the 21st Century byWWF and explores in a more det ailed manner how some companies in I ndia
are under standing and r esponding to changing sustainability tr ends thr ough
innovation and business st rat egy.1
The five in-depth case st udies and t wo examples in t his report include
companies from diverse economic sectors tha t have var ied economic, social
and environmental concerns and impacts. Never theless, they contain some
common thr eads and lessons t hat can be applied in different context s. The
case studies captur e key initiatives and identify important ways in which
sustainability has affected t he dr ivers of business competitiveness and
success: access t o market s, operat ional efficiency, access t o capit al or super ior
reput ation, and most import antly innovation.
The Corporat e r eality in t he 21st centur y
Recent yea rs have seen a gr owing range of economic, social, environmental
and governance issues push into the mainstream of politics and business. The
priorities for action emer ging from a r ange of summit meetings - such as the
G8 and t he Wor ld Economic F orum - tend t o share one common
characteristic: they all relate t o curr ent m arket failures or dysfunctions.
While most sust ainability challenges such as income dispar ity, loss of
biodiversity and assosiated impacts - are not new; globalisation has directly
or indirectly exacerbated many pr oblems to a degree wher e many of these
questions are now dealt with as matt ers of global and national security, e.g.
climate change and food pr ices. Informat ion t echnology is propelling
increased awareness about the scope of societal needs and the lack of
progress t o date by government s and tr aditional non-government al
organ izat ions. Businesses, civil society and gover nment s, once consider ed
str ange bed-fellows, are now working together to r esolve some of the most
chronic problems.
This tr end was implicit in the 2008 agenda of the World E conomic F orum
annual meet ing at Davos, which closed with a call by business, gover nment
and civil society leader s for a new br and of collaborat ive and innovat iveleaders to address the challenges of globalisation, particularly the pressing
problems of conflict, terrorism, climate change and water conservation.2
Business, polit ical and civil society leaders at the World E conomic
F orums I ndia E conomic Summit 2007, called on I ndia t o focus on skills
development , impr oving gover nance, upgrading of educat ion, forg ing public-
private partnerships in infrastructure and addressing environmental
degradat ion and water scarcity t o sustain the high growth t he countr y
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requires. The theme of the 23rd India Economic Summit, Building Centres of
E xcellence,
3
acknowledged Indias remarkable achievement s in creat inghighly compet itive and innovat ive companies. But more import ant ly, it also
underscored t he challenge of extending t hat success beyond t raditional
industry, urban and academic centr es t o rur al communities, where 70 per
cent of the populat ion st ill re sides.
The discussions at the forum did not focus, as they usually did in the past ,
on how t o achieve great er consensus among industry, state and national
leaders around key gr owth challenges, but wer e directed instead at adopting
and scaling grassroots innovations that ar e delivering faster and gr eater
results on the gr ound. It was in this spirit of gett ing things done faster t hat
the India E conomic Summit 2007 was designed t o tap into t he collective
intellect, on-the-ground experience and global insight from among itscommunity of stakeholders. It was agreed that innovative ideas and
processes can often be applied from one industry to another and t hat
indust ries can learn fr om one another. The concept of innovat ion may by
necessity mean t hat organizations need t o develop new business models to
remain relevant.4
The world is gett ing better, but it is not gett ing better fast enough, and
it is not gett ing bett er for ever yone, argued Bill Gates at t he World
E conomic F orum, Davos 2008.5 He called for creat ive capitalism: an
approach where government s, businesses and nonprofits work t ogether t o
str etch th e reach of market forces so that more people can make a profit, or
gain recognition, doing work that eases the world's inequities.
The inequities between t he haves and the have-nots, most st ark in Ind ia,
need t o be reduced if other key sust ainability challenges are t o be tackled.
Traditional approach of development aid and philanthropy have had limited
success. Povert y is most effectively reduced t hrough engaging t he poor and
the excluded in the economic growth. The businesses, with their increasing
contribution to economic growth with substantial social and enviromental
impacts, ar e best placed t o facilitat e t his enagement.
C K Pr ahalad, in The F ortu ne at t he Bottom of the Pyr amid, present ed
not just th e hidden fort une with t he four billion people who live on less than
$2 per day globally, but how businesses could ident ify, tap into, and expandthis for tune by developing new models of doing bus iness, often us ing new
technology. Pr ahalad proposes that businesses, government s and donor
agencies stop t hinking of the poor as victims and instead star t seeing them as
resilient and creat ive entr epreneur s as well as value-demanding consumers.
He proposes that tr emendous benefits will accrue t o businesses that choose
to serve t hese market s in ways that are r esponsive to their needs. After all
the poor of today can be t he middle-class of tomorrow.6
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Michael Port er and Mark Kr amer sum up t hese new opport unities in
their Harvard Business R eview art icle on the links between competitiveadvantage and corporate social responsibility (CSR). They conclude that
CSR offers many of the gr eatest opport unities for companies to benefit
society.7 F urt her, ifcorporations were to analyse t heir pr ospects for social
responsibility using the same frameworks that guide their core choices, they
would discover t hat CSR can be much more than a cost, a constraint, or a
charit able deed - it can be a sour ce of opport unity, innovat ion, and
competitive advantage.
What all this means is that corpor ations can der ive sustainability value
and increase business value at the same t ime, if they are able to identify
opportunities within the array of risks and challenges. Success of
microfinance in South Asia and par t s of Africa, pr icing and distr ibution ofHI V-ARVs, extending st ripped-down ver sions of FMCG products to t he
poor, community-based waste management, home-cleaning and waste
disposal ser vices in slums, ar e some of the many examples of wher e
companies have begun t o shift from risk and cost approach to opportunity
and profit approach for sustainability.
India poses sustainability challeges of huge scales for businesses t o tackle
thr ough innovative appr oaches. India has a third of its population still under
the poverty line, is amongst t he most vulnerable countr ies to climate change
impacts, and a lso has one of the highest incidences of diseases such as
HI V/AIDS, TB and diabetes. At t he same time, India is among the fastest
gr owing economies in the wor ld, has t he youngest population, and offers one
of the largest mar kets for r enewable energy. This inter esting mix of
str engths and weak ar eas makes the countr y a breeding ground for
innovations. The bott om of the pyr amid, the 800 million I ndians, can become
a major source of breakt hrough innovations.8
Clayton Christensen and his colleagues spotlighted two different forms of
innovation, sustaining and disruptive.9 Susta ining technologiesimpr ove
the performance of established products along the dimensions of performance
that mainstream customers in major mar kets have historically valued. By
contrast, disruptive innovations dont, by traditional measures, meet
existing customers needs as well as currently available products or services.They may lack certain features or capabilities of the established goods.
However, they are typically simpler, more convenient and less expensive, so
they appeal to new or less-demanding customers.10
Christensen and Stuart Hart point out that disruptive innovations are
suitable for developing market s - because they offer a pr oduct or ser vice t o
people who would other wise be left out ent irely or poorly served by existing
products.11 They also talk about a subset of disrupt ive innovations -
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catalytic innovations - wher e social change is the pr imary object ive.
In a situation where greenhouse gas (GHG) emissions, and in particularthat of carbon di-oxide (CO2) emissions need to be dramatically reduced,
efficient use of natur al resources has to be encouraged and a bett er life has to
be pr ovided for billions of people, disrupt ive technologies ar e the most
import ant . Obviously sustaining innovat ions can also help, but if too much
focus is spent on t hem, the really sustainable ideas might get lost.
Sustainability-driven innovation
Innovat ion is crit ical for t he futur e success of any business. Companies who
do not innovate will sooner or later become unsust ainable and irrelevant .
However, for innovations to have sustainability impact and to add to businessvalue, sustainability should be integr ated with t he core business.
With a st rong corporat e commitment to sust ainable development, many
of the st andard tools of management can help t o deliver sustainable
innovation in both senses of the word.
Companies that have a pur e sustainability appr oach pr ovide inter esting
and inspiring examples, but many of them have t heir own set of problems.
Often t hey tr y to create a niche and define themselves not as leaders but as
companies cater ing to an exclusive minority. Thereby they contr ibute t o a
broader development where sustainability is seen as alternat ive instead of
mainstream.
Other companies have att empted to align pr oduct and ser vice innovation
to sustainability objectives but with limited success. Interface, the floorings
company, is perhaps the best known example. The company developed a
ser vice-based business model for corporat e clients b ased on leasing out floor
coverings and retaining the responsibility for replacing worn sections,
avoiding the need to r eplace an ent ire carpet when a small section has worn
through. The approach potentially could save Interface and its clients money
and reduce resource use. But I nter face has str uggled to persuade clients t hat
it wont cost them more. According t o Rebecca Willis and J enny Oldham at
Green Alliance, one of the major barriers the company faces is split budgets.
Typically t he per son who buys the carpets is different from the one whoarr anges for t hem to be cleaned. Neither is asked to think about t he
environment al consequences of their companys flooring either, tha t s left t o
the environment manager who probably has nothing to do with buying
carpets.12
Similar challenges ex ist in different par t s of society. Ener gy efficient
housing is probably one of the most ser ious challenges, but appliances like
referiger ators and even computers suffer from the same drawback. There is a
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lack of life cycle persp ective and ability t o unders tand t he total cost of
ownership (TCO). Too often t he per son buying t hings only looks at theupfront cost, not at the cost over t he lifetime. F or I T solutions the challenge
is even bigger as the ser vice t hat t he product pr ovides is often considered t he
most import ant. A notebook computer can allow people t o work without
being in the office, something that can save travel time and cost and building
space. The distance between a per son looking at t he upfront cost and a total
cost perspective from the company is hard to br idge.
E xamples of business opportunities
The challenges that India faces also present opport unities to tackle them.
Indias curr ent Pr ime Minister, Manmohan Singh has r epeatedly r emindedthe private sector of the need for inclusive gr owth across t he country, while
the 2007 budget provided for a 31 per cent r ise in ru ral infrast ructur e
expenditur e and br oadened the availability of farm credit.13
Much of this hope rest s on t he economic progress India has made,
part icularly in the past few year s. India is among the fastest growing
countr ies in t he world and if estimates ar e t o be believed, it will be the thir d
largest economy in the world by 2050.14 It would have expanded employment
and ent repr eneurial opport unities for t he youngest population in the world
and reduced poverty further.
Cur rent ly, 55 per cent of Indias population is younger than 25 year s.15 By
2025, while 40 per cent of the population will be considered to be middle class
[Rs 200,000-500,000 (US$ 4,440 11,110) Annual H ousehold I ncome], those
ear ning less than $2/day would be 18 per cent, down from curr ent 45 per
cent.16 Consumption pat ter ns ar e already changing and will increasingly
show a trend for convenience and lifestyle products and services. These
volumes provide scope for companies t o develop sustainable consumer
market s. At t hat scale, sustainable products would not have to be expensive.
The innovat ion will be in pr icing for mass affordability.
Growth sectors such as telecom, infrast ructur e, tr ansport, r etail are
not only relevant for t heir double digit g rowth rat es, but also for their
significant sustainability footprint. In a business as usual scenario, thesesectors could have a lopsided impact; impr essive economic benefits at the
cost of environmental degr adation and social unrest .
Overall infrastructure investment is expected to increase from $201
billion in t he 10th plan (F Y02-07) to $492 billion in t he 11th plan (F Y07-12),
which will be nine per cent of GDP.17 Of t his more t han 30 per cent will
come from privat e sector. The const r uction act ivity u rg ent ly needs eco-
friendly mater ial use and t echnology to minimise its su sta inability damage .
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The potent ial for cleaner met hods and mater ials is r eflected in growt h
numbers.Indias r etail market - 5th largest ret ail destination globally - is estimated
to grow from the US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$
637 billion by 2015. Simultaneously, modern r etail is likely t o increase its
share in t he tot al retail market to 22 per cent by 2010.18 Ret ail outlets,
shopping malls and hyper mart s could become gr een buildings or energy
positive buildings. The best of corp orat ions in organised r etail Tata Group,
Aditya Birla Group, Reliance Ind ustr ies, RP G, F utur e Group, Bhart i Group
have the r esource potent ial to set t arget s and deliver on these energy
positive centr es.
The r etail industr y also helps bridge the r ural-urban divide by means of
sustainable livelihoods creat ion, integrat ing farmers and r ural unemployedinto processing industries and extending the F MCG market s to rur al areas.
Media stor ies of Indias mobile telecom revolution abound. The t elecom
industry is gr owing at t he fastest pace in the world and India is expected to
become the s econd largest te lecom mar ket globally by 2010. Almost 10 per
cent of the population became mobile phone user s in the first quart er of
2007.19 India's overall tele-densit y st ood at 26.89 per cent in June 2008, and
the government has plans to raise the t ele-density t o 40-45 per cent by
2010.20 F orthcoming ser vices such as 3G and WiMax will furt her augment the
growth rate.
Cheap mobile ut ility charges for consumers complemented by bett er
technology use is att racting companies and social entr epreneur s t o provide
access t o healthcare , financial services and mar ket connectivity, to the
mar ginalised. The Boston Consulting Group est imates $85 billion revenue by
2015 through mobile banking with those who ar e curr ently unbanked in
China, Ind ia, and Br azil.21 ZMQ Software Systems, a Gurgaon-based mobile
gaming company, will soon start offering prenatal advice via text messages to
women in rur al areas.22 Similar ly, E nableM a mobile-lear ning company -
offers progr ammes ranging from basic English to test pr eparat ion and career
counselling offered at Rs 25-30 (US$ 0.56-0.67) per month , all thr ough mobile
phones, has almost 250,000 subscribers, and expects t o grow th reefold by t he
end of 2009.23
Sustainability Innovation t hrough New Business Models
In a way, social entr epreneur s ar e pur suing a prolonged endeavour of
sustainability t hat bett er aligns societal and environmental needs with
business values. By creating new business models, they are able to deliver
new forms of value by helping meet sust ainability challenges. I nnovat ion,
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apparent ly, runs right across the business model, delivery mechanisms, and
resource mobility and utilisation.In ter estingly, and as showcased in this re port , many social
entr epreneurs are pursuing disrupt ive paths t hat, while focused on new
mar kets , have potent ial implications for t he mainstr eam. This applicability
to t he mainst rea m also creat es t he innovat ors dilemma - how to ensur e
tha t t his disru ptive innovation is tak en ser iously with in the company
without put ting at r isk the needs of pr esent customer s who pr ovide profit
and growth.24
Social entr epreneur s tend to seek opport unity in situat ions of
subopt imal equilibrium. In t hese sit uat ions society is set tling for a poor
solution to a pr oblem because no one has yet come up with an alter native.25
These entr epreneur s are confronted by a suboptimal state in society t hat:causes t he exclusion, marginalisat ion, or suffering of a segment of humanit y
that lacks the financial means or political clout to achieve any transformative
benefit on its own. Such disequilibrium present s the opport unity t o
transform the situation by developing a social value proposition and bringing
to bear inspiration, creativity, direct action, courage, and fortitude, forge a
new, stable equilibrium that releases tr apped potent ial.26
Social entrepr eneurs such as Muhammad Yunus, founder of the Grameen
Bank ident ified such suboptimal equilibrium which was limited or gave no
access t o formal financial serv ices syst em for t he poor in Bangladesh . The
result is not only evident in the success of Grameen Bank and it s var ious
sister concerns but has also inspired other social entr epreneur s t o look at
similar and completely different but critical sustainability challenges. It went
much beyond its br ief to inspire th e pr ivate sector t o resolve sust ainability
challenges, not t hrough philanthropy but thr ough new business models.
The five case studies and two examples present ed in this report at tempt
to unlock t he spirit of innovation and generat e different ideas to t ackle some
of the most chronic social and envir onmental ailment s India is facing. Using
the crite r ia along four dimensional benefits environmen t, social, business
and innovation t he five case st udies are present ed in t he next section. Table
2.1 shows how they were filtered by looking at the approach and solution
mat rix for each of the companies.
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These case s tu dies look at new business model of sustainable livelihood
pr omotion to impr ove the quality of life for t he have-not s (BASIX) and social
entr epreneur ship with poor as the first consumer t o provide access to basic
minimum light ing (Cosmos Ignite). The case studies also looks at exper eince
of scaling-up low-hanging fruits t o creat e sust ainability (I TC); sust ainability
driven oportunit ies thr ough technology products and service delivery (L&T);
and innovat ive solut ions for challenges of sustainability by lever aging IT
innovations (TCS). In addition t o these case studies, this r eport covers two
specific examples of emer ging business solutions developed by I ndian
companies t o reduce GHG emissions - telepr esence ser vices of Tat a
Communications to r educe companies carbon footpr int; and t echnology
leapfrogging for p roviding clean energy solutions of Suzlong E ner gy.
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 25
Ta b le 2 .1 :
C o m p a n y - A p p r o a c h - S o l u t i o n M a t r i xAPPRO ACH
N e w b u s in e s s m o d e l :
Sus ta i na b le li ve l ihoo ds p ro m ot i on
Soc i a l e n t re pre ne ur sh i p : p oor a s the f i rs t
c us t om e r
Sc a l e d-up low-ha ng i ng f ru it s to c re a te
sus ta inabi l i ty image
Ide nt i fies sus ta ina bi l ity=driven
oppor t un i t i e s
Inno vat ive solut ion s for sus ta ina bi l ity
c ha l l e nge s
SO LUTIO N
Inn ova t ion to impro ve qu a li ty of l ife for
t he ha ve -no t s
Disrup tive inno va tion : Ligh t Emitting
Di ode (LE D)=ba se d so la r p owe r l igh t i ng
system
Susta inabi l i ty benefi t s across SBUs due
t o in t e gra t e d m a t e r ia l & c om p e t e nc e
flows
Ha s t e c hno l ogy , p rod uc ts & se rv i ce s
de li ve ry i n p l a c e
Sub stant ia l success in levera ging IT-
i nnova t ion c a p a b i li ti e s
BASIX
Cosmos Igni te
Innova t i ons
ITC
L&T
TCS
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3 .CASE STUDI ES
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BASIX1.0 Organisat ional Set -up
BASI X is a livelihood promotion instit ut ion est ablished in 1996, working with
over a million and a half customer s, over 90 per cent of them ar e rur al poor
households and about t en per cent ar e urban slum dwellers. It has
cumulatively disbur sed R s 89.3 million (US$ 200 million) th rough near ly
578,000 cumulative number of loans. BASIX wor ks wit h over one million
households in 100 distr icts in the I ndian stat es of Andhra P radesh,
Karnat aka, Orissa, Jhar khand, Maharashtr a, Madhya Pr adesh, Rajast han,
Bihar, Chhattisgarh, West Bengal, Delhi, Sikkim and Assam.27 BASIX is anintermediar y bet ween mainstr eam capital held by people unfamiliar with
rur al development on one side and low-income rur al entr epreneur s in poor
areas on t he other. BASIX makes loans to r ural businesses in poor areas and
also provides assistance in solving business pr oblems.
BASI X is known for it s scale, innovation, commercial or ientat ion and
part nership approach. It has addressed r isk mitigation and cost reduction to
improve its access to mainstr eam capital mar kets. This has enabled
improved rural sector lending, including agri-based lending in drought-prone
ar eas. The loan out st andings a re about Rs 23.4 million (US $ 52 million) for
the Group with over 347,651 cust omers. As much as 41 per cent of the loans
went to t he farm sector (severely impaired for want of credit) and 59 per cent
to women (who tend to be financially excluded) .28
Through its ar m - Indian Grameen Ser vices BASIX conducts resear ch
and development in livelihood pr omotion, designs and develops financial
products for extending credit, evolves distribution channels for delivery of its
services, and develops necessary systems for service delivery such as
accounting and Management Information System (MIS). The Livelihood
School is promoted for knowledge building and t ra ining of livelihood
pr ofessionals in NGOs, government agencies, banks, Micro-F inance
Inst itutions (MFI s) and the staff at BASIX.
2.0 Str at egy29
BASI Xs str ategy is to pr ovide livelihood financial services, agricultur e and
business development services, and institutional development services, which
together are known as the triad strategy (see Figure 3.1.1).30
The fund-based, fee-based and social businesses of the BASIX group have
a synergy and contr ibute t o each others gr owth and pr osperity (Table 3.1.1).
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IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 29
Insti tut iona l Develop me nt
Ser vices (IDS)
Agr icul tura l / B us ines s Deve lopme nt
Services (AG/ B DS)
C us tomer
retention
Livelihoo d Fina ncia l
Services (LFS)
R evenue
g e n e r a t i o n
C us tomer a cqui s i ti on
& risk mitiga t ion
F ig u r e 3 . 1 . 1 :
Liveliho o d Tria d
Ta b le 3 .1 .1 :
BASIXs Susta ina b le Se rvices
Ins t itutiona l Develop me nt
Services (IDS)
Form a t i on o f g roups ,
fe d e ra t ions , c oo pe ra t ive s ,
m ut ua l be n e f it s o f p rod uc e r s
A c co u n tin g a n d m a n a g e m e n t
informat ion sys tems, us ing IT
Bui lding col labora t ions to
de l ive r a w i de r a nge o f s e rv ic e s
Se c to r a nd Po li cy wo rk
a n a ly s is a n d a d v o c a c y fo r
c h a n g e s / r e fo r m s
The se s e r v ic e s we re e x t e nde d t o
2 5 , 1 1 0 g r o u p s , w i t h o v e r
6 8 3 , 0 0 0 m e m b e r s . Fe e s
c o l le c t e d t owa rds p rov id i ng suc h
se rv ic e s a m ount e d to Rs . 24
m i l l i on (US$ 53 ,300) .
Ag r ic u ltu ra l/ Bus i ne s s
De ve lop m e nt Se rv ic e s( A G / BD S )
Produc t iv it y e nha nc e m e nt
Risk mi t iga t ion (non-
i nsura nc e )
Loca l va lue a dd i tion
Ma rke t li nka ge s - Inpu t
sup ply, ou tput sa les
These services were
e x te n d e d to 7 2 , 0 0 0
producers . Fees col lec ted
t owa rds p rov i d i ng suc h
se rv ic e s a m ount e d to Rs 16
m i l l i on (US$ 36 ,000) .
Live lihoo d Fina ncia l Services
(LFS)
Sa vings (on ly in three di s t r ic t s
w h e r e w e h a v e a b a n k in g
l icence)
Credi t : agricul tura l , a l l i ed and
n o n - f a r m
Insura nc e , fo r l ive s a nd
l ive l ihoods
Financia l orchest ra t ion
( a r r a n g i n g fu n d i n g fr o m
va r i ous sourc e s )
In 2 0 0 6 - 0 7 , c o v e ra g e
e x te n d e d t o 4 7 3 , 9 3 2 a s s e t
o w n e r s. O v e r 1 0 , 0 0 0
c um ul a t ive c la i m s ha ve be e n
se tt le d a m ou nt ing to Rs.36
m i llio n ( US $ 8 0 0 , 0 0 0 ) .
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The credit business enables customer acquisition, while the insur ance
business mitigates customer and credit r isk, and t he AGBIDS businessenables customer retent ion by enhancing the ir incomes. The consulting and
IT business allows BASIX t o earn r evenues from offering ser vices. The social
businesses enable re search and development , and knowledge building.
3.0 Sustainability Driving Innovation
BASIX is helping rural people build tangible assets, raise incomes, protect
the environment and sust ain community values. It is helping bring
mainst ream capital to rur al communities and foster ing rur al peoples
innovative ideas about equity and economic development.
BASIXs r ural pr oduct innovation is particularly inter esting. It hascreated new insurance products for poor families in part nership with
mainstream insurance companies. This is the kind of innovation for greater
rur al equality t hat at tr acts the investment capital of market institut ions.
BASIX has est ablished part nerships with insurance entities such as
AVIVA Life Insur ance Company (for life insurance product s), Royal
Sundaram Alliance General Insurance Company (for health, livestock and
micro-enter prise insurance), and ICICI Lombard General I nsurance
Company (for weather insurance). In 2003, BASIX part nered with t he World
Bank and ICI CI L ombard to pilot the first weat her insurance product for
farmers.
BASIX saw t hat poor, rur al Indian households have no insurance, slender
earnings with little cushion, and their income is exposed to all sorts of natural
and human r isks, so they need help. BASIX has worked with insur ance
companies t o design insurance for ver y poor families needs - for example,
insurance on livestock holdings, against r ainfall problems and against loss of
income due t o poor h ealth. BASI X set t les claims on life insur ance in 15 days,
livest ock claims with in a month and r ainfall claims before the end of the
harvest.31 It delivers t hese products thr ough its micro-credit outr each
system. This ensur es low t ransaction and operat ing costs, something
mainstream insurance companies cannot achieve on their own.
The other significant innovation is lever aging I T-platform for financialinclusion of the poor. BASI X initiat ed Technology Assisted F inancial
Inclusion in a few low-income neighbourhoods in Delhi and Muzzafarpur,
Bihar. This pilot covers an ur ban and a r ur al locat ion, and can potent ially be
scaled across all BASI X locat ions. This is done as t he Business
Correspondent of Axis Bank, on the basis of a tr ipartit e agreement between
BASIX, Axis Bank and the technology provider, A L ittle World.32
In the first four months of the pilot, BASI X had enr olled over 4000
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customers for no-frills saving bank accounts. After accounts were opened,
customers were t hen issued biometric authentication based smart cards.These customers now have access t o both savings and withdr awal services, in
addition to other financial services insurance, credit, remittances, pensions -
at e ither a SP OT (Specified Point of Transact ion) within five kilomet re s of
their homes, or at their doorstep.
3.1 Scaling-up Innovat ion
In order to incubate fresh innovations and scale-up the Livelihood Triad
Appr oach, BASIX set -up a thr ee-year (2005-08) Livelihood Tr iad F und
(LTF) wor th Rs 99 million (US$ 2.2 million) with t he support of Swiss
Agency for Development and Cooperation (SDC). This supports the
Livelihood Triad strategy of BASIX discussed earlier.Over 70 innovat ive project s took off from the gr ound 33 that included:
Innovat ive g ras sroot s work
Grass root s work at s cale
Sector and policy work, and
Knowledge build ing
These pr ojects are in the areas of agriculture, livestock and diary, non-farm,
co-oper at ives, financial services, technology, gender and nat ur al resour ce
management. Table 3.1.2 captures some of these projects.
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 31
Ta b le 3 .1 .2 :
BASIXs Inno va tive Pro jects
Descript ion
These projec t s , implemented in various BASIX
l oc a t i ons , ha ve e na b l e d f a rm e rs t o i nc re a se
produc t i v i t y , c ha nge c ropp i ng pa t t e rns , o r e nga ge
wi th a n a lt e rna t ive l ive li hood . Co ve r s m a rke t
l i nka ge s .
E xpe r i m e nt s wit h low r i sk c om m uni ty go a t insura nc e ,
through pi lot s of three di ffe rent models of a r t i f i c ia li nse m i na t ion a nd i n te gra te d li ve s toc k p rod uc ts w i ll be
d e v e l o p e d .
Projec t s a re in various BASIX loca t ions , and usua l ly
em ploy a ll three vert ica ls of the l ive l iho od t r ia d. They
e i the r c re a t e n e w li ve l ihoo d op po r t un iti e s ( ru ra l
t our ism , BPO , e m p loym e nt e xc ha ng e ) o r im p rove
current l ivelihood activit ies.
c on t i nue d
Sector
Agricul ture
Livestock a nd
D i a r y
N o n - F a r m
Sub-se c t o r
F a r m in g te c h n iq u e s ( p a d d y
SRI, c o t ton , whe a t , g re e n
fodder) , seed mul t ipl ica t ion
(ve ge ta b l e s ), l a c , p re s sm ud ,
oi l seed
Ar tificia l insem ina tion (milch
ca t tle ) , integra ted l ives tockde ve l opm e nt s e rv i ce s ,
i nsura nc e
Ha ndi c ra f ts (b ra s s , l e a t he r,
h a n d l o o m e m b r o i d e r y ) , r a g
p i c k ing , ru ra l tour i sm , ru ra l
e m p l o y m e n t e x c h a n g e
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Many LTF projects actively build knowledge from pr actice, thr ough a
process called accompaniment. These projects encourage project field teams
to syst ematically reflect and learn from t heir work. Accompaniment helps
systematically build knowledge throughout the life-cycle of the project.
4.0 Susta inability I mpact
In a litt le over ten year s of its existence, BASIX h as expanded its ser vices to
over one million households in 100 distr ict s across some 14 sta te s in I ndia.
While its focus continues t o remain on rur al poor and t he excluded sections, it
is now reaching out to the urban poor also. According to Government of India
est imates, in 2007 ther e wer e near ly 220.1 million people living below the
poverty line. Near ly 21.1 per cent of the ent ire r ural population and 15 per
cent of the urban populat ion of India do not have access t o basic physical and
social infrastr ucture.34 About 25 per cent of the poor live in ur ban ar eas.35
BASI Xs vent ur e into urban areas is to provide livelihood options to these
urban poor.
Thr ough its L ivelihood F inancial Serv ices (LF S), 473,932 per sons/assetowners wer e covered in 2006-07. Over 10,000 cumulat ive claims have been
set t led amount ing to Rs 36 million (US$ 800,000). Not only does BASI X
select distr ict s with high pover ty r at io, low HDI and low financial inclusion,
within those distr icts also, it t arget s member s of the socially backward
communit ies, as can be seen fr om the caste -wise classificat ion of its
customers in Table 3.1.3.36
The Agricultur al/Business Development Ser vices (AG/BDS) wer e
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Ta b le 3 .1 .2 : c on t inue d
BASIXs Inno va tive Pro jectsDescript ion
Inc lude s bo th p rod uc t de ve lop m e n t (s a v i ngs ,
e duc a t i ona l l oa ns ) a nd e na b l i ng be t t e r a c c e s s t o
e x i s ti ng p ro duc t s
La rge ly LFS-oriented pro jec ts , these use
t e c hno l ogy ba se d s e r v ic e s fo r i nc re a s i ng
f ina nc i a l ou t r e a c h o f ba nks .
In t roduc e s ne w t e c hn i que s o r r e v ive s o l d one s fo r
wa t e r m a na ge m e nt th roug h c o l le c ti ve a c ti on
Sector
F i na nc i a l
Services
Techn olog y
N a t u r a l
Re sourc eM a n a g e m e n t
Sub-se c t o r
Poor - f ri e nd l y s a v i ngs p rodu c ts ,
r e m i tt a nc e s , wa re hou se r e c e i p t s,
c om m od i ty de r i va t ive s ,
e duc a t i ona l l oa ns
Techn olog y ass i s ted f ina nc ia l
inc lus ion, securi ty
I r r i ga t i on , g roundwa t e r
m a n a g e m e n t
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ext ended to 72,000 producers raising fees collect ion of Rs 16 million (US$
355,560). BASIX part ners with pr ivate companies to pr ovide a wide range ofagri ser vices. F or instance, in its collaborat ion with P epsico for F rit o Lays
chip grade pot ato far ming in Jhar khand, it was initiat ed in 2005-06 with 216
farmers and gr ew to 1100 farmer s in 2006-07. These farmer s had an increase
in crop yield, benefited from delivery of quality planting material , got pre-
det ermined pr ice (average pr ice paid was R s 7.60/Kg (US$ 0.17/Kg)), and had
an access t o credit and crop insurance.37
BASIX organises farmer s, livestock r earer s and non-farm sector
producers like handloom weavers into informal and later formal producers'
organisations. BASIX also works with other livelihood promotion
organisations involved in t he development of th e disadvantaged and
marginalised gr oups. It is curr ently working with 37 Non-governmental
Organisations (NGOs) and Community Based MF Is, seven Panchayati Raj
Inst itutions and several government poverty alleviation programmes in
Madhya Pr adesh, Andhra P radesh, Rajast han and Bihar. These organisations
ar e engag ed in var ious aspects of livelihood promotion including
microfinance, handicrafts, promotion of watershed, dairy, natural resource
management and fisheries, among other s. These Inst itutional Development
Ser vices (IDS) were ext ended t o 25,110 groups, with over 683,000 members
generating fees of Rs 24 million (US$ 533,330).38
F rom Risk to Opport unityIncreased regulat ion and local political inter ference keeps compliance r isks
intact for BASI X. Cost competitiveness and building new investment
capacity are key success factors. It has leveraged IT, achieved scale and
maintained impressive repayment rat es. While it has come up with
innovative solut ions for inclusion of poor in mainst ream economic activities,
the next tr anformat ion for BASI X will be when it is able to scale its pilots
and increase t he size of urban poor a s its client ele.
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 33
Ta b le 3 .1 .3 :
Custom er Class i fi ca t ionCa ste C la ss i fica t ion
Sc he du le d Sc he d u le d Mi nor i ty O the r Forwa rd
C a sts Trib e s C u sto m e rs Ba ckw a rd Ca ste s
Ca s t e s
Pe r ce n t o f C u sto m e rs 1 8 6 1 1 4 8 1 7
Pe r ce n t O u ts ta n d in g 1 7 5 1 0 4 9 1 8
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The Pat h towards Sust ainable Pr ofit & Innovation
BASIX leverages innovation and new approaches to creat e and pr ovide
sustainable livelihood opportun ities to the poor (see Figu re 3.1.2). It has also
managed t o leverage available IT platforms to maintain cost competitiveness
and impr ove operat ional efficiencies. Alongside these, BASI X has crea ted a
tr usted brand image, engaged in policy advocacy and worked t owards
creating good behaviour st andards for the industry, part icularly
microfinance. These cumulatively have helped the institution convert certain
sustainability challenges into opportunities.
I NDI AN COMPANI ES WI TH SOL UTI ONS THAT THE WORLD NEEDS34
Th e n ext b ig wa ve ? Sca le -u p Bo P m a rke ts ; u rb a n p oo r
C o m p e t itiv e o p p o r t u ni ti e s In c r ea s i ng a c ce s si b ili ty fo r t h e e x clu d e d ; b e s t so lu ti o n to b r id g e
fac i li ta t e / provide a cces s ib i l it y
Bra n d Bo rro w e rs/ e m p lo ye e s/ in s titu tio n s
A na lyst a n d d eb t ra tin g Re p a ym en t r a te s a n d d efa u lte rs
C itiz en sh ip Pro mo tio n o f su sta in a b le live lih oo ds
C o mp e titive r isks C o st c om p e titive n ess a n d in ve vs tm e n t c a p a city
C om p lia n ce Re g ula tio n a n d vo lu nta r y sta n d a rd s; p o litica l in te rfe re nce
F ig u r e 3 . 1 . 2 :
In n o v a t io n in l iv e lih o o d p r o m o t io n sp r e a d s a c r o s s b u s i n e s s d r i ve r s
D e v e lo p b u s i n e s s
P a r t n e r sh i p s
N e w p r o d u c ts d e v e lo p m e n t
En s u r e i m a g e / Br a n d
C u s to m e r r e la t io n
m a n a g e m e n t
In n o v a t io n e d g e
Develop bus iness
C r e a t e g r o w t h
Bo P m a r k e t s
U rb a n p o o r
Low -cost solut ions
H o u s e k e e p i n g
P o li cy a n d g u i d e li n e s
C a p a c i ty b u i ld i n g
H o u s e k e e p i n g
O p e r a ti o n a l p la n g o a l, a c t iv iti e s, e tc
G o v e r n a n c e s tr u c tu r e
TIME
Capacity
Profitab
ility
Innovation
Secure d i rec t ion
P u b li c p o li cy a d v o c a c y Econom ic sus t a inab i li ty
F ig u r e 3 . 1 . 3 :
Susta inab i l ty pa th
RI
SK
O
PPO
RTU
N
ITY
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BASIX has been able t o do all this t hrough building its own capacity and
also that of the indust ry. However, as shown in figur e 3.1.3, it needs t ofurt her st rengt hen this resolve to respond to newer challenges and tar get
fresh mar kets such as t he urban poor. Responding to problems of the ur ban
poor is the next significant growt h area t hat BASI X and others could tap.
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 35
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Cosmos Ignite Innova tions
1.0 Organisat ional Set -up
Cosmos I gnite I nnovations is a social enter prise using a disrupt ive
technology solution to resolve two key sustainability challenges at the same
time. It was founded on an innovative business model as t he first global
company (as against an N GO or charity), to bring Solar Light E mitting Diode
(LE D) lighting and micro-energy for domestic use thr ough a sustainable
commer cial model, focussed on the poor a t the Bott om of the economic
pyr amid in Ind ia and in par t s of developing world across Africa, Asia and
Lat in America. It developed an innovative product - MightyL ight to helpsolve the light ing pr oblems of millions of poor in these r egions.
Building on the work of Stanford U niversity and LU TW (Light Up The
Wor ld) F oundat ion39, MightyLight uses t he LE D t echnology combined with
solar energy into a product designed as a multi-functional lamp t hat is water-
resistant , break-resistant , and can be used as a r oom light, reading lamp or
flashlight.
It believes t his model pioneers a pat h t o sustainability both for the
users and t he pr oducers thr ough safe, affordable, easy-to-use solutions, that
deliver social benefit s; suppor t economic development ; as well as mitigat e
climate change impact, at the same time.
The Company follows t he vision of Em powering L ives thr ough
I nnovative P roducts , beginning with th e mission to help Rem oval of
Dar kness for millions with out light at t he Bott om of the Py ra mid. It s
mission is t o provide a cheaper alter nat ive for th e 1.6 billion people
without e lectr icity who are dep endent on fuel-based lighting such as
kerosene.40 The Might yLight is used acr oss India, Afghanistan and
Pakistan t hrough to Kenya, Nigeria, Guatemala and Panama, and many
other re gions, with almost 100,000 people being impacted by t he end of th e
year 2008.41
Cosmos has its own design, development, and manufactur ing and works
in partner ship with leaders from t he development, government andcommercial sectors to distribute its solutions.
2.0 Str at egy
Cosmos Ignit es innovation is in t he pr oduct and t he financing model
developed t o make it a market -based sustainable social enter prise. Cosmos
Ignit e consciously chose t o be a pr ofit-oriented ventur e t o make t he pr oject
sust ainable in its aim t o effect social change. This philosophy is based on the
I NDI AN COMPANI ES WI TH SOL UTI ONS THAT THE WORLD NEEDS36
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belief that market s, and not mer e charity, leads to sustainable gr owth.
MightyLight is in use in India, Afghanistan, Pakistan, Cambodia,Niger ia, Kenya, Rwanda, Panama, Guyana, Colombia and has become
integrat ed into numerous inter national projects by NGOs, the U N, the World
Bank, with commercial distribution now underway.42
On account of it being a lean entr epreneur ial ventur e, instead of a large
corporate, it has chosen to design and learn from a large number of pilot
progr ammes t hat support its own financial sustainability as well as provide it
with r eadiness to r apidly scale in t he coming st ages.
Cosmos Ign ites delivery model is based on:
1. P roblem or Market ident ificat ion
2. Technology or Pr oduct development
3. F inancing or Affordability4. Distr ibution or Scale
F ollowing a design-based appr oach, th e company st udied consumer
behaviour as well as the consumer need and t ried t o come up with a pr oduct
that would fit these consumer needs. The need gap could best be met by
disruptive change.
Consequently, Cosmos Ignite developed a product t hat was not
technology- or stat e-dictated, but was dr iven by customer needs.
Might yL ight pr ovides off-the-gr id electr icity using freely available solar
power an d is close to the customer. This also includes huge re sear ch and
development costs, and intellectual pr operty right s.
The key stat istic to appreciate t his innovation is the fact t hat even t he
poorest are already paying heav ily for kerosene oil to the t une of Rs 80-150
per month t hat is US$ 1.78- 3.30 (@ Rs 9/ litr e (US$ 0.2)from the P DS or t he
public distr ibution syst em); while t he nat ion pays almost thr ee t imes as much
per litr e amount ing to R s 30,000 crore s per annum (US$ 6.7 billion) in
ker osene subsidy. This amounts to a spend of up to Rs 2000 (US$ 44) per
annum on ker osene alone, without consider ing the addit ional cost s of black-
market ed ker osene owing to leakages in t he P DS, cost of batter ies for
torches, and cost of damage to health from polluting smoke and eyesight from
dim ker osene oil lamps.St ar ting wit h a pr ice of Rs 1500 (US$ 33) for t he lamp plus R s 1000 (US$
22) for the solar panel, (offering 30 per cent or R s. 1000 (US$ 22) discount
over t he pr ice of the government-supplied lamps43), Cosmos Ignit e has
managed to reduce the pr ice to only Rs 1250 (US$ 28) for t he lamp and R s
750 (US$ 16.67) for t he pane l. This means t hat the cost r eduction is being
passed on to t he user s of almost 40 per cent in t hree years, which is providing
a payback within just a year on actual spend for lighting by the poor.
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It has done t his while simultaneously increasing t he br ightness of light
delivered t o about four t imes of where it st art ed from, being the first todeliver internat ional standar ds of brightness of >300 Lux the recommended
safety stand ard for eyesight for any per son to t he very poor users. This is
almost 100 times t hat of the dim, pollut ing and fire-prone ker osene oil lamp.44
Given t he ver y significant advances made, it is clear t hat even at this
reduced price the poorest cannot afford the up-front acquisition cost, and it is
imperative t hat Cosmos I gnite finds an alter native met hodology t o product
financing for s calability. It is addr essing this problem in t wo ways: micro-
financing and carbon credits.
In order to r ealise minimal profits th at Cosmos Ignite r equires for
sustainability as a social enterprise, and to cover maximum beneficiaries,
scale is a key success factor for t he company. I t will achieve scale and widerdistribut ion thr ough institut ional and market -based networks and
partnerships.
The company achieves some sales t hrough mult ilater al institutions such
as t he U N, t he World Bank, other donor institutions and not-for-profit
projects. In order to increase it s rur al penetr ation, Cosmos I gnite is now
tying up with
MF Is (Micro-Finance Institutions)
SHGs (Self-Help Groups), and
Co-oper at ives
The company is also looking to use t he increasing impor tance of CSR
(Corporat e Social Responsibility) t o part ner delivery of its sustainable
lighting solutions for t he poor with the large corporations addresing t heir
constituencies. In t he next phase it aims to extend t he distr ibution scale to
urban mar kets t hrough organised ret ail or chain stores, stand-alone or brand
stores, direct market ing companies and net -based ret ailing options, to br ing
green energy products t o everyone.
3.0 Sustainability Driving Innovation
MightyL ight is a solar power ed LE D-based port able home lighting syst emconfigured to hang as a light fixtur e in multiple orientat ions. LE D lamps are
believed to produce nearly 200 times more useful light than a kerosene lamp
and almost 50 times t he amount of useful light of a conventional bulb.45 These
lamps also come wit h an economic payback per iod of 12 mont hs or less. The
light is rat ed t o last for mor e than 50,000 hours (which is more than 30 year s
on usage of four hours da ily or more t han 15 years on usage of eight hours
daily). The light is water- and br eak-resistant, low on cost, r equires virt ually
I NDI AN COMPANI ES WI TH SOL UTI ONS THAT THE WORLD NEEDS38
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no maintenance and is environment-friendly.
The light can be delivered a t a high-volume pr ice point of Rs 1000(US$ 25) including the lamp and solar panel, thus opening up a pr eviously un-
served segment of the market (see Figure 3.2.1).
The bus iness model is now being ext ended t o include a car bon financing
plan with br eakthr ough verification t hrough t echnical remote monitoring and
data centre, linked to Gold Standard Voluntary Carbon Market.
MightyL ight is a disruptive pr oduct tar geted t o meet a social need; at
the same t ime, the company is modelled to function not as a char ity, but like
any other business organisation with focus on the bottom-line.
While solar energy and L E D t echnology have been around for a long
time, what is innovative is their use in combination in MightyLight, suddenly
opening up a whole new mar ket to more than 1.6 billion people without
regular lighting around the world. Moreover, this is health friendly,
environment-friendly and contr ibutes t o CO2 reductions.I t could provide the foundat ions for the developing world to leap frog
development to t he next generat ion of lighting, even more efficient t han both
incandescent as well as CF L bu lbs, while avoiding the pitfalls of danger ous
mercury vapour in these bulbs. It could also be the st art for a br oader tr end
of decentralised energy solutions.
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 39
F ig u r e 3 . 2 . 1 :
Migh tyLight s Ma rke t Seg me nta t ion
Cost in india
$ 5 0 0
$ 1 7 0
Cur r en t so la r
h o m e s y s t e m s
7 4 W C FL
1 8 W C FL
O p p o r t u n i t y
fo r
Migh ty Ligh t cos t reduct ion suppo r ted by ca rbon p lan
f in a n c in g - t o t a l c o s ts o v e r 1 0 y e a r s
Affluent
> $ 4 0 0 0
Mid- income
$ 2 0 0 0
$ 4 0 0 0
P o o r
$ 3 0 0 $ 2 0 00
Very Poo r
< $ 3 0 0
A n n u a l
lighting
$ 5 0 +
$ 2 5 +
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4.0 Susta inability I mpact
Studies indicate the carbon emission of 134 kg per year per ker osene lamp.46
Ker osene is not only expensive account ing for near ly 20 per cent of global
light ing cost s,47 it is also hugely inefficient , gener at ing only 0.2 per cent of
global lighting output.48 In addit ion to genera t ing millions of tonnes of CO2,
t he social cost s of kerosene are enor mous. Some social costs include
respiratory illnesses, accidental fires and burns, high risk of crime, and
virtually no opportunities for health and education in no or dim lights.
A single MightyLight saves over one tonne of CO2
over t en year s. Given
that 83 million people in India ar e dependent on oil-based lamps,49 Cosmos
Ignite estimates its lighting India programme would only cost about $2
billion, as against th e annual kerosene subsidy of appr oximately $5 billion, aswell as save one to t wo per cent of Indias CO2 emissions.
50 Indias t otal CO2emissions ar e around 1400 million tonnes . MightyLight would ther efore save
14-28 million tonnes of CO2 only in I ndia and among t he poor. This compar es
with Swedens tot al CO2 emissions of appr oxemat ly 50 million t onnes. This
has huge global CO2 reduction potential if extended t o other poor regions of
the world as wells as the affluent populations.
The challenges of carbon aggr egation in a distr ibuted model have been
specifically addressed through a specially-designed version of MightyLight to
enable micro-chip-based assur ed measur ement of usage and carbon
displacement for t ranspar ent carbon financing.
Sustainability benefits of solar-powered LED light are significant
compar ed t o social, economic and envir onmental problems creat ed by
dependency on kerosene lamps. These are briefly captured in the table 3.2.1.
I NDI AN COMPANI ES WI TH SOL UTI ONS THAT THE WORLD NEEDS40
Ta b le 3 .2 .1
Susta ina b i li ty Imp a c t o f So la r -p ow ered LED ligh t ve rsus Kero sene La mp s
P ro b le m : Ke r o se n e La m p s S o lu tio n : S o la r p o w e r e d LED lig h t
Ec o no m ic Ke r o se n e A n n ua l s a vin g s o f Rs 1 2 0 0 (U S$ 2 7 ) o n k er o se n e
e xpe nd i tu re up t o e xpe nd i t u re
Rs 1 0 0 ( US $ 2 ) A llo w s m o n e y to b e s p e n t o n fo o d , c lo t h in g , s c h o o l
p e r m o n th fe e s o r live lih o o d b u ild in g
P ro v id e s li g h t fo r e d u c a t io n a n d i n cr e a s e d i n c o m e
ge n e ra ti on th roug h li ve l ihoo ds suc h a s s e wi ng ,
we a v ing , ha nd i c ra f ts , f ish i ng , food -c a r t s , e tc
En a b l e s m o n e y s a vin g o n r e s p ir a to r y d is e a s e s, a n d
i nc re a se d i nc om e f rom p rod uc ti ve , s i ckne s s - fr e e d a ys
Ex tr a - o r d in a r y s a v in g s to th e e x c h e q u e r d u e to b r e a k -
t h rough e ne rg y e f fi ci e nc y a nd r e duc t ion i n sub s idy
C o n t i n u e d
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F rom Risk to Opport unity
Cosmos has been able to demonstrate how mechanisms (carbon financing)
creat ed to tackle a global issue (climate change ) could be lever aged t o
effectively re solve a socio-economic pr oblem (access t o sust ained light ing)
faced by t he poor (see Figure 3.2.2). While climat e-friendliness of the pr oduct
helps derisk business to a gr eat extent , one could assume future risks, for
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 41
Ta b le 3 . 2 . 1 c o n tin u e d
Susta ina b i li ty Imp a c t o f So la r -p ow ered LED ligh t ve rsus Kero sene La mp sPro b le m: Ke ro se ne La m p s S olu tio n: S ola r po w ere d LED lig h t
So cia l Ke ro se ne is p o llu tin g le a din g Elim in a te s d a ng ero us n a ke d fla m e a n d
He a lth to re sp ira to ry d ise a se s p ollu tin g sm oke o f ke ro se n e la m ps
P o o r q u a l ity lig h t a l so Im p r o v e in d o o r a i r q u a l ity
d a m a g e s e y e sig h t
Le a d i n g to e x p e n d itu r e o n
m e di c i ne s a nd l os s o f
i nc om e d ue t o s i c kne s s
Ed u ca tio n Ke ro se ne o fte n ra tio ne d G o o d q u a lity lig h t w he n ch ild re n re a d
re d u cin g tim e fo r stu d y a nd stu d y in th e eve n in g s
Sa fe ty Ke ro se ne is a fire h a z a rd Pro vid es so cia l se cu rity in d a rkn ess
for vi lla ge huts
En viro nm en ta l 3 0 -2 5 0 kg o f C O2
e m is sio n s Re d u c e s d e fo r e sta t io n c a u s e d b y
p e r ye a r p e r la m p d e p e n d e n ce o n w o o d o r ch a rco a l
N o n - p o l lu tin g a n d e n v ir o n m e n t -fr ie n d l y
Re d uce d C O2
emiss ions
Th e ne xt b ig w a ve ? M a ss ma r ke t fo r lo w co st cle a n en er gy so lu tio n s
C o m p e titiv e o p p o rtu n itie s Lo w -c o st so lu tio n s fo r th e p o o r
Bra n d C o n su m e rs/ Pa r tn e rs
C itiz en sh ip So cia l e nte rp rise re so lvin g ke y so cia l issu es
C om pe t it ive Dono r-a ided pro jec ts a nd l a rge ente rpr i s es wi th mo re f ina nc ia l
r isks m u scle
C o mp lia nce Sta nd a rd s a nd re g ula tio ns o n b a tte r y w a ste
F ig u r e 3 . 2 . 2 :
C lim a te c h a n g e a n d so lu tio n s f o r th e p o o r u n d e r p i n s e n t ir e b u s in e s s sp e c t r u m
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instance pile-up of bat te r ies. The next big wave for Cosmos would be t o
pioneer yet another product/solution success st ory and creat e a mass-marketfor these products. Competition for its lighting solutions already comes from
large lighting companies and similar pr oducts distribut ed by NGOs thr ough
donor-aided funds.
The Pat h towards Sust ainable Pr ofit & Innovation
Cosmos began with pr oduct, deliver y and financing innovation. However, as
it pr ogresses in business, securing direction for futur e gr owth t hrough
est ablishing economic sust ainability and policy inter vent ion will become vital
(see Figure 3.2.3). In order to furt her r educe prices so as to make it
financially more attractive to the poor, Cosmos needs to achieve certain
economies of scale. Such a scale cannot be achieved without pr oper policyframework t hat facilitates growth of decentralised home-based energy
systems. At the same time, sett ing plans and compliance with standar ds and
regulat ions will mean bu ilding organ isational capacity and supply chain
net work. F or instan ce, collect ion and safe disposal of batt ery and pr oduct
waste. The next big leap will be to extend its pr oduct-solution to urban poor
as well as the not -so-poor, with different iated design, pricing and dist r ibution
str ategy. Also vital to its gr owth will be to not r emain a one-product success
story, but to develop more product-solutions on similar product-business
model.
I NDI AN COMPANI ES WI TH SOL UTI ONS THAT THE WORLD NEEDS42
D e v e lo p b u s i n e s s
D i srupt ive innova t ion
C a r b o n f in a n c i n gEn s u r e i m a g e / Br a n d
C us tomer re l a t ions wi th
t h e p o o r
S ta k e h o l d e r r e l a t io n s
D e v e lo p b u s i n e s s C r e a t e g r o w t h
M a s s m a r ke t
N e w p r o d u c ts & s o lu t io n s
Pa r tne rs hips to s ca le -up
H o u s e k e e p i n g
C o m p li a n c e a n d s ta n d a r d s
O p e r a t io n a l p l a n g o a l, a c t iv it ie s , e tc
LC A
TIME
Capacity
Profitability
Innovation
Secure Di rec tion
Econom ic sus t a inab i li ty
P o li cy i n te r v e n ti o n / a d v o c a c y
F ig u r e 3 . 2 . 3 :
Susta inab i l ty pa th
RISK
O
PPO
RTU
N
ITY
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ITC Limited
1.0 Organisat ional set -up
ITC is one of India's largest privat e sector companies with a market
capitalisation of over US$ 19 billion and a t ur nover of nearly U S$ 5.1 billion.51
It was ranked 14th among the top 40 firms listed by F orbes in 2006.52 The
group has a diversified presence in cigarett es, hotels, paperboards and
specialty pape rs, packaging, agri-business, packaged foods and confectionery,
information technology, branded apparel, personal care, stationery, safety
matches and other F MCG products (see Figure 3.3.1).
ITC's diversified stat us originates from its corporat e str ategy of creat ing
multiple drivers of growth leveraging its core competencies: wide
distr ibution reach, brand-building capabilities, effect ive supply chain
management and ser vice deliver y. The gr oup employs over 25,000 people at
more t han 60 locat ions across India.53
ITC has a sust ainability management str ucture t o develop and review
policies, tar gets, pr ogress, and then r eport (see Figure 3.3.2).This structure
overlaps with t he governance str ucture and business str ucture of the
company, which helps mainstr eam sust ainability into business str ategy and
processes.54
E very Business Division/ SBU at ITC is r un by a Chief Executive also
responsible for t he sust ainability performance of the business unit. E ach
Division/ SBU is also responsible for its innovat ion and crea t ivity for the
competitive edge. This decentralised str ucture with centr al oversight and
accountability p rovides scope for sust ainability and innovation to inter face at
ITC. This is reflected, for instance, thr ough company-level tar gets on energy
IN DIAN COMPANIES WIT H SOLU T IONS T HAT T HE WORLD NEEDS 43
FM C G * H o te ls
A g r i B u s i n e s s
Lea f Tob a cco
A g r i C o m m o d i ti e s
* FM C G i n c lu d e s c i g a r e t te s , l if e s ty le r e t a i l in g , b r a n d e d p a c k a g e d f o o d s , p e r s o n a l c a r e p r o d u c t s , m a t c h e s , i n c e n s e s t i ck s
P a p e r b o a r d
P a p e r &
P a c k a g i n g
I n f o r m a t i o n
Te c h n o l o g y
F ig u r e 3 . 3 . 1 :
ITCs Busine ss A rea s
ITC
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efficiency and emission and wast e r eduction, whereas innovation in new
business models such as the e-choupal happens within t he agr i business unit.
ITCs Car bon Commit tee looks after t he company st rategies to red uce
its climate footprint . It comprises E xecutive Vice P residents from F inance
and E nvironment, Health & Safety and t hree Senior Managers from F inance
and Legal functions.
2.0 Str at egy
ITCs str at egy to invest in developing societal capita l and addr ess
environment al challenges th rough large-scale implement at ion of socially-
relevant business models entails costs t hat const