Last September, at the UN Global Compact Leaders’ summit in New York, we published the global findings of our study of 1,000 CEOs’ attitudes towards sustainability. Since then we have discussed the findings in Davos, in January, and published specific findings in February in both China and India — with the Global Compact Network India.

Reflecting on the discussions, we have noticed a distinct change in tone throughout: from one of crisis and survival in the recent past, to a determination to tackle issues of sustainable growth and to look forward, albeit with a cautious optimism.
It is fair to say that this determination has been particularly evident in Indian business leaders.

Communities, the key
With a rising fiscal deficit and slowing GDP in India, the challenge of sustainable growth has put the spotlight back on business. We know that leading companies have a critical role to play in stimulating growth, but also that this growth must be inclusive. It is no surprise then that 63 per cent of Indian CEOs see communities as their most important stakeholders in the next five years.
The message from Indian business leaders seems to be that philanthropy is good, but it is not enough and not the same as driving sustainable core business. Indeed, only 16 per cent of Indian CEOs feel that consumer demand is motivating them to take action on sustainability at the moment (a stark contrast to the ‘global’ average of 47 per cent). But this may change.

Around half of the CEOs said that consumers would become a major stakeholder within five years. Again, that’s less than the global average (64 per cent) but it’s still a big growth.

The study also demonstrated that business leaders are frustrated at the pace and scale of change on sustainability. Of the 32 Indian CEOs we spoke to, only 22 per cent felt that the global economy was on track to meet the demands of a growing population. Although 66 per cent felt that sustainability would be ‘very important’ to their future business success, only 44 per cent believed that business as a whole is making sufficient efforts to address sustainability challenges. Many describe a recurring ‘pilot paralysis’, and the parallel danger of overly celebrating these undoubtedly powerful examples as if the change was already happening at scale.

Whether it be at the UNGC summit, at Davos or at publication launches around the world, the same questions seem to be on CEOs’ minds: How can we get beyond pilot projects and incremental change? How can we work together to recognise and reward sustainability leaders? And what would that look like in the most important emerging economies such as India?

Finding answers
Our study, comprising contributions from more than 1,000 CEOs worldwide, demonstrates that some companies — the ‘Transformational Leaders’ — are beginning to find answers to these questions. Not just societal benefits, these leaders are outperforming their peers on measures of traditional economic and sustainability leadership.

On profitability, for example, these leaders on average outperform 59 per cent of their respective sectors, and 65 per cent of their sectors on total shareholder returns, over three- and seven-year time horizons.

At the same time, on average, they reduced absolute carbon emissions by 13 per cent from 2008 to 2012, while reducing carbon intensity of revenues more than four times faster than their peers.
Already in India, we can see signs of leaders exploring new opportunities while delivering social and environmental value to local communities.

A good example of the power of partnerships is a joint venture among Bharti Airtel, IFFCO and Star Global to provide a ‘Kisan Sanchar’ service, allowing the operators to extend coverage into rural markets, while providing information on weather, prices and farming techniques to farmers. Similarly, Unilever’s ‘Shakti Ammas’, ITC’s e-choupal, and the Tata ‘Swach’ water filter, are stellar examples of sustainable innovation.

Distribution losses cut
Likewise, Tata Power’s roll-out of smart grids at its Delhi network has significantly reduced distribution losses, as well as showcased a pathway towards the low carbon Indian economy of the future. We are also seeing an increasing focus on demand side measures, but with the global carbon price collapse, some of these investments could be precarious without the right incentives and markets.

As many as 63 per cent of Indian CEOs already see difficulties in operating environments as the most significant barrier to sustainability implementation and nearly all of them (97 per cent) want governments and policymakers to provide market signals that support green growth.
In the innovations of these leaders, we can see the seeds of a new approach to sustainability. But few, if any, of these transformational leaders are seeing their impact add up to speed and scale required for aligning markets with sustainable development.

Nonetheless, there are important lessons here for Indian business leaders on where future opportunities and competitive advantage in driving both business results and sustainability will lie on an Indian and global stage.

Peter Lacy is Managing Director, Strategy and Sustainability Services in Asia Pacific, based in Shanghai. Pranshu Gupta is a Senior Analyst in Accenture Sustainability Services, based in Delhi.
(This article was published on April 1, 2014)