 So, in the last session we discussed about certain factors which are affecting the nature of business, business model, ways businesses are conducted like demography, technology and globalization. So, these factors which are affecting the business world and ways of doing business. As a result of that you see so many different types and innovative business models coming up and that has impact on in the existing organizations and that is resulting in to the emergence of new organization. Today we are going to look at a very important factor which is which has been recognized now as one of the most powerful factor in front of the humanity and that is sustainable development. How sustainable development and concern for sustainable development are redefining the business landscape. So, before we talk about business we need to first have some overview of what we are doing to our planet. And Otto Schemmer and Koffer in their book leading from the emerging future from ecosystem to ecosystem economies they have beautifully summarized what we are doing to our planet, what humanity is doing to the planet. And so, they have given few numbers and I will explain just now what is the meaning of those numbers. But essentially the proposition of the observation of the Schemmer and Koffer is that there is a increasing divide in society and that divide is in terms of ecological divide, in terms of socioeconomic divide and also in terms of the inner cultural or spiritual divide, what does that mean ecological divide. Ecological divide means what in terms of the impact of human activity on our ecology is happening. So, that means, how much we are polluting, how we are producing this stuff or what are the byproduct of over the production production activities on the planet and what it is doing to the planet. So, there is a assessment and there is a measurement called carrying capacity. So, carrying capacity earth carrying capacity simply means the ability of the earth to absorb or process the environmentally degrading stuff being produced as a result of the human activity. Yes. So, that means, whatever the production activities are going on we have some byproducts. Some of those byproducts are useful some of them are waste. So, this measurement is about the waste, how much waste is being created and our joint ability the planet's ability to process that waste and that becomes the measurement and that is called earth carrying capacity. It simply means how much waste humanity can afford to create which can be processed by our planetary ecosystem and the result is that we are producing the waste which is one and a half time of the total earth's capacity to process. Suddenly this is a very unsustainable way and details are even more gory because one and a half means we need one and a half size of the planet to absorb the waste being created as a result of the human activity. But if we look at the nationwide data we can see and living earth statistics there is a website and there is a organization living earth which which tracks these activities and keep releasing the these measurements. If everybody in the on the planet is start consuming equivalent to the average American consumer we will need 7 earths to dispose of the waste being created in the process. What about the India's statistics? India earth carrying capacity is one that means average Indian the how much they consume if whole world all the world population start consuming equivalent to the average Indian consumer this one earth is sufficient to absorb that waste we should not feel proud about it because in India the socioeconomic divide is very high that is so in the US as well. But in India the top 14 percent population owns more than 80 percent of the wealth and obviously their consumption is more and the waste they create in the process is also much more. So, Indian's story is actually result of its poors who are actually consuming less it is not of the well to well of people of the residing in India. So, that is the that is what is happening at the ecological divide 1 and a half is the earth carrying capacity we are operating it we look at the socioeconomic divide. Top 2 percent of the wealthiest Americans own more than 80 percent of the wealth similar to stories in India as well. So, top 10 percent of the wealthiest population in India own more than 80 percent of the Indian wealth. This divide is unfortunately increasing and this economic divide has a impact on people's aspiration has impact on the social harmony it has impact on the quality of life and so many things. And this is one figure 2 and a half that means for last several decades population is increasing so large number of people are being brought out of the trap of the poverty that also is happening, but this number 2 and a half billion people that is constant since last so many decades who are residing below the poverty line that means they are earning less than 1 dollar a day. So, this number is staring at us decades after decades. So, that is a indicator of the socioeconomic divide. If we keep overlooking the environmental degradation, we will experience that in the form of the climate change, global warming and increasing number of diseases and eventually the quality of life. If we overlook the socioeconomic divide that will be reflected in the social dish harmony that will be reflected in so many social unrest and that will definitely have impact on the intellectual, cultural and scientific growth of humanity. We can understand this with a simple example that if we keep making policy keeping the benefit of 98 percent of population and 2 percent population or 3 percent population who are in the deep forest and probably not part of the so called mainstream, if we keep ignoring their concerns out of those 2, 3 percent so called marginalized group, they can take up weapons and they can make the quality of life miserable for rest of the population. So, actually utilitarian principles means doing good for the largest number of possible largest number of people is not the logic on which social and economic policy can work upon. Now, come to the third example. If you simply compare the time and space given in the media about incidences related to terrorism, accident, war, how much percentage of the space, time and space do you think is given to these issues, war, terrorism and accidents and crimes. Large percentage, very large percentage, if you look at if you read the local newspaper other than the first paper, other than the first page which gives the international news or some national news, most of the other pages are filled with these incidences about war, accident and the crimes related death. How much do you read and hear about the meaninglessness, mental health, depression and anxiety people are suffering? We hardly get to hear about these things, we hardly talk about these things, but if you look at the statistics, number of people dying and many of them are actually suicides is 3 times year after year, 3 times of the total number of people dying with the joint impact of war, accident and crimes. So, this is the kind of meaninglessness and anxieties prevailing in our society. How many percentage of the people actually look forward going to work on Monday morning? There are there are large number of statistics about the Gallup survey, about employee engagement survey, about many organizations who are conducting the surveys about mental health. A large number of people, one third population is having some or other type of mental disturbance anxiety, depression, insomnia and that is resulting in more severe somatic diseases like gut pressure and heart attack. And India this particularly relevant and particularly a matter of concern because many of you might not be aware that India is the capital of youth society in suicides in the world. So, if we look at the suicide rates in the group of 18 years to 28 years, the percentage of the deaths being caused due to suicide in India is amongst the highest comparing to the to the whole world. So, ecological degradation, the huge inequality and cultural divide and spiritual divide lack of meaning in life, these are the different and very concerning parameters to understand what is happening to the planet. Now, why business should worry about it that is the question. Witnesses should bother about this because most of the production activities are done in the organizations. So, that more than the 70 percent of world GDP is produced in the organizations in the business organizations. If you look around yourself in this room and wherever to whatever extent you can see other than oxygen which we are getting from the plants and the water we are getting because it is a it is a rainy season, it is difficult to find anything in this room which is not created by organization. So, if so, we the humanity a large number of people are actually part of some organization and this planet is suffering from all these things that is why organizations cannot remain oblivious to these things. Organizations are the new forms of collective life. After family and society organizations are the third form of the collective life. They have emerged so powerful in last 150 years, but they cannot remain oblivious to what is happening to the planet because business and all other activities they carry out has a it depends on what is the situation on the planet what is the situation in the society. So, that is why sustainable development and the sustainability is a very important question mark and it is a very important criteria and a most one of the most important factors of the management of the change. So, in this session we will look at how this factor is redefining the business and has to redefine the business. If we talk about the sustainable environmental sustainable business process is still a large number of business students and the business executives carry certain perception. What are the what are those? These perception are that producing green products places us in disadvantages position and vis-a-vis our rivals in developing countries. If I am a multinational, if I am producing environmentally eco-friendly product, then cost increases and when the cost increases I do not remain competitive in the developing country. Another concern is that suppliers cannot provide green input or transparency of the process. I want to provide the eco-friendly product, but I cannot produce all the stuff all the component I have to rely the suppliers and suppliers are not competent to give this green inputs or they do not give do not provide the kind of a transparency which is needed to be ensured that what they are supplying eco-friendly. Global manufacturing demands additional investment in technology and equipment when anyway facing the challenge of reducing cost every day putting up a machinery to produce environmentally friendly product is a is additional cost and when as a business we cannot afford that and last but not the least. How many customers are actually willing to pay premium for the environmental friendly products I am offering? Customers are not willing to pay more so in India they are not willing to pay because we are very cost sensitive that is the logic given. So, we will see that these logic are the primary logic, but they may not hold true when we look at what is going on at one level in the world. That happens partly because of the enlightened leadership and largely because there are so many voluntary organizations which are releasing some codes. So, for example, greenhouse gas protocol, forest stewardship council code, all alternate product environmental assessment tools these frameworks are not given by regulatory bodies. These frameworks are given by professional bodies, but they are sometime more stringent than the regulatory requirements number one. They create a competition amongst the players in the field. You will see the business in general and within the organization versus within the profession the profession is more fair and ethical. So, there the parameter for excellence are more fair and more towards being more responsible. So, these codes many a time act as precursors to the regulatory requirement. There are two options for organizations either you follow the least required norms while operating in a market. So, if I am operating in Africa I follow what is least required in Africa, if I am operating in India I follow what is least required in India and if I am also for operating in US in America. Let me follow what is least required thing in terms of being environmentally responsive and environment means social environment as well as the natural environment that is one logic. What is found in their study is that instead of following the lowest criteria if we follow the highest criteria that gives edge to not only in the more developed economies where the regulations are more stringent in the long run it gives advantage to developing economies as well. So, there are few examples like HP recognize that lead based shoulders and lead is environmental unfriendly stuff. So, they are using a lot of components which are which has lead and they in the 90s they recognize that we need to find substitute which is more environmental. They invested on that and around 2000, 2001 a regulation came in the in the in Europe to stop these lead based things by 2006. Marketing organizations started research to find the eco friendly substitute of lead when this announcement was made. So, they had practically only 5 years whereas, HP had a backing of the research of more than 12, 15 years to address this issue. So, the moment it was launched they launched one year before it became a regulatory requirement and then they became a business leader they became the leader in that category. Another example is where again HP is involved electronic recycling it became very clear at some point of time that electronic waste is a when electronic waste become a big question mark and a big matter of concern. It was recognized that there will be some regulation before actually regulation came up Electrolux, HP, Braun and Sony they came together a build a platform a business platform for the electronic recycling. So, that involved collecting the used products and recycling them that gave them a concrete advantage they that also gave them a major value in the process of recycling. So, viewing compliance is an opportunity is not only environmental and responsible thing but it can be a good business sense as well. Next stage is making value chain sustainable an organization which is following the regulations or which is proactively following some norms about providing eco friendly product and services next stage for them is making the value chain also sustainable. What does that mean? It means at this stage organizations focus on reducing the consumption of non-renewable resources. So, the drive to adopt environmental friendly processes move from manufacturing to the supply chain. That means, organization that this stage work with suppliers and retailers to supply and adopt eco friendly products and processes make their operations workplace product return policy more eco friendly. So, it is not so, you can see that at this stage it is not only about one product or some component in the product, but the whole value chain becomes the focus area. There are certain tools which can help to make the supply chain more responsibly social for the toward the social environment as well as natural environment. Those tools are enterprise carbon management, carbon and energy footprint analysis, life cycle assessment etcetera. There are some interesting examples and we can look at two very significant examples because these are coming from some of the very large corporations which have huge network and presence all across the world. So, organizations are Cargill and Unilever they invested not only in the technological development, but they have also worked with the communities to make and to follow the sustainable practices in cultivating oil, cocoa, soya bean etcetera. In India as well which is a one of the biggest markets for Unilever they declared that by 2015 my complete supply chain the value chain will be sustainable. That means, there will be no child labor, there will be no harmful chemicals being used, there are the processes being followed in producing all the input will be responsible not harming the environment. You can imagine how big project this could be, but they were able to achieve that. There was a time when Coca-Cola was criticized for using lot of water. So, they would say that many times of the quantity of the water present in the bottle of the Coca-Cola, many time of that water is being wasted in the process of producing that. So, at one point of time they decided to be the water positive and the supply chain they reformed in certain way at now Coca-Cola India is water positive that is what they claim. There are some other examples where not only the manufacturing companies, but even the services companies have used the sustainability logic in their value chain. For example, FedEx they replace their old aircraft with the new ones which has a obviously, a huge cost involved, but in that process they saved more than 35 percent of their fuel consumption and obviously, they are carbon footprint, IBM, AT&T, MACSN. So, these are the organizations which have used telecomputing, telecomputing as an option for the sustainable value chain. So, more than 3 lakh employee 3 lakh employees in IBM mostly work from home. There is one example of the MACSN which is a organization which provides the nursing services and they have 1000 plus nurses and most of them work from home. And this is one of the most appreciated workplace in terms of employee engagement. Cisco's policy and value recapturing process of the product return. When product return was not a regulatory requirement, recycling was not the regulatory requirement, Cisco adopted this policy of the taking back the products and 80 percent of them, 80 percent of the product they received is actually functional nature. And many of those with some thinking in some modification can be sold to some other market and rest of the 20 percent can be used for the value recapturing in a sustainable manner. Third stage where organizations achieve the sustainability in their process and systems is designing sustainable products and services. So, not only making the supply chain environmentally responsive and socially responsive, producing the products itself which are sustainable in nature. So, at this stage, organizations aim at catering to the environmentally conscious customers with sustainable and eco-friendly products and services. The example is of the PNG. We talked about life cycle assessment, product life cycle assessment in the previous slide. As a result of their life cycle assessment, they realized that of the total what are the major causes of the pollution energy and in the energy what are the which are the places where energy is consumption is causing the highest. And they found that after automobile, electricity being used for the domestic purpose is the biggest cause for the environmental degradation. And out of the domestic consumption, 3 percent is used for you making the hot water for the washing purpose. And this all inside was result of their life cycle assessment. So, that means, for the washing purpose, all the machines work on the hot water. They said that if we can replace the product which does not require hot water which work with the cold water, we can serve, we can save lot of energy and actually that happened. In one of the hackathon, they developed this, they identified this idea and then in few months, they could develop the line of the washing powders which would work equally good with the cold water. So, in Europe, they launched cool clean and tight cold water they launched in USA, they launched one brand of Ariel in Europe which would work equally well with the cold water. And as a result of that, they could help in saving lot of energy and that process it was good for the planet. Another example which is Clorox, this company launched the non-synthetic cleaning product after spending 20 million dollars in research and after postponing the launch for 2-3 times. So, as a result of that research, they launched the green works line. So, the 5 products detergent and washing products all non-synthetic and eco-friendly. They were instrumental in changing the behavior of the customers. So, in USA, in some European markets, where 2 percent and 5 percent customers were using the environmental friendly product for the cleaning and washing, that percentage rose from 2 percent and 5 percent to 2 percent, 25 percent and 40 percent. So, 40 percent people converted with the launch of these products towards using most environmental friendly product. So, this was the willingness of the customers to use and they adopted one more goal for themselves and that goal was we need to provide the products which are better or equally good comparing to the conventional synthetic product. So, obviously, they could not they they had to charge some premium. In some markets they charge, but at the along with charging premium, they also did the networking with the Walmart and Safeway, they are the retailers to position their products and communicate about the benefits of this product to the customers. At the same time, they partner with the Sierra Club and Sierra Club is a advocate and NGO for the environmental friendly activities and Sierra Club they got the endorsement of from the Sierra Club and in return of that they gave some money also huge they gave a fees also to the Sierra Club. So, it is a it is helping that fee is helping Sierra Club to carry out their activity and their endorsement the Sierra Club's endorsement to this product is also being used as a confidence measure and a important message to the customers. Though they were it is size for this kind of a business deal, but you will see and in this session we are going to look at how business and environmental concerns are getting blurred more and more with time. Fourth stage is developing new business model itself on the sustainability logic. So, discovering novel way of capturing revenue and providing services at the level of other companies in a very innovative way and that is where the role of innovation comes so prominently. You can understand this with two examples. FedEx recognized that transferring the stuff physically from one place to another results in causes lot of energy consumption. So, they collaborated with the Kingco Print Shop. So, FedEx we know is a kind of a courier company and the Kingco Print Shop is a is a printing company which prints the document. They develop a line of service FedEx develop a line of service where they gave a proposition to the customers that instead of sending a document in the physical copy in the hard copy you can transfer it electronically to wherever you wish to and if you want this to be delivered in the hard copy Kingco shop at that place will print that document and deliver it to the to the recipient. This became a new business line. Another example is even more fascinating. This company Salera is into the waste management. You might have heard the process called biomimicry. It means learning something mechanical or scientific process looking at nature. So, that is the process called biomimicry and if you want to know more about it you can check a website called Ask Nature. So, Ask Nature gives so many examples where nature does certain things which sometime human beings also require to do and how human beings can learn from those things in the nature. For example, how to make a chamber which has the room temperature of 25 degrees in desert. We can learn it from the nature by looking at how some ends actually make the nest which has the temperature of 25 degree under the hot summer in desert areas where normal temperature is 45 more than that. So, corals do a process they by releasing the carbon dioxide in the sea water with the help of carbon dioxide and magnesium they produce the cover that is what the corals do. Learning from this process they developed a technology of passing the CO2 into the sea water and in that and producing some cement which is similar to the coral the material we have in corals. Now, that cement is not of very high quality you cannot make you cannot use it in a very sophisticated and the structures which requires a huge strength. However, it is useful at many places like parking lot that cement is sufficiently strong to be used. So, they develop this technology started producing the cement and started convincing the construction companies to use this cement wherever it was appropriate to be used and they started giving this cement free of cost to these construction companies. Now, where they are getting revenue from? Any guesses? It is a for profit business whatever we are talking about is a for profit business. They are getting their revenue from the industry pollutants which are leasing lot of carbon dioxide. So, if you are leasing carbon dioxide, Kallara will say that we will on the on the logic of the carbon credit they will take the CO2 they will also get money from the from those polluting pollutant organizations and use that CO2 to produce that cement. So, these are the kind of business models coming up which are redefining the business. It is happening in the new businesses, it is happening in the existing businesses. All these examples which we have discussed most of them are being incorporated in the existing businesses. Fifth and last stage is where organizations are creating next practice platforms making an intellectual and financial investment in challenging the existing paradigms. So, one example is smart grid technology. So, smart grid technology is a combination of the electrical engineering and computer science and when it is used it can optimize the uses of electricity. By so many instruments most of the instruments when they are not in use their electricity consumption can come down a smart grid can take care of so many of these things. There is a very significant field emerging these days is social entrepreneurship which is about business models which takes care of social environmental or a special divides and that is that looks like that is the future of humanity. So, if you have to say what is going to redefine the business in decades to come today it is looking like artificial intelligence, robotics, machine learning etcetera, but you will see in your career that sustainability logic is going to redefine the business space like no other factor is redefining. And you will see lot of business models coming up these things have these things have already started happening we are going to discuss how these things have started happening very soon in your career you will see that.