India’s progress towards tackling climate change has been progressing seemingly unnoticed, in spite of the fact that Asia’s second largest economy has been pursuing serious efforts to create innovative solutions to environmental and social issues. This is especially true since the passing of the 2013 Companies Act – the first law defining and incorporating CSR activities for firms generating revenues of over INR 5 billion – which highlighted an unprecedented attempt to ensure business’ contribution to India’s sustainable development.
India’s two main conglomerates, TATA and Mahindra & Mahindra, have been leading the way with massive investments in their CSR strategies to determine the social and economic advancement of the more affected regions, with Mahindra spending INR 63 million just on waste disposal, treatment and pollution regulation, out of its total INR 2,000 million spent on CSR during the financial year 2014-15.
The automotive manufacturer Mahindra, split into Mahindra & Mahindra (M&M), Mahindra Finance, and Tech Mahindra, featured in the Dow Jones Sustainability Index 2015. M&M has also had a Level 1 rating for governance and value creation from the global analytic company CRISIL for three years in a row, and both Tech Mahindra and M&M are among the top 10 companies in the Carbon Disclosure Project (CDP) listing. Mahindra is seeking to explore alternative fuel technologies, green living and large-scale solar projects. Mahindra’s mobility products must pass the ‘5C test’: clean, convenient, connected, clever, and cost-effective. Among its most laudable creations are Reva, the GenZe electric scooter, and India’s first CRDe tractor, which offers better fuel efficiency.
Furthermore, Mahindra Finance has invested around 5 million INR ($80,000) in Flybird Innovations, a Villgro-incubated startup focused on the agricultural sector. Flybird Innovations is working in the area of smart irrigation and fertilisation for the farming sector, and this is the first equity funding raised by the company. As part of alternative energy creation, Mahindra has also produced a portfolio of over 350MW of solar projects in both utility and rooftop solar, and has been instrumental in pioneering two solar solutions for consumers – the solar generator and the DG-PV hybrid system. As most CSR activities are involved in helping the poorer, less educated and more vulnerable regions, Mahindra has taken on the unique challenge of providing a complete reconfiguration and modernisation of farming practices. Through its farming division it has developed AppliTrac, which looks at the end-to-end value chain of farm mechanisation solutions – from land preparation to post-harvest – as a way to empower farmers through easy access to modern farming technologies and market linkages.
Waste to Wealth seminar
Further evidence of Mahindra & Mahindra’s involvement in environmental sustainability was demonstrated at the “Waste to Wealth” Seminar, hosted in February 2016, which showcased the creation of its Bio-CNG plant that was set up at Mahindra World City (MWC), Chennai, as a joint CSR initiative between Mahindra Research Valley and Mahindra World City Developers Limited.
The plant aims to expand India’s progress towards using biogas as a central energy source for both urban and farming needs, and to create an end-to-end carbon neutral ecosystem. Biogas has been proven to be a secure, efficient and ecological source of energy which derives from the anaerobic transformation of organic waste. Biogas can be used for fuelling lamps and cars and can also be used for fertilisation. This would be a major revolution in the electricity supply to India’s rural areas, which still face basic difficulties.
The new Bio-CNG plant has the objective of generating 10 tonnes of effective manure daily with a ratio of manure generated to input of 1:3. In this way, MWC Chennai has become India’s first food-waste-free city, a significant milestone towards becoming a low carbon footprint world city that can successfully convert waste to wealth and improve the quality of life of all stakeholders, including local communities. The project is partnered by local authority bodies, such as the Khadi Village Industries Commission and other competent facilities, including IIT Delhi and the Naandi Foundation, which can oversee the technological needs and logistical development of the completion of the farmers’ recycling process.
The steel and automotive giant TATA comes immediately after Mahindra & Mahindra in the list of contributors to sustainability in India, and has received accolades from the UK-based Corporate Sustainability Index and the United Nations Development Programme for its singular business operations and sustainable approach. As of May 2016 (along with India’s leading software exporter, Infosys) it joined the RE100, a global initiative that currently groups businesses committed to creating 100% renewable electricity. In fact, TATA gets around 8% of its power from renewable sources, thanks to a 21.95MW wind energy project and solar installations at three of its Indian manufacturing plants.
Along with other investment projects, the steel and car giant TATA Motors has been taking an innovative approach to improving the efficiency of its production cycle. TATA’s business venture, TATA Motors Assured, is a strong example of this. The service, in operation since 2009, allows customers and clients to sell or buy pre-owned TATA cars. Owners who are willing to sell their vehicle can go to local vending points, where a verification and assessment of the car’s condition is made by TATA technicians. The cars go through a process of careful refurbishment, updated using new tools, and are then sold again at lower cost to new potential clients who are looking to buy cars at an affordable price. New customers will also benefit from different financing schemes and warranty.
The programme adopted by the owners of Jaguar and Land Rover is not simply a second-hand retail market, but is a concrete example of an effort on behalf of TATA to conceptualise products at the design level as assets that have the potential to be re-used multiple times and re-introduced into the market cycle for more profit. At a business level this model also helps to increase the consumer base and create a more solid customer relationship. Furthermore, in the light of the expanding automobile market, this system has ensured a flexible way to face the higher economic costs of raw inputs while maintaining mass-market appeal.
The situation of the automotive industry in India
The Indian automotive industry, however, is struggling to make real developments on technological grounds, especially in the use of materials that are more lightweight, energy-efficient and recyclable, such as aluminium. Most Indian cars only use 40kg of the metal while European cars use almost 140kg per car. The option to choose materials such as steel and cast iron is linked closely to expenses. Whereas traditional materials help keep costs low, an aluminium alternative raises costs when converting it into sheet metal, something which would create a demand-related problem. For this reason the current focus has been on producing smaller and more affordable cars, as exemplified by the $2,500 Nano car that has achieved resounding success.
TATA is also gearing towards leading the race for electric-powered vehicles, but it is in the market for aluminium where it can begin to cut down on excess material waste. India is a mass importer of commodities with nearly 60% of aluminium being absorbed in the automotive production, although a move towards self-reliance in the aluminium sector could lead it to capitalise enormously, increasing its own productivity and shortening the gap to China’s competitive advantage in the global market.
India has already taken steps to develop its own facilities and supply chains that can manage the transportation and differentiation of aluminium. For instance, Vedanta has become the first primary aluminium producer in the country to roll out a special category of billets that can be used in air conditioning heat exchangers, an automotive application. Furthermore, the Aluminium Association of India has taken up a project on the design and development of lightweight urban transport buses, in collaboration with the Automotive Research Association of India and IIT Bombay and with support from the Ministry of Heavy Industries. Leading aluminium companies like Hindalc, which owns the US-based Novelis, are already working with carmakers on several other projects.
India is therefore heading in an encouraging direction, with a joint vision shared by both the institutions and major companies to invest strongly in India’s civic welfare and consequently in its human capital to develop a more competitive and environmentally-conscious future for the present generation of farmers, entrepreneurs and citizens. The cases of Mahindra and TATA demonstrate an almost unique way of thinking about CSR as a tool that can truly bring about systemic change which is not simply limited to changing the quality of their supplies.
Further development for India
India still has several regions in need of infrastructural development in clean water facilities, power and roads, which comes as a great investment opportunity where we could see the application of circular and energy efficient structures. However, if the objective is that of providing the durable and long-term development of certain regions, companies should not disperse nor isolate their investments and projects. Some form of alignment should take place in accordance with other firms so as to create high-impact, high-investment programmes to reap future benefits.
Simply because CSR is now mandatory – with around 8,000 companies spending a total of INR 150 billion ($2 billion) annually on it – there is no full guarantee that the investment can ensure social and environmental good. A large part of the current debate revolves around the channelling of company funds to community organisations or NGO’s (of which there are 3.3 million in India) as a demonstration of their CSR activities, although few organisations actually have the capacity and skill to effectively manage projects that can have a large-scale impact.
At any rate, while this aspect of controversy could be fixed through some more articulated discussion and dialogue, also at a governmental level, in the near future, India remains an important case showing how consideration for developing real solutions relating to environmental and socio-economic problems are being implemented through the lens of sustainability.