The Next In Corporate Governance: Sustainability Embedded

Sustainability is more than just a corporate way of life. It’s also the solution to most of the world’s problems

The primary purpose of companies is to maximize shareholders wealth and supply goods and services to the customer. While bearing this purpose of its existence it has to execute many functions. These include delivery of products and services as per customer’s needs. For this it has to tap existing and new markets  with the help of sales and marketing functions in a manner that enhances brand equity and reputation. They employ adept manpower, train and skill them for a suitable jobs, build infrastructure and deploy technology, design and implement competitive strategy, counter risks to avoid major losses and foresee overall functioning according to set  rules and regulations.

This is the way business is done and it involves a web of departments, human resources, technology, and infrastructure. Risk management is an essential ingredient towards reaching this desired purpose. It comes in many forms: natural calamity like floods, cyclones, air pollution, disasters due to climate change, company specific risks like labour unrest, corporate fraud, money laundering and many more. Company’s success rests on how it mitigates these risks and avoids any pitfalls that threaten its value and equity.

It is the responsibility of boards along with CEO and chairman to direct the company to move in a particular direction. Thus their function within the company is of utmost importance. They govern the company by establishing broad policies and objectives, ensure the availability of adequate financial resources, approve budgets, and account to stakeholders for organizations performance. This function is very well termed as “Corporate Governance”.

Within the framework of corporate governance boards look at various issues affecting the company, its policies and objectives. It is also the backbone of any company which is a visage for any crisis and risk to knock on. It is important that the framework of sustainable business and corporate governance takes into account such risks within its functioning and mitigate their affect. Risks do not only affect companies but in varied forms affect society, economy and environment.

To manage such risks, continue to grow and remain relevant to changing markets, companies have to reinvent and reorganise themselves. According to an analysis conducted by the CII-ITC Centre of Excellence for Sustainable Development, over the period of four decades (from 1970 to 2010) 407 new companies have been added to the list of Fortune 500 companies. This means that around 407 companies of 1970 have lost it to Fortune 500 list in 2010. One reason can be increased competition from new companies or existing companies with better and enhanced working style; others can be mergers, acquisition, bankruptcy, etc.

Companies should reinvent in a manner that defines or responds to evolving sustainability trends and indicators. Sustainability is increasingly becoming the norm of economic growth and consumer lifestyles. It is not just about becoming green. Sustainability goes beyond climate change and greener planet to include socio-economic wellbeing of all people. Companies need completely different work-styles and business models that embrace economic, social and environmental issues and indicators in business strategies.

These new formats of business require sustainability to be embedded into corporate governance. Unless that happens, reinvention and reorganisation of companies is unlikely to take place successfully.

Framework for integration of corporate governance and sustainability not only focuses on the functioning of boards but also on the functioning of senior management. The management of the company ensures that the objectives of the company are met. Strategies are developed by senior management, their implementation is monitored by boards, and result sensed by stakeholders. These three parties are integral to corporate governance.

 

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The Next In Corporate Governance: Sustainability Embedded

National Optical Fibre Network: viable business models for inclusive growth

A report on the role of broadband for inclusive growth in India, ‘Creating viable business models for inclusive growth through the National Optical Fibre Network’ by CII & KPMG, was recently released by Mr MF Farooqui, Secretary, Telecom. 

The report explores how, using the national fibre infrastructure, commercially feasible business models for relevant e-services in areas such as education, healthcare, banking and agriculture can be built on the foundation of a Public-Private-Panchayat ecosystem.  This report is expected to serve as a useful reference for the Government and the industry as they jointly deliberate on how best the national fibre network asset can be leveraged.

Key Highlights:

• With its promise of delivering speed up to 100 Mbps, the National Optical Fibre Network (NOFN) has significant potential to deliver e-services to India’s six lakh plus villages in the areas of education, healthcare, banking and agriculture. These services can speed up the Government’s inclusive growth agenda while generating rural employment, skill-building and growth.
• Private players may have been hesitant in certain instances to venture out into the remote areas as the business case of being able to provide scalable, profit-driven services appears uncertain. However, several e-service pilots have been trailed successfully on a limited scale and with a non-profit motive, indicating that there is demand for such services
• To scale up these e-services, a Public-Private-Panchayat ecosystem – comprising the Central and State Governments the providers of enabling products and services (both public and private), and local governing bodies (Gram Panchayats) – needs to come together and build commercially sustainable business models that provide affordable services to the end-users and also generate adequate commercial and social returns
• In Healthcare, telemedicine services involving remote consultations using two-way video conferencing can address the dual challenges of low doctor-to-patient ratio and the lack of access to specialist advice in rural healthcare delivery. Such telemedicine units can be set up directly by private healthcare service providers or offered through the Common Service Centres (CSCs)s, with the Village Level Entrepreneur (VLE) leading the service.
• In Education, NOFN can enable remote learning environments in Government-run rural schools, and thus address the challenge of high pupil to teacher ratio and declining learning quality. Such ICT-enabled environments can be operated by private education service providers. High-speed broadband can also enable online vocational training imparted at the CSCs for a nominal fee
• Private business correspondents can use connected point-of-transaction terminals to conduct nearer-home cash-in-cash-out banking transactions for the rural population. Such models already exist, but NOFN can further boost these models by resolving connectivity issues. There could also be a model where private sector banks integrate their IT systems with that of the Post Offices to offer a bouquet of banking-related services to rural customers
• In Agriculture, broadband can address the high information asymmetry existing among farmers by providing them with timely information and advice on relevant topics. There could also be software tools provided by technology companies for farm management, soil analysis, seed analysis, etc. These services could be provided through kiosks run by rural entrepreneurs or through the CSCs at a nominal fee charged to the farmers.
• While many of these business models could be self-sustaining, a few would require some money to be infused in the hands of the consumer to generate demand. The report proposes the possibility of channeling funds from existing Government programs such as Sarva Siksha Abhiyan and the new National Health Mission (a new program created in FY14 combining the National Rural Health Mission and the National Urban Health Mission) to create this corpus.
• For many of the priority sectors, the existing network of nearly 1 lakh CSCs can form a good starting point. Equipped with computers, basic peripherals, Internet connectivity, and a VLE owning the centre, these CSCs can act as multi-service delivery points for several e-services. High-speed broadband access is expected to broaden the range and improve the quality of e-services available at these CSCs.
• Recognizing the potential of coupling the Government’s social imperatives with the private sector’s commercial interests, and appreciating the need to bring together multiple stakeholders from the government and the private sector to this effect, the report proposes a CII-Government Working Group with a well-defined set of objectives and responsibilities. With such a diverse, yet cohesive body at the helm of planning and execution, it will be possible to bring the multiple facets of expertise, decision-making and administrative guidance that will be essential to harness the NOFN into a medium of holistic inclusive growth.

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IT for India – New Horizons, New Opportunities

CII has been making sustained efforts to create a conducive business environment to propel higher growth rate for India Inc. and will continue to play a meaningful role in this direction. CII believes that the adoption of Information Technology is a key transformational tool that will help India “leap–frog” to achieve competitive advantage for its growth. 

India is at the forefront of the large IT –ITES market and is well established as a ‘destination of choice’. Having grown manifold in size and matured in terms of service delivery capability and footprint over the past decade, the Indian IT industry is now at an inflexion point—and faces a unique opportunity to enhance its role as a full–service, value–adding partner to the domestic industry as well. There is significant headroom in the addressable IT adoption opportunity for India Inc., and there are sizeable untapped opportunities across a wide spectrum of verticals. Also, the Indian IT industry is favourably positioned to benefit from its established delivery capabilities, which bear a key influence on user industries’ decision to adopt IT .

Over the next three years, the right choices by stakeholders of the Indian IT industry could effect a three–fold growth. The aspired target is aggressive, but is surely achievable, and will bring huge payoffs to India’s economy, employment and role in the global marketplace.

For the last few years, businesses have been trying to harness the power of information technology to transform the way they work. In CII’s interactions with CEOs across industry verticals, four common themes resonate:

• Increasing growth
• Building a competitive advantage
• Enhancing user productivitya
• Reducing costs of operations

As the four interconnected technology megatrends—Mobility, Social, Big Data and Cloud, dominate the next decade, the IT industry has a compelling opportunity to bring a paradigm shift in the way technology gets adopted by businesses across verticals at lower costs and at scale.

The CII-BCG report on IT enablement of Indian business, titled “IT for India – New Horizons, New Opportunities”, discusses the trends in IT enablement of Indian businesses and lays down the opportunities, challenges and the role of different stakeholders. An 8 point action plan is also outlined to ensure the active collaboration of the key stakeholders.

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Nurturing the Positive Powers of India

Dr APJ Abdul Kalam, fondly known as the ‘People’s President’, shared his thoughts on the ‘power of a strong society and how best it can be leveraged in today’s environment’. He was addressing a jam-packed audience of students at the Indira Institute of Commerce and Science, at an event organised by CII’s India@75.

A scientist, an orator, an author, a poet and above all a visionary, Dr Kalam had envisioned a developed India by 2020 built by and for the youth of this nation. During his speech, Dr Kalam said that “the ignited mind of the youth is the most powerful resource on the earth, under the earth and above the earth. If you have an aim in life, continuously acquire the knowledge, work hard with confidence to win and have the courage to defeat problems and succeed with a righteous heart; you will definitely succeed in all your missions”. He highlighted Agriculture and Food processing, Education and Healthcare, Information and Communications Technology, Infrastructure, Reliable and Quality Power, and Self Reliance on Critical Technologies as important pillars in order to achieve an inclusive, sustainable and developed India by 2020 – an ideology and mission that is in complete consonance with the work being carried out by CII, India@75 and Young Indians.

He suggested to the students, gathered from different colleges across the city, to select one important task pertaining to any of the ten pillars enshrined in his Vision Document 2020, as per their interest and core competence. Dr Kalam mentioned that by doing so the students could become significant partners in national development.

There was a surprise in store for Dr Kalam when a student asked him whether Mr Anna Hazare losing mass support would impact the anti-corruption movement in the country. While replying, Dr Kalam said that corruption is a deep-rooted sociological phenomena which needs to be eradicated, beginning from our homes. “We should have the courage to remove corruption beginning from our homes itself.”

While answering questions on the role of Information Technology, Dr Kalam reiterated that IT has to work in tandem with other advanced technologies in order to find alternatives for problems in the agricultural sector. He also said that in the years to come, technology will have a crucial role in addressing the growing food grain demand in the country.

“Each one of you should follow the pillars in making India a nation where there is no crime against women and children, no rural-urban divide and equal opportunities in terms of education and health care. I do hope India@75 provides a bridge to the youth to contribute”, said Dr Kalam while drawing parallels between CII, India@75 and India Mission 2020 which according to Dr Kalam is also meant to influence the youth to work hard in the run up to the year 2020, to transform India.

Learn More about India@75