‘Creating Shared Value’

In today’s world of business and governance, the two catchphrases are CSR (corporate social responsibility) and philanthropy. However, over the past few years, since 2011, a new buzz-phrase has emerged — ‘Creating Shared Value’. Unlike the former two, which focus on ‘giving back to the society’, the latter relies on creating crucial and sustainable values within the corporation, and among stakeholders, and local communities that can be shared between them. Several companies like Pernod Ricard India (PRI) have consciously adopted this approach.

The co-authors of this seminal management approach, Michael E. Porter and Mark Kramer, emphasised on the three levels of ‘Creating Shared Value’, which include:

• To re-conceive products and markets in a manner that they meet the societal needs, and address unserved or underserved customers. This was akin to the decades-old thinking of how corporations can benefit from serving the ‘bottom of the pyramid’.

• To re-define productivity in a company’s value chain and drive it through better and efficient utilisation of resources, employees, and partners.

• To enable the development of local-cluster that can improve skills and suppliers’ bases, and support institutions in the local communities where a company operates to boost productivity, innovation, and growth.

PRI is way ahead on these three fronts. Guillaume Girard-Reydet, MD & CEO, PRI, explains, “Our corporate social responsibility purpose is to enhance quality of life towards a better future for the communities around our operations. Our belief in the long term is only by creating value, for both our shareholders and for the society. We are committed to the development of thriving and resilient communities, and on stewarding the planet’s natural resources for future generations, with a particular focus on water.”

‘Creating Shared Value’ concept at PRI is largely implemented through its environment and water stewardship programmes. Essentially, they entail a ground-up approach that aims at end-to-end sustainable practices. The Environment Stewardship Programme includes the management of natural resources, reduction in land degradation and biodiversity loss, and restoration of water. Both conservation and sustainable practices form an integral part  of it. This is done at the three levels of organisation, stakeholders, and communities.

Each stage in the lifecycle of PRI’s products has a direct and an indirect impact on the environment. This impact is exacerbated by the climate and environment phenomena that pose multiple risks to operations, including on procurement of raw materials and water management in particular. To counter these risks, the company has enumerated an overall environment policy, ‘Roadmap For 2020’, which sets out clearcut priorities and objectives.

The five areas of commitment under this umbrella policy include:

• Roll-out of an effective environmental management system.

• Promotion of a sustainable agriculture and biodiversity protection.

• Preservation of water resources.

• Reduction in energy consumption and carbon footprint.

• Development of sustainable products and a reduction in the impact of waste.

In addition, the over-arching policy is aligned to the United Nations’ Sustainable Development Goals (SDGs). The SDGs are a global blueprint for the UN’s member nations to address the challenges that the planet faces, which are related to poverty, inequality, climate, environmental degradation, prosperity, peace, and justice. Sunil Duggal, Vice President (Corporate Affairs), PRI, adds, “All our programmes are aligned to the SDGs, and provide us with a common language to contribute to India’s Development Goals, and then measure how we are also contributing to the world’s sustainability.”

Take the case of biodiversity in the country. At a positive level, India is one of the 17 mega-diverse nations, as identified by the Conservation International, and has four diversity hotspots. It has 668 protected areas, which comprise sanctuaries, national parks, tiger reserves, elephant reserves, community reserves, and conservation reserves. Recognised as one of the eight Vavilovian centres of origin and diversity of crop plants, it possesses more than 300 wild ancestors and close relatives of cultivated plants, which are still evolving under natural conditions. India is home to 89,000 animal species, 46,000 plant species, and nearly half of the world’s aquatic plants. With only 2.4% of the planet’s land mass, it houses 7-8% of the recorded species.

Unfortunately, at the negative level, rapid economic growth and limitations in integrating environmental concerns with development planning have put pressure on the existing biodiversity. With half of the country’s land under cultivation, rising population, and the increasingly-evident threat of climate change, the protection of diverse habitats is posing a formidable challenge to the conservationists and local communities.

PRI’s environment policy is closely attuned with the country’s target of SDG 15.5, which includes urgent and significant action to reduce degradation of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent extinction of threatened species. Under the company’s biodiversity upgrade plan, it has regenerated the Kudikunta Lake (Hyderabad), and Hauz Khas Lake (Delhi). This has energised the local biodiversity and ecosystem, as well as enabled the neighbouring population to breathe fresh air.

One of the most critical component of any environmental strategy, especially in a country like India, has to include water. The situation is frightening, to say the least. By 2050, it is estimated that the per capita availability of water in the country will drop by 40-50% due to rapid population growth and higher commercial use. A report by the Safe Water Network (SWN) concludes that the government will need to spend Rs 44,000 crore on 220,000 small water enterprises to provide safe drinking water to 370 million people, who reside largely in urban slums  where piped water infrastructure is difficult to build, and in rural areas with contaminated water sources.

More than 820 million Indians do not have access to piped water, and 70% of the country’s sources are contaminated by pollutants. Hence, the government needs to act urgently, and immediately. Small water enterprises are cheaper, but they require policy changes, and at least a doubling of tariffs to help bridge the national water gap, according to the SWN’s report. Fortunately, the policy makers have realised the importance of such enterprises, which include water ATMs and community purification plants, as an alternative.

Under its Water Stewardship Programme, PRI has implemented a 360-degree plan in several states. At the heart of the programme lies the principles of 4-R’s – Reduce-Reuse-Recycle-Recharge. At the organisational level, according to P. Sriram, Vice President (Operations), PRI, “Through the ongoing practice of reducing water consumption by 50%, we are looking at the larger objective to becoming a ‘water-neutral’ organisation by 2021. In order to achieve this aim, multiple far-reaching initiatives and innovations, which limit environmental stress while enhancing manufacturing efficiency, have been embedded at our production sites.”

For example, the group’s regular water audits improve the process efficiency in its manufacturing plants through sensor-based taps, interlocking of water washer for No run-No water, optimisation of the rinse water pressure for minimal water usage, use of aerated taps for reduced consumption, and level sensors in water storage tanks to prevent overflow. An overall water efficiency system is linked to the management system through:

• Reuse of RO reject in back wash of toilets, gardening, and floor washing.

• Reuse of ETP, STP, and tertiary treated water for gardening.

• Recycling of empty bottle washing water up to 80% by passing through multiple barrier treatment system.

• Standardised water recycling process across all the sites, and training and awareness for water conservation allows delivery on the reuse/recycle commitment.

From the organisation, this responsibility then extends to the local communities around the manufacturing sites. Several initiatives are undertaken to protect and preserve water in the immediate ecosystem. Duggal explains, “We realise that our business relies on this limited and precious natural resource, and we are committed to use these resources responsibly, and preserving them for future generations. Harvesting the depleting ground water and aquifers is paramount to our commitment, and we are continuously striving to decrease our water footprint.”

For instance, the ongoing projects in Behror, Rajasthan, actively engage agri-communities in conservation and sustainability practices. Over 8,000 farmers co-nurture with the company’s key objectives to mitigate groundwater depletion, increase availability through surface storage and groundwater recharge, and improve water efficiency in agriculture. These co-join to the larger societal aims to effect social transformation through effective participation of the locals, especially women, and the participation of the youth in digital literacy and skills education.

Yet another key initiative is to replenish water in water-stressed areas through interventions of over 30 rain water harvesting and recharge structures, over 50 ponds, dams and de-silting projects in Chattisgarh, Nashik (Maharashtra), Behror and Phagi (Rajasthan), Kolar (Karnataka), and Medak (Telangana). These have resulted in the recharging potential of over 540 million litres.

In addition, the Group is also engaging in agriculture intervention through higher-efficiency agri-practices and reforestation. Initiatives include imparting insights on improved farming techniques to the local communities, setting up harvesting reservoirs that cater to the demands for drinking water, sanitation, agriculture and livestock. For example, a project in Shivpuri, Madhya Pradesh, aims to enhance incomes of 4,500 marginal women through high-density nano-orchards to increase productivity by 30%, women-producer groups in non-timber forest products, and marketing efforts via village-level collection centres and an Apex FPO.

At PRI, creating shared value addresses the undeniable linkages between societal development and environmental preservation. Through tailored activities targeting disparate community needs and challenges, the company has created a portfolio of highly innovative solutions that are modernising entire communities, while also delivering measurable benefits to the environment.

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Samridh Bharat

PRI’s initiative, “Samridhi”, in Behror, Rajasthan, which is being implemented by its partner, S. M. Sehgal Foundation, seeks to capture, conserve, and harvest rainwater with the construction of watershed structures; improve farm livelihoods to bring prosperity to more than 8,000 villagers through promotion of water-saving agriculture practices; and digital literacy and life skills education for youth. The project targets Goal 1 and Goal 6 of the United Nations Sustainable Development Goals (SDGs), i.e. ‘No Poverty’, and ‘Clean Water and Sanitation’, respectively.

Project Samridhi is an integrated three-year plan to benefit the five villages of Karoda, Antpura, Untoli, Banhad, and Maharajawas. It will create and rejuvenate ponds for surface water storage that can be used by communities for domestic, irrigation, and animal husbandry purposes; create groundwater recharge structures, viz nala bunds and recharge wells; construct soak wells for wastewater management and groundwater recharge; promote water-saving irrigation practices; and facilitate digital literacy and life skills education classes. Community engagement will be an integral part of the project with continuous capacity building and training.

Anjali Makhija, Chief Operating Officer, Sehgal Foundation, says,  “Emphasis will be laid on organising community members into a gram sangathan that will be trained to ensure sustainability of the physical assets and social capital created during the course of the project.”