If we are to truly make India a global manufacturing hub—as envisioned by Prime Minister Narendra Modi through his ‘Make in India’ mission—and change India’s image into a quality manufacturing destination, it is imperative we adhere to the goal of ‘zero defects, zero effects’, that is, achieve quality through ‘sustainable’ practices. Turning India into a preferred location for new manufacturing and carve a place in the global supply chain hinges on building a culture of quality and responsible business, says Dr Bimal Arora, Chairperson, Centre for Responsible Business
When Prime Minister Narendra Modi launched his ambitious ‘Make in India’ programme in September 2014—aimed at driving economic growth by positioning India as a new centre for global production—he hoped that India would soon emerge as the global destination for foreign direct investment (FDI), surpassing the United States of America as well as China.
Describing it as ‘the biggest brand created in India’, he also called for ‘zero defects, zero effects’ as a national goal for both MNCs and others having their manufacturing units in India. The idea was that, their products must not get rejected in the world markets and the growth in the manufacturing sector does not undermine the environment. It also signified production mechanisms wherein products have no defects and the process through which they are made has zero adverse environmental and ecological effects. The slogan also aimed at preventing products developed in India from being rejected by the global markets.
Thus, realising the importance of standards, the Indian government had asked its Bureau of Indian Standards to develop standards for 43 products for manufacturing quality under its ‘Make in India’ programme. It had also decided to upgrade standards for basic consumer services like potable water and waste collection and disposal and to revise the National Building Code.
Thus, to support his global call for ‘Make in India’ and the mission of ‘zero defects, zero effects’, a three-day international conference and dialogue on India and Sustainability Standards, was held in New Delhi recently. Organised by the Delhi-based Centre for Responsible Business (CRB), with as many as 50 partners, 23 sessions and 600-plus delegates and top corporate thinkers and leaders, it turned out to be a landmark event as, perhaps for the first time, it initiated a truly intellectual debate in India on how Indian business leaders should respond to the Prime Minister’s vision for his ‘Make in India’ programme.
Some of the key partners of the three-day event included the Ministry of Environment, Forests & Climate Change, Ministry of Consumer Affairs, ISEAL Alliance (International Social and Environmental Accreditation and Labelling Alliance), UNICEF, UN Development Program (UNDP), C&A Foundation, OECD (Organisation for Economic Co-operation and Development), German Development Corporation (or GIZ), Alliance for Integrity, Okhla Garment & Textile Cluster (OGTC), Indian Texpreneurs Federation (ITF), Bombay Textiles Research Association (BTRA), Better Cotton Initiative (BCI) and Cotton Connect, among others.
To know how sustainability standards can be adapted and implemented in India and how the conference agenda was designed to enable active exchange among company executives, government officials and Indian and international standard setters and policymakers, Corporate Citizen spoke to CRB’s chairperson, Dr Bimal Arora, an astute thinker, strategist and author on sustainability, CSR and ethical trade with extensive experience of working in diverse sectors. Excerpts:
That’s true. It’s a complex concept and, to some extent, it’s a jargon. When you talk to the layman about carbon footprint and climate change, it is all jargon, except when it comes to smog in Delhi or China or acute water crisis in different parts of Maharashtra and elsewhere. Until it comes to that, we don’t understand it. Some people blame Delhi’s smog on farmers in Punjab, some on automotive emissions and such other things. Some people think it’s something for other people to worry about. But sustainability concerns us all because it’s not just about your environment or cities or rivers or businesses or jobs, it’s about all these and more. It’s about meeting your needs of the present without compromising the ability of the future generations to meet their own demands.
If we keep exploiting natural resources without supporting the earth’s life support systems, then all the things that I mentioned above will keep happening and that’s what is happening. With growing economic growth, these things are bound to happen. In our quest for more and more economic prosperity, we’ve brought things to a point where there’s going to be acute water crisis, air crisis, emission crisis, effluent crisis and the rest, because every business has an externality. The world is changing fast and hence all these externalities have to be internalised. You can no longer work by leaving your effluents untreated, taking natural resources for granted and continue to prosper by treating them as externalities.
When we deal with complex issues within and beyond businesses, we have to see their connectivity. If there’s smog in Delhi, we have to obviously see how the people in the automotive industry—who produce and sell cars—contribute to it. What can they do to improve their products? Do they follow the global emission standards accepted by the government or not? Do the raw material they procure to develop their product come from sources where it doesn’t harm the environment? All these questions come into play because these environmental issues are related to the level of India’s economic development and that’s where the sustainability standards come into the picture.
These are voluntary, usually third party-assessed, norms and standards—relating to environmental, social and ethical issues—that companies adopt to show the performance of their products in specific areas. There are roughly 500-plus such standards and the numbers are increasing every year. The trend started with the introduction of eco-labels and standards for organic food and other products in the late 1980s in the United States and the European Union.
The objective of these labels was to provide customers with information about the environmental costs of their food choices. For example, organic labelling was primarily meant to prohibit the use of synthetic chemicals in their food products. The broader objective was to start a chain of ‘sustainable foods’ which could take care of many interests, lowering the carbon footprint of foods at all stages, reducing consumption, supplying healthier foods, promoting sustainable agriculture and encouraging more efficient use of land and water resources.
Compared to the global landscape of these certifications, the performance of Indian companies is pretty bad because not many are really aware of these standards and certifications. Some also say they don’t care where the raw material for their products comes from, how it is produced and what harm or benefit it has for the environment. Right now, their only focus is in putting all these material together and selling it to the market and they don’t want to go beyond this. But when sustainability comes in, then you have to start thinking about all this.
‘For the past 20 years, most of our suppliers have been following what you call the tick-box approach. Rather than understanding why they need to follow a certain standard, they have just been ticking out boxes as per the demands of the buyers’
Our effort has been to bring this debate to a level where people and industries can relate and understand what sustainability standards mean for them. It was with this very objective that we designed this conference. So people from different sectors like apparel, electronics, tea, fair trade, gold, infrastructure, forestry and energy efficiency had creative brainstorming sessions amongst themselves. Then there were workshops on women’s empowerment and skill development. In each such discussion, they discussed how our manufacturing units in these sectors could get certified with a particular sustainability standard to become part of the global supply chain. They discussed all sustainability-related issues with international subject experts in the apparel sector including labour exploitation, wages, working conditions, effluents, chemicals, dyeing, water usage and exports, price, quality and the importance of the time factor, to name a few.
Based on our experience of working with buyers, sellers, auditors, inspectors, government departments and other organisations, I can say, so far, these things have not been much thought through in India. Hence, for the past 20 years, most of our suppliers have been following what you call the tick-box approach. Rather than understanding why they need to follow a certain standard, they have just been ticking out boxes as per the demands of the buyers. OK, since you want me to source water from sustainable sources, maintain a wage register, have labour representation and so on, I’ll do it and tick out the boxes. That’s what has been happening all these years.
It’s even worse. In 2012, certified textile factories in Pakistan’s Karachi and Lahore caught fire, killing nearly 250 people and injuring over 600. A similar incident happened in a certified Dhaka fashion factory in the same year claiming over 120 lives. Then, in 2013, there was an eight-storey commercial plaza building which collapsed in Dhaka with a death toll of over 1,100 and injury to 2,500-plus. Such tragedies keep happening in our part of the world.
Our analysis is that first of all most suppliers don’t understand what these standards are all about and why they should be complied with. Secondly, even though there may not be any lack of intention on their part, factory owners generally depend on their managers who come and do their paperwork. Now, these people, without internalising the standards and effecting any required changes, just do the paperwork so that when auditors come and check their papers, everything looks fine. But in this process of ticking out boxes they sometimes overlook if the fire safety equipment is at a particular height or not; or if a safety door is locked or not; or if there is a child out there or not; or do they have a register for wages or whether the building they work in has developed cracks and those kind of things, which, if ignored, may lead to big tragedies. But all this is happening for the last 20 years.
It is that this model is not working. Our suppliers are simple, normal and not very qualified people. When they come to do their job, they have a thousand other things in their head and maintaining a sustainability standard is just an additional thing to them. They do this because they have been asked to do it. They don’t believe in it. How does it impact them, their factory, their country’s economy and its image abroad— they don’t know and no one explains it to them either. So, clearly there is a disconnect some-where and we have been trying to tell the world about this. Our fear is that even big Indian companies like the Tatas, Birlas and Reliances are also taking this from their own suppliers.
There are two to three challenges. First, the standards which have been set outside of India, in the so-called developed or Western world, actually do not reflect our realities. No voices from our part of the world are going there. So, we have a four-pronged objective: one, creating a larger awareness on standards as tools and frameworks to define and achieve sustainability. Two, define sustainability for each sector of our own businesses, set those targets or frameworks and work towards achieving them. Third, raise the voice of our people and sensitise the western world about the Indian realities and fourth, help the government build a policy framework on this subject. So, that was the basic objective of creating this whole forum, raising the profile and pitch to the required levels so that people can actually pay attention
.With 50 partners, 23 sessions and around 600 delegates and speakers, the three-day conference exceeded all our expectations as it generated a huge interest among participants. We succeeded in achieving its goal of convening international and Indian stakeholders to initiate dialogue, build understanding, and exchange proposals centred on paths going forward on sustainability across a range of industry sectors, commodities and themes. Some of the key partners of the three-day event included the Government of India’s Ministry of Environment, Forests & Climate Change; Ministry of Consumer Affairs; ISEAL Alliance (International Social and Environmental Accreditation and Labelling Alliance—which has emerged as the authority on good practices for sustainability standards and its code of good practices); UN Development Program (UNDP) and UNICEF. Other equally important partners were Switzerland’s C&A Foundation (which works for workers in the apparel industry), Paris-based Organisation for Economic Co-operation and Development (OECD), German Development Corporation (or GIZ), Alliance for Integrity, Okhla Garment & Textile Cluster (OGTC), Indian Texpreneurs Federation (ITF), Bombay Textiles Research Association (BTRA), Better Cotton Initiative (BCI) and Cotton Connect, to name a few.
Oh yes, so much so that the GoI is challenging the United States of America. It’s challenging the European Union on very strong issues. For the first time, India is asserting its viewpoint that these are the things we need. We’re not saying that we won’t comply with Western sustainability standards but what we’re saying is that they must also understand that the stakes should be natural and inherent. It should not be stretched to include those who may be working with ulterior motives. Nature is pure. Hence, only pure intentions can keep it intact. After all, our businesses also need to grow and strengthen our economy. Our people also need jobs; we also need energy to grow fast, which means there will surely be some impact on the environment. Now, we need their support to mitigate those impacts.
What we are looking for is how Indian businesses get glued into this process of voluntary standardisation. We don’t want them to fail this critical test in becoming part of the global supply chain. We want them to learn it fast so that they do not repeat the mistakes that have been made globally. You know, even such big global players like Walmart, Mark & Spencer’s, Swedish multinational retail-clothing company H&M, branded sportswear firm Puma, German luxury cars manufacturer BMW and Volkswagen and Japan’s Toyota, Suzuki, Mitsubishi, Honda and America’s Ford and General Motors have learnt it over the years. They had to recall their cars in huge numbers. In fact, some of them are struggling even now. How to improve their products is a constant worry for them. How to get their suppliers in China, Malaysia, India and Latin America behave—they are struggling with all this.
‘When you talk to the layman about carbon footprint and climate change, it is all jargon, except when it comes to smog in Delhi or China or acute water crisis in different parts of Maharashtra and elsewhere.... But sustainability concerns us all because it’s not just about your environment or cities or rivers or businesses or jobs, it’s about all these and more. It’s about meeting your needs of the present without compromising the ability of the future generations‘ meet their own demands’
It’s a non-profit organisation. We were incubated through a three-year development partnership project between the German government’s sustainability enterprise GIZ, America’s Social Accountability International (SAI) and the global value chain in Brussels called the Business Social Compliance Initiative (BSCI). These three came together in 2010 to create a centre to train suppliers in India. But when I joined them in 2010 to set up this organisation, I said, this requires not just training but it requires thought leadership, research and convening meetings of all stakeholders. So, we did all that. This is what we’ve been doing for the last five years—offering capacity building for developing and implementing voluntary standards in various sectors including textile and apparel, food and beverage, leather, natural minerals and stones and electrical and electronic equipment. We’ve also been involved in researching, capacity building of suppliers and companies, engaging with policy makers and organising events.
Actually I had just come back from the UK where, after completing my Masters from the London School of Economics, I had done my PhD in Sustainability and CSR from the International Centre for CSR, Nottingham University Business School.
We’re institutionalising this international dialogue and conference. We’ve already started work for our November 2016 dialogue and putting our thoughts in its designing. We had 50 partners this time but we’re aiming for 100 partners for the next meet to bring all stakeholders together to create a forum offering vibrant engagement and where different sets of standards from overseas and from India are hotly debated, policies discussed, businesses participated and engaged. Once this kind of constant engagement starts happening, western standard setters will start appreciating how Indian businesses work. For, until someone goes and tells them how things work here, they won’t truly understand our issues. Similarly, many of us also believe that the people outside India are biased against us and interested only in money. That also is not correct. Our effort will be to clear all such misunderstanding and contribute meaningfully to organisational productivity, environmental sustainability, business continuity and growth for all.
By Pradeep Mathur
