In an exclusive interview with Industry Outlook, Prabodha Acharya, Chief Sustainability Officer, JSW Group, shares his insights on how businesses can incorporate sustainability without losing their market relevance and emphasize the implementation of the right technology to make it happen. In his current role, he partners with CEOs, senior executives, and operations heads to develop and drive sustainability strategies for the group companies. He has nearly three decades of working experience in the field of corporate sustainability, environmental management, emissions reduction, climate change corporate strategy and policy development.
Given the growing emphasis on environmental, social, and governance (ESG) criteria, what are the most significant trends currently shaping ESG performances in businesses?
The world economic forum, has been releasing global risk reports annually for the last two decades. The respondents are CEOs of major conglomerates, they are stating that managing environmental hazards is vital to managing business risks. Typically, business risks are associated with fundraising, supply chain resilience and product quality. But now, environmental issues and its associated risks are taking precedent.
In ESG, G is fundamental; without proper governance, nothing can be moved, regardless of whatever is being done. Though environmental issues are becoming more significant than social issues, all three are interrelated. Due to climate change, there is a lot of uproar and social disturbances, which is resulting in a domino effect that is impacting business productivity. Investors, Regulators and NGOs are demanding actions to be taken from the business side. From a business perspective, it is increasingly making sense to manage climate actions.
Nature is not dependent on business, business is dependent on nature. It is a common sight to see industries being closed down for a long stretch due to lack of water and raw materials.
Could you shed some light on how companies are developing strategies that effectively integrate ESG considerations into their core business strategies and decision-making processes?
When a business strategy is being developed, governance has to be present. The absence of a proper governance mechanism makes businesses unable to function. Investor pressure, regulatory pressure and pressure from local communities are forcing corporations to develop strategies to integrate sustainable solutions as part of their decision-making policies.
In the case of JSW Group, the steel division produces a lot of slag, a waste byproduct of steel making. It was initially dumped, but later, in the cement division, we replaced clinkers with slag for cement making. Clinker preparation is a carbon emission-intensive process. Now, the waste is made to behave as a raw material. This has resulted in green cement and successfully created market demand.
The above anecdote serves as an excellent example of how climate action and business strategy can result in innovation without compromising anything that may harm the business—profitability and efficiency rise, resulting in increasing economic value.
In light of technological advancements and innovations, how do these contribute to advancing ESG initiatives? Could you provide any notable examples?
There are two kinds of technologies when it comes to sustainability: those that are feasible and those that are commercially viable. In the case of the steel sector, the reduction of carbon emissions is emphasized. There is coke dry quenching (CDQ), where the resulting steam can be repurposed for other purposes; this is a commercially viable technique. Another solution is utilizing green hydrogen to make steel; while this may be technically feasible, it is not commercially implementable due to the high costs involved.
This is where trial and error must be carried to see how technology behaves. The third kind of technology is which comes under this umbrella where neither commercial nor technical feasibility can be established. An example of this is molten oxygen electrolysis by Boston Metal. This process eliminates the carbon requirements and directly electrolyses the iron ore, it has to be scaled up, but it takes time.
The other technology which cannot be overlooked is digitization. It is impacting everyone’s life. It is essential that businesses adopt it. At JSW, we have a CDO whose job is to examine and digitize processes so maximum benefits can be derived. Digitization allows operations to become more efficient and results in a sustainable outcome for the business.
With consumers increasingly favoring environmentally responsible companies, how can businesses leverage this trend to enhance their competitive edge and improve their ESG performance while building sustainable business practices?
The drastic progression of the IT industry, with the iPhone being a market leader and numerous companies following their footsteps to innovate, is a prominent example of taking the lead and others following suit. Similarly, when it comes to green products, someone has to take the lead. There is consumer favor now, and people are now aware and looking for environmentally friendly products.
But, the question still remains, are people ready? Is society ready to pay a premium for green products? This is the cross roads that the market is stuck at. But if the cost can be brought down, the greener product will have a greater demand. This is good for the business, leaders will focus on greening the supply chain, greening the operations and offering a greener product at a competitive price.
In the case of JSW cement, our green cement is not significantly higher than regular grey cement. This is competitive in the market. Our green product is pushing consumer favor while also pushing business growth. This consequently improves our ESG performance.
With over 30 years of experience in sustainability and environmental management, what note would you like to offer to emerging leaders, or what legacy do you aspire to leave in terms of environmental stewardship and sustainable business practices?
It is crucial for businesses to adopt better technology and make themselves greener to remain leaders in the future. It is an evolutionary process. Businesses have to take a lead and green their processes according to consumer demand. They shouldn’t slack around in any of these processes.
My mission is to change the mindset of the people who can change the world. Decisions are taken by top management and entrepreneurs, and my job is to ensure they make the best decisions. Hence, the impact on society is favorable and the next generation flourishes. This is the legacy I aspire to leave behind.