The key to India's economic future is a bottom-up strategy that addresses the needs of the more than 250 million Indians still trapped in poverty. Photo Credit: Stock.xchng.com

India during a moment of global financial panic is an object-lesson both in the integration of the world's markets and the scale of the challenge facing the country's leaders in building an economic model capable of addressing such crises. In particular, a week-long visit to Agra, Delhi and Mumbai on behalf of SustainAbility¹ convinces me that India faces even bigger convulsions in the next forty years than in its first sixty as an independent nation.

This is not an entirely comfortable message - the theme of my keynote speech to a centennial conference of the Indian Merchants' Chamber² in Mumbai - reflects partly a belief in the utility for India of the "triple bottom line" (TBC) concept I launched in 1994 (a point echoed by the chamber's president, Niraj Bajaj, in his introduction). More widely, it seems to me that the world's second most populous country is now embarking on its third great liberation process since the end of the second world war, and that the third is likely to be greater even than the first and second taken together.

Politics, Economics...Society

India's first liberation was the achievement of independence from British rule, consummated at horrendous cost in 1947 as the partition process literally tore the country apart. As the sixtieth anniversary approached, the world's media - as well as India and Pakistan's - was full of reports and analyses memorialising the process and assessing its legacy. But so epic was this event that it is likely that the seismic aftershocks of partition will still be shaping the world in 2047.

The world's second most populous country is now embarking on its third great liberation process since the end of the second world war.

The second liberation arrived in the 1990s, as the levers of economic power were gradually won from the iron grip of the state - and India proceeded to catch up with broader processes of liberalisation, privatisation and globalisation. Again, the convulsive effects are still working their way through the country's economy - and will continue to do so for decades to come. The new order has many beneficiaries, but millions remain left behind or have been pushed even deeper into poverty.

This is a clue to the third liberation. If the first broke the stranglehold of the British and the second that of the state, the next must be even more ambitious. It involves nothing less than a simultaneous triple-whammy:

1. Developing a sustainable, modern economy
2. Ensuring that its benefits can be extended to the 250 million-plus of India's people trapped in poverty
3. Protecting the country's natural environment from degradation, and playing a key role in minimizing global climate change.

The scale of this national challenge was underscored by prime minister Manmohan Singh's commemorative speech³ on independence day, 15 August, in which he argued that economic, social, political and educational forms of empowerment are crucial to India's future - and must support efforts to tackle environmental issues, notably global warming. At the same time, India's leaders - like China's - have often argued that the country's relatively meagre contribution to worldwide greenhouse-gas emissions means that this is not India's problem to solve.

The scale of India's national challenge was underscored by prime minister Manmohan Singh's commemorative speech - he argued that economic, social, political and educational forms of empowerment are crucial to India's future.

If there are no easy answers to this argument, it was striking that the mood at a business-leaders' programme in Agra organised by the Confederation of Indian Industry (CII) was more serious and engaged on the question of business responsibility than ever. A theme of the proceedings - whose participants included Stuart Hart of Cornell University (whose specialty is sustainable-enterprise management) and PD Jose (of the Indian Institute of Management (IIMB in Bangalore) - was that India's second liberation devolves onto business a growing share of the responsibility for tackling sustainability issues. A key factor in developing this understanding has been the work of the CII-ITC Centre of Excellence on Sustainable Development under the current chairmanship of ITC chairman, YC Deveshwar.

The fact that ITC originally stood for "Imperial Tobacco Company" indicates the contradictions in which discussions of these themes can be enmeshed. It is a company that splits me down the middle: on one side, it is identified with a product that causes huge damage to public health (though the proportion of its revenues derived from the sale of tobacco products has fallen to around 47%); on the other, it has contributed to extraordinary successes in such areas as social forestry (exactly the sort of the ventures that India needs more of).

YC Deveshwar is open about the difficulties posed by his company's profile, while stressing that ITC's commitment to "triple-bottom-line benchmarks" is central to "our resolve to contribute to the national goal of sustainable and inclusive growth." Among the achievements claimed were that ITC has been a "water- positive" company for five years in a row and "carbon-positive" for the last two; and that its meeting of recycling targets during the past year brings it close to "zero solid waste".

There is encouragement here, but to turn new language into a new way of doing things also requires civil-society organisations to monitor and challenge business. There is a profusion of NGOs in India, but the country has still some way to go in this respect. The World Wildlife Fund for Nature (WWF), which also took part in the Confederation of Indian Industry event, is even calling for an "axis for business sustainability ⁴" encompassing China and India to ensure that the transformation of the global economy proceeds on increasingly sustainable lines. Certainly there is growing awareness - underscored at the World Economic Forum summit in Davos - that the sustainability, public accountability and social responsibility of business will be one of the defining issues of the 21st century.

One of the difining issues of the 21st century will be the sustainability, public accountability and social responsibility of business.

If India and China and other major developing and developed countries fail to act quickly in this area, the current "market correction" will be only a prelude to the main event. The financial jitters over "sub-prime" mortgage lending in the United States are having global reverberations; the massive product recall of China-made Mattel toys in the US - following the discovery of unacceptably high lead levels in the paint used in some toys - has contributed to the tense political atmosphere surrounding one of the world's major trading relationship; but even this scale of problem may appear insignificant if and when the effects of global warming go into overdrive. Both the business community and civil society - no less than governments - have a huge responsibility in leading society's response.

The Next Superpowers

The Mattel recall and the wider issue of concern over the quality and safety of Chinese goods also raise profound questions about the accountability of business and the political authorities responsible for its regulatory oversight, which are relevant in India too (if in ways that operate differently because of its very different political system).

The Bhopal disaster of 1984 is a case-study of corporate culpability (by Union Carbide, which operated the plant) and neglect (by Dow Chemical, which bought Union Carbide's Bhopal assets in 2001, and which failed to grasp the way that legal, financial and moral liability regimes are being transformed around the world). But various levels of the Indian government too carry blame for shambolic post-disaster management which reinforced terrible human suffering. (Bhopal's lessons for the new liability agenda are explored by my colleague Geoff Lye in a 2005 report, The Changing Landscape of Liability ⁵

Both the business community and civil society - no less than governments - have a huge responsibility in leading society's response to global issues such as climate change.

The connections and the contrasts between China and India in this larger arena of business and politics will indeed help to determine whether the global economy can establish itself on a sustainable track in the 21st century. In this respect, I see strong similarities in the India-China relationship and the United States-Soviet Union one after 1945. During this cold-war era, the fundamental question was whether democratic or non-democratic political forms were most sustainable in the longer term. The "experiment" showed pretty conclusively that (for that period at least) democracy the better bet (though a qualification is essential: few would see the American economic, consumerist model and which helped underpin the democratic victory as sustainable, certainly on a worldwide scale).

Now, once again, two mega-nations very different political models - this time with one billion-plus citizens each - are competing over the future. The outcome is hard to predict (and it cannot in any case be a "zero-sum" game, for the survival and health of the would demands cooperation); though it may be that India's democratic foundation, whose importance writers such as Amartya Sen and OpenDemocracy's Rajeev Bhargava have emphasised, may give it a decisive edge in the long term.

An Indian Agenda

Small steps can make a modest contribution to the outcome of big contests. The changing experience of SustainAbility in India reflects a perceptible shift in the way that companies think and operate. To begin with, our clients were non-Indian corporations with sub-companies (like Ford of India) which wanted to test local policies and operations against emerging local concerns; or foreign corporations (BT and Norwich Union, for example) with call-centre and other outlets in India, which sought to assess the responsibility of the relevant operations and relationships. There is now an increasing sense that Indian companies themselves will be in the market to seek help in shaping their strategies, performance and accountability mechanisms in areas covered by the "triple bottom line" agenda.

As one result, SustainAbility plans to establish our first emerging-economy office in India in 2008. That said, my experience in the country as it embarks on its seventh decade of independence leaves me in no doubt that it is not just India that is changing or needs to change: so too must those from outside who wish to engage and cooperate with the country at business and civil-society and political levels. This is a daunting challenge, but India's emerging economy, civil society and polity deserve no less. India's third liberation will be a global event that will challenge non-Indians too to think afresh about this extraordinary, old-new country.

Footnotes:

¹SustainAbility: Tomorrow's Value

²Indian Merchants' Chamber - History

³The Hindu

⁴ World Wildlife Fund - India Companies in the 21st Century

⁵ SustainAbility - The Changing Landscape of Liability




Contributed by John Elkington, founder and chief entrepreneur at SustainAbility. Reprinted with permission from Open Democracy.

To read another Global Envision article about an innovative business model in India, see A Recipe for Job Creation in India.



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