11
GREEN COMPANIES OVERVIEW Outlook Business > May 1, 2010 47 SRIRAM SRINIVASAN Chakan this March is built to comply with stringent emission norms in Europe, where the company exports vehicles. By making a large commitment today, it has created a facility that is better prepared to meet clean- technology legislations when they come along. Or, take engineering and construction company L&T. A slew of measures on energy efficiency, water con- servation, renewable energy, and usage of eco-friendly material in production have been unleashed inside the organisation in the last few years. “It is slowly becom- ing part of our DNA,” says RN Mukhija, Whole-time Director and President of engineering and construc- tion company L&T. Mukhija says the company started making and marketing the marginally costlier but environmentally-friendlier supercritical boilers even when the market wasn’t ready. “Even now, we are losing business because many independent power producers say no to supercritical.” Why It Matters But these are more the exception than the norm in corporate India. Explains Sudipta Das, Partner and National Head, Climate Change and Sustainability Services, Ernst & Young: “A majority of Indian com- panies are waiting for regulation to come in and then comply with it.” A report late last year by PricewaterhouseCoopers (PwC) indicated that a majority of Indian CEOs didn’t have a climate-change strategy in place. UK-based Car- bon Disclosure Project, which collects emissions data of major companies the world over, got a response from just 20% of the 200 Indian companies it approached. At the same time, however, both reports found things to cheer about. e PwC report noted that the percent- age of Indian CEOs concerned over climate change has doubled over a year. e Carbon Disclosure Project report mentioned that the answers of respondents were qualitatively better than earlier years. Why bother with a climate change strategy, one might ask. at too, when the word elicits more scepticism than ever, with a string of goof-ups, doubts over whether data is cooked, and a much-advertised summit that produced nearly nothing. Because, a good part of the world, including the governments that matter, is taking 46 Outlook Business > May 1, 2010 THE EMERGING BUSINESS CASE For these seven companies, climate change is more than a conscience call—it’s a part of their business strategy. NDIA INC’S FIRST PUBLIC BRUSH WITH ANYTHING RELATED TO CLIMATE change came in 2005. It was the year Gujarat Fluorochemicals’ project to deal with greenhouse gas HFC-23 got approved by the United Nations Framework Convention on Climate Change, enabling it to fetch carbon credits. Since then, hundreds of Indian projects (a bit under 500 till date) have followed suit. e mechanism, which made Indian companies invest in greenhouse gas-reducing technology, was a roaring suc- cess, and understandably so. It gave Indian companies a chance to sell carbon credits to developed countries (who, under the Kyoto Protocol, had the option to either re- duce their own emissions or buy credits from developing countries). Even as companies indulge in selective engagement with the serious problem of cli- mate change, taking back with them goodies like carbon credits, a handful of Indian companies are elevating that engagement to another level: they are making it a part of their business strategy, in different ways and in varying degrees. And they are discov- ering it makes business sense; or, even if it doesn’t today, it will tomorrow. As much as these realignments are a conscience call for companies to consume less and to consume right, it’s also about tapping—even shaping—the business opportu- nity in this collective awakening to save the planet. Take Yes Bank. e newest Indian private bank has made sustainability a vertical, and has a 12-member team advis- ing businesses in this area. As the groundswell of businesses in this space increases, the bank expects to have a competitive and early-mover advantage in this area over other banks. Or, take auto major Mahindra & Mahindra. e Rs 2,500 crore plant it opened in ILLUSTRATION BY ARINDAM

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GREENCOMPANIESOVERVIEW

OutlookBusiness > May 1, 2010 47

SRIRAM SRINIVASAN

Chakan this March is built to comply with stringent emission norms in Europe, where the company exports vehicles. By making a large commitment today, it has created a facility that is better prepared to meet clean-technology legislations when they come along.

Or, take engineering and construction company L&T. A slew of measures on energy effi ciency, water con-servation, renewable energy, and usage of eco-friendly material in production have been unleashed inside the organisation in the last few years. “It is slowly becom-ing part of our DNA,” says RN Mukhija, Whole-time Director and President of engineering and construc-tion company L&T. Mukhija says the company started making and marketing the marginally costlier but environmentally-friendlier supercritical boilers even when the market wasn’t ready. “Even now, we are losing business because many independent power producers say no to supercritical.”

Why It MattersBut these are more the exception than the norm in corporate India. Explains Sudipta Das, Partner and

National Head, Climate Change and Sustainability Services, Ernst & Young: “A majority of Indian com-panies are waiting for regulation to come in and then comply with it.”

A report late last year by PricewaterhouseCoopers (PwC) indicated that a majority of Indian CEOs didn’t have a climate-change strategy in place. UK-based Car-bon Disclosure Project, which collects emissions data of major companies the world over, got a response from just 20% of the 200 Indian companies it approached.

At the same time, however, both reports found things to cheer about. Th e PwC report noted that the percent-age of Indian CEOs concerned over climate change has doubled over a year. Th e Carbon Disclosure Project report mentioned that the answers of respondents were qualitatively better than earlier years.

Why bother with a climate change strategy, one might ask. Th at too, when the word elicits more scepticism than ever, with a string of goof-ups, doubts over whether data is cooked, and a much-advertised summit that produced nearly nothing. Because, a good part of the world, including the governments that matter, is taking

46 OutlookBusiness > May 1, 2010

THE EMERGING BUSINESS CASEFor these seven companies, climate change is more than a conscience call—it’s a part of their business strategy.

NDIA INC’S FIRST PUBLIC BRUSH WITH ANYTHING RELATED TO CLIMATE change came in 2005. It was the year Gujarat Fluorochemicals’ project to deal with greenhouse gas HFC-23 got approved by the United Nations Framework Convention on Climate Change, enabling it to fetch carbon credits. Since then, hundreds of Indian projects (a bit under 500 till date) have followed suit. Th e mechanism, which made Indian companies invest in greenhouse gas-reducing technology, was a roaring suc-cess, and understandably so. It gave Indian companies a chance to sell carbon credits to developed countries (who, under the Kyoto Protocol, had the option to either re-duce their own emissions or buy credits from developing countries).

Even as companies indulge in selective engagement with the serious problem of cli-mate change, taking back with them goodies like carbon credits, a handful of Indian companies are elevating that engagement to another level: they are making it a part of their business strategy, in diff erent ways and in varying degrees. And they are discov-ering it makes business sense; or, even if it doesn’t today, it will tomorrow.

As much as these realignments are a conscience call for companies to consume less and to consume right, it’s also about tapping—even shaping—the business opportu-nity in this collective awakening to save the planet. Take Yes Bank. Th e newest Indian private bank has made sustainability a vertical, and has a 12-member team advis-ing businesses in this area. As the groundswell of businesses in this space increases, the bank expects to have a competitive and early-mover advantage in this area over other banks.

Or, take auto major Mahindra & Mahindra. Th e Rs 2,500 crore plant it opened in

ILLUSTRATION BY ARINDAM

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00 OutlookBusiness > May 1, 2010OutlookBusiness > May 1, 201048

A PwC report says that the number of Indian CEOs con-cerned over climate change has doubled in the last year.

quite soon. “We have a dedicated team to assess and analyse the risks and opportunities of climate change,” says its spokesperson, Raghavendra Rao.

Ahead Of The CurveA more positive conclusion of the Carbon Disclosure Project was, as COO Paul Simpson put it, that increas-ingly board-level managerial personnel are being put in charge of climate-change strategies. “Th ese companies are already embracing the opportunities,” he says.

Th e seven Indian companies featured in this package identifi ed climate change as something that can’t be ignored. Th ey did so earlier than most others. Th ey also recognised that it is something that can’t be attended to piecemeal —so, climate change is infl uencing their long-term strategies and business plans.

Th ey are investing today with hope but without a robust estimate of payback timelines. Th ese are the companies that look 10-20 years down the line, try-ing to factor in what governmental policy could lead them towards. Th ese are the ones that have given sus-tainability reports their due, tried to spread climate change awareness through the rank and fi le of their organisations, participated in government panels and working groups, and religiously tied up with new tech-nology providers.

Each one of these companies is dealing with climate change strongly because of the realisation that a busi-ness-as-usual approach won’t work. Climate change could most certainly change the business climate. <

With inputs from Sudipto Dey

climate change seriously. Th e message is: stiff regulation isn’t far off . Some of it has already come in.

Th e Indian government has already revealed its Na-tional Action Plan on Climate Change, which touches upon aspects such as solar energy and energy effi ciency, apart from six other issues. It has also announced a targeted energy-intensity reduction of up to 25% by 2020 over 2005 levels. One way of ensuring it meets that target is by having a market for energy-effi ciency certifi cates, under which the more energy-effi cient companies in an industry can sell credits to those who aren’t (the defaulter would otherwise get penalised).

India’s recent imposition of a levy on coal production is another pointer to the climate change thinking. Else-where in the world, the more developed countries are already partial to ecologically sustainable goods. Th e European Commission wants to tax imported goods that aren’t made by ecologically safe methods. Th ere’s a good chance that expansion of, say, coal mines might become unpopular even as demand rises.

Of course, there’s also the physical impact —fl oods, drought, change in crop patterns and so on. Increas-ingly, like in the case of ITC, companies are starting to measure those risks. Th ey are then putting in mecha-nisms to deal with such situations.

Opportunity? Th reat? Depends on how prepared one is. One can immediately appreciate why the Baldota Group, whose fl agship business is iron ore mining, has invested Rs 1,200 crore in wind energy. Not just that. It’s mulling getting into thin-fi lm solar-cell manufac-turing, is not averse to checking out nuclear and hydro technologies in the long run, and believes aff orestation programmes are the key. Th e group has something that might become inevitable for the whole of India Inc

CUT TREES. Burn coal. Burn some other fossil fuel too, let’s say oil. Do it for 200 years. And

lo, you have climate change on your hands. This recipe has been perfected so well by human beings that we are fi nding it diffi cult to change, even if our very survival hinges on it. Climate change, by the way, is how the earth’s climate is getting impacted by carbon-dioxide emissions and other greenhouse gases, courtesy the cutting and burning. It, of course, means a hotter planet. But it also means changes in rainfall patterns, ocean currents and melting of glaciers. It wouldn’t make for a livable planet. The Maldives, for instance, is seen sinking. Yet, sceptics still call climate change fi ction.

Start cutting emissions right away, scientists have been warning for nearly two-and-a-half decades. And someone like Al Gore, former US Vice-President, drummed up awareness for the cause through his award-winning fi lm An Inconvenient Truth. World governments, in principle, agree with scientists. But the worldwide framework to tackle climate change still eludes them.

The US, a big polluter, opted out of the fi rst such effort, the Kyoto Protocol, set to expire in 2012. It was in this Protocol that the Clean Development Mechanism made its debut. Under this, developed countries either had to cut down their emissions or buy carbon credits from greenhouse gas-reducing projects in developing countries. Corporates in China and India generated the majority of credits. Under Kyoto, developing countries didn’t need to make emission cuts, and this is the bone of contention now. This is sensitive because emission reduction is seen as economically suicidal.

What polluters such as China and India have done is have national roadmaps to attack climate change. India’s is called the National Action Plan on Climate Change. It has eight components, including measures to boost solar energy, energy effi ciency, ensure sustainable habitats and agriculture, optimise water use, sustain the Himalayan ecosystem, promote afforestation, and build knowledge in climate modelling.

This is a source of regulatory risks and opportunities. Its energy effi ciency component, for instance, will be targeted at the industrial sector. Those like power, cement, fertiliser, iron and steel plants. The idea is to set energy effi ciency standards for each sector. Those bettering standards can then sell energy-effi ciency credits or energy-saving certifi cates to the laggards, as part of a market mechanism. The other option for laggards is to get penalised.

One other way to ensure India isn’t too drunk

on oil and coal is to promote clean power. Wind and solar, for instance. Apart from tax sops and incentives for generation, the government plans what are called renewable-energy certifi cates. Under this, renewable energy targets for utilities and big power consumers will be set. Each megawatt-hour will stand for one renewable energy certifi cate. Again, those exceeding targets can sell to the laggards. This too is a market mechanism.

The developed world has offered emission reductions in varying proportions, from the more ambitious EU and Japan to the politically practical and modest US. India and China and similar developing countries wouldn’t announce absolute emissions. They have settled for carbon intensity reductions, or emissions per unit of economic output. In a growing economy, this wouldn’t lead to a cut in absolute emissions.

Meanwhile, the developed world, already more aware in environmental matters, is mulling things like green procurement. That will enable it to reject products made in an ecologically unsustainable manner. It is also pouring money into clean-tech research. The current emission-reduction pledges of all countries, however, are not seen by scientists to be good enough to stop a dangerous increase in temperatures. The arguments continue.

CLIMATE CHANGE FOR DUMMIES

THE COMPANIES

TATAS Pg50

ITC Pg54

YES BANK Pg58

IOC Pg60

WIPRO Pg62

M&M Pg64

INFOSYS Pg66

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OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

In power, the gestation period of a project can be long. We are trying to shorten it.Avinash PatkarChief Sustainability Offi cer, Tata Power

GREENCOMPANIESTATA GROUP

The Clean SweepThe Tatas want all their companies to cut emissions drastically.

a vast group like the Tatas isn’t possible without each employee being aware of the eff ort. Ever since Irani got hooked on the issue, courtesy Al Gore’s An Inconvenient Truth, he has been wanting to make others aware. Th e idea is to have the group tackle climate change with the same zeal with which it has dealt with quality and business excellence, since two decades ago.

Future PathMeanwhile, climate change is shaping Tata companies’ future roadmaps. Take Tata Power. Currently, it gener-ates 40% of its power from coal and a little less than 25% from renewable energy sources. Th e company has made a huge commitment to renewable energy. So, by

2017, you would expect the renewables share to shoot up. Wrong. Renewables would still hover around the 25% mark. Th at’s because the total installed capacity of the company is likely to go up over eight times to 25,000 MW in the next seven years. In absolute terms, however, it would still be a huge leap.

Tata Power believes it can pull this off . And it should. Th e reasons are easy to see. Th e government has shown its keenness to fi ght climate change by unveiling a re-newable energy-friendly policy. Currently, there are goodies for wind and solar energy. At some point, trad-able renewable-energy certifi cates are likely to be intro-duced, making the deal even more attractive. Th e policy indicates how utilities that exceed renewable energy

Sriram Srinivasan

TWO TITLES, ONE OF THEM unconventional, describe Dr Avinash Patkar’s role at Tata Power. He’s the compa-ny’s Chief Sustainability Offi cer. And he’s also a ‘Climate Change Champion’. Th ere

are 49 more people bearing this unusual title inside the Tata group. Th eir job is to spread the climate change message across hundreds of group companies and help fi gure out how emissions can be minimised.

Th at job, inside the group’s top fi ve emitters—Tata Motors, Tata Chemicals, Tata Power, TCS and Tata Steel—is being done by McKinsey. Patkar and his peers will take over from McKinsey for the smaller compa-nies. Th e message from the group to its companies is clear. “You must be the best in your industry segment (in emissions),” says Tata Sons Director JJ Irani. In Jamshedpur, for instance, Tata Steel is working on a programme that will put its plant on par with the best in the world. Across the group, environmental impact has been included as a criterion to judge a scheme. So, for instance, if TCS wants to rent a building, it will have to go in for an energy-effi cient one.

Irani insists that the climate change eff orts aren’t be-ing made with an eye on business opportunities. “We’ll do it anyway” he says. Yet, it’s hard to miss the oppor-tunity in the future. Th e government already has plans to introduce a market in energy-effi ciency certifi cates. Under this scheme, starting in a year, energy-intensive industrial segments will be given targets to cut their energy use. Th ose exceeding the targets will be able to sell ‘credits’ to the laggards. Undoubtedly, the best in business can reap rewards. Also, there’s a chance that more developed economies can charge duties on products not following effi ciency standards. Th at risk can be neutralised by such plans.

Energy effi ciency isn’t easy as it sounds. Th e 0.5 per-centage-point reduction in Tata Steel’s emissions, for example, may take fi ve to six years. And to do this across

It’s becoming diffi cult to fund projects. Foreign lenders are wary of carbon issues.Banmali AgrawalaExecutive Director, Strategy and Business Development, Tata Power

targets can sell these certifi cates to those who haven’t, much like with energy-effi ciency certifi cates.

Th e bread-and-butter source would still be coal. Th at could be a worry in a world that increasingly looks at this combustible material with disdain. Governments around the world no longer shy away from using the stick against the commodity. India has already imposed a levy of Rs 50 per tonne of coal produced. Sourcing it could also become problematic and Tata Power is moving in to cover such risks.

First, it is betting on supercritical technology. And so is Reliance Power. According to a Reliance Infrastruc-ture presentation, supercritical and ultra-supercriti-cal boilers enjoy 5-10% more thermal effi ciency than normal ones. Th at’s because they can operate at higher temperatures and pressures. Also, their emissions are lower. So, even though the capital cost of supercritical technology is on the higher side, their effi ciency and environmental advantages make them more attractive. Th e upcoming Rs 17,000 crore, 4,000 MW Mundra project, Tata Power believes, is clear proof of that.

Th e other angle that justifi es supercritical technol-ogy is fi nance. “If you need to fund projects, it’s in-creasingly diffi cult because the Indian market can’t raise that much,” says Banmali Agrawala, Executive Director, Strategy and Business Development, Tata Power. On the other hand, “foreign lenders are very careful about carbon issues.” In the case of the Mun-dra project, $1.8 billion of the total funds came from a consortium of foreign lenders.

Second, Tata Power (as does Reliance) is covering

CLEAN POWER: The upcoming 4,000 MW Mundra power plant will use supercritical technology—more

expensive, but more effi cient.

50 51

PHOTOGRAPHS BY SOUMIK KAR

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It won’t be easy. Th e targeted 0.5 percentage-point reduc-tion in Tata Steel’s emis-sions may take 5-6 years.

its risks by controlling sources. Th ree years back, it bought a 30% stake in two coal mines and a trad-ing company in Indonesia for a little over $1 billion. Control of a vital resource like coal is seen as a hedge against future supply constraints.

Th e X factor in Tata Power’s strategy matrix would be new technologies and getting ready for alternatives such as nuclear and geothermal energy. Th e company’s investments in two Australian companies are geared towards the future. One is a 10% stake for Rs 165 crore in Geodynamics, a geothermal energy company. Th e other is a stake purchase in Exergen, whose technology is said to control harmful emissions from coal.

What the company is also doing is testing out clean-tech, minimising risks by not being ambitious in scale. “In power, the gestation period could be long,” says Dr Patkar. “We are trying to shorten it.” Th e idea is to have distributed set-ups of small cleantech capacities, which can be replicated in hundreds of other places.

Tata Power’s sister companies are on the ball as well. In a climate-change awareness report entitled ‘Carbon Disclosure Project’, Tata Motors has been quoted as viewing the issue as an opportunity to design and de-velop low-emission vehicles. Its association with MDI (a small, French engine technology company) on using compressed air as a fuel is one such initiative.

Sanjay Choudhary, Chief Technology and Sustain-ability Offi cer of Tata Chemicals, is betting big on re-search in aspects like feedstock. “We are collaborating with technology and agricultural institutes such as MIT, IITs, NIN and Icrisat,” says Choudhary. “And we have invested in JOil, Singapore, for development of jatropha seeds.” Sustainable feedstock is a strategic issue for an industry dependent on oil. Going forward, the sense is that an increasingly climate-sensitive agricultural realm will need a balanced diet of nutrients and crop protection. Th at’s the business area of the future. <

“It’s not only about the opportunity”

How are you reducing your carbon footprint?We have established our carbon footprint—how much we are emitting—in most of our companies. We may be having 100 companies, even more. Five of our major companies (Tata Motors, Tata Chemi-cals, Tata Power, TCS and Tata Steel) emit 80% of the group’s total output. Th ese fi ve also have established ‘climate champions’ well versed in this. We are not only using them to spread the message in their com-panies but also in our other companies. McKinsey is helping us in our mitigation process.

We have taken the baseline of 2008, and we should certainly see a reduction in our CO2 emissions on a per-MW or per-tonne basis in fi ve years. I won’t say we will emit less but a 10% reduction in inten-sity is defi nitely possible.

Can you give us an example?In Jamshedpur, Tata Steel emits around 2 tonnes of CO2 per tonne of steel made. Th e world’s best is 1.5. Corus in UK is about 1.7. So, obviously we need to have a programme to make it the most effi cient plant in the world. We will reduce CO2 by taking various measures to fi rst bring it down to 1.7 and then from 1.7 to 1.5. Th at may take us 5 or 6 years.

What about having a green supply chain?First, we have to look at ourselves. We’ll certainly encourage suppliers who want to go in for climate-change initiatives. In the case of affi rmative action, we say if you employ a certain number, we’ll give you more orders. So, here too, we will say that if you fol-low climate-change principles in your manufacturing process, you will get more business from us.

But before we do all this, we are fi rst readying ourselves. We can’t become teachers before we learn ourselves.

Are you looking at business opportunities?One of our companies in Orissa, Tata Sponge Iron, has already fi nanced an entire power generating unit through carbon credits. Th ey did it two years ago. So, we are fully aware of the potential. But we will not do it only because it’s a business opportu-nity. We’ll do it anyway. And if this happens to be a business opportunity, all the better.

JJ Irani says going green is a matter of course for the Tatas.

INTERVIEW: JJ IRANI

OutlookBusiness > May 1, 201052

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OutlookBusiness > May 1, 2010

Nandita Datta

INFOSYS’ GREEN JOURNEY BEGAN WHEN former Vice-Chairman Nandan Nilekani said climate change was one of the key challenges that would impact society, and consequently, business, in the next 25 years. At various fo-

rums, in-house meetings and boardroom discussions, Nilekani made impassioned pleas for the company to take on a leadership role in the area of ecological sustainability, thereby maintaining its brand value. “As the top management bought into his argument, we were able to look at the issue in a very integrated manner, which, in turn, resulted in exponential sav-ings internally,” recalls Rohan Parikh, Director (Green Initiatives) at Infosys Technologies. “Our fi nance guys were ecstatic that we were able to save 10% each year on our utility bills and 5% on our water bills.”

To ensure this doesn’t remain a top-down initiative, Infosys has successfully co-opted its army of young engineers into its greening programmes. Th e company welcomes new ideas and allows people at all levels to take full responsibility for their execution.

Aft er achieving success on the green front internally, Infosys is looking to take some of its solutions to cli-ents across the world, especially IT-related ones. “We have made some very disruptive innovations, which we would like to take to the marketplace,” notes Parikh. One such innovation is an energy management solu-tion that allows a company to take a 360 degree view on its energy consumption—the data thus generated can be used to vastly improve energy effi ciency.

It was originally developed for internal use. Before creating this solution, Infosys had to wait till the end of the month to compare its electricity bills and cal-culate the impact of all its energy saving initiatives. “It

It crafted solutions to become energy-effi cient. Now, it plans to sell them to clients around the world.

GREENCOMPANIESINFOSYS

was time-consuming and ineffi cient,” says Parikh. To address this problem, electronic meters were installed in every building. Next, all the lighting panels, air-con-ditioning and UPS systems were sub-metered. Th is allowed the company to fi gure out where and when electricity was being consumed on a real-time basis, at the click of a mouse. As a result, Infosys was able to make targeted improvements to remotely control power wastage.

Parikh is upbeat on the market demand for such a solution. Infosys also plans to market other sustain-ability solutions to monitor greenhouse gas emissions as well as water accounting.

Smart Grids“India’s top IT companies have multiple opportunities,” says Ashish Sethia, Head of Research (India), Bloomb-erg New Energy Finance. “One, helping distribution companies or utilities enable smart grids. Two, helping supply chains become carbon effi cient. And, helping retailers with carbon footprinting.”

Infosys is focusing strongly on smart power-grid solutions. Estimated to be a $50 billion business, this involves linking all the parts of an electrical grid such that energy usage can be monitored and controlled. Th e ultimate aim is to enable users to see their consump-tion real-time, and thus identify areas of wastage. It’s a business that has attracted biggies like IBM and Cisco, who are focusing primarily on the box or device that will enable a two-way communication between power distributors and billions of consumers.

Infosys’ off ering in this segment is largely around monitoring and implementation solutions. Th e com-pany recently bagged a contract from Down Under to implement one such solution. For the company, the green space holds big business opportunities. <

Smart grids monitor and control ener-gy usage in every part of an electrical grid. Th e in-dustry size: $50 billion.

The Grid Master

AP

66

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OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

Kunal N Talgeri

IN JANUARY 2008, MAHINDRA & Mahindra (M&M) chose a quiet corner of the madding acreage in Delhi known as the Auto Expo for its vehicle display. As most Indian and global automakers showed off their small-cars,

M&M had a ‘green pavilion’. It was a diff erentiator in a cluttered motor show; to the sceptic, it was a leap of faith that went relatively unnoticed.

By July that year, the Mahindra Group produced its fi rst Sustainability Review for fi scal 2008. It was graded by the Global Reporting Initiative (GRI), a Dutch organisation that drives a sustainability-disclo-sure framework. And in March this year, it walked the green talk with its Rs 2,500-crore plant in Chakan, an industrial town near Pune.

As the facility manufactures 300,000 vehicles through its fi rst phase, it will use solar energy from the oven exhaust to reduce consumption of LPG and electricity in its paint shop. Th is is expected to result in an an-

nual reduction of 3,500 tonnes of CO2. Th en, a set of 70 solar dishes will heat water that will be used to cool the paint on vehicle bodies. At each stage of the vehicle assembly, M&M has given cost effi ciencies a re-look through its green shades. By making a large commit-ment now, it has a compliant facility for tomorrow.

Many such measures are ingrained in the landscape. With auto suppliers who are local to Chakan, transport costs are conserved. “At a policy level, it is about ask-ing questions like ‘how can we make our supply chain greener’?” says Beroz Gazdar, Vice-President in Ma-hindra Infrastructure Development. She spearheads sustainability for the group. “Can you source from near the plant? If you talk the cost language, it makes sense to business heads across sectors.”

Using the cost lexicon, the Corporate Sustainability Cell (CSC) has managed to pose more poignant ques-tions. Will its vehicles be able to comply with stringent European norms? Could next-generation products at-tract green technology investments? Th e answers are forthcoming when the questions are strategic. Th is is

The Cost CutterIt’s selling climate change to employees through the prism of cost.

CLEAN START: At the Chakan plant, solar energy will help lower CO2 emissions by 3,500 tonnes a year in the paint shop alone.

If you talk the cost language, it makes sense to business heads across sectors.Beroz Gazdar, V-P,Mahindra Infrastructure Development

why the Chakan plant is a symbol within the group.

Do The EvolutionSays Abdul Majeed, auto practice leader at PwC India: “It’s very essential for companies with global ambitions like M&M and Tata Motors to address climate change.” Th is is because environmental standards are more stringent in the developed world. Indian companies, Majeed reckons, however don’t spend on R&D as much as those in developed countries. Th at’s why technology tie-ups make sense. Recent rumours point to M&M trying to take a stake in electric carmaker Reva.

M&M’s green thrust was fi rst evident at a product level in 2007, when the company’s farm equipment vertical produced a bio-diesel tractor. Th e focus has been on measuring sustainability. Each business wants to reduce 5% of its non-renewable energy consump-tion by 2013-14. Towards this, Scope I GHG (green-house gas) emissions measures direct emission through fuel combustion; Scope II measures indirect emission though electricity consumption and so on. Th e Ma-hindras are now targeting Scope III GHG: to disclose reduction of emissions from commuting, shipping and receiving supplies.

To do this at a group level, Gazdar requires disclosure from all verticals. “We have identifi ed people within each business who are denoted champions,” she says. Th eir role is critical in defi ning the areas of conserva-

tion. “Th e champions come up with ideas in line with their sectors,” says Gazdar. However, the CSC has to be sensitive to multiple scenarios. First, acquisition and expansion strategies of the group companies. For instance, in 2008-09, water consumption of the farm equipment vertical increased substantially. Th is was attributed to the added share of consumption by the Swaraj Division, which was merged with M&M.

Second, the varying levels of maturity and nature of group businesses. Tech Mahindra is about two dec-ades old, whereas the auto sector dates back to over 60 years. Tech Mahindra is a services company, whereas M&M is a manufacturing company. Th is makes the operational aspects of reporting sustainability complex. Lastly, awareness is essential to engage everybody.

Th e Kyoto Protocol in Marathi and/or Hindi is one of the myriad awareness messages the Mahindra CSC took up in the past 18 months. Th is was to provide the essential background information on GHG or global warming or Kyoto even to shop-fl oor workers.

Th e workers’ role is not to be underestimated, go-ing by M&M’s Zaheerabad experience. Th is region in Andhra Pradesh has scarce water. Still, its plant there has seldom had problems. Credit for this goes to the groundwater recharging eff orts of the plant managers and workers, says Gazdar, referring to an initiative in 2002 to plant trees. <

With inputs from Sriram Srinivasan

GREENCOMPANIESMAHINDRAS

SOUMIK KAR

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OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

FLOWER POWER: Fifteen of Wipro’s facilities have been certifi ed green—they are effi cient in energy, water and waste disposal.

TheSales LineIt’s building green campuses, products, solutions… and gaining an edge over the competition.

Nandita Datta

WHEN THEY EVALUATE potential vendors to implement an IT services project, clients typical-ly look at issues like people capa-bilities, project expertise, domain

knowledge and pricing. A vendor who delivers on these counts lands the deal. Th at’s how IT services companies have been doing business for over two decades.

But things are changing. In the not-too distant fu-ture, they will be forced to showcase more than just their technical prowess. Th ey’ll have to answer tough questions on sustainability. With more and more CEOs wanting to green their supply chain, vendors with large carbon footprints will start to feel the heat. “Nowadays when customers plan contracts or send RFPs (requests for proposal), there is a clear clause that says, ‘what have you done to comply with climate change and sus-tainability?’” says Sridhar Vedala, Managing Director of Quantum Step, a London-based sourcing advisory fi rm that focuses on continental Europe. In one case, he adds, a customer sent an independent consultant to audit an IT-service provider.

Anurag Behar, Chief Executive, Wipro Infrastructure Engineering & Corporate Vice-President, Social Initia-tives, agrees. “At present only a handful of clients are quizzing us on sustainability, but we see this becoming much more mainstream,” he says. “Clients will demand to see written policies governing sustainability.”

Realising this, Wipro, which has always been proac-tive on issues like effi cient use of water and energy, decided to make ecological sustainability a part of its core values. Behar says that Wipro was doing its two

bits for ecological sustainability “even prior to Al Gore’s campaign on climate change and global warming”. It has been doing this through things like turning waste food from cafeterias into methane for burners, harvesting rain water to cool AC towers and setting up the fi rst platinum-certifi ed green campus in India. “We were doing this as it was a nice thing to do. As an organisa-tion, we had no stand on the issue,” he recalls.

It was at a strategy meeting in 2007 that Wipro’s top management decided to take an organisational view on the issue of ecological sustainability. Chairman Azim Premji was the driving force behind this shift . He felt that in the next 25-30 years, concerns on the ecological front would be one of the defi ning factors that shaped society, and, therefore, business.

Walking The Talk But before Wipro could embark on its green journey, it was deemed necessary to build a knowledge base within the company. Th e man chosen for this job was Behar, who took a year off from work to read every book written on the subject and to talk to scientists world over on issues that impacted climate change. Behar’s journey resulted in Wipro launching eco-eye, a sustainability initiative, in April 2008.

“When you take an organisational stand on an is-sue, you need to know the ‘action implications’ on your business. Else, it’s just talking shop.” Th e action implication on ecological sustainability meant Wipro had to signifi cantly reduce its carbon footprint, which entailed bringing down greenhouse-gas emissions across the entire supply chain (from vendors down to product disposal), using water responsibly, disposing waste effi ciently and preserving bio-diversity.

Apart from greening its own business and eco-sys-tem, Wipro also decided to invest in businesses that were in some way linked to ecological concerns—in other words, green businesses. Th e way it did this was by adding green solutions and products to its existing lines of business. For example, Wipro’s lighting arm started off ering more energy-effi cient LED products. A new eco-friendly product line was introduced in the furniture business. In IT, Wipro started actively pursing deals to green a client’s datacentre. It also began off ering IT solutions to help a client green its business.

Over the last year, Wipro has gone a step beyond and invested in completely new areas. In 2009, it acquired Mumbai-based Aquatech Industries, which enabled it to off er water re-use solutions to industrial clients. A new division called Wipro EcoEnergy was also set up to off er clean energy solutions to organisations. It off ers consulting, implementation and managed services in areas likes sensor-controlled lighting, energy-effi cient cooling and heating systems, clean-coal technology and conversion of organic waste into bio-methane.

Off ering these solutions was one thing; selling them was another. While they made appreciative noises when Wipro’s executives came calling, most organisations refused to sign on the dotted line unless they were as-sured of tangible benefi ts. “Unless we could commit to a client that his capital expenditure to set up a green building would be equal to that of a non-green building and his operational expenses would be 10-15 per cent cheaper, he wouldn’t come on board. We learnt this the hard way.” But today, he says, this experience is help-ing Wipro win deals in the marketplace. Th e forward thinking strategy is beginning to pay off .<

With inputs from Kunal N Talgeri

“Over the last two to three years, we have launched multiple projects (currently 60) to achieve this. Fift een of our facilities are platinum or gold certifi ed from the green building stand point—by far the most for any corporation in India,” explains Behar. A green certifi ca-tion implies a company is effi cient on energy, water and waste. Behar says Wipro’s computers have been rated the greenest by Greenpeace for the last two years.

According to Wipro’s Sustainability Report 2009, per-employee power consumption has dropped 18% over the last few years, thanks to several initiatives taken by the company, including use of sensors and timers, as well as LED lighting. Wipro currently recycles 39% of the total water used in its facilities across India—the eventual goal is to become water-positive.

Today, only a handful of clients quiz us on sustainabil-ity. But we see this becom-ing much more mainstream. Anurag BeharChief Executive, Wipro Infrastructure Engineering, & Corporate V-P, Social Initiatives

GREENCOMPANIESWIPRO

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NAMAS BHOJANI

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Every oil company, in its heart, knows that just crude is no longer a sustainable business.Anand KumarDirector (R&D), IOC

Anurag Prasad

FOSSIL FUELS ARE THE BIGGESTculprits when it comes to climate change. So, if anything, oil companies would have to be in the vanguard in improving their production processes and making their fuels

energy effi cient. Indeed, that’s what many are doing today. Th ey’re looking for alternative fuels and also get-ting into alternative energy forms, such as wind power and geo-thermal power. Th at’s why BP’s tagline today reads ‘Beyond Petroleum’. Indian Oil Corporation (IOC) too is a part of this brigade. But alternative energy is still a small part of its operations. For the most part, it continues to be an oil refi ner and marketer.

“Every oil company, in its heart, knows that just crude is no longer a sustainable business,” says Anand Kumar, Director (R&D), IOC. “Not because oil will get reduced but because of the kind of restrictions that will be put by governments as well as green activists.”

At the Copenhagen summit, India did just that, com-mitting to reduce its emissions by 20% from 2005 levels by 2020. And IOC, being state-owned, will need to com-ply as best it can with the government’s commitment. To its credit, the company had begun the process even before Copenhagen. IOC has worked on biofuels since 1999-2000. Its R&D team came up with a 5% ethanol blend back in 2005. Th e same year, it started working on a hydrogen CNG fuel. CNG does release greenhouse gases but in much smaller quantities than fossil fuels. Hydrogen is, by nature, clean. When it is burnt, it does not emit carbon dioxide (CO2). Hence, if the two are combined, the result is a cleaner fuel.

IOC’s eff orts to develop cleaner fuels are already showing some creditable results. In the last 10 years, Kumar says, Indian Railways has saved close to Rs 1,000

crore on diesel because of IOC’s multigrade lubricant. Th at achievement also gives it a competitive edge in the market, in terms of the effi cacy of its lube.

Long-Term Vision IOC is also trying to squeeze ethanol out of forest waste, which can then be blended in gasoline. Another of its clean-fuel initiatives involves using algae as a carbon scrubber. Algae naturally sucks CO2 out of the atmos-phere. Th e company is working on using algae ponds to take out the carbon from its fuel. Here, the carbon emission will be captured and fed into the pond. Th e algae processes the CO2 and are then harvested. Next, the algae’s oil is extracted for use as a biofuel. Th e resi-due will be usable as fertiliser. If successful, IOC will be able to lower its greenhouse gas emissions, while also generating revenue from the by-product.

“Th e ultimate aim is to fi x CO2 emissions through algae, and if we can do 20% by 2012, it will be a big achievement,” says Kumar. IOC is partnering with Petroalgae, an American company that Kumar says has some success in this fi eld, on this project. Th e refi ner’s own scientists are working on 61 strains of algae to see which one is most suited for Indian conditions.

In recent years, IOC has also got involved in the ma-rine oil segment, as well as in developing catalysts for refi neries. In addition, IOC plans to make lubricants

for nuclear plants in alliance with the Bhabha Atomic Research Centre. It also wants to develop windmill lu-bricants and thermal fl uids (for solar). Bio-degradable lubricants, which are in demand in the food processing industry, are another likely extension.

But it will take a few years for all these eff orts to become commercially viable. When it comes to bio-diesel, for instance, Kumar believes the government goal of 20% blending by 2017 is close to impossible. Jatropha and pangomia are used in large quantities to make bio-diesel, but they are not widely cultivated, and hence there is a supply shortage. “To get 3 million tonnes, imagine how many hectares of land would be required for cultivation (of jatropha and pangomia).” Th e answer: at least 3 million hectares. Not feasible, hence the focus on other alternatives.

Nevertheless, the company is serious about bio-diesel. “When we wanted to enter the biofuels space and cul-tivate jatropha, our company secretary said we couldn’t do it legally,” recalls Dr DK Tuli, GM, R&D, IOC. “Our board took a resolution to the eff ect that this is also our business as we are an energy company.” Outlining IOC’s long-term vision, Tuli says: “We will go into any space that gives energy,” IOC is sampling wind and so-lar already. It has 61 MW of installed wind power and wants to set up a solar farm in Rajasthan.

Arthur Hanna, Industry Managing Director, Energy,

The Alternative SeekerAlgae, hydrogen, jatropha… it is using everything it can to make cleaner fuel.

GREENCOMPANIESIOC

OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

Accenture, says that “renewables are going to be an ‘and’ agenda.”

Companies in the oil realm will try and invest heavily in energy effi ciency in their core businesses. “Indian oil companies in general, and the refi nery and gas production industry in particular, have a signifi cant task at hand. On the one hand, they will be expected to take up a large part of the carbon-reduction targets,” says Deepak Mahurkar, Associate Director, Pricewa-terhouseCoopers. “On the other, technology, funds and magnitude may prove to be constraints.”

Many global majors have made sizeable investments (though small, as a percentage of total investments). Shell has invested $1.7 billion in the last fi ve years in biofuels. Exxon is spending $600 million on algae-based biofuels. Kumar emphasises that there are no restrictions on IOC’s budget—it spends Rs 250 crore a year.

To emphasise the long-term nature of these eff orts, Ku-mar recounts an anecdote: “When Bill Clinton opened the fi rst hydrogen plant in the US, he was asked when American citizens would get to use vehicles running on hydrogen. He replied that an American child born today would use hydrogen-powered vehicles when he turns 18. It was a 20-year programme.” <

With inputs from Sriram Srinivasan & Sudipto Dey

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When the (climate) mar-ket explodes, we will be the investment bank of fi rst choice in this area.Vivek MehraManaging Director, Sustainable Investment Banking, Yes Bank

Sriram Srinivasan and Ahona Ghosh

THE TERM CLIMATE CHANGE BRINGS to mind visions of carbon-spewing fac-tories and cars—certainly not of a bank. Yet, if you listen to Vivek Mehra, MD of Yes Bank’s private equity business, you’d

realise that banks can have a lot to do with climate change—in a positive way. “A large part of what we are doing as a bank is gearing ourselves to our cli-ents,” he says. Th at, in the context of climate change, means getting into the picture “right from the time the clients start thinking” about, say, clean energy. And increasingly, companies are mulling over clean tech, what with the world increasingly looking at penalising dirty energy and traditional sources of energy becom-ing scarce and costly.

To elaborate on his point, without mentioning any name, Mehra cites the example of a Rs 2,000 crore en-gineering client. Th e client is trying to identify clean-energy sectors that it can venture into. Enter, the bank’s advisory side (a special 12-member business vertical called Sustainable Investment Banking, half of whom work on energy and environment). Having helped the client identify clean-energy sectors, the Yes Bank advisory team will also help in implementation. It will do so through diff erent things, like raising mon-ies, fi nding technologies and partners, even scouting for acquisition targets. Eventually, the hope is to have this particular client as a Yes Bank borrower. Says Me-hra: “What I see over the next three to four years is an increasing emphasis on the lending side—to use our balance sheet to also support such clients.” Th en, they could tap the bank’s other services, such as trade fi nance and foreign exchange.

What Yes Bank wants to do, as a result, is use the advisory side as some sort of arrowhead. Th ough its primary business is lending, the bank knows it isn’t immediately feasible to have an entire lending team for this sector. Th e advisory team is creating an image for the bank in this space. Mehra believes that once lending opportunities start fl owing in, there will be specialist verticals sprouting up.

In the last year, Yes Bank created a business of almost Rs 300 crore in this space. “Th e time isn’t far (say, 3 to 5 years) when this business emerges as a very signifi cant revenue stream, as well as a high-pocket business for us.” Today, the broad sustainability segments, of which climate change is a part, represent nearly a fourth of its balance sheet. Renewables represent between 6% and 8% (since 2008, the bank has been involved in 28 transactions). If, as targeted, Yes Bank manages to grow its balance sheet six-fold to $30 billion by 2015, renewables would account for signifi cant sums of mon-ey, even without an increase in the share.

OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

Th e association with clean energy is being taken to a new level now. Th e buzz is that Yes Bank is in the process of raising a $200 million fund for investment in clean energy and technologies in South Asia. And that it’s doing this in alliance with Washington-based Global Environment Fund. When asked about this, Yes Bank’s Mehra refused to comment.

Th e bank is also aware of the physical risk to the projects it lends to. Financial institutions are increas-ingly debating things like the regulatory risks of lend-ing to a coal plant. Yes Bank conducts internal as-sessments of projects, and this would hold good for environmental projects too.

Indian banks are considered less aware than global banks in this area. For instance, HSBC has created a climate change benchmark index. Th e Royal Bank of Scotland evaluates the risk profi le of its clients in terms of climate change. Bank of America has a unique goal: to reduce indirect emissions from borrowers who are energy companies.

The Rabo ConnectionFor its climate change interest, Yes Bank has to thank its Rabobank link. Rabo, a signifi cant player in sus-tainability sectors, is a major investor in Yes Bank. (Its MD and CEO Rana Kapoor came from Rabo as well.) Mehra reckons that Rabo’s culture of lending has in-fl uenced Yes Bank right from day one. Since its launch in 2004, Yes Bank has been lending in the renewable energy space, particularly in wind energy. It has also invested in hydropower and biomass projects.

But beyond Rabo, there was an obvious reason for Yes Bank targeting nascent yet promising sectors. It was a late entrant in the banking sector (SBI had a legacy of nearly 200 years by the time Yes Bank emerged). “We had to identify sectors where the big boys wouldn’t be playing. Th ere was no way we could match SBI’s or ICICI’s lending might,” says Mehra. It was smarter for it to operate in something like wind than, say, steel.

Analysts say banks are slowly moving to tap this space. Not long ago, they were cagey to fi nance po-tential carbon credit-fetching projects, which Indian Inc took to quite eagerly. If they did, it was based on the relationship the banks had with the companies executing projects, or on the strength of their balance sheet—not on the potential fi nancial performance of the project, which they were unsure about.

“We are today the only investment bank that is so narrowly focused,” says Mehra. “And I have no doubt that this is going to change in the next 3-5 years.” He says that when the top 20-30 groups seriously get into clean energy, deal sizes will improve, and, consequently the fee potential. “When the market explodes, we will be the investment bank of fi rst choice in this area,” says Mehra. <

GREENCOMPANIESYES BANK

In the last year, Yes Bank has created business of almost Rs 300 crore in this space.

The Money PlantThe bank dug into sustainability to stand out from the crowd. It’s made it a vertical—such is the business opportunity that it sees here.

PRIYAM DHAR

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OutlookBusiness > May 1, 2010 OutlookBusiness > May 1, 2010

Sriram Srinivasan and Sudipto Dey

About a decade ago, ITC almost closed down its paperboard division aft er run-ning into a big hurdle that prevented it from scaling up. Th e problem was with the raw material, wood, which accounts

for almost 45% of the paper’s cost. Laws prevented cor-porates such as ITC from buying plantations, and, of course, there was the issue about cutting trees.

Cut to the present. Th e paper division is very much around and worth well over Rs 2,800 crore today. What’s more, ITC does not anticipate any scaling-up problems

in the foreseeable future. Ten years ago, the predominantly tobacco group’s agri

business was also fl oundering. What has happened in the decade that followed is, coincidentally, proving to be the backbone of its climate-change strategy. What ITC did was shift from what is recognised these days as shareholder focus to stakeholder focus, according to Nazeeb Arif, V-P, Corporate Communications, ITC.

Th e wood problem was solved when ITC spent money and time developing saplings (125 varieties) that grow fast, and in wasteland. It then partnered with tribals owning private lease lands to grow the trees. Until then, the latter hadn’t grown anything on those lands.

Today, it is an income generator for them. Moreover, says Arif, the tribals can sell the wood to anyone and are not bound to sell it just to ITC. Plus, of course, there is the benefi t of the green cover; about 100,000 hectares—10 times the size of Paris, says Arif, for ef-fect—has been greened in this manner. And for every tree that is felled, “there are 8-10 standing trees,” he asserts.

About 3,000 hectares of the aff orestation project is registered under the United Nations Framework Con-vention on Climate Change, which means it will be eligible for carbon credits. Pradeep Dhobale, Chief Executive of the group’s paperboard and speciality pa-per division, estimates that each farmer can earn up to Rs 7,500 per hectare as proceeds just from the credits. Going forward, the whole aff orestation programme is potentially eligible for credits, he says.

But it’s easier said than done. “Th e process of estab-lishing that no forest existed in the plantation area as on December 1989 (a prerequisite) is very complex.” ITC wants its future plantations in prequalifi ed areas to make things easier.

Carbon CaptureIt’s largely due to this huge carbon sink (as trees absorb carbon dioxide) that ITC calls itself a carbon-positive group today. “We sequester (capture and store) twice the amount of the total emission from our plants and freight together,” says Arif. “For us, climate change is part of a business model. Not just an emission issue.” Th is model will stand the group in good stead even if some countries ban pulp production due to environ-mental concerns.

Th e company also prides itself on an environmentally friendly paper-making process. By not using chlorine in the bleaching process, it lowers water pollution. ITC says companies such as Nokia opt solely for ITC’s pa-per because of the positive environmental play. But a Nokia here or another company there don’t make for premium pricing of environmentally friendly paper. Demand needs to pick up for that to happen. And when that will happen is a million-dollar question.

All Round FocusAs with paperboards, ITC is making sure sustainabil-ity-related risks, and therefore, climate change-related risks, are well addressed in its other businesses too. Th at’s what led it to register eight clean development mechanism (CDM) projects. Or, make sure its upcom-ing Chennai hotel is entirely fed by wind energy. In fact, a whopping 30% of its energy needs come from renewable energy, a fi gure that will go up to 50% in the next two years.

Walk into the lobby of Bangalore’s Royal Gardenia, a unit of ITC Hotels, and you would know how the nitty-gritties are being worked out. A vertical garden on the walls and a pool-sized water fountain greet you. You sense that something’s missing. And then, it

strikes you that the lobby doesn’t have air-condition-ing. It has been built to make maximum use of Ban-galore’s cool weather. Th e design takes advantage of the natural wind fl ow and allows natural light aplenty to fl ood in. ITC spent Rs 1 crore on the Royal Gar-denia’s lobby. Not much when you consider that the cost of air-conditioning alone would come to about Rs 25 lakh a year.

On to water now. As a matter of policy, ITC Hotels does not use virgin water at any of its construction sites. In fact, the division, as a whole, is water posi-tive. “For every cup of water we consume, we produce three cups,” says Niranjan Khatri, General Manager, WelcomEnviron Initiatives, ITC-Welcomgroup.

Th e Royal Gardenia, for instance, recycles grey wa-ter (from showers and wash basins) and uses them in gardens and decorative water bodies. Black water (recycled from water closets, kitchens and the laun-dry) is used in the cooling systems and AC towers. S Arunaachalam, the hotel’s Chief Engineer, says it has more recycled water than it can use. Th e hotel plans to give the excess to other buildings in the vicinity. It is currently laying pipes to transfer surplus re-cycled water to the neighbouring Bangalore Club.

Water use is reduced even in things like thawing of

As with all potential disasters, we have done a risk assessment of climate change on our properties.Sanjib K BezbaroaHead, Corporate EHS, ITC

For every cup of water we consume, we produce three cups. Niranjan KhatriGeneral Manager, WelcomEnviron Initiatives, ITC-Welcomgroup.

DEEP ROOTS: This plantation,

near Bhadracha-lam, AP, is one of the raw material sources for ITC’s

paper plants.

GREENCOMPANIESITC

The Business ModelIt’s water positive. It’s carbon positive. Now, it’s waiting to reap the rewards of being environment friendly.

54 55

SOU

MIK

KAR

VISHAL KO

UL

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Th ere’s no AC in the lobby of the Royal Gar-denia in Bangalore. It’s built to make use of the city’s cool weather.

GREEN COMPANIES ITC

chicken in the kitchen, through the use of coolers. In New Delhi, ITC Maurya uses a consolidated solar concave mirror to generate steam for the kitchen and laundry. Th e group is currently mapping the carbon footprint of every ITC hotel. Several hotel buildings are also going through the process of getting LEED (Leadership in Energy and Environmental Design) certifi cation, a US standard for green buildings.

ITC is also assessing the physical risk of climate change, as it does with other natural disasters. It has a lot of installations in coastal areas, such as the green-leaf processing plant in Chirala, Andhra Pradesh, says Sanjib K Bezbaroa, Head, Corporate EHS (Environ-ment, Health & Safety). “So we have carried out a risk-assessment exercise. We have quantifi ed the kind of possible wind speeds, risk of inundation and drain-age-related issues.” Consequently, ITC has drawn up mechanisms to protect people and property in high-risk areas.

Waiting For The RewardsAgain, as with paperboards, it’s a question of when the consumer will reward the hotel division with pre-mium pricing, if at all. “Would consumers prefer a green hotel? Th ere’s no investment timeline,” says Arif. “Unless there’s a push from the consumer, it’s diffi cult

for companies to invest in the long run.” Right now, he adds, from a market point of view, shareholders don’t treat companies diff erently. So, a lot of them get away. “We have done this because of the sustainabil-ity philosophy.”

From a perceptional view point, the sustainability plank fi ts perfectly for ITC at a time when it’s trying to move away from being a tobacco company to a con-sumer company. ITC wants to make sure this philosophy continues. Its business initiatives are based on plans that are triple bottom line—apart from economic value, they have to also evaluate the social and environmental impact of a project. “Sustainability and low carbon will be determinants of competitiveness in years to come. We believe that,” says Arif. He draws hope from recent developments in a totally unrelated industry: “Th ere’s an energy-effi cient AC market now, not imaginable fi ve years back. So things can fall into place.”

Ashish Sethia, Head of Research (India), Bloomb-erg New Energy Finance, says that it’s not only about higher margins. “It’s about getting more market share at the same price, that too in the face of increased com-petition.” When it clicks, premium pricing might fi rst work for more premium products, he adds. Like, for instance, luxury hotels. Having done the sustainability repositioning, it now awaits the rewards. <

OutlookBusiness > May 1, 201056

NILOTPAL BARUAH