Review: 'Outlast' offers counsel to businesses starting out on their ESG journeys

Gone are the days when ‘sustainability’ was seen as the preserve of the anti-capitalists. Corporates in India and elsewhere are already taking crucial steps to improve performance on Environmental, Social and Governance (ESG) metrics that influence the sustainability of businesses. To learn more about these developments, read Mukund Rajan and Col. Rajeev Kumar’s book.

If this kind of jargon gets on your nerves, here’s why you should care. Improvement on ESG metrics can help businesses “gain greater efficiency in the use of resources, a lower cost of operations, reduced risk and therefore cheaper insurance premia, minimized regulatory and legal interventions, greater employee productivity, lower cost of borrowing, increased analyst coverage and investor interest, and greater prospects for valuation rerating.”

Rajan is the Chairman of ECube Investment Advisors, a platform to catalyse ESG improvements. He has served the Tata Group as their Brand Custodian, Chief Ethics Officer, Chairman of the Tata Global Sustainability Council and Member of the Group Executive Council.

Col Kumar currently works as a strategic communications consultant, and he used to be the Head of Learning and Development at Tata Group Corporate Communication.

This book will empower corporate leaders to pull up their socks to begin addressing carbon emissions, lack of women’s participation in the workforce, under-representation of Dalits and Adivasis, exploitation of local communities, repression of union members, and other issues. The authors make it clear that compliance alone cannot be a driving force for companies to prioritize ESG metrics; ownership will come from linking these to their values and profits.

The authors draw considerably on their “experience of working for the Tatas”. The subject that they have chosen has wider implications, so they bring in examples from many other companies such as Marico, Unilever, PepsiCo, Nestlé, Amazon India, Flipkart, Mahindra & Mahindra, and The Gap Inc. This is, by no means, an exhaustive study of best practices. It will give you a flavour of what is possible, and inspire you to come up with solutions.

One of the most unusual examples here has to do with Discovery, a life and health insurance company in South Africa “that has the stated purpose of making people healthier.” This might seem counter-intuitive because an insurance company typically benefits “when subscribers seek out products as a hedge against their possible ill-health.” Discovery has integrated economic incentives for customers to adopt behaviours reducing healthcare costs.

How does an insurance company gain from increasing the life expectancy of customers? Rajan and Col. Kumar write, “Discovery is able to offer its insurance products at lower premia while sustaining superior profitability tied directly to the social impact created by delivering on its purpose…The social impact Discovery creates – improving health – is central to its strategic positioning and creates shared value for both society and its shareholders.”

This book offers wise counsel to businesses starting out on their ESG journeys, urging them to learn about the India Climate Collaborative, India CEO Forum on Climate Change, and the Confederation of Indian Industry’s CII-Sohrabji Godrej Green Business Centre. It also brings forth insights from the World Health Organization, the World Bank, the Centre for Science and Environment, The Energy and Resources Institute, and the National Green Tribunal.

Apart from this, the authors recommend getting familiar with the United Nations Sustainable Development Goals and the UN Guiding Principles on Business and Human Rights in addition to ESG Reporting and Assessment Frameworks and Standards that have been developed by the Global Reporting Initiative, the Sustainability Accounting Standards Board, the International Integrated Reporting Council and the International Standards Organization.

The amount of research that has gone into this book is remarkable. If you have the time and inclination, read the notes compiled by the authors after the concluding chapter. They will lead you to a variety of reports, white papers, books, documents, surveys, journal articles and roundtable proceedings that will sharpen your understanding of ESG even further.

This book suggests that companies will have to make this effort sooner or later because defaulting on ESG criteria can lead to massive drops in market value. Companies that want to be part of global supply chains or seek foreign investment will also have to pay more attention to their performance on ESG metrics, else they might lose out against competitors. In the years to come, they will face more pressure from activists, customers and regulators.

While this book is a terrific resource, it unfortunately leaves out two major groups that ought to be part of diversity and inclusion policies in companies that want to jump onto the ESG bandwagon. These are persons with disabilities, and LGBTQIA+ people. Hopefully, the authors will address these gaps, and the next edition of the book will be even better.