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Oct 26, 2015

Why businesses need to invest in creating a productive population for a sustainable future

Madhukar Shukla

Historically, in India, business was a part of the society. If one considers the national movement and development of indigenous technology during earlier years of independence, one will recognize how business was geared to contribute to society. However, over a period of time, this focus has been diluted, and there is a need for it to be rediscovered. Businesses need to appreciate that they are part of society, and that society is not just a factor of production. Once this understanding is revived, business responsibility will come on its own.

We are at a juncture in India where business has a role to play not only for society’s, but for their own sustainability. For instance, if business is to expand, they need skilled manpower. According to a recent NSSO report, just about 2.5 per cent of our population has formal training, and another 7-8 per cent has received some form of informal training. So, despite a large population we lack qualified and skilled manpower. The government is making efforts to through skill development missions, but it is in businesses’ interest that they do their part to help develop this qualified workforce.

Similarly, from a long-term perspective, it is important to develop a healthy and well-educated population. Without that, how can we build a more dynamic India? We have one of the largest numbers of illiterate people, who cannot be given formal training. We have 40-45 per cent of the malnourished children in the world. Such an unhealthy population cannot become productive. Businesses need to think beyond the next five years to the next 20 years and plant seeds for a strong and productive population now.

When it comes to business and society, it’s not “either/or”; it’s “and.” Business models need to take care of this “and.” All of our business models right now focus on wealth creation. If we look at the last 25 years, more wealth has been created per capita — but the number of poor people and malnourished children has increased. Wealth has been created, but there is no model to disseminate this wealth so that society gets a part of it. We need to think of such models.

Currently, a large part of the value gets lost in the chain. We need to develop models where the entire value chain becomes more efficient. One example of this is the ITC e-Choupal model. They are definitely looking at profits, and getting better produce for the right price, but they are also ensuring that the producer gets better returns for his goods. They have removed the middle men, where the value used to get lost. In the process, they have created a model that is win/win.

Management institutes and business schools can play an extremely important role in developing and helping mould the thought process around responsible business strategies. Management institutes can, of course, promote such thinking through courses such as business and society, sustainable business models, development economics, social entrepreneurship, etc. However, an equally, or perhaps more important role of the institutes is to “architect” the out-of-class learning environment, which exposes the students to the critical issues of society, and encourages them to think of the possible solutions.

At XLRI, for instance, we realized about 10 years ago that most of our students come from urban, middle class middle class backgrounds, and lack exposure to the larger community. Many of them hadn’t seen a village outside of a movie. In order to give them this exposure, we have tied up with local NGOs, and small student teams go to the villages nearby over a weekend to gain an understanding of the rural community, and come up with suggestions for improving their lives. This exposure greatly benefits students in gaining a world view. These students may not necessarily join the social sector upon graduation, but when they join a company, these experiences will help mould the process of their decision making.

The India Responsible Business Forum (IRBF) Index 2015 is an initiative by Oxfam India in partnership with Corporate Responsibility Watch, Praxis and Partners in Change, non-profits which look at corporate accountability and business responsibility.

 

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