ITC Chairman: “Cannot seek short-term profits at expense of future generations”

YC Deveshwar, chairman of ITC Ltd, seems to be setting sustainability standards for other Indian, and global, companies to emulate. ‘Lead by example’ may well sound like his company’s motto. His view, as shared exclusively with Ajay Jain:

Societal, shareholder interests: differing only in timeframe
The interest of society is to ensure societal assets are secure over a longer term, whereas shareholders appear to think only about returns for themselves on a quarter to quarter basis. However, if social capital is not created, business will never be sustainable. Their respective interests are thus effectively aligned except in timeframes. We cannot seek short term profits at the expense of future generations.

India has leaders with vision but…
The country has leaders with the vision and capacity to do what benefits their shareholders and go beyond to create social and natural capital. Unfortunately, only a few are doing something in this direction. Why else would we be losing water, top soil, forests and other natural assets? When I talk to other business leaders to adopt sustainable practices just like ITC has, many say, “What are you doing, Mr. Deveshwar? We will become unprofitable if we have to follow your footsteps.” Some of their concerns may be genuine, but we also cannot defer any action just to be competitive with the unsustainable but cheaper models of China.

Companies should begin to take stock of how they deal with their own resources, external resources and resources beyond their own value chains and analyse how it all impacts society. ITC is already a water positive and carbon positive company, and will soon be a zero solid waste company making us perhaps the first company in the world to be so in all these parameters. But we are also growing very fast, and need to continually work to maintain these standards.

Aligning short term and long term destinies
People and companies look beyond profits when they are either inspired to do so, or there are incentives like greater public recognition to do so. They also do so when survival becomes an issue for them; this can happen when, say, they are coerced by society. If we wait too long for companies to show greater responsible behaviour, our common destiny will be eroded. Civil society needs to start punishing organizations whose conduct affects our present and future adversely. At the same time, there should be rewards for those who demonstrate exemplary action.

People say I am a professional manager and can thus look beyond profit as I have little at stake personally. But I believe it is the purpose of business to serve society, but to do so one needs to make money or else shareholders will pull their investments back. The interests of shareholders and society need not be at loggerheads.

Links: Download ITC’s Sustainability Report 2006 at www.itcportal.com