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River of revenue
JUL 16 -
In an analysis of the Nepali business community’s social contributions, particularly towards the environment, one finds an immaturity of approach—in need of less modesty, and requiring a shift from philanthropy to the institutionalisation of sustainable business practices. If they move in this direction, businesses will find that there is more to ecological rejuvenation than mere moral relief; among other paybacks, there are savings vortexes and profit milky ways.
The all-embracing Bagmati Action Plan suggests that the private-sector “can play a significant role in awareness and clean-up campaigns, community-based waste management, river-side plantation and protection, culture and heritage preservation, and management of parks and other public utilities along the river banks.” Furthermore, “there is now sufficient evidence of change”—in the form of resource productivity and markets in which living systems matter—”to suggest that if your corporation or institution is not paying attention to this revolution, it will lose competitive advantage,” as Paul Hawken, Amory and L Hunter Lovins say in their book Natural Capitalism. Nepal itself has a few examples to offer.
Philanthropy Feelers
A popular vector of this model is the acronym CSR, or Corporate Social Responsibility, described as “voluntarily balancing the interests of all stakeholders by integrating social and environmental concerns in all operations,” by Catrin Froehlich, CSR expert at the National Business Initiative (NBI), a private-sector initiative to promote CSR, and an advocate for private-sector contribution to inclusive economic growth. “CSR should align with the core business,” adds Froehlich. “CSR is a wise way of spending your money that brings returns,” agrees Umesh Lal Shrestha, coordinator of FNCCI’s CSR Forum and managing director of Quest Pharmaceuticals, “But in Nepali society, we have just been donating money.” Introduced only in the last decade, the concept has yet to ferment.
Even if 67 percent of the 28 businesses queried in a UN-HABITAT survey responded that CSR was part of their ‘business strategy’, conversations with authorities in the field reveal a frailer approach that depends primarily on goodwill. Megh Ale, managing director of the rafting agency Ultimate Descents and president of the Nepal River Conservation Trust, says of the Bagmati rafting campaign, “We never thought of it as a business. We have been working with the river since 1985, and felt that we owe it something.” Similarly, Rajendra Khetan, executive director of the Khetan Group, clarifies, “CSR is not a commercial enterprise for us; we do not try to collect money from it. Nor is it seen as a profitable investment.”
The current project-based implementation of CSR, like the ninth tentacle of an octopus, always leaves the option open to cut off that superfluous arm. Usually, companies will receive proposals and accept or reject them as they wish, with no set amount earmarked for CSR activities. Be it tree plantations, CFL and plastic bag campaigns, donations for hospitals, schools, religious centres, and emergencies, these admirable initiatives are often one-off efforts that are not financially self-sustaining. Their benefit to the company is neither qualified nor quantified—or many are just shy to admit it. “Yes, a cleaner Bagmati might boost tourism, but we don’t think of this at the NGO Friends of the Bagmati,” says Ambica Shrestha, president of Dwarika’s Hotel that hosts the NGO. That philanthropy is the preferred nomenclature is apparent.
Excess cream
CSR in Nepal is gracious charity and a self-imposed social obligation to share that extra layer of cream. But when the cake is no longer copious, who’s to be generous? As Ambica elaborates, “Until business is allowed to flourish, without the interference of political instability and unconducive labour policies, we have to think about our survival.” Reservations towards long-term investment seem further complicated by lack of immediate and bulk capital. “Over the last five years, we have had to spend our limited resources on exploitation, intimidation and extortion,” protests Khetan. “Even if we tell people to spend, how will they do this if they don’t have the funds for it?” stresses Umesh. Government incentives primarily involve tax deductions through donations, social benefits for employees, and investment in pollution-controlling processes or equipment. Unlike in neighbouring countries, no mandates exist in Nepal for the disclosure of environmental and social practices, and no real obligation to spend a certain percentage of the profits on CSR, except for some nominal earmarking, for example in loans in the banking sector.
Too bad
Nevertheless, a few efforts to institutionalise CSR through FNCCI and NBI have been made. Over 30 companies in Nepal have signed up to the Global Compact, a voluntary alliance committed to upholding principles of human rights, labour rights, environmental stewardship and anti-corruption. In looking towards international markets, companies have also had to adapt to tougher regulations and consumer demands. Meanwhile, scattered but pioneering examples exist in Nepal’s private-sector, yet these are often not advertised nor understood as CSR.
Too bad—because profits can be made in streamlining environmental and social sustenance into operations. “Why should the government provide incentives for companies when they are doing themselves good?” asks Umesh. For him, regular donations clearly reflect in his company’s balance sheets as gains. By renovating Ganga Lal heart hospital’s entire emergency section, “I increased business because doctors are more likely to recommend my heart products.”
Efforts to increase efficiency have led to symbiotic reductions in resource use and risks to the environment. Almost 2500 ‘Cleaner Production’ options implemented by DANIDA between 2001-2005 in industries across the southern belt of Nepal resulted in savings of 7,000 tonnes of raw material, 535 cu. m of water, and 4,216,000 kWh of electricity, as well as abatements of 9,800 tonnes of solid waste, 395 thousand cu. m of effluents and 24,800 tonnes in greenhouse gas emissions. The payback period for each investment was on average one-and-a-quarter years. “If businesses do not adapt to cleaner production, it will become difficult for them to survive,” emphasises Govinda Tiwari, director of SEED-Nepal.
Laxmi Bank provides a case-study. The first to use internet banking in the country, it started mobile banking last year, and recently introduced a ‘Green Savings’ account for a paperless and commute-free banking experience. Laxmi Bank’s traditional CSR efforts are channelled through the NGO Laxmi Cares—set up by its employees to raise funds for social activities—but its operational reforms are a less-conventional but more-ideal form of CSR. The overhaul will save trees and reduce waste, while also increasing efficiency, quality and profits, thus ensuring its longevity. In another example, the Vertical Shaft Brick Kilns (VSBK) project provides a cleaner alternative to traditional kilns. VSBK kilns consume 40 percent less energy and reduce stack emissions by 80 percent. The programme was introduced in 2003; since then, it has been implemented in 17 kilns. Entrepreneurs profit by saving energy. “If there was no return on the investment, I would never invest, and I wouldn’t try to convince others to do so either,” admits Urs Hagnauer, VSBK programme manager.
Some private individuals have adopted the philosophy of a rooted rather than removed building, through installations of—among other technologies—solar panels, efficient lighting, compost bins, rainwater collection systems, and water-frugal toilets, shower-heads and taps. “After learning just two years back that the Bagmati’s main problem is lack of water, we renovated our nine wells to recharge water into the ground,” acknowledges Ambica. Others are learning from their foreign associates. At the behest of its Danish partner, Carlsberg, the Khetan Group constructed a Waste Water Treatment System at its brewery in Chitwan. “The liquid waste is neutralized and the solid waste—mostly imported high-quality maize and malt—is fed to our cows. As a result, our cows produce three times the amount of milk,” describes Khetan.
Besides intrusive liposuction to reduce inefficiencies and waste within businesses, the recycling and reusing industries are also showing to be profitable. Gintex Industries was the first to introduce recycling of overhead tanks more than 20 years ago. Proprietor Navin Puri buys back or replaces old tanks at 50 percent of the sale price, the plastic is then recycled into new drums. “This makes our customers happy and is better for the environment.” Puri’s next project will be to manufacture pipes from locally-purchased recycled plastic. In another example, former Tantra manager Deepesh Budhathoki runs Nepal Kalpabriksha, a compost plant that converts biodegradable waste from Kalimati Wholesale Market into compost and biopesticides.
Chew, then swallow
There is undeniably huge potential for business to capitalize through ecological protection, but regrettably also definite profits in damaging surrounding ecosystems—at least in the short-term. Therefore, the role of government agencies cannot be discounted in enforcing existing codes and provisions, developing appealing incentives for the private-sector, and publicly rewarding good practices. Nor can we ignore conscience and compassion in private-sector engagements. Customers need to vigilantly flaunt their selective purchasing power. However, the above examples are witness to a slow copycat trend towards environmentally-sound business practices, and provide refreshing insights into profit-making and its pro-nature qualities.
Posted on: 2010-07-17 10:06
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