SAFIM • New Delhi • 18th January, 2014 Sustainability : Corporate Evolution through Consciousness Dr. A.K.Balyan MD&CEO Petronet LNG Limited
Do We Need a New Business Paradigm? • Historians will one day view the 20th century as the great struggle between Capitalism and Socialism. Capitalism won this battle decisively, but it did not capture the minds of the intellectuals or the hearts of the people. • Corporations: the most influential institutions in the world, but they are widely perceived as greedy, selfish, exploitative, & not trustworthy • Current financial crisis & recession being blamed on “greedy” financial corporations & deregulation, rather than bad government regulations & monetary policies, combined with widespread governmental incompetence and corruption • Corporations & capitalism have serious “branding” problems & we appear to now be moving backwards toward either government control of companies (Fascism) or government ownership (Socialism) • What is needed instead in the 21st century is Conscious Capitalism
What Then is Conscious Capitalism? • Conscious Capitalism is based on three primary principles: • A Conscious Business has a higher purpose that transcends maximizing profits. It is focused on fulfilling its higher purpose, which evolves dynamically over time. • The enterprise is managed to optimize value for all of the major interdependent stakeholders. • Conscious Leadership to the enterprise & its stakeholders.
What is the Purpose of a Business? • What is the purpose of most professions? • If all the professions have a purpose that relates to the public good, why doesn’t business? • Who defines the purpose of any business? • Surely it is the entrepreneurs who create the business that define the original purpose of the business ?
Entrepreneurs Create the Original Purpose • Entrepreneurs of the Conscious Business are also entrepreneurs of meaning • Stakeholder community of customers, employees, investors, suppliers, and communities co-evolve the purpose of the Conscious Business over time • Businesses flourishing over the long-term evolve their purpose to higher levels of complexity and meaning
Great Companies Have Great Purposes • Service to Others: Expressing Love & Care The Good • Discovery & the Pursuit of Truth The True • Excellence & the Quest for Perfection The Beautiful • Changing & Improving the World The Heroic Which of these great purposes will be at the core of your own organization?
The Paradox of Profits • Happiness is a by-product of other things: • purpose, service, excellence • personal growth • friendship, generosity, forgiveness, love & compassion • Profits are best when not primary goal: • higher business purpose • great products & services • customer satisfaction • employee happiness • supplier partnerships
Long-Term Profits are Maximized by notMaking them the Primary Goal • Business is not a machine, it is a complex adaptive system of interdependent stakeholders • Leadership’s job is to fulfill the deeper purpose of the business,optimize the health & value of the entire business system, be a servant leader to the business • Optimize entire interdependent system = highest long-term profits & shareholder value • The price system is a tool for leadership to use—a valuable source of information
Creating Prosperity through Profits & Growth • Business has a fundamental responsibility to create prosperity for society & the world • The percentage of people living on less than $1 per day has dropped from 85% in 1820 to only 20% today Source: World Bank (constant 2003 dollars)
Caring About our Environment • We strongly support organic, local, & sustainable agriculture • Sustainable seafood—Marine Stewardship Council plus farmed fish standards with 3rd party certification • Commitment to recycling and alternative energy: up to 100% Wind Energy Credits. • Green Building, fuel cells and solar installations • Store & Facility Green Mission Teams • Animal Welfare program for livestock • Environmental strategy should be thought of as win-win-win-win
Conscious Capitalism & Non-Profit Organizations • Non-profits do understand the importance of deeper purpose & mission—corporations need to learn from them • Are non-profits able to transcend self-interest because they have an deeper purpose? Problem of self-interested, self-perpetuating Boards. • Anti-profit mentality frequently creates inefficiencies, waste, & stagnation • Many are not financially sustainable over the long-term—they need to learn from corporations • Non-profit organizations also need to evolve to a more holistic model
The Conscious Non-Profit Organization Model: Holistic Interdependence
Evil Greedy, Selfish (Corporations) Good Altruistic (Non-Profits) vs.
Corporate Social Responsibility is not Conscious Capitalism Source :Daniel Yankelovich, Profit with Honor: The New Stage of Market Capitalism
From Traditional Capitalism to Conscious Capitalism From This To this Profit-focus Purpose-focus Only shareholders win All stakeholders win Short-Term Long-Term Zero Sum Win-Win-Win-Win Self-centered Holistic Conflicts of interest Harmony of Interests Parasitic Mutualistic Exploitative Creating Value Trade-offs Synergies Disliked Valued/Loved Not Trusted Trusted
Moving towards Conscious Capitalism – The Global Compact Initiative • Shared Values for the Global Market • Promoting Responsible Global Corporate Citizenship • Encouraging Companies to meet Social Concerns • Launched by the then UN Secretary General , Mr.Kofi Annan on 26th July, 2000 • Objective :- To work towards a more stable and inclusive global market by encouraging the business community to build universal principles into their strategic vision and work practices
Global Compact – Millennium Development Goals • Subscribingto Global Compact also involves recognizing the relevance of the Millennium Development Goals and the role of business and of the various institutions of society so that these goals can be reached. • Millennium Development Goals are: • Eradicate extreme poverty and hunger • Achieve universal primary education • Promote gender equality and empower women • Reduce child mortality • Improve maternal health • Combat HIV/AIDS, Malaria and other diseases • Ensure environment sustainability • Develop a global partnership for development
Global Compact is…. • A Voluntary initiative to promote sustainable development and good corporate citizenship • A set of values based on universally accepted principles • A network of companies and other stake holders • Flexible , so that it can be adapted to concrete needs and situation of individual company.
HUMAN RIGHTS Principle 1Business should support and respect the protection of internationally proclaimed human rights within their sphere of influence; and Principle 2 Make sure that they are not compliant in human abuse Ten principles of Global Compact
LABOUR Principle 3Business should uphold the freedom of association and the effective recognition of right to collective bargaining Principle 4The Elimination of all forms of forced and Compulsory labour Principle 5The Effective Abolition of Child Labour Principle 6Eliminate discrimination in respect of employment and occupation Ten principles of Global Compact
Ten principles of Global Compact ENVIRONMENT Principle 7Business should support a precautionary approach to environmental challenges Principle 8Undertake initiative to promote greater environmental responsibility Principle 9Encourage the development and diffusion of environmentally friendlytechnologies ANTICORRUPTION Principle 10Business should work against Corruption in all its forms including extortion and bribery
Conclusion Conscious Capitalism—New Paradigm for the 21st Century • A Conscious Business has a higher purpose that transcends maximizing profits. It is focused on fulfilling its higher purpose, which evolves dynamically over time. • The enterprise is managed to optimize value for all of the major interdependent stakeholders. • Conscious Leadership to the enterprise & its stakeholders. • This way of thinking about business transforms the underlying ethics of the enterprise to win-win-win-win-win-win. • The larger societal brands of business and capitalism will evolve toward fulfilling the deepest ideals that humans aspire to—all things Good, True, Beautiful, and Heroic.