New Paradigm for Corporate Governance

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Walmart is buying clean energy, PepsiCo is promoting healthier snacks, P&G is committed to improving environmental sustainability of its products and Apple is into recycling. Unilever’s sustainable living plan pledges to cut the company’s environmental impact in half by 2020, it also vows to improve the health of one billion people and enhance livelihoods for millions.

Many such global corporates are racing to make the business case for Long-Term Investments, Reinvesting in the Sustainable Business for Growth and Pursuing R&D and Innovation. These corporates are striving for minimal negative impact on the global or local environment, community or economy.

In this new paradigm for governance each company should articulate how such investments are reviewed and demonstrate why and how they matter to long-term growth and value creation. Stakeholders need to understand that such sustainable business investments will take time to bear fruit and the value creation in terms of the planet and people will be equally important as profits and dividends. Sharing sustainability information and corporate responsibility initiatives publicly and bringing them to investors’ attention are significant actions in the new paradigm.

Designing sustainable products and services
In 2015, Procter & Gamble partnered with Constellation, a subsidiary of Exelon, for the development of an up to 50-megawatt biomass plant that will help run one of P&G’s largest U.S. facilities. The plant will significantly increase P&G’s use of renewable energy, helping move the company closer to its 2020 goal of obtaining 30% of its total energy from renewable sources.

P&G is working to eliminate deforestation in its palm oil supply chain. Separating sustainable sources from non-sustainable sources in the production of palm oil and palm kernel oil is highly complicated, but Procter & Gamble is stepping up to address the problem. The Company is conducting an in-field study to understand the practices of small farmers – and how those practices can be improved to protect local forests.

P&G also found U.S. households spend 3% of their annual electricity budgets to heat water for washing clothes and if they switched to cold-water washing, P&G reckoned, they would consume 80 billion fewer kilowatt-hours of electricity and emit 34 million fewer tons of carbon dioxide. That’s why the company made the development of cold-water detergents a priority. Tide Coldwater laundry detergent was launched in 2005 by P&G as a way to for consumers to switch to cold water washes to help save energy, reduce their carbon footprint and cut down on household utility costs. Heating water for laundry loads accounts for up to 80 percent of the energy used per wash load in the U.S.

Unilever’s Brands that suit the Environment
As chief executive of Unilever, Mr. Polman has made sustainable production — of Hellmann’s, Lipton tea, Dove soap, Axe body spray and all the other products Unilever makes — the company’s top priority. Detergents are being reformulated to use less water. Packaging is becoming more efficient. Unilever’s sustainable living plan promises to cut the company’s environmental impact, improve health and enhance livelihoods. Some examples of Unilever’s brands are:
Hellmann’s
Mayonnaise trying to use oil made from sustainable soybeans; introduced a more ecologically designed plastic bottle.

Maille
Mustard line encouraging consumers to refill ceramic containers rather than buy new glass jars.

Lipton
Tea bags now filled with leaves certified as sustainable by the Rainforest Alliance.

Magnum
Ice cream using vanilla and chocolate certified as sustainable by the Rainforest Alliance.

Comfort
Fabric softener designed to use less water than rival brands.

Omo
Laundry detergent from Brazil marketed as more efficient than the competition.

Conclusion
“Climate change is destroying our path to sustainability. Ours is a world of looming challenges and increasingly limited resources. Sustainable development offers the best chance to adjust our course.”
– Ban Ki-moon

Leading a sustainable business that operates in an environmentally responsible way protects the planet and also contributes to the bottom line. If not for a business case the global corporates are unlikely to run charitable businesses. Therefore, it is possible for any company to design Its products and business processes in such a manner that no negative environmental impact is felt as a result of their existence. This is the challenge and the new paradigm for corporate governance.

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About surenraj

“Views expressed are my own”
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