With businesses getting back on their feet amid Covid, a study by the $19.4-billion Mahindra Group — shared exclusively with TOI — attempts to find a common ground for responding to various challenges and understand what constitutes a ‘good business’.
Mahindra Group chairman Anand Mahindra believes this to be the “most important conversation of the decade”. “If we do the right thing in terms of impacting communities and driving positive change, profits will follow,” Mahindra said in an exclusive email interaction with TOI.
Mahindra said in order to survive, businesses have to be sensitive to the demands of their environment. “The businesses that make the transition successfully will be the organisations of the future,” he said. Over the last decade, a number of foreign MNCs’ CEOs have stressed the need for businesses to become accountable on conscious capitalism. A well known founder of an Indian conglomerate is now pushing the need to have a conversation on the subject.
The findings of the study, which involved over 2,000 respondents across 10 tier-1 and -2 cities, reveal that 62% of respondents believe that a ‘good business’ constitutes more than a financial return. More than 45% of young Indians aged between 18 and 25 give priority to ethical standards, caring for the community and inclusivity, rather than just profits. But ‘transactional’ and ‘performance’ metrics like profitability, growth and market leadership tend to increase among older respondents (48%) aged over 46.
From the times when all that businessmen demanded was “a level-playing field” to now when they realise that investors and consumers are being influenced by factors like environmental, social and governance (ESG) and PPP, India appears to have come a long way. Globally, climate change, greed exceeding need, the fall of Wall Street and the rise of a new millennial generation are some of the triggers towards the emergence of conscious capitalism.
“This year, Covid has underlined that we are all interconnected and that everybody’s well-being depends on the well-being of humbler members of society — delivery men, migrants, medical caregivers, vegetable vendors, domestic labour. Hence, in taking care of them, we take care of ourselves,” said Mahindra.
He said it is essential for businesses to align their enlightened self-interest with a wide definition of community capitalism that sees not just local communities but people all over the world as their stakeholders.
From an employment perspective, nearly half (49%) of the respondents chose salary and employee benefits, career & growth potential and climate change policies & environmental commitments as the top 3 considerations for a ‘good business’. The profile of the typical Indian consumer too is undergoing a transition with 60% of people saying it is important for the company to be ‘good’ in their opinion if they were purchasing a product or service from it. What’s more, a large majority (70%) of respondents said they would never invest in a business they did not consider a genuinely ‘good business’.
Mahindra said a company’s approach “beyond the balance sheet” now exerts a material impact. “If the general trends we observe are correct, that people will want to invest their money and their patronage in businesses that have a wider perspective, in businesses that care about people and sustainability, then businesses that don’t ‘get this’ will see their brand value erode before their very eyes,” said Mahindra.
This could also impact the way business is conducted. A firm called Y Analytics, a spin-off from the TPG Rise Fund, has created metrics to measure the social and environmental impact of companies. “We will explore the value of harnessing such metrics to the conventional ones in order to better evaluate where we are on the journey towards ‘good business’,” said Mahindra.
Some costs could, however, increase. “In such a case, the cost of not recognising these new broader expectations of ‘good business’ may be higher than simply carrying on. With the best will in the world, the costs of complying with BS6 norms will impact the cost of production. But it will also impact the environment and health, so there is a societal trade-off,” said Mahindra.
Are other businesses ready to make such trade-offs?