Securities and Exchange Board of India (SEBI) Chairperson recently issued a statement saying, “any business that operates on the black box model that cannot be audited or validated will not be permitted”, suggesting, a model constituting facets of sufficient transparency and disclosures would be acceptable. The competition watchdog of India – Competition Commission of India (CCI), addressing similar concerns, recently imposed monetary penalties on a few new-age economy companies citing anti-competitive behaviour. Vide the recently elicited orders from the CCI, these companies have been directed to rectify their market behavior so as to maintain healthy & fair competition by ceasing any tendencies that may monopolize the market conditions.
These instances emphasize on the duties and needs pertaining to running responsible business processes benefitting all stakeholders, while also being conducive to competition. Profitability and sustainability remain undoubtedly mission critical for businesses today; however, founders also carry the onus of implementing an ethical and moral business processes by complying with all applicable rules and regulations. Such business processes primarily aim striking a balance between societal, economic, environmental, and social values. The renowned business model canvas by Alexandar Osterwalder’s delineates the flow between key components of the company viz. value proposition, customer segments, distribution channels, customer relationships, revenue streams, resources, activities, partners and cost structure. Success of any company is believed to be dependent on the optimal synergy between each of these components, collectively comprising objectives of business goals and benefits.
The Indian economy has witnessed cyclical trends in almost all the sectors owing to varied factors, and the businesses that have survived are those with a holistic vision of creating an impact in the society through successful businesses and efficient business models. Not only have these businesses flourished in terms of size, valuation, and market capitalization, but have also witnessed an organic growth in the components of the model catering to them, in-turn contributing to the wealth and economic growth of the economy. Late investor Rakesh Jhunjhunwala, during one of his televised interviews (in the year 2018), cited the House of Tatas as a precedent for building responsible businesses. According to him the House of Tatas qualifies to be a role model for businesses today and shall persist so in the times to come, all owing to their commitment to wealth creation for the good of the society as part of their business model. Corporate governance and values of this conglomerate are part of their legacy and is being imbibed and organised as part of their culture over generations. The sense of responsibility towards the society is not reflective solely through companies like Tata Steel, Tata Motors or TCS, but also through Tata Hospitals and research institutes such as Indian Institute of Science. These insights and beliefs of late Mr. Jhunjhunwala are corroborated by the economic indicators recorded over the past.
One of the areas business entities conducting their businesses in India, today, are to ensure alignment with the Economic Sustainable Development Goals encompassing a myriad of developmental schemes in the social, economical, and environmental segments. A recent article published in Outlook Business, highlights how Indian businesses can grow inclusively and sustainably by adopting the Environmental, Social, and Governance (ESG) approach. The Business Responsibility and Sustainability Report is mandated by SEBI for the top 1000 companies listed by market capitalization. These eligible companies are required to disclose respective material ESG risks and opportunities, along with their financial implication and risk management. While environmental sustainability is the area of priority, businesses are also required to divert focus towards social and governance issues.
While companies in the nascent stages may only be required to comply with the specific statutes and regulations as the likes of the – Companies Act, early stage stakeholders are already orienting them to align with ESG goals. This is done with an objective to seal a sustainable growth at scale in all quarters even in the subsequent stages of business. This would mean alignment of product innovation, processes, channel/partner arrangement collaborations, technology interface, customer centric decisions and key strategies, with an objective to building sustainable, responsible, and profitable businesses. While ethical & fair business practices offer a platform conducive to healthy competition, unrealistic and unfair expectations amongst stakeholders and/or market players corrode the market with unethical business practices, thus impacting economic growth. Democratization of business practices walks hand in hand with responsible business practices that emanate from responsible business models. Hence establishing relevance of the phrase “responsibility with accountability” for today’s businesses and emerging businesses of tomorrow.