SAFIM
New Delhi
18th January, 2014
Sustainability : Corporate Evolution through
Consciousness
Dr. A.K.Balyan
MD&CEO
Petronet LNG Limited
1
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:
1. A Conscious Business has a higher
purpose that transcends maximizing
profits. It is focused on fulfilling its
higher purpose, which evolves
dynamically over time.
2. The enterprise is managed to
optimize value for all of the major
interdependent stakeholders.
3. 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 longterm 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
not Making 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
Percentage World Population
Living on Less Than $1 per Day
1820
1950
Less than $1
Less than $2
1980
2003
0
50
100
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 longterm—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
Good
Altruistic
(Non-Profits)
vs.
Evil
Greedy, Selfish
(Corporations)
Corporate Social Responsibility is not Conscious Capitalism
Corporate Social Responsibility
Conscious Capitalism
Shareholder-oriented
Has nothing to do with corporate purpose
Stakeholder-oriented
Incorporates higher purpose
Reconciles caring and profitability through higher
Adds ethical and financial burden to business goals
synergies
Consistent with traditional, mechanistic view of
Holistic, ecosystem view of business as a complex
business
adaptive system
Often an “add-on” – grafted on to traditional business Social responsibility is at the core of business model
model—usually as a separate CSR Department or is and is the responsibility of the entire company—not
part of the Public Relations Department
just one separate department
Easy to meet as a charitable gesture—frequently just
Requires genuine transformation
another PR messaging strategy—green washing
Assumes all good deeds are equally desirable and
Requires that good deeds also advance the
are not connected to company’s core mission
company’s core mission[1]
Source :Daniel Yankelovich, Profit with Honor: The New Stage of Market Capitalism
From Traditional Capitalism to Conscious Capitalism
From This
To this
Profit-focus
Only shareholders win
Short-Term
Zero Sum
Self-centered
Conflicts of interest
Parasitic
Exploitative
Trade-offs
Disliked
Not Trusted
Purpose-focus
All stakeholders win
Long-Term
Win-Win-Win-Win
Holistic
Harmony of Interests
Mutualistic
Creating Value
Synergies
Valued/Loved
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
16
Global Compact – Millennium Development Goals
•
Subscribing to 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:
17
–
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.
18
Ten principles of Global Compact
HUMAN RIGHTS
Principle 1
Business 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 3
Business should uphold the freedom of
association and the effective recognition of right to
collective bargaining
Principle 4
The Elimination of all forms of forced and Compulsory
labour
Principle 5
The Effective Abolition of Child Labour
Principle 6
Eliminate discrimination in respect of employment and
occupation
Ten principles of Global Compact
ENVIRONMENT
Principle 7
Business should support a precautionary approach to environmental
challenges
Principle 8
Undertake initiative to promote greater environmental responsibility
Principle 9
Encourage the development and diffusion of environmentally friendly
technologies
ANTICORRUPTION
Principle 10
Business 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-winwin.
• 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.
Thank You