Interview: M&M feels engaging second and third tier suppliers essential for supply chain sustainability

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In this next article in the "Corporate Sustainability Series", Beroz Gazdar, Vice President- Group Sustainability in Mahindra and Mahindra, talks about how the company percieves sustainability, their sustainability targets till 2015 and the supply chain initiatives of M&M.

Ms. Beroz Gazdar joined Mahindra Gesco as VP in the Office of the Executive Director and President - IDS. She has a B. Com. from Mumbai University and is an Associate Company Secretary from the Institute of Company Secretaries of India, New Delhi. She has over 30 years of experience, both in India as well as in Kenya and Cambodia. Her past experience includes fifteen years in Tata Finance Ltd.

Every organization has a different definition of sustainability involving different aspects (environmental, social, and labor), how does M&M define sustainability in its business construct?
We feel that if we want to have holistic or sustainable development, then we need to move ahead of technology/ customer/quality and look at the environment, the people and our progress- in short everything. We have always consciously taken a very holistic approach ever since we started on this ‘sustainability’ journey and have been a very CSR responsive company.

In the Indian context CSR is understood in a very narrow context. But since Mahindra has always been doing it, this was not new to us. We have taken the GRI guidelines as a platform to go by, to consider all parameters and issues that add up to what we today call ‘sustainability’ in the modern day jargon.

Initially when such initiatives were started by Mahindra, how did you make the business case for sustainability? What were the key drivers behind it?
The key drivers were energy, food and water security. We realized that these were essential to our business operations, and so we could not ignore them. We have consciously enhanced our knowledge base to understand what is happening on the world stage, what is climate change, and how is it affecting our business. We did a thorough look into it, and realized that we have to look at all these issues in order to take the agenda forward.

Does Mahindra have any particular emission reduction targets to meet by 2010?
We are already in 2010, but as a group we have developed a sustainability roadmap for the next 2-3 years (given in M& M’s Sustainability Report). We have divided the roadmap into two distinct time horizons- a) by 2011-2012 (3 year time horizon) and b) by 2014-2015 (5 year time horizon). We have set definite targets for GHG emissions, energy conservation, water and waste.

What are some of the key sustainability initiatives or accomplishments of the company?
Our sustainability initiatives vary from business to business. For example, if you look at the infrastructure sector, we were one of the first real estate developers to say that we are committed to making all future developments ‘green’, like using fly-ash bricks and non toxic paints in a great part of our developments keeping in mind the health of the people.

For our world cities, which are large integrated township developments, we have signed an MoU with the Clinton Foundation for making this development carbon neutral. We would be using a lot of environmental measures ranging from road building, lighting, and street lighting, to water conservation, proper waste treatment and reducing dependence on landfills, etc. This is the kind of a fairly holistic model that we have.

What are some of the reporting mechanisms other than GRI that Mahindra is following?
Other than the Global Reporting Initiative, we are also reporting under the Carbon Disclosure Project and are also signatories to the United Nations Global Compact.

A lot of companies today have integrated the supply chain element into their sustainability practice. Why do you think supply chain sustainability is so important?
According to me, supply chain sustainability is particularly important in a country like India, because more than 50% of our population lives in rural India. Most of that population is below the poverty line. They feed into the main manufacturing processes of the supply chain, either as second, third or fourth tier in the supply chain. If you have to look at inclusive growth then you have to ensure that your supply chains are sustainable in terms of following good people practices and good environmental practices. For example, while sourcing, though the first tier supplier may be a responsible company, their second/third tier supplier could be sourcing using child labor, or illegal extraction of water or raw material. Therefore, it is not only hurting the environment, but also the people.

So in order to make the supply chain sustainable, it is important to try and engage the members of your supply chain to share best practices and also help them in understanding them. This is easier said than done unless companies have the financial wherewithal and a certain clout with these people. Therefore there is a very long term, far reaching implication to this, in terms of societal development and inclusive growth for our country.

Does Mahindra have any particular program for supply chain sustainability?
Yes. 90% of the products for car and tractor manufacturing have an intensive supply chain. Therefore we have done a lot of work where we helped supply chains understand best practices, taught them about quality, and also helped them with product development. We engage the supply chain for more inclusive growth.

Do you have a fixed supplier’s code of conduct? Do you also have any tools to track these?
Yes. We anyway had a supplier’s code of conduct, and now we have added sustainability related issues to it. For example a supplier should also see that his own supplier is above board, has got proper sustainable practices, gives minimum wages to his people, etc. Though we have not started with any regular audits for this, we have told suppliers in our recent supplier meets about the inclusion of sustainability in the supplier’s code of conduct and out expectation from them to follow it.

Has there been any instance where you have helped your supplier to either lower their footprint or become more efficient?
We do have supplier support systems, supplier grading systems, and awards for suppliers who do good things. We even have suppliers join us in our CSR initiatives. One of the things we do in a big way is expanding green cover. We make a commitment to try and plant a million trees every year, and our suppliers and dealers help us out in that in a major way.


Author: Roselin Dey