CELERITY SUPPLY CHAIN TRIBE FEBRUARY 23

INSIDE

Candid Conversations with

 Vikas Sharma, Senior Vice President – Operations, Zepto

 Arun Saravanakumar, Director of Operations, L’Oréal India

DRIVING THE ESG AGENDA

Presenting some illustrious leaders’ experiences and vision for ESG

Mr. Shailesh Haribhakti, Board Chairman at some of the country’s most preeminent organisations, ESG & IR (Integrated Reporting) Evangelist

Mr. Prabodha Acharya, Chief Sustainability Officer, JSW

Padmashree Prof. Ganapati Yadav, National Science Chair, SERB, Govt. of India; Emeritus Professor Of Eminence, ICT Mumbai, and Consultant to Industry

Dr. Umesh Kulkarni, Partner 3PS Advisory, Sustainability Consulting

Sanjay Desai, Co-Founder & Regional Director, Humana International

Group

2023 – The Year for Net Zero

Dear Readers, India aspires to be Net Zero by 2070!

One of the biggest challenges is our heavy reliance on coal. In fact, as per Ministry of Coal, India’s overall coal production increased by almost 13% during January this year as compared to same period of last year.

Net Zero, or becoming carbon neutral, implies not adding greenhouse gases to the atmosphere. Green Hydrogen (GH) may account for 12% of global energy use by 2050. Globally governments are fast-tracking use of GH2, its production, storage, and logistics, through various incentives and programs.

In India, the government provided a policy framework for GH2 and approved budgets towards making India into a global hub for the production and export of GH2. This is an opportunity for India to capture the white space in clean energy and further consolidate its position as one of the global leaders.

Manufacturing capacities for Solar, and Wind energies have been steadily increasing. Electric Vehicle (EV) sales in India reached a record one million units in 2022, a 300% jump from 2021.

While we can see overall progress, we would like to invite case studies from companies on their journey towards Net Zero. The most innovative case studies will get due recognition and will be published in our magazine.

India’s road to Net Zero is riddled with many challenges, and we look forward to your submissions on how your organisations are moving towards it. Let’s all pledge towards a clean and green lifestyle!

Charulata Bansal Publisher Charulata.bansal@celerityin.com

CONTENTS

Integrating ESG into the Next Phase of Business Growth

Environmental, Social and Governance (ESG) factors are becoming a global phenomenon, placing companies under increasing scrutiny. In addition to external pressures to address ESG issues, more and more organisations are also realising the benefits of embedding ESG criteria in their financial & business practices to reduce their exposure to a range of risks, and to improve their baseline performance, which will be sustainable over the long term.

Mr. Sanjay Desai, Co-Founder & Regional Director at Humana International Group, stresses that compliance with ESG reporting frameworks and ESG scores can be strategic tools if used correctly.

Mr. Shailesh Haribhakti, Board Chairman at some of the country’s most preeminent organisations, and ESG &

IR Evangelist, highlights the need to unleash the forces of collaboration, innovation, and change of mindset to make sure that we get to the root of it.

Padmashree Prof. Ganapati Yadav, National Science Chair, SERB, Govt. of India; Emeritus Professor of Eminence, ICT Mumbai, and consultant to industry, emphasises on the power of research and innovation to scale up for production of zero carbon and carbon negative technologies.

For Mr. Prabodha Acharya, Chief Sustainability Officer at JSW, the supply chain needs to be sustainable to build a sustainable business.

Dr. Umesh Kulkarni, Partner 3PS Advisory - Sustainability Consulting, underscores the importance of accurate carbon and GHG accounting.

INTERVIEW RECAP

04 | Amping Up the Glamour Quotient of Supply Chain

Arun Saravanakumar, Director of Operations, L’Oréal India, deciphers to the need to simplify supply chain and show its relevance to real impact in everyday life.

26 | The ‘Quick’ Delivery Masters

Vikas Sharma, Senior Vice President – Operations, Zepto, decrypts Zepto’s incredible journey in making 10-minute deliveries a reality.

30 | Davos Diary

Trade, Tech, and Tackling the Climate Crisis were the 3Ts that hogged the limelight during the recently concluded World Economic Forum in Davos. A quick recap of stance that unfolded at WEF…

33 | Trending Globally

Supply Chain News & Views from around the globe

Editor: Prerna Lodaya

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Amping Up the of

GLAMOUR QUOTIENT Supply Chain

“Supply Chain and Operations can be lot of science and heavy-duty acronyms – we need to simplify, show relevance to real impact in everyday life and add loads of humor. I find myself considering this as one of the purposes I need to fulfill in my career in this profession. I belong here and as in any profession; it takes a lot of your life – so why not lead it the glamorous and fun way. On a more business-like note, it also means the best of creative talent would choose this field more actively than what the reality is today,” deciphers Arun Saravanakumar, Director of Operations, L’Oréal India, during this exclusive interview…

You have been a close witness to the transformational landscape of Operations & Supply Chains. What are the factors that have led to this transformation?

I would pick three. The rise of e-commerce has been a transformation in the way goods reach the end consumer and their direct participation. It means the variability; last mile access and quick response are the new needs to be met through Supply Chain. The second would be affordable technology. In manufacturing space, this transformation started first, with factories prototyping and scaling automation and robotics in a big way and for Supply Chain, the possibility of big data enabled decisions followed suit. The last would be the consumer awareness on sustainable supply chain. It is changing the way producers source, manufacture and distribute products and is an indisposable competitive advantage now.

While supply chain has always been considered a less-glamourous job, can it up the glam quotient? If yes, then

who better than you working with the best company in the glamour world to solve this puzzle?

This question is very close to my heart and at many times, I find myself considering this as one of the purposes I need to fulfill in my career in this profession. I belong here and as in any profession; it takes a lot of your life – so why not lead it the glamorous and fun way. On a more business-like note, it also means the best of creative talent would choose this field more actively than what the reality is today. Of the two main ways to do this, the first would be, as you can see with all successful brands, to Market it well. Here the operation and supply chain leaders have a role to play in talking it up across mediums to keep the subject in popular knowledge. There is no dearth of such mediums like social media, mainstream conferences, books, games and such to propagate engaging content. The second more important thing to do is to demystify the subject. SC/Operations can be lot of science and heavy-duty acronyms – we need to simplify, show

Arun S. has 17 intense years of both Supply chain and Manufacturing experience having started his career with Asian paints before joining L’Oréal. He has contributed in various capacities at AP by helping to set and scale up the organisation’s first automated factory back in 2005. Later in strategic SC roles such as Planner, New product head & National Distribution, he has deployed many cutting-edge data driven improvements before returning to lead as manufacturing head in facilities at both AP and subsequently L’Oréal.

The biggest skill for future is ability to adapt. Context changes rapidly now-adays and dynamism is how life is. So, whatever is thrown at you, learn to adapt and you should be fine. Next, one should stay close to business. SC/Operations cannot operate in silo or hang on to its own version of what is right. The right supply chain is the one which can fuel business ahead. The last would be to look out for consumer expectations. Think outside in from the perspective of the consumer on what he/she thinks or finds as value add in your Supply Chain. Hang on to those and you can cut out the other noise.

relevance to real impact in everyday life and add loads of humor.

You have spoken on the gamut of Remote Manufacturing – the Future of Work. How do foresee things shaping up?

It looked more closer than what it seems now during the Pandemic. Then it was a big shift the world had to adapt to, to run things as usual when mobility was impacted. It, for sure, accelerated the idea of remote manufacturing across the board. But since the return of life as we used to know before, it is now back to progressing at a pace that is largely

dictated by the efficiency it can bring and real need. Needless to say, there are many factories, concentrated in China and a few developed nations where this is a living reality. Lights out factories, central data towers governing multiple sites are gaining popularity here. For others, it might still be a while.

What have been few of the greatest learnings that will stay with you forever and help you climb the success ladder?

The biggest skill for future is ability to adapt. Context changes rapidly now-adays and dynamism is how life is. So,

whatever is thrown at you, learn to adapt and you should be fine. Next, one should stay close to business. Supply Chain/ Operations cannot operate in silo or hang on to its own version of what is right. The right supply chain is the one which can fuel business ahead. The last would be to look out for consumer expectations. Think outside in from the perspective of the consumer on what he/she thinks or finds as value add in your Supply Chain. Hang on to those and you can cut out the other noise.

How complex and unique is the supply chain at L’Oréal?

Research & Innovation Centre, courtesy L’Oréal

It’s truly a global supply chain, very unique in that sense and extremely interesting as a result. The complexity at L’Oréal also comes from three other factors…

Go-to-market: The end consumer ranges from a retail shopper looking for beauty and personal products, to consumers looking at service at a salon, to premium users looking to get the best of what luxury can buy to consumers looking for solutions to their skin, hair, beauty problems. The route to provide them the needed availability takes you to everything from a deep distributed nextdoor shop, to salons, to retail chains, to malls, to internet. This is complex. The expectation and variety of need: It could be hair care, colour, skin care or makeup and the range of requirements in colour, texture, application, utility makes the product range large, sometimes niche and fragmented adding to the intricacies. The quality L’Oréal brand stands for: One needs to manage the above product and channel complexity without compromising the customer experience and quality of what they get. This is nonnegotiable at the highest order and hence adds layers to the work done before you hold a L’Oréal product at hand that gives you the smile.

What have been the challenges faced in managing the supply chain and how did you overcome them?

Managing to stay true to your fundamentals in the midst of chaos in both the challenge and the way to overcome it as I see. Continue to review for every opportunity to continually improve on service & cost and it is a bare essential here. While the fundamentals continue to tick, one must also stay open to new ways of working. At one point in time, efficiency was the bread & butter in supply chain… over time, while this is still a large attraction, efficiency has given way to agility. Stay open and humble to learn and change. The other massive challenge is the availability of the right supply chain and operation talent. The ways to overcome this is to have enhanced job profile, attract young people and give them larger responsibilities, build merit driven culture, fuel high engagement actions and have loads of patience.

We would like to know the sustainability journey that you have taken, especially on the supply chain front.

One of the aspects that make me proud at L’Oréal every day is the orientation towards creating a future for all that is sustainable. We run a company-wide program globally called ‘L’Oréal for the future’ that encompasses all aspects of how we can positively influence in this space. Closer to home in supply chain and operations, we drive many initiatives as a result under this umbrella. We have, over the years, drastically reduced the carbon emissions coming from any site we operate and now are looking at the near future where we will be fully carbon neutral in our factories, offices, transportation and are extending this towards our upstream and downstream supply chain beyond the organisational boundaries as well by engaging with our suppliers, partners, and consumers. We are working towards water loops at factories to consume no fresh water and be water positive. Zero discharge and waste reductions have been in our ways of working for a long time and there are `now extremely cutting-edge innovation in our packaging that puts less dependency on plastic with each passing day. We also work actively in sustainable sourcing for all our input material, POS merchandise and packaging. Also interesting is the solidarity angle here in our sourcing where there is an active purpose in making sure we source to benefit the underprivileged in every way possible.

What are the global best practices you have incorporated in supply chain management for India operations?

The practice of having nodes of excellence across the globe that can translate the best practices from operations across the world to one another is a beautiful structure at L’Oréal. As a result, many first-time implementations in a country can be fructified in the first go due to the available expertise from a previous geography through these nodes. Many processes in planning, data management, operations have been, in the past, incorporated in the ways of India operations, which is a developing market for us. The biggest best practice would be the way data is managed & propagated and the technology associated with it, which can be copy-pasted under most circumstances.

What has been one of the most challenging tasks that you have achieved in the supply chain? Please elaborate…

I will elaborate an example from Asian Paints where I previously worked before joining L’Oréal. Supply Chain is a very evolved and super-efficient function here and it’s always a challenge to push the boundaries when you are already the very best. A challenging assignment we undertook was to reimagine the way our physical distribution would work to hold back inventory upstream such that it can be deployed to a more accurate mid-month forecast so as to support the swing in sales towards the month

Managing to stay true to your fundamentals in the midst of chaos in both the challenge and the way to overcome it as I see. Continue to review for every opportunity to continually improve on service & cost and it is a bare essential here. While the fundamentals continue to tick, one must also stay open to new ways of work. At one point in time, efficiency was the bread & butter in supply chain… over time, while this is still a large attraction, efficiency has given way to agility. Stay open and humble to learn and change.

We drive many initiatives as a result under this umbrella. We have, over the years, drastically reduced the carbon emissions coming from any site we operate and now are looking at the near future where we will be fully carbon neutral in our factories, offices, transportation and are extending this towards our upstream and downstream supply chain beyond the organisational boundaries as well by engaging with our suppliers, partners, and consumers. We are working towards water loops at factories to consume no fresh water and be water positive. Zero discharge and waste reductions have been in our ways of working for long and there are `now extremely cutting-edge innovation in our packaging that puts less dependency on plastic with each passing day. We also work actively in sustainable sourcing for all our input material, POS merchandise and packaging. Also interesting is the solidarity angle here in our sourcing where there is an active purpose in making sure we source to benefit the underprivileged in every way possible.

end. It was a huge change management, infrastructure upgrade and system reconfiguration that we undertook. The results though, made every effort worthwhile. At L’Oréal, the current engagement is equally challenging. As we look to build scale and size of the business

in India with all the complexities I have mentioned previously, imaging a Supply Chain of future, and making it happen is a dream work for anyone in this field.

Data Analytics in Operations & Supply Chain is changing the course

of action. Your views on the same… It is clearly the future. The potential of data analytics is very evident to see and is an exciting one. Data has been used for ages now, but the ability to handle explosions in data and mine it to get the best use for visibility, predictability, simulations, and decision making can only make operations and supply chain more incisive in the years to come. I have had the good fortune of already seeing how we can sharpen availability to promise with better data, put machine and artificial intelligence to predict the next place we need the stocks, to create digital twins to replicate ground reality and fix bottlenecks in the last few years. It will only grow from here. The work we need to do is to keep experimenting, investing early, take risks and be ok to fail, and continue to build people capability to manage this transition to the future of work.

What are the operations & supply chain technological innovations you are most excited about in times to come…

Everything about IoT sounds awesome. The application matters though and not the glamour of implementing something for its buzz worthiness. 3D printing can change the way inventory is managed, packaging to product lifecycle is cut and end good customized. Robotics and automation make scale possible and over time even flexibility. IR/VR would be a great ally for remote working soon as Big Data would be for insights. Every aspect is exciting based on a problem it can solve or an opportunity it can bring.

What are the aspects that will make India’s Supply Chain Future-Ready and Resilient?

If I speak of India specifically, the basic infrastructure like road, warehouse, policies, and government push would continue to matter a lot in the medium term. Investment and the right entrepreneurial environment for technology to bloom will bring future capabilities closer. Taking Industrial management and supply chain education earlier than managerial degree will create capable minds.

Sustainable Haircare System, courtesy L’Oréal

Integrating ESG Business Growth Next Phase into of

Environmental, Social and Governance (ESG) factors are becoming a global phenomenon, placing companies under increasing scrutiny. This heightened stakeholder focus indicates that boards are confronted with new expectations. However, not many global organisations and their leaders are equipped to adopt ESG issues in their business goals. In addition to external pressures to address ESG issues, more and more organisations are also realising the benefits of embedding ESG criteria in their financial & business practices to reduce their exposure to a range of risks, and to improve their baseline performance, which will be sustainable over the long term. Our recently held webinar, ‘Sustainability and the next phase of Business Growth’ stressed on the key facets that have an impact on the organisations’ ESG metrics. Our illustrious panellists’ captivating & forward-looking visions & experiences will surely not just be an eye opener for companies, they will also offer companies a great head start towards implementing ESG agenda in full throttle. Excerpts…

COMPLIANCE WITH ESG REPORTING

FRAMEWORKS AND ESG SCORES CAN BE STRATEGIC TOOLS IF USED CORRECTLY.

SANJAY DESAI, CO-FOUNDER & REGIONAL DIRECTOR, HUMANA INTERNATIONAL GROUP

Is ESG a process cadence or an application tool? How should businesses get aligned to it?

ESG is a term used to represent an organisation's operational, business processes and financial efficiencies, focusing mainly on sustainable and ethical impacts to society and environment at large. Capital markets use ESG to evaluate organisations and determine future financial performance. While ethical, sustainable, and corporate governance are considered non-financial performance indicators, their role is to manage organisation’s impact, such as carbon footprint, GHG emissions and use of scares resources (esp. water).

Environmental factors are climate change, energy consumption and how much an organisation works to protect these resources and their impact on environment.

Social factors guide how an organisation treats their human capital, personal data protection & inculcate diversity and inclusion across the entire organisation physically.

Governance, as the word indicates, validates how organisations develop their corporate policies addressing internal checks & balances, transparency in reporting, integrity and ethics in their business transactions and dealings within and outside their organisations.

ESG has many different perspectives. You can look at it through a health and safety lens or a risk management lens or a reporting lens. On this note, I would like to echo a quote from the great leader, Mr. Mahatma Gandhi, “What we are doing to the forests of the world is but a

mirror reflection of what we are doing to ourselves and to one another.”

For a long time, we heard about CSR. Are ESG and CSR the same or two different ends of the corporate philosophy?

ESG is a process tool that helps organisations to understand as to how they are managing the impact of their operations on environment / social cause / GHG emissions / CO2 disposition. This framework helps them to balance their financial investment v/s social and environmental impacts as well as gauge risk and opportunities in the future. ESG focuses on materials issue of an organisation.

CSR (Corporate Social Responsibility) is a form of self-regulation that reflects a business’s accountability and commitment to the well-being of communities and society through various environmental and social measures. It is a strong belief that CSR plays a crucial role in a company’s brand perception; attractiveness to customers, their investors, help retain talent and show overall business success. An organisation can implement four types of CSR efforts, viz., environmental initiatives, charity work, ethical labour practices and volunteer projects.

There are subtle differences, let us take a look at few of them…

Environmental Social Governance

GHG emissions:  Amount of Scope 1, 2, and 3 emissions

Employee Diversity & Inclusion: Percentage of gender / racial or ethnic group representation for management and employees

Business ethics:  Amount of net revenue in countries that have the twenty lowest rankings in Transparency International’s Corruption Perception Index

Water management: Total water consumption from all areas with water stress

Energy management: Total energy consumed, percentage grid electricity, percentage renewable electricity

Employee health and safety: Total recordable incident rate

Labour practices:  Percentage of active workforce covered under collective bargaining agreements

What are the ESG metrics? Are they managed in the similar way as business metrics?

Interesting question… ESG metrics are indeed similar to business metrics in the way they decipher the data or both have similar quantitative and qualitative KPI formats. However, the outputs they track are different. ESG metrics are used to assess a company’s performance related to environmental, social, and governance issues, which, in turn, indicates whether an organisation is creating, reducing, or preserving the

Environmental Social Governance Corporate Social Responsibility

ESG is data oriented & the primary objective of ESG is reporting & disclosure to satisfy the requirements of customers/stakeholder and Board members.

ESG is an act of corporate compliance, which is fairly standardised, regulated and controlled.

ESG is more quantitative. Organisations need to collect & disclose significant amounts of quantitative data although qualitative data also has a key role in ESG reporting.

ESG’s focus is more on materials issues and their risk or impact to the environment, society, resources, and mankind.

CSR is often designed to engage employees and build a positive corporate reputation in the eyes of consumers and invested communities.

CSR engagement is voluntary and a self-generated initiative by the organisations.

CSR initiatives can certainly involve quantifiable goals. Reporting outcomes and their action planning is generally developed independently by the company for their own good.

CSR’s focus/ reporting will be to align to an organisation’s values, brand equity in the market including social scorecard.

Remuneration:  Annual total compensation ratio of CEO to median for all employees

Business Model

Resilience: Amount/ percentage of material recycled, composted, and processed as waste energy

Source – Novisto / Gartner

impacts to the environment, mankind, and resources. These metrics will include indicators such as GHG emissions intensity, amount of waste generated, and gender diversity in an organisation. Traditionally investors were looking at financial metrics or financial outcomes to judge the performance & quality of an organisation. But it has changed in the recent past. Now most investors also consider ESG metrics alongside financial data to access the viability and long-term performance of organisation in a more ‘sustainable’ way. Table above looks at a few metrics deeply…

What is a Carbon market

and how can an organisation be a part of it?

In simplistic form, carbon markets are trading systems where carbon credits are sold and bought by many organisations/ institutions. Carbon markets are still in their infancy and currently lack quality and credibility; technology can help in promoting their transparency, integrity, and usage. While the carbon markets are considered as legitimate globally, they do have their own issues. For example, a question comes to mind, does the carbon credit create real-world decarbonisation, and would that carbon emission be (really) offset if the credit was not purchased? Hence organisations who buy carbon credits need to ensure

carbon offsetting is only utilised for the part of emissions that cannot be abated. While claims and offset quality may vary, offsets are on the rise and there is a need for carbon credit markets to be vigilant, credible, and transparent. There are two types of Carbon markets.

Regulatory or Compliance market: This market is getting bigger and bigger each year for last few years. At present, the global market size could be in the vicinity of US$265-275 billion. According to World Bank, there are over 47 national jurisdictions representing more than 20% of global GHG emissions. At a ballpark, academics estimate the real price of GHG emissions to be around $200 per tonne CO2e. However, the actual cost will vary from country to country.

Voluntary carbon market: This market is much smaller, fragmented, largely private, with varying standards. It is estimated that the market size is from $400 million to US$2 billion. The cost of carbon credits varies, particularly for carbon offsets since the value is linked closely to the perceived quality of the issuing company. Typically, voluntary credits are purchased by private companies all over the globe who want to compensate for their carbon footprints, especially those corporations who have strict sustainability targets and net zero strategies.

Over the last few years, supply chain is on the sustainability media radar. Few new terms we hear are “Sustainable Supply Chain Finance”, what does this mean?

Over the last few years, supply chain has been in the limelight for many right or wrong reasons… As the term indicates, these are two processes combined (Sustainability and Supply Chain Finance). From a practical definition point of view, sustainable supply chain

finance is defined as financial practices and techniques those support trade transactions, in a manner which will help to reduce negative impacts and create environmental, social, and economic benefits to all stakeholders involved in bringing products and services to markets. Everyone is a winner in this process –The manufacturer, borrowers, lenders, consumers, and trade. Sustainable finance means investing money into organisations that demonstrate social values, good governance, and diversity & inclusion in their staff. It also means investing money in financial institutions / private funds managers who invest in their funds (lending) based on ESG principles.

Sustainability has rapidly become a core consideration in today’s corporate supply chain discussion, driven in large part by consumers and investors looking for more ethical manufacturing practices from the companies they buy from and invest in. Similarly on banking and trade finance front, having access to sustainable-labelled finance solutions is key for corporates to meet their ESG goals, whether it is reducing emissions or ensuring fair wages and working conditions among their suppliers.

While the above sounds very promising, please note these are purely corporate / Industrial or Institutional investors who have big pockets and are able to access the big data. For them more is merrier. For end consumers like us or small retail investors to openly embrace sustainable investments, the financial market needs to be much easily accessible & consistent with a personalised sustainability approach.

There is always room for improvement, given the advancement we have made on the technology spectrum. How are technology companies leveraging

and leading the way in this global phenomenon?

Yes, data science and analytics will guide organisations to follow ESG principles to the core. Imagine that in the last turbulent three years, almost every industry suffered in some or the other way, but it is only technology industry, which remained relatively calm and resilient. They stood strong during the pandemic, many of them had double digit growth during 2021-22. In order to see their growth especially the tech start-ups who stand to benefit further with a renewed focus on ESG, one of the silver linings in an otherwise disastrous Covid-19 aftermath.

The technology industry is a significant contributor to the global carbon footprint, and almost 60% of IT industry emissions come from their hardware used by customers. This explains why these organisations are at the forefront of the corporate push for green energy globally. This also acts as a catalyst for other industries to invest & adopt similar technology and follow suit on their growth path. The big five tech companies (Amazon, Apple, Facebook, Google, and Microsoft) are all setting targets to use 100% renewable energy. Most of these industry players intend to be carbon-negative by as early as 2030.

In one example, datacentre providers in Singapore have had to be resourceful in their search for renewable energy, since the government has been critical of the industry’s large carbon footprint. In March 2021, solar energy provider Sunseap, which works with Microsoft and Apple’s datacentres in Singapore, unveiled a floating solar farm that could produce an estimated six-millionkilowatt hours of energy per year at 5MW peak installation. Industry participants are also discussing the expansion of datacentres powered by onsite generated hydrogen.

Sustainability has rapidly become a core consideration in today’s corporate supply chain discussion, driven in large part by consumers and investors looking for more ethical manufacturing practices from the companies they buy from and invest in. Similarly on banking and trade finance front, having access to sustainable-labelled finance solutions is key for corporates to meet their ESG goals, whether it is reducing emissions or ensuring fair wages and working conditions among their suppliers.

Greta Thunberg talks about climate change, global warming in her book The Climate Book published recently. A teenager from Sweden has succeeded in shifting the global attention around climate emergency. Taking a cue from this, what actions should each of us at corporate as well as personal level take?

The message that I got reading through all the wonderful writings in that book was, “Let's get serious about the climate issue and collaborate to make sure that we can save our species by taking concrete actions in our day-to-day lives”. For example, switch to LED lights, stop using single use plastic, make sure that you are always reminded like I am reminded of the 17 SDGs. It is a question of how we can integrate the whole thought process about the material things that can make a difference to our emissions which are destroying the planet. First lesson is owning up the responsibility. Second let us have our own action plans at corporate level, at individual level and at community level. We have seen so many instances in the last one year that it is now very clear that it is Human Action, which can turn the needle back from the Armageddon that we face if we continue along our past ways. That is the big lesson for all of us from the book.

What is greenwashing? How can consumers differentiate between an organisation which is involved in greenwashing v/s with the one which is genuinely investing in sustainable products?

Recently a PwC report was released,

“WE HAVE TO UNLEASH THE FORCES OF COLLABORATION, INNOVATION, ACCEPTANCE OF TECHNOLOGY AND CHANGE OF MINDSET TO MAKE SURE THAT WE GET TO THE ROOT OF IT.”

MR. SHAILESH HARIBHAKTI, BOARD CHAIRMAN AT SOME OF THE COUNTRY’S MOST PREEMINENT ORGANISATIONS, ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) & IR (INTEGRATED REPORTING) EVANGELIST

which indicates that in 87% of the reports on sustainability, greenwashing of some kind was discovered. Now that is an extremely high percentage. I am reminded of the recent UN expert panel, set up to examine net-zero claims made by non-state organizations – which calls for regulation to stop baseless environmental claims by companies, banks, and municipalities. Calling for regulation to ensure pledges are genuine, the panel highlighted, “Deceptive or misleading net zero claims by nonstate actors not only erode confidence in net zero pledges overall, but they also undermine sovereign state commitments and understate the work required to achieve global net zero.”

Greenwashing is overstating a company’s climate change contribution. False environmental claims are harming the fight against climate change. Let us say that companies are reporting on some recycling initiative, and they are recycling some of the plastic that they have collected out of their own efforts. Now if they overstate the input-output ratio from the plastic that they are trying to recycle to make the end product, then they are greenwashing. They are not actually performing the role of reducing the impact on the planet and are still claiming it.

Let me give you three instances of out-of-the-box ideas that people are now using to first reduce their footprint and then making sure that the reporting is

correct…

w Switch from the idea of data entry to data set capture as it arises. Therefore, all measurements in the future will happen as the physical flow of materials of energy, of everything that you are using in the whole supply chain gets consumed.

w Block chain the process so that you have no chance of over-reporting or under-reporting and that will be a great dampener on greenwashing.

w Disrupt your supply chain completely. This is what at least one Cement Group in the country is thinking about. They are planning to develop the grinding units across the entire coastline that India has so that the distance that the material has to travel to reach to the end consumer gets drastically reduced. That is an example of domestic supply chain reimagination, which can dramatically alter the amount of footprint from cradle to grave.

These are the ways in which you can identify greenwashing, reduce it, and make sure that your measurement systems are such that they will automatically produce accurate data to be reported.

Is there a global organization or an association which can coordinate prompt sharing of this green technology and measuring it as a common initiative?

This is one area where the whole world has got together to actually make sure that the standards of reporting and the frameworks of reporting get commonalised. This effort is today housed under the International Sustainability Standards Board (ISSB) in London. There is a convergence happening in both frameworks for reporting as well as the standards based on which companies will report all the information that they need to provide in the regulatory reports on sustainability. ISSB is that one central organisation that we need to keep watching out for. It will be the fastest issuer of standards on sustainability that the world has ever seen. In two years’, we will have a common framework and tangible standards of measurement.

There are many sustainably standards GRI, ISB, IFC, CDP etc. Is there a feasibility of having just one or two common standards? I think convergence is necessary, but I do want to talk about heuristics in Scope 3 emissions. In India, we will soon see the emergence of BRSR light, which is being designed for simpler organisations, which are just a part of a supply chain. We must realise that Scope 3 emissions are, in many instances, between 75% and 85% of all emissions that a company is actually responsible. It is critical that in some way we are able to estimate if we cannot measure these things accurately. The small organisations do not have the

Organisations should have a higher purpose beyond pure profits to inspire and engage their key stakeholders. The focus should be on the entire business ecosystem to create and optimise value across all stakeholders. Imagine this… Investors will be more willing to invest if they see that your organisation has an ethical supply chain, which also cares for society. Lenders will be more willing to approve financing if your organisation is taking steps to reduce its carbon footprint, automatically reducing long-term risk. Insurers will be more likely to provide insurance when you’re limiting the use of harmful pollutants and chemicals. Your organisation is less likely to be a liability in the longer run.

resources to do that.

So, we would have to unleash the forces of collaboration, innovation, acceptance of technology and change of mindset to make sure that we get to the root of it. We need to completely eliminate the carbon footprint that we are causing and one of the ideas that I am also a great believer of, is green hydrogen, green ammonia and ultimately, we will see some version of fusion, which will enable us to eradicate the problem of greenhouse gases altogether, so I am a great votary of that.

Agricultural Sustainability means - using farming practices which adhere to ecological cycles. India is used to "Traditional Farming". How, as a nation, do we transition to this approach? What role does Pradhan Mantri Krishi Sinchai Yojana (PMKSY) play in this transition?

I will share with everybody a wonderful experiment that is being done at a place called Parli by an organization called Global Parli in Maharashtra. The idea is that we need to wean people away from high water consuming crops, which are – one completely destructive of the environment, using up a very scarce resource like water and are not even good in terms of the output that they generate. For example, if you were to go on a sugar fast, the first thing that you will have to eliminate is your consumption of Wheat and rice. Therefore, this experiment envisions to disrupt the habits and the allocation of land to appropriate crops, which will be sustainable in the long run from the point of view of input consumption and energy released from the output. In addition to that, multicropping is being considered to bring in exotic vegetables and fruits to make sure that the right mix of food that we need to produce for good energy, good health, and good immunity, comes into being.

As a matter of fact, Global Parli movement has planted 2.5 crore + fruit trees in the last three and half years, benefitting thousands of farmers and greening the environment. This is an experiment, which is highly replicable, can be performed in many parts, not only in India but in the whole world. Also, let's not forget that the world

is now beginning to see the massive benefits of hydroponics, aeroponics, greenhouse cultivation and farming, which is on steroids because you take care of it through using machine learning and artificial intelligence. The use of micronutrients and micro water delivery to the plant as it needs it and as it demands it dramatically alters productivity.

Today a whole lot of the water and the nutrients that we are using are simply wasted because the plant cannot absorb it and that is being changed by bringing in this technology of hydroponics and aeroponics. This is a very major contribution that the world can actually receive from Agri-innovation.

With ESG rapidly growing in India who is leading the push is it the institutional investors or is it the government or is the Venture Capitalist?

Fortunately for us in India, the government is extremely serious on this matter. For the government to have chosen ESG as one of the frontiers in its leadership at the G20 is itself a huge indicator of the government's intent. I must give full credit to the Government of India for the amazing thrust that they are taking on this front. Add to that the tremendous leadership that is being displayed by our large industrialists. While, on one hand, all of them are competing with each other to get to the highest ranks in ESGI, but at the same time, they are making sure that we have a great ESG expanse to look up to for our future generations to embrace and imbibe.

Everyone in the value chain aspires to do better in terms of environmental portrait – the industrialists are on board; the NGOs are phenomenally on board. I can sense that the extent of work, which is being done in India, is impressive and we should be proud of the way we have embraced all the 17 SDGs and the way that industry and the government partnership is shaping up across the board to make sure that this becomes reality. There is a long way to go, but the start is fabulous. Having said that, the largest emission action has to be taken by the Western world and even if we were to take all these actions, we are not going

to be able to actually limit the increase in temperature to 1.5 degrees Celsius unless the whole world starts becoming serious about it.

Crypto is gaining grounds. The big problem with Crypto is Energy consumption. It takes an estimated 1,449-kilowatt hours (kWh) of energy to mine a single bitcoin. How do we tackle the massive surge in energy consumption besides the environmental pollution? Let me let me give you a very out of the box thought… what is the Bitcoin? Can you not think about it as a storehouse of energy that might otherwise be wasted? The energy to mine it is being utilised to transfer that mass quantity of energy, which otherwise would have been lost. Bulk of the world's mining is being done in the extreme northern limits and extreme south having extreme weather conditions with abundance of power. It becomes a question of enabling that power to be transferred to places where that power is not actually available.

I am not a votary of Bitcoin at all but let us not confuse Blockchain with Bitcoin. Blockchain is important because it creates decentralization, transparency, and the ability for people to share without feeling concerned or threatened by who is going to see it because it is only the permissioned people who will be able to access that open ledger. Blockchain is an extremely valuable concept, which will not only create the use case of Bitcoin, but many other use cases. It is not cryptocurrencies that I am tracking, I am tracking the Central Bank digital currency, a revolution that is taking the world over and that I think is an exceptionally positive move by the entire world.

The cost of using cash is the highest cost of any other method of exchange and therefore the faster we wean ourselves away from Hard Cash, the better it is. All other forms are intermediates to an absolute adoption of digital currency using identity layers, using the layer of recognition and the layer of transfer so if you can get a whole Central Bank Digital Currency (CBDC) framework, we can see a very different world.

FURTHER RESEARCH AND INNOVATION ARE NEEDED TO SCALE UP FOR PRODUCTION OF ZERO CARBON AND CARBON NEGATIVE TECHNOLOGIES.

It is becoming increasingly clear that good Governance drives environmental and social responsibility ownerships (and not the other way round). In this scenario, how C Level leadership will balance & integrate ESG priorities to the organisation’s value chain model?

Whether it is a CEO or an employee, they have to be environmentally conscious, socially responsible and we must mention the ethical standards, which is the basic principle in ESG. Since we are talking about environment, carbon neutral fuels or low carbon fuels are one of the alternatives that hold immense potential in reducing the greenhouse gases and in a country like India where wood is used as a firewood, one can imagine the kind of carbon dioxide emissions we generate. As a matter of fact, last year the entire world generated 40 gigatons of carbon dioxide. We must reduce this figure to less than 10 gigatons, then only we'll be able to maintain the 2 degrees Celsius limit or 1.5-degree Celsius limit. That requires everyone to ensure stringent environment management and every company must take efforts whether it is with regards to water management, land management, building management and the recycling endeavours because tomorrow's world will be a recycling world.

I jokingly call my students of chemical engineering the Recycle Engineers of Tomorrow where they will treat all materials including energy, whether it is physical, chemical, or biological to be recycled, otherwise one Earth is not sufficient for us. We have to be environmentally conscious and energy efficient because a lot of energy is lost during transmission. When

PADMASHREE PROF. GANAPATI YADAV, NATIONAL SCIENCE CHAIR, SERB, GOVT. OF INDIA; EMERITUS PROFESSOR OF EMINENCE, ICT MUMBAI, AND CONSULTANT TO INDUSTRY

we talk about social angle to the ESG priorities in an organisation, we have to be inclusive, gender-sensitive and we must value human rights, which are the integral parts of the SGD goals. Since I am a board member of the over six leading companies, I always emphasise on adhering to the ethical standards of the board, which requires a strong governance model, a genderdiverse board membership including women members on the board, which is also a mandate from the BSE. Every company must ensure a right balance of independent directors who are not the promoters. If you want to promote any policy, you have to engage with the political class whether you like it or not because they are ultimately making the legislations. In short, everyone has a role to play in meeting the ESG agenda.

The shipping industry is probably the most challenging sectors to decarbonize—faces growing calls by shareholders, regulators, customers, and other stakeholders. In this scenario, what is the role that shipping companies including their boards/ CEOs can play? How financial institution / banks can help them in this journey?

The shipping industry produces about 2.5% of global greenhouse gases for a simple reason that they use tons of oil as a fuel. In order to reduce the environmental impact, shipping industry must find alternative sources as renewable resources as a fuel. At times, we hear companies utilising biofuels, ethanol-based fuels, which are carbon neutral in nature. But I am of the firm belief that we need carbon negative sources such as hydrogen and ammonia. Hydrogen is directly being used as a fuel, which has the potential to reduce the impact on the environment, particularly in the shipping industry. Same is true for green ammonia. It is not just green hydrogen but green ammonia because green ammonia can be stored at a lesser pressure, for example 10 atmosphere vis-a-vis hydrogen, which may require anywhere between 300 and 700 atmospheres. There are many ways where shipping industry can work towards reduce their emission impact. Can we

use batteries for shortest distances? This necessitates the deployment of heavyduty batteries. These batteries also require electricity, which can either be powered by solar, wind, hydro, or nuclear resources. By all these measures, about 2.5% impact can be brought down. I believe that the industry stakeholders are fast realising the harmful impact and are taking significant steps towards ensuring sustainable expanse. By taking small yet impactful steps, companies can design systems better and improve energy efficiency of the shipping business.

Measuring scope 3 emissions is very difficult since most activities happen outside of an organisation. What kind of ecosystem or infra an organisation requires in order to accurately manage / control scope 3 emissions?

Scope 3 emissions, also known as value chain emissions, are indirect GHG emissions both upstream and downstream of an organisation’s main operations. This usually means all of the emissions a company is responsible for outside of its own operations—from the goods it purchases to the disposal of the products it sells. It is often the case that Scope 3 emissions are by far the largest proportion of an organisations’ carbon footprint. However, they are also the area over which businesses have the least control and have the most difficulty quantifying.

Steel industry is not only highly energy intensive industry but a highly polluting industry as well. Around 2.38 tons of carbon dioxide is emitted per ton of steel produced and I think India will

produce about 120 million tons between 2020 – 2022 and it is likely to go to 300 million tons by 2030. One part of the solution is utilising green hydrogen. Another initiative that companies should fast explore is by depolymerising, repolymerising, upcycling and downcycling of plastics.

As far as the emissions are concerned, the so-called Scope 3 emissions, which are indirect emissions, companies need to ensure their suppliers are following the due diligence and implementing ecofriendly processes in their operations. For instance, transportation of raw as well as finished materials result in huge amount of CO2 emissions. Steel companies must evaluate and analyse the life cycle analysis along with their logistics service providers and ensure that they adhere to the international standards being laid down by the respective organisations.

The type of fuel used by ships has a direct impact on the industry’s carbon footprint. What alternatives the shipping companies have in this regard?

The shipping industry can use green hydrogen, green ammonia, and electrofuels. Using a mix of electro-fuels and electricity which are produced using renewable energy, plus some limited biofuels, the shipping industry can achieve the GHG goals and reduce emissions further. Production of electricity from renewable sources and battery storage technology is needed. However, further research and innovation are needed to scale up for production of zero carbon and carbon negative technologies. Policy framework for shipping industry is required.

The shipping industry can use green hydrogen, green ammonia, and electrofuels.

Using a mix of electro-fuels and electricity, which are produced using renewable energy, plus some limited biofuels, the shipping industry can achieve the GHG goals and reduce emissions further.

SUPPLY CHAIN NEEDS TO BE SUSTAINABLE TO BUILD A SUSTAINABLE BUSINESS

MR. PRABODHA ACHARYA, CHIEF SUSTAINABILITY OFFICER, JSW

The Chief Sustainability Officer (CSO) role is becoming increasingly crucial. In order to put ESG at the heart of value creation, how does a CSO and other C Suite leaders collaborate? Which are the top 2-3 elements that they must address?

I think today it's very clear that sustainability is a crisis of our generation and in fact, I am not really worried about sustainability of the mother Earth. I am worried about the sustainability of the

business and sustainability of human race because that's the biggest concern in front of us as to how do we run the business in the right way so that we can build a sustainable world where humans can thrive and lead so that sustainable business can thrive. Therefore, it is not possible to live sustainably if we erode and deplete our capitals whether it is economic capital, social capital or environmental capital and that is where, in a business context, specifically for a Group like JSW, the role of CSO is

becoming crucial. In my view, the CSO is emerging as the organisation's ‘Sense Maker in Chief’ as he makes a sense out of what's happening outside the business that can impact your business activities and ultimately guides the organisation to create a meaningful impact on the outside world.

The important aspects that a CSO must address starts with understanding the impact of the business on the external environment and bringing insights back into the organisations. He needs to direct the team in making the desired process changes and strategic changes to meet the objective. World Economic Forum, since the last five years, has been repeatedly informing that climate change inaction is going to be the topmost business risk. Top three are environmental related risk and out of top 10, almost all are sustainability related risks. Making changes into your long-term business strategy is very important and that is where CSO has an important role to play in influencing the decisions of the future including the present but more on the strategy side so that the organisation can reconfigure its business strategy.

The third and the most important aspect that a CSO must address is providing a thought leadership and help align teams by engaging, educating and connecting them under one roof to help them gauge its impact on the business. We all know that in business nothing moves faster if it is not related to the

finances, therefore it is very important that your CFO is aligned and that is where I see, as a CSO, I have seen that bringing in sustainability-linked finances to the organisations really brings tangible gains. Through this, the organisation actually commits to do better in their sustainability performance and therefore they attract finances at a cheaper rate. Every organisation needs finances for their growth. Now there are various means to raise those finances but if your ESG performance is better, then you attract finances easily. There are the instruments like green bonds, sustainability-linked bond, Social-linked Bond, which help companies to tread along the eco-conscious pathways. When you commit those targets with your financial performances, then you will be in the right track. As a CSO, I'll be happy to do that because that ensures me the entire organisation will align to achieve the sustainable targets and the buy-off becomes easy.

Then comes the crucial role of Chief Marketing Officers (CMOs) where the CSO has to work with them to design new products & services which is eco-friendly

and that is where this CSO get engaged with marketing and salespeople. Coming to digitisation, it is very important that digitisation drives the changes in the organisation and that is where possibly CSOs need to make that thought process changes. If you look at the CTOs or the R&D heads, it is a very important role for CSOs to influence the new technologies specifically in the manufacturing sector. In that sense, I can tell you that CSO has been touched upon each and every function of the organisation to drive these changes, in which a business can thrive going forward.

We would like to know any specific sustainable supply chain initiative undertaken by JSW…

First of all, let me mention it very clearly that supply chain needs to be sustainable to build a sustainable business because if you don't have both – Downstream and Upstream supply chain – your business will get affected. The fundamentals require organisations to work with supplier who are able to supply the quality of materials that you need in time so that you can run your business, but

that is not good enough, only looking at quality cost available just in time, it's not really good enough. We must ensure that we address those sustainability issues, which could impact our businesses in the long run. In this regard, at JSW, we have developed Supplier Code of Conduct that every supplier needs to adhere to. These codes of conduct are based on all the available international standards. We ensure that any supplier who wants to do business with JSW, has to first sign that code of conduct document and promise to meet all those requirements. The reason for this is that I always believe that if you don't get things in written, it will never be never get implemented. So the first step is to get it in writing. Once that happens, we ask suppliers to conduct self-assessment and then it has to be audited. Every business remains sustainable when you have a positive bottom line, the question is – how do you get to that bottom line?

Moreover, it is imperative that the carbon footprint is looked at from the Cradle to Grave angle. In the process, we look at our carbon emissions during the mining stage, the transportation stage,

material handling stage, so on and so forth. We work collaboratively with the big supplier because many-a-times, we are responsible for more emissions than they are.

How do you monitor and control that your suppliers deliver on what they sign for?

Let me very honest with you as I had mentioned earlier, you have to get things in writing, but then you have to have a monitoring mechanism in place to ensure that what has been signed for gets delivered and that is there the gap lies. Therefore, we must have a system for supply chain management and assessment in place to continuously monitor their performance on the sustainability parameters. To ensure that we achieve our sustainability target, not only we have given a policy statement, but we have also provided our suppliers with the necessary documentation that help them in this journey. We have developed an internal standard and as part of that standard, in the first phase, we ask our supplier to self-comply against the requirement and then selectively if somebody is telling they have a high level of conformance, we'll go back and get it vetted by external auditor or by internal

auditor. This process is still at an infancy, we have not yet matured in the process. We are looking at designing the system right and start this process. We have some time to achieve this objective.

Steel is recyclable, durable and requires relatively less energy to produce. This industry has made immense efforts to limit environmental pollution. With your rich experience in this industry, can you talk about circularity of value chain of this industry?

To start with, let me correct the statement… Steel industry is not a low energy industry, in fact, it is an energy intensive process. We really consume lot of energy and therefore we are also responsible for a lot of GHG emissions and therefore our focus now has been to figure out the possible ways to reduce our energy consumptions and the GHG emissions and circularity is one of the biggest levers in promoting reductions in GHG emissions and energy consumptions.

There are two things worth mentioning when we talk about circularity. Steel is a 100% recyclable material, entailing the first steel made

by the mankind is still in use and the recyclability of the steel is the largest of any material. It can be recycled infinite times, that's the circularity of the material itself. Another important point to highlight the steel industry’s efforts in supporting the circular economy. To make one ton of steel, you require almost four ton of materials. The question is what happens to the rest three tons?

I believe steel industries is probably the first industry, which supports circular economy in totality and utilises or reuses all the by-products whether it is a gas coming out of production cycle, or solid wastes or liquid effluents. All the gases, which come out, become an energy source, and support the energy transition and energy industry. All the dust coming out of the chimneys, gets captured and put into agglomeration and doubles us as a raw material. The waste material coming out from the iron making or steel making process, serves as an excellent input material for cement making. Similarly, all the slag, which is coming from this steel melting processes, gets converted into sand and with that, we are doing soil conditioning. We are also doing palletisation.

The Indian steel industry, in recent decades, has shown phenomenal growth. JSW Steel Limited is one of the fastest growing steel plants in India and has adopted the best practices and technologies available to mitigate the adverse environmental impact. The increasing use of plastics, its sustainable reuse and recycling, has become a serious environmental challenge. The company’s in-house pilot scale trials confirmed the sustainability of using plastics in electric arc furnace as a partial replacement of coke fines. EAF utilizes Coke fines to increase the foaming behaviour of its slag for stable arcing and reduced arcing time. A new technology to recycle Plastics in electric Arc furnace as a foaming agent has been developed and implemented by JSW Steel. This process helps in reducing approximately 1000 tons of carbon dioxide emissions annually due to reduced coke fines usage in addition to the reduction in usage of carbon bearing materials. The project also resulted in annual cost savings of Rs1.97 million. This is an excellent example where the wastes are becoming enablers in reducing

One of the greatest challenges the planet will face in the near future is to produce sufficient decarbonised energy to support the economic growth where operating excellence and technology innovation are the key factors for winning this challenge. JSW Energy is committed to shape a cleaner energy for fuelling future growth. The technological solutions to achieve this are available and are being developed. This decade will witness disruptions in technology of generation, storage and use of energy. JSW Energy is prepared to address and lead this challenge of energy transition.

the cost and also reducing one of the important GHG emissions. Now we are extending that and working on how we can use in other processes like iron making and coke making.

With all these measures, we are increasingly integrating circularity into all our policies and strategies when we talk about sustainability strategy or ESG strategy.

Are there any processes, which are outside of JSW and how do you manage them?

If you look at plastics itself, the generation of plastic is not within JSW. We have to develop a proper supply chain to ensure that it is available at the right quality and quantity so that it can be used efficiently. That itself is a challenge and that is where our foundation is working on that supply chain and that supply chain actually involves improving the social aspect, the economic conditions of the people who are used to collect those plastics. It is a holistic sustainability issue management and not only reducing carbon emissions. We are also looking at improving the quality of the people involved in the supply chain and we all know that plastic collection in India is normally handled by rack pickers who belong to low-income strata, and we are aiming to work holistically in the supply chain.

Measuring scope 3 emissions is very difficult since most activities happen outside of an organisation. What kind of ecosystem or infra an organisation requires in order to accurately manage / control scope 3 emissions?

From the industry practitioner point of view, we do not monitor Scope 3

emissions. In fact, we don't monitor any GHG emission, rather we calculate GHG emissions. There are two processes that the industry normally uses –Activity data multiplied with emission Factor. Most people use factor, which is international average, and you can take estimate of your activity data in scope 3, particularly it is a challenge when you do not have sector specific or national or industry specific emission factors established, then you go to a higher level of international emission factor, which is very average. The level of uncertainty in calculating Score 3 is very high.

There are many sustainably standards GRI ISB IFC CDP. Is there a feasibility of one or two common standards within your industry and outside?

ISSB is standardising the process but when you look at the international standards, all standards are not addressing the same issues. Some are reporting standards like GRI and many of the organisations are following and making that as a base such as Business Responsibility and Sustainability Reporting (BRSR), which is based on NGRBC (National Guidelines for Responsible Business Conduct), which in India, is a reporting requirement, but there are some strategic standards like Task Force on Climate-Related Financial Disclosures (TCFD), a strategic standard that helps to build your strategy to climate change management and also helps you reporting climate change related risk and opportunity. Corporate Accounting and Reporting Standard will be more helpful for Balancing Act for accountability as well as the reporting standard. I am of the firm belief that there is a need for unification and standardisations in the aspect. We should think of having one

reporting standard instead of multiple reporting standards.

Are there any new technological driven approaches available like (for example) to reduce use of Carbon and replace it with Hydrogen, which will generate water instead of CO2?

The maximum amount of greenhouse gas is coming from energy sector, but I think massive work is happening on the energy transition. The renewable energy is a different form, which is coming in a tremendous way and is also proving to be cost effective. At one point, I think, to decarbonise the entire world, we should start electrifying everything and that will be possibly easier solutions and cost effective solution, but there are a lot of promising technologies such as green hydrogen, which is going to be a phenomenal change and I believe the Government of India has taken right steps and specifically from a steel industry perspective, green hydrogen is going to play a very important role, but we are yet to see when it will become cost-effective for the adoption.

A lot of clean technology has emerged in the last few years, and I am witnessing maximum numbers of such impressive solutions coming from India. There are interesting solutions whether it is a biodegradable plastic, energy storage, making water out of the atmosphere, and the list goes on. I'm pretty hopeful that the younger generation is serious about it, and they will move this technology in a very faster rate than we can anticipate. Of course, we must all try to limit our temperature rise to 1.5 degree, but I think we should be able to, at least, be within 2 degrees.

The journey to sustainability doesn’t have to be long and winding. The right ESG analytics can help you prepare for many deliverables like investor reporting, implement carbon reduction plans, manage climate risk, align to Paris Agreement goals, and accelerate to net zero. By volunteering your ESG performance information, you’re demonstrating your organisation is protecting itself and its stakeholders from ESG risks.

ACCURATE CARBON AND GHG ACCOUNTING ARE IMPORTANT DUE TO EMERGING REGULATIONS AND A SHIFT IN THE AVAILABILITY OF CAPITAL.

DR. UMESH KULKARNI, PARTNER 3PS ADVISORY, SUSTAINABILITY CONSULTING

Identifying material issues which are relevant to companies’ risks is critical. Given this scenario, do Indian companies have a matured assessment model to identify the most relevant ESG issues affecting them?

Materiality encompasses all of those issues that organisations need to take into account when assessing their opportunities and risks. They are the issues they cannot afford to ignore. It allows businesses to:

w Report on non-financial issues

w Make more robust decisions about where to invest

w Assess new business opportunities

w Weigh up potential risks

w Enhance stakeholder engagement by offering insight into how the business functions

w Stay on top of regulatory and legal developments.

Organisations need to focus on those elements of ESG that are financially material to the way they do business. For example:

w Reduction of fuel consumption will have a more direct impact on a transport company’s financial position than on that of an accounting firm.

w Paper recycling is a large-scale undertaking for a print media organization,

w While pesticide use is high on the list of environmental issues for farmers

There are a number of ways to perform materiality assessments:

w The Sustainability Accounting Standards Board (SASB) Materiality Map, for example, offers a sector-bysector breakdown of how strongly

26 specific ESG issues impact on particular industries.

w Global Sustainability Standards Board (GSSB) issued GRI – 3 (Topic Standard), wherein the organisation is required to report Disclosure 3-3 Management of material topics for each material topic.

In today’s complex business landscape, companies can be held accountable for the behaviour of their suppliers, and so need a mechanism for surfacing activity in their value chain that might leave them open to ESG risk. Clothing retailers, for example, need complete transparency of where and how their stock is manufactured due to the industry’s history of exploitative employment practices.

If you see lately, all the industries, whether they are small scale, medium scale or the large scale, are identifying their own material ESG issues and they are trying to address them into their day-to-day working such as identifying the key stakeholders then brainstorming material issues, designing & conducting survey, analysing the survey’s insights, creating and executing an action plan. In last five to ten years, this is on rise, and it is it is going to be a key issue in next 10 years.

Key ESG materiality assessment steps include:

Step 1: Identify key stakeholders.

w Define your company's purpose and strategic objectives for the materiality assessment

w Create a list of stakeholders that considers both internal contacts and external contacts

w Build support with key internal and external stakeholders.

Step 2: Brainstorm material issues

w Engaging both internal and external stakeholders

w Identify both financially material issues as well as socially and environmentally material factors.

Step 3: Design and conduct a materiality survey

w Develop engagement surveys that ask key stakeholders to rank a list of material issues from one to 10

w Host discussions with key

stakeholders to gain deeper insights into their feedback.

Step 4: Analyze survey insights

w Review findings to explore gaps and opportunities for ESG issues.

w Use the resulting insights to create a materiality matrix

w Share results with key stakeholders and gather additional feedback.

Step 5: Create and execute an action plan and update your company’s materiality assessment regularly.

There is a new concept of “Double Materiality”, which was introduced recently with the updation of GRI Standards i.e., “Materiality is the effect of climate change on finance and corporate activities, while Double Materiality includes the effect of finance and corporate activities on climate change”.

Companies need to consider materiality from two perspectives:

w Economic, Environmental, and Social impact of the company’s activities on all stakeholders

w The impact of sustainability issues on the value of the company.

A company should start with the assessment of the outward impact followed by the identification of the subset of information, which is financially material to the company and of interest to financially focused stakeholder groups.

What are green corridors? In India, how do we establish this process? Do we need to incentivise and/or create a publicprivate partnerships to drive the success?

“A Wildlife Corridor, Habitat Corridor, or Green Corridor is a thin strip of land that provides sufficient habitat to support wildlife, often within an urban environment, thus allowing the movement of wildlife along it”.

They are planned or unplanned linear landscape elements that allow multiple ecological, social, cultural and other uses compatible with sustainable land use. Common Green Corridors includes railway embankments, riverbanks and roadside grass verges.

In today's era where we are witnessing a tremendous growth in infrastructure

projects, we are also witnessing a very silent change in the making. We all must know that most of these projects pass through the either wildlife habitat or the habitat corridors. In that aspect, the green corridor has become a MUST, which envisions to provide habitat to support wildlife.

Innovative and efficient technologies, practices, designs, and development come together in a smart green corridor to drive job creation, enhance water and soil resources, and increase community and economic value.

There are a lot of benefits of green corridors…

w Increased biodiversity by having more green areas in the urban environment

w Promotion of non-polluting mobility: bicycles or scooters, for example

w Reduced air pollution and noise pollution in the city

w Helping prevent heat islands from forming, effectively lowering the temperature

w Contributing to a better storm water management, i.e., rainwater.

In addition to the environmental benefits already mentioned, they also generate social, cultural, and economic benefits. For example:

w Improving people's quality of life by promoting physical activity and mental relaxation,

w Boosting the cultural scene with open-air auditoriums or buildings dedicated to exhibitions and,

w Tourist attraction that has a positive impact on the city's economy

I'll share with you one of the latest examples - In the Samruddhi Mahamarg project, which spreads from Nagpur to Mumbai, I was elated to see that Ministry of Environment & Forest (MoEF) and Climate Change Government of India made it mandatory for the project proponent – MSRDC – to ensure green corridors planned for the 701 km stretch because it is passing through a great amount of wildlife. To their satisfaction, MSRDC did follow all these green corridors and they are now coming out with the Green Corridors along the way.

Additionally, Indian Railways has

taken the initiative to start the green rail corridors. North-Western Railway has also declared two big green corridors in Rajasthan, even in the state of Gujarat, they are coming up with the green corridor. The importance of Green Corridor has now become very prominent, and I think that every project, which is non-urbanised or going through the nonurbanised areas, should have the green corridors for the betterment. This is the most important movement taken by the Central Government. Green Corridors are now even aimed at contributing towards the Swachh Bharat Abhiyan.

Is there a possibility to start using the maritime green corridors in some other lanes because if you see the Pan American ways or some of the Australian and Singapore kind of Pacific ways they're already in practice?

Definitely we can try it, but it’s not easy to achieve that in India as we have to circumvent many local challenges such as dealing with fisher community. Having said that the government is proactive, but then a lot of political interference certainly plays a big role in implementing and developing such Green Marine corridors.

There is a greater need to have transportation ships to have green energy for its manoeuvring. It could be phasewise, but with minimal time to achieve 100% using solar power ships. The hybrid versions with good quality fuel, which has low carbon emission combined with solar power, will be an effective and efficient way to use maritime green corridors. To achieve 100% green energy induced ships, it is assumed that for large dimension ships, it could be achieved in a period of 5-10 years, whereas for smaller DWT ships, it could be done in 3-5 years. In this initial period also, they should achieve stage wise green energy power

so that there will be a dedicated Green Maritime Corridor established.

How far are we from investing in Carbon as a new Asset Class? The logic behind these investment decisions, is that these exposures can act as portfolio diversifiers, allowing investors a way to price carbon risks in their portfolios for future.

Accurate carbon and GHG accounting are important due to emerging regulations and a shift in the availability of capital (towards more sustainable companies). Many companies measure their carbon

impact by conducting a Life Cycle Assessment (LCA). Carbon accounting is now becoming a requirement and it is important for businesses because it helps them to set goals for reducing their carbon emissions and preventing climate change. Our financial institutions are not yet fully ready to cope up with this kind of situation. I think it is still at a primitive stage and to overcome this problem will take some more time.

With rapid decarbonization and active transition to net zero in next 5 years on the anvil, we require a workforce which will drive the economies to net-zero goals. Do we have experienced senior leadership to cultivate and grow future leaders?

Formal environmental regulations as well as informal social expectations are pushing many firms to seek professionals with expertise with environmental, energy efficiency, and clean renewable energy issues. Decarbonization represents significant economic opportunity, but it also presents risks for workers whose jobs may be affected by climate change and disruption in the low-carbon transition.

I don't think the generation next is really ready with the green collar workforce because the age group of 25 – 40 projects that they know everything about ESG but when you really interact with them, then you realise how superficial their knowledge is in this matter. It requires a lot of efforts for this generation to really make them into a Green Collar workforce because it is going to be a right transition time for them to move from the blue collar job to white collar job and now to a green collar job.

I think it is imperative that the senior leadership should impart knowledgebased seminars and curriculum to make it really environmentally conscious design policy and technology. It really requires a formal knowledge, formal implementation or formal experience into creating this kind of green collar workforce because anything and everything related to environmental conservation is a green collar job, but actually to deal with the climate change and the green column, workforce is a different story because there are about

15-16 type of jobs, which are categorised as green collar job, implementing environmentally conscious design, policy, and technology to improve conservation and sustainability.

Sports is fundamental to the wellbeing of communities. How Sports as an Industry can play its role in achieving sustainable goals?

Sport has proven to be a cost-effective and flexible tool for promoting peace and development objectives. Sport is also an important enabler of sustainable development. We recognise the growing contribution of sport to the realisation of development and peace in its promotion of tolerance and respect and the contributions it makes to the empowerment of women and of young people, individuals, and communities as well as to health, education and social inclusion objectives. Sport contributes to well-being regardless of age, gender or ethnicity, and are fully in harmony with the SDGs, particularly with regard to health (Goal 3: Ensure healthy lives and promote well-being for all at all ages).

Furthermore, sport in its most basic form encourages balanced participation and has the capacity to promote gender equality (Goal 5: Achieve gender equality and empower all women and girls). Sport contributes to making cities and communities more inclusive (Goal 11: Make cities inclusive, safe, resilient, and sustainable).

Apart from contributing to and for SDG, Sports, as a carbon emitting issue, is one of the most important aspects that no one has looked after so far or have ignored. If you see the recent reports of what has happened during the World Cup in Qatar, people have to take corrective action in the decarbonisation for sports.

It also applies to various annual mega events in every sport such as Lawn tennis, cricket, baseball, etc., which are played in the open arena or in stadium. The construction of stadiums and various other attributes to make the event successful, utilises lots of substances, which cause Carbon its life cycle i.e. Cradle to Grave.

‘QUICK’ Delivery Masters

“Quick commerce is all about short distances over fast speed. Zepto has made 10-minute deliveries a reality by strategically placing delivery hubs that cover a radius of 1.7 kilometres, lower than any other hyper-local player in the country. To break it down – it takes under two minutes to pack the order and give it to the delivery partner and eight minutes to complete the delivery. To travel 1.7 kms within 8 minutes, the rider’s speed has to be 21-22 kmph, which is also much lower than an average biker on the road. While we’re ambitious and driven to disrupt, we are taking a People-First approach and the safety of our riders will always be our top priority,” highlights Vikas Sharma, Senior Vice President – Operations, Zepto, in this exclusive interview…

You have been a part of the transformative e-commerce domain in the past few years. Kindly highlight some of the biggest pathbreaking and defining moments in this journey. The e-commerce industry has been on a roller coaster with its fair share of ups and downs. Scepticism prevailed in the industry for a long time, especially in 2011 with investors exploring the space more cautiously. However, as experts understood the potential of the industry, investments began to roll in millions for several e-commerce companies that are doing supremely well in the market today. The category has evolved into one of the most successful, high-value business categories today, still there are several potential areas yet to be tapped within the segment. And that will continue to evolve as increasingly more consumers fall in love with the convenience of e-commerce. Consumers all over the country are shopping online today. Their preferences are changing, behaviours evolving, and they are more regularly engaging with online stores as compared to shopping in-person. That’s not just limited to tier I cities or metros. The nooks of the country are potential markets for e-commerce businesses. That

also means more scope for diversification, and greater responsibility to serve the consumer right.

Quick commerce landscape has been shaping up faster than one can even imagine. What are the factors that led to this growth?

The advent of quick commerce, especially for groceries, offered consumers the convenience to have their needs delivered at their doorsteps within minutes. Zepto started in the midst of the pandemic to make it easier for people to acquire groceries without having to step out or wait for hours and days. But people got used to the convenience, and our customer base continued to expand even as physical stores reopened. Products like fresh fruits and vegetables, milk, bread, and similar items, which were traditionally bought offline, were some of the highest searched products on Zepto in 2022. The ease of quick deliveries has seeped into people’s behaviour, and they’re increasingly leaning on our services for almost all their essentials. While groceries continue to lead the way, we have diversified our categories and are making a greater range of products available for 10-minute delivery. That

has led to order values going higher, and Zepto is gradually becoming a part of people’s every-day lives.

What sets Zepto apart from its competitors?

At Zepto, we take a lot of learnings from data to improve customer experience.

Vikas has over 12 years of rich & diverse exposure with FMCG & startups like Zepto, Flipkart, Pepperfry, Supermax Personal care across various Supply Chain & Customer experience roles. He has built a large scale setup from scratch, best in class unit economics with superior customer experience. He has got great exposure to work with founders & investors, gained rich business expertise along with building a high performance Culture. He is an astute operations professional with a Post-Graduate (PGDIM) from NITIE.

We’ve noticed that 10-minute delivery is a strong point of gratification for our customers. And this makes it important for us to double down on this core proposition of ours while making improvements that allow greater delivery accuracy. From the business perspective, we have been determined to enhance our capital efficiency and unit economics since day one. We are seeing our mature markets turn cash flow positive, which has been because of the efficient supply chain and solid focus on unit economics.

How is Zepto disrupting the last mile delivery?

Maintaining the highest levels of customer satisfaction and yet keeping up with the speed of last-mile delivery is complex, and our riders play the most critical role in ensuring that we do it right. That is why, we take special care of our riders and delivery teams, who are efficiently acquired through our

inhouse sourcing teams. We offer 100% support through our Support Centre for our riders. Our centers and warehouses/ stores also have allocated washrooms and spaces for riders to sit and rest. The safety of our riders is paramount, and we extend insurance policies along with training on traffic rules, communication, as well as professional development to encourage a better learning curve. Moreover, we also implement wisely formulated planning techniques to predict demand patterns, accurately forecast day-hour supply requirements, and cut down costs while ensuring a highly efficient execution system that can quickly adapt to changing demands.

While 10-minute delivery sounds quite promising for consumers. We are interested to know the science and mechanics behind achieving the arduous task.

Quick commerce is all about short

Erratic demand patterns, unforeseen situations and upkeeping perishable products can sometimes be a challenge in managing the supply chain. At Zepto, we overcome them with targeted solutions for each of our key challenges. To manage seamless deliveries during festive seasons and weekends, we host an inhouse proprietary tool to better forecast the demand and be ready with supply in the back end. We directly procure perishable products like fruits and vegetables from the farmers to ensure freshness. Our cold storage supply chain takes care of the upkeep of temperature sensitive products.

distances over fast speed. Zepto has made 10-minute deliveries a reality by strategically placing delivery hubs that cover a radius of 1.7 kilometres, lower than any other hyper-local player in the country. To break it down – it takes under two minutes to pack the order and give it to the delivery partner and eight minutes to complete the delivery. To travel 1.7 kilometres within eight minutes, the rider's speed has to be 2122 kmph, which is also much lower than an average biker on the road. While we're ambitious and driven to disrupt, we are taking a people-first approach and the safety of our riders will always be our priority.

What are the challenges that you encounter in managing the supply

chain? How do you circumvent them?

Erratic demand patterns, unforeseen situations and upkeeping perishable products can sometimes be a challenge in managing the supply chain. At Zepto, we overcome them with targeted solutions for each of our key challenges. To manage seamless deliveries during festive seasons and weekends, we host an inhouse proprietary tool to better forecast the demand and be ready with supply in the back end. We also ensure perks like higher incentives, flexible shifts, and food arrangements for our riders during peak festive seasons. Unforeseen situations such as heavy rain causing floods and traffic are also addressed by additional incentives and surges to motivate riders and manage delivery time expectations with the customers. Finally, we directly procure perishable products like fruits and vegetables from the farmers to ensure freshness. Our cold storage supply chain takes care of the upkeep of temperature sensitive products.

Supply Chain Network Design is a critical pillar in ensuring quick deliveries. How does Zepto manage this?

Network design for Q-commerce is an intricate component and we rely heavily on processing location data to strategically position our stores. From identifying dense residential concentration to determining optimized polygon size, a lot goes behind discovering the perfect location for a dark store to ensure a pleasant delivery experience for both our stakeholders (i.e., quicker deliveries for the customer & shorter deliveries for the delivery partner).

We use complex machine learning algorithms to predict demand clusters and utilize multiple platforms to visualize geospatial data. After gathering intelligence on geographical conditions (such as Railway tracks, highways, road obstructions), access routes (such as U-turns, internal roads) and traffic conditions, geo boundaries are established. The ideal store location is then determined after mathematically and geographically processing the most efficient way of serving the demand in the polygon which essentially means serving the maximum customers within shortest possible delivery times. As and

Network design for Q-commerce is an intricate component and we rely heavily on processing location data to strategically position our stores. From identifying dense residential concentration to determining optimized polygon size, a lot goes behind discovering the perfect location for a dark store to ensure a pleasant delivery experience for both our stakeholders (i.e., quicker deliveries for the customer & shorter deliveries for the delivery partner).

when we introduce more stores in the ecosystem, we re-evaluate the network geo boundaries for more optimal delivery time solutions.

Technology will be a crucial enabler in achieving the mean feat. Kindly enlighten us on this and what are the tech tools you have deployed at Zepto?

One of the biggest factors that helped us bring the quick delivery of online groceries to life has been our attention to detail. Right from setting up the foundation of the app, geo-fencing, and the back-end support tech at the start, to now looking at micro-optimisation of the customer journey on the app, our focus has always been to enrich customer experience. Our tech solutions have led us to predict ETA more accurately, set efficient route navigation systems for our riders on the road, stabilise supply chain and fulfilment at mother hubs, track real-time trends and predict demand,

improve inventory management, as well as reduce wastage. Overall, improving the TAT (turnaround time) across all functions has been the key to Zepto’s 10-minute delivery success.

We would like to know more about Zepto’s ‘return and recycle’ initiative. What’s your take and stance on sustainability in the supply chain? Our Return and Recycle initiative was born out of our understanding of our customers’ behaviour. An increasing number of customers had reached out to us at Zepto wanting to understand if they could return bags that weren’t of use to them. Leaning into our conscious customers’ ask, we implemented this insight into our last mile. Customers could opt to return bags to our delivery partners while receiving their orders –making a positive impact by encouraging reuse and cutting down wastage. The response to this initiative inspired us to take it further, and we’ve extended the

model to plastic collection. Partnering with Coca Cola, we led a successful 45day pilot at select stores and now plan to expand the scale of this initiative across the country. Our strong last mile delivery network has been instrumental in the success of these efforts, and we will continue to invest in unique initiatives like these to contribute towards building a more sustainable world.

How upbeat are you about the future that will unfold in the near future as far as e-commerce and quick commerce is concerned?

As pioneers of quick commerce in

India, we are building a sustainable model that will set global benchmarks in both efficient logistics and customer satisfaction. As we continue to grow, industry reports have also indicated that India’s quick commerce sector will grow by as much as 15 times over the next five years, touching $5 billion by 2025. An increasing number of consumers rapidly adopting quicker deliveries for every-day needs will lead to shortening of delivery times for more categories. With homegrown and small businesses joining the industry, we are positive about talent demand going higher. Additionally, as orders continue to

One of the biggest factors that helped us bring the quick delivery of online groceries to life has been our attention to detail. Right from setting up the foundation of the app, geo-fencing and the back-end support tech at the start, to now looking at micro-optimisation of the customer journey on the app, our focus has always been to enrich customer experience. Our tech solutions have led us to predict ETA more accurately, set efficient route navigation systems for our riders on the road, stabilise supply chain and fulfilment at mother hubs, track real-time trends and predict demand, improve inventory management, as well as reduce wastage. Overall, improving the TAT (turnaround time) across all functions has been the key to Zepto’s 10-minute delivery success.

increase for fresh fruits and vegetables, the farmer ecosystem is likely to reach more audiences through quick commerce platforms through critical innovations in supply chain systems.

What are the trends we are yet to witness in the next year as far as the quick commerce supply chain is concerned?

2022 was the year of quick commerce where we witnessed an increasing preference for quicker delivery times. In the coming year, we’re optimistic that the need for quicker delivery times will only continue to grow. Trends like warehouse automation for better efficiency, use of EVs with customised bikes designed for last mile delivery, higher retention and sustainability, innovation to increase storage capacity will be the driving forces of this change. Additionally, Investment in new technologies is likely to grow to optimise supply chain and logistics operations to expand the range of products offered on quick delivery and reduce the delivery cost over time.

We are doubling down our efforts to not only meet the customer demand for groceries, but also expand our horizons and make deliveries across wider categories in 10-minutes a reality. In addition to adding more product categories for delivery, we are driving the applicability of our business model to Zepto Cafe, where you can order snacks and tea from well-known brands within 10 minutes.

What’s your views on the fast shaping up EV trend in last mile delivery? Is Zepto taking the EV route?

Considering the sustainability and unit Economics focus, EVs, in last mile delivery, are one of the key focus areas for Zepto. EVs bring down the variable cost for riders by 80% leading to higher earnings and reduced cost. There are a bunch of challenges like pickup speed, battery range, efficiency and safety, vehicle endurance and safety which exist in the present ecosystem. We are working with OEMs on solving these challenges and building solutions from scratch.

DAVOS DIARY

Trade, Tech and Tackling the Climate Crisis were the 3Ts that hogged the limelight during the recently concluded World Economic Forum in Davos. The indispensable role of supply chain in the global trade dynamics remained the spotlight of every discussion during this decisive global forum. Experts unequivocally iterated that global, interlinked crises require global, interlinked solutions. Here’s a quick recap of stance that unfolded at WEF…

THE scale of the challenge, the sense of urgency, and the importance of collaboration was a thread that linked all the discussions at Davos, whether on Ukraine, the climate crises, supply chains, technology and innovation, health, the economy and so much more. The 53rd Annual Meeting in Davos covered a huge range of topics and themes at a difficult time for the global community as it faces a series of interlinked crises – as this year's Global Risks Report explained, a POLYCRISIS. It's against this backdrop that global leaders met under the theme 'Cooperation in a Fragmented World'.

“We see the manifold political, economic, and social forces creating increased fragmentation on a global and national level. To address the root causes of this erosion of trust, we need to reinforce cooperation between the government and business sectors, creating the conditions for a strong and durable recovery. At the same time, there must be the recognition that economic development needs to be made more resilient, more sustainable and nobody should be left behind,” said Klaus Schwab, Founder &

and there is consistent 6-8% growth rate for a complete decade with moderate inflation.”

Second, as the world moves towards resilient supply chains, India must figure out how to ‘attract a large number of supply chain participants’ while using local research and development capabilities. The third and fourth cover areas of energy transition and digital transformation.

The Minister highlighted that India has been able to achieve ‘high growth, moderate inflation’ despite global economic turbulences.

He further stated, “India has emerged an important destination for companies to expand their supply chain footprint with the government undertaking several initiatives such as production-linked incentive (PLI) schemes and abolishing archaic laws and compliances.”

encouraging sign,” he said.

"Despite all problems with the global commons we face today, we can't solve them without multilateralism, cooperation and trade. We should not throw out the baby with the bathwater,” emphasised Ngozi OkonjoIweala, Director General, World Trade Organization (WTO). “Likewise, several speakers observed that despite the polycrisis we find ourselves in threatening a fragmentation of global trade, multilateralism and cooperation remain effective tools for prosperity. If the world decouples into even two blocks that would cost us 5% of real global GDP. Global economic fragmentation, including friendshoring, is bound to be expensive because it will lead to inefficiencies and duplication and thus to inflation.”

KEY SUPPLY CHAIN TAKEAWAYS EMERGED AT DAVOS

Executive

Chairman, World Economic Forum.

During a panel discussing ‘India’s Road to a $10 Trillion Economy’, Ashwini Vaishnaw, Minister of Railways, Communications, and Electronics & Information Technology, highlighted four key factors that will make all the difference: “The first dimension is to make sure India’s economy is resilient,

“People want effective and resilient supply chains. Cost efficiency is ‘no longer the sole factor for the supply chains to be differentiated’. Supply chains have to work with whatever the magnitude of global disruption may be. There would be many supply chain partners who are looking at alternate geographies or new places. And India is of course a very important destination.”

“Assembly activities have increased in India over the last one-and-a-half years, and the wider component supply chain is shifting into the country. Homegrown companies are building components as well as playing a critical role in many parts of the supply chain, which is a very

Trade and investment emerged as an overarching theme in this year’s Annual Meeting in Davos. Over the last 12 months, despite widespread inflation; supply chain issues lingering since the COVID-19 pandemic; geopolitical shocks, including Russia’s invasion of Ukraine; and talks of deglobalisation and geoeconomic fragmentation, global trade touched a record volume of $32 trillion.

Speaking at Davos 2023, Kristalina Georgieva, MD, International Monetary Fund (IMF) urged the international community to stay realistic about the

prospects of an economic recovery. She also issued a stark warning on the potential for global fragmentation of trade to slow or even reverse the fragile global economic recovery. She urged governments and the private sector to ‘be pragmatic, collaborate’ and ‘keep the global economy integrated for the benefit of all of us.’ On supply chains, she said, “If we diversify rationally, the cost of this adjustment would be low. We put it down to 0.2% of GDP. If we are like an elephant in a China shop and we trash trade that has been an engine for growth for so many decades, the costs can go up to 7% loss of GDP: $7 trillion.”

SUPPLY CHAIN DISRUPTIONS TO EASE IN 2023 AS FIRMS ADAPT

The World Economic Forum's (WEF) Chief Economists Outlook, produced for the WEF's annual meeting in Davos, found half (50%) of experts considered it either somewhat or extremely unlikely that there will be an adverse impact from supply chain factors. The report said this reflected “significant stabilisation after Covid-19 restrictions and integration of war-related disruptions in business planning”. Just one in five (23%) chief economists expect supply chain disruption to have a significant impact on businesses in 2023, according to a report. More than three-quarters (77%) of respondents expected businesses to respond to headwinds by optimising

supply chains.

Fernando Honorato Barbosa, Chief Economist, Banco Bradesco, said, “Businesses will face a completely different economic environment from now on. We have not seen such a combination in decades: high rates, geopolitical uncertainties, energy insecurity, and the need to rethink the global supply chains. Amid that, there is a need to innovate, protect the environment, become more inclusive and reskill the labour force. No CEO has the roadmap to address these challenges in a smooth and predictable way. They will have to take larger risks and, as usual, face the burden of their decisions. Nearshoring and reshoring are expected to take hold this year as geopolitical trends overall are expected to continue to redraw the map of global economic activity.”

Every respondent viewed it as likely (73% somewhat, 27% extremely) that economic activity will continue to reallocate around the world along new geopolitical faultlines. The wider economic impact of these geopolitical realignments will be felt through trade, investment, labour and technology flows, creating ‘myriad challenges and opportunities for business, even as supply chain disruptions are seen to impose a relatively low drag on business activity in the coming year’.

Bangladesh and India may benefit from global trends such as a diversification of manufacturing supply

chains away from China, the report said. Honorato Barbosa continued, “The long-term sustainability of a business has never been so dependent on these multidimensional factors. Taking care of its cash positions in an environment of worsening financial conditions is solely the starting point but might not be enough to grant the survival of a company in this new era.”

“Forging resilience, integration and financial robustness with an eye on the people and nature will be mandatory. The risk of de-globalisation and acting to fulfil only the company’s own interests is real, but that is not in the best interest of society. Easier said than done, but true leaders will be called into action like no other time in the past.”

END-TO-END GHG REPORTING OF LOGISTICS OPERATIONS

At the World Economic Forum Annual Meeting in Davos, Smart Freight Centre and the World Business Council for Sustainable Development (WBCSD) released a new guidance to advance the quantification and sharing of logistics emissions and support the logistics industry on their journey to net-zero emissions. The objective of this guidance, ‘End-to-End GHG Reporting of Logistics Operations’, is to enable companies to better understand and track their logistics emissions on a granular operational level and seeks to quantify the footprint of

end-to-end logistics emissions, from supplier to final customer, with focus on primary data calculations.

Special focus was dedicated to multimodal logistics solutions, including ocean, road, train and air transportation. It sets out the data requirements, introducing a data quality index and the associated assurance requirements to support businesses in the implementation of their decarbonisation strategies.

This guidance builds upon and complements two existing frameworks. The first being the Smart Freight Centre’s Global Logistics Emissions Council (GLEC) Framework 2.0 – the globally recognized methodology for accounting and reporting of logistics emissions. The second being the WBCSD’s Pathfinder Framework – the guidance for accounting and exchange of product life cycle emissions.

In practice, the guidance provides solutions to core challenges faced in reporting of logistics emissions: reporting at a customer required level and from network operations; the combination and comparison of Scope 3 data with varying levels of granularity and differing reporting methodologies used; and, finally, a recommended assurance process to increase trust and confidence.

This guidance is a springboard to further increase carbon visibility by enhancing emission data sets and the exchange of emission data that can be deployed in the industry.

IT'S ALL ABOUT COLLABORATION…

Barbara Frei, Executive Vice-President and Chief Executive Officer, Industrial Automation, Schneider Electric, stated, “Headwinds had severe repercussions on supply chains, and catapulted operational resilience, agility, sustainability to top of corporate agenda. ‘Lighthouses’ guide other players in the sector as they seek to overcome challenges and scale opportunities of the 4th Industrial Revolution. The next chapter in the industrial transformation story is to take the power of digitised manufacturing systems and apply them not just to single sites, but across organizations’ entire production and logistics networks and supply chains. These networks can consist of dozens, even hundreds, of sites – manufacturing facilities, warehouses and the like – in many different countries and continents. Schneider Electric, for example, has close to 200 factories, over 80 distribution centres and thousands of suppliers with whom we’re working

closely to tackle our scope 3 carbon emissions. To address the seemingly endless string of crises around us, companies need to fundamentally rethink how they approach industrial transformation – ensuring it happens in a systemic, digital, data-driven and holistic way that allows them to scale value and operational performance across multiple sites, throughout the entire enterprise.”

Børge Brende, President, World Economic Forum, in his closing remark, stated, "In an uncertain and challenging time, one thing is clear. We can shape a more resilient, sustainable and equitable future, but the only way to do so is together." For him, global trade systems are a 'lynchpin' for growth and resilience.

António Guterres, Secretary-General, United Nations, strongly emphasised, "There are no perfect solutions in a perfect storm. But we can work to control the damage and seize opportunities. Now more than ever, it’s time to forge the pathways to cooperation in our fragmented world."

Source: World Economic Forum

Trending GL BALLY

India’s logistics growth story continues to remain resilient

Industrial and warehousing demand rose 8% year-on-year across the top five cities in India in 2022. Average quarterly leasing last year remained strong at 6.1 mn sqft, up from 5.7 mn sqft in 2021, according to Colliers. Third-party logistics players (3PLs) remained the top occupier of warehousing space, contributing to about 44% of total demand in the sector during 2022.

“As consumer demand remains upbeat, 3PL players, e-commerce and retail companies are leasing industrial and warehousing space to cater to this growing demand. At the same time, there has been a spurt in demand for spaces from engineering companies. Improved market sentiments are expected to keep the momentum in the sector high," the report said.

Delhi-NCR led demand during 2022, with a 36% share, followed by Pune at a 23% share in total leasing activity, backed by robust demand from 3PL, engineering & electronics players. Tauru road and Luhari saw a majority of the demand in Delhi-NCR, while Bhamboli continued to attract industrial and warehousing occupiers in Pune.

“The fundamentals remain strong for India’s industrial demand and Production Linked Incentive (PLI) schemes announced for key sectors by the government are expected to further boost local production fuelling demand for organised industrial spaces and warehousing facilities. China plus one strategy is gaining more vigour and global companies are keen on shifting their manufacturing focus to India as part of their de-risking strategy. This would be a key trend to watch out for this year," said Shyam Arumugam, MD, Industrial & Logistics Services, Colliers India.

“The Indian logistics growth story continues to remain resilient and is further progressing on an accelerated growth trajectory owing to the focus on companies catering to changing consumer behaviour across India. The convenience of shopping/returns, improved UPI adoption, omnichannel retailing, etc. have led to

e-commerce demand growth thereby translating into demand for more warehousing capacities, especially to augment last-mile connectivity in Tier I and Tier II cities this year," it added.

During 2022, demand from engineering and electronics firms surged more than 2X (YoY), while their share in the leasing pie rose from 13% in 2021 to 28%. About 70% of leasing in engineering and electronics were large-sized deals (>1,00,000 sqft) as they ramped up their operations across cities. DelhiNCR and Pune were the most preferred locations for these firms. “Large deals (deals > 100,000 sqft) contributed about 70% of the demand during 2022. Amongst the larger deals, the share of 3PL, engineering and electronics companies remained the highest. Demand from engineering and electronics is picking pace with a rise in consumption and easing of supply chain bottlenecks. We expect engineering and electronics companies to continue to take up larger spaces in the next few quarters as fundamentals remain strong," said Vimal Nadar, Senior Director, Research Colliers India.

While demand remained robust in 2022, markets remained restricted with supply. During 2022, there was about 19 mn sqft new supply, a 20% decline YoY. Developers went slower with new supply as the cost of construction remained volatile during the year. They remained cautious and awaited pre-commitments. Consequently, this led to a drop in vacancy levels amid robust demand, the report said.

Supply is likely to remain under check, thus rents are likely to firm up over the next few quarters. However, this would largely depend on how the economic and business environment pans out. Going ahead, there will be a greater focus on sustainability and adoption of technology to bring in greater operational efficiency, mentioned Colliers.

Sneak peek into the Museum of Procurement

A Museum of Procurement has been opened at the University of Arkansas (U of A) in the US to encourage innovation in the profession. The museum, a collaboration between procurement analytics firm Arkestro and the university, features reproductions of influential procurement documents and instruments from around the world.

The attraction forms part of the U of A’s Supply Chain Hall of Fame, which showcases notable procurement professionals from throughout history, including Taiichi Ohno, creator of the Toyota Production System and just-in-time sourcing. The museum chronicles the evolution of the procurement function and includes the earliest example of a goods receipt found in Babylon written in cuneiform – one of the oldest forms of writing known to man. Other exhibits include the invention of the general ledger, double entry accounting, the development of enterprise resource planning systems and the creation of the internet.

Remko Van Hoek, Supply Chain Management Professor, U of A and Executive Director of the Supply Chain Hall of Fame, said, “For most businesses, securing the right materials, resources or services is a core element of an effective, fully functional supply chain. By spotlighting contributors to our profession in the Supply Chain Hall of Fame, we hope to stoke the enthusiasm of current and future leaders as they tackle challenges, drive innovation and continuous improvement. That’s why we are delighted to host Arkestro’s Museum of Procurement: it celebrates how today’s approaches come from a storied history and a grand tradition stretching back to antiquity and hopefully

New technologies are required to assess carbon content of new fuels

A new report from Lloyd’s Register Maritime Decarbonisation Hub and Safetytech Accelerator concludes that new technologies are required to assess accurately the well-to-wake carbon content of new fuels, such as hydrogen and ammonia. Noting that the fuels of tomorrow can come in various forms – grey, blue, or green – the report highlights findings of a feasibility study on tracking the true carbon intensity of fuels over the entire supply chain. As things stand today, ship operators lack clear visibility of the processes by which fuel is produced, delivered, and supplied to ships, the report points out. This presents a range of challenges, both upstream and downstream. In an upstream context, fuels could have an electronic guarantee of origin (GO) certification to prove that they had been produced meeting specific quality criteria and methods. Downstream, isotopic ‘fingerprinting’ and ‘marking’ processes could be established, the report suggests, although rigorous protection and security would be required to prevent cheats from passing off blue or grey fuels as higher-cost green ones.

The report points out that there are no regulations currently in place to address these and other issues relating to the true carbon content of tomorrow’s fuels. Even as life cycle assessment (LCA) methodologies and regulations are being discussed, the scope for widespread non-compliance still remains a challenge while

inspires efforts to further the field.”

Van Hoek said he hopes the museum will “create opportunities to learn from the best innovations and leadership accomplishments in procurement and supply chains to date and hopefully get inspired to innovate going forward, given how far we have to go”.

The hall of fame was established online in 2015 by the Council of Supply Chain Management Professionals (CSCMP) and was later introduced as a physical hall in the U of A in 2020, where it highlights notable leaders in the function and supply chain innovations. Inductees include Jeff Bazos, founder of Amazon, and Henry Ford, founder of the Ford Motor Company. The CSCMP said its goal was “to energise the next generation of talent – both professionals and students – as they unleash their creativity and passion to pave the way for the supply chain of the future”.

there are no robust methods to assure fuel carbon intensity effectively.

5-point plan on supply chain digital transformation

‘New normal’ for supply chains looks nothing like the prepandemic ‘normal’. Stability and predictability have been replaced with economic, societal, and geopolitical shocks. To combat the uncertainty and disruption that has become commonplace, businesses are increasingly looking to digitalise processes and operations, with supply chain and procurement being two areas that can deliver competitive advantage if organisations have the digital visibility needed to navigate the never-ending headwinds. McKinsey has recently published a five-point guide for organisations seeking to digitally transform…

Target senior digital leaders: Ultimately, performance is defined by your talent and technology strategies and the capabilities of the lead data scientists who are driving the transformation. Such people shape your organisation in multiple ways: screening and hiring candidates, establishing technical standards, and setting the tone for ways of working, such as collaborating, innovating, and maintaining high quality. Selecting the right individuals for these roles will define the success of your digital transformation. Therefore, it is vital to invest the time needed to conduct a broad search. The chief digital officer (CDO) is a key contributor to your employee value proposition. The CDO’s experience and credibility will help convince top-tier talent to join the company, which plays a crucial role in achieving the initial wins needed to gain traction, such as successfully developing digital products or setting up technical infrastructure.

Rethink digital-talent value proposition: It is important to consider the local hiring market and talent pool, as well as factors specific to your industry sector, and strive to improve your own work environment in a local context. Consider how your industry can appeal to each individual candidate’s specific needs. To stand out, you need to be committed to a modern technology stack. Understand the factors that motivate different categories of candidates and adjust your pitch – and work environment – accordingly. Offer development opportunities, including top-tier training programs, or access to educational conferences.

Be realistic about reskilling: Not all digital talent comes from outside your organisation; most companies have untapped pockets of digital talent. Not all digital products require sophisticated skill sets. Companies with strong nondigital talent can cover most of their digital needs by upskilling current employees. Being able to spot these people is vital and can be achieved via techniques such as skill surveys. The first employees to upskill would be those with high data and technical readiness and who benefit from strong business sponsorship. Beyond this, companies should place internal hires in positions where they can learn and grow while working alongside more experienced engineers, whether these are hired externally or staffed via a third party.

Build learning & development programs: Skills development must extend beyond training because the pace of technological change makes setting up formal training programs difficult. This is why an on-the-job apprenticeship model works well. This push toward ongoing learning applies both to junior and senior employees. Ideally, they should spend half to twothirds of their time actively doing day-to-day work. This way, everyone is involved in developing the final product, improving both upskilling and retention. At Google most training happens via an employee-to-employee network called G2G (Googler-toGoogler). Members of the 6,000-person network offer their time to help peers develop.

Leverage temporary contractors: Embedding new skills and culture is vital for the success of any transformation. However, there are trade-offs to be considered between quick wins and sustainability. All companies need these skills; the question is how much, and when. Contractors can help speed the early stages of a transformation. A number of strategies can help here: Ensure early product ownership by internal teams; Involve employees on teams from the start; Encourage employees to get out of their comfort zones; and Establish strong protocols and ways of working from the outset.