Being a member of the Godrej Family, which was the first one to make products which displaced entrenched foreign labels, for Nadir Godrej, business as well as poetry, runs in the blood. Nadir Godrej, the Managing Director of Godrej Industries and Chairman of Godrej Agrovet has his vision all set to change the strategy adopted by one of India’s oldest conglomerates. Having won the Porter prize for Creating Shared Value, Godrej spoke to Ankur Gaurav of Pitch about the concept of shared value and more.
What have you learnt from so many years at Godrej Industries?
I believe businesses can deal with a lot of issues our society has struggled to deal with. Economic ties among villages, towns and countries have led to a strong affinity among the ones divided by territories. It is time corporates turned companies’ responsibilities into businesses.
CSR initiatives have not performed or lived upto the expectations, and this has led to the development of the concept of Shared Value; is it true?
The reason behind the foundation of CSR was to help the society at large and yet we have faced the charges. It does not mean CSR has not lived upto the expectations but it has taken social causes from the philanthropic level to the corporate level and now to connect these dots we need to twist it into a business model. For example indulging in Palm Oil Business, the plant absorbs a lot of carbon dioxide which is used to produce palm oil, which can be used for combustion. The idea is to make palm oil your business; you grow a lot of palm plants. Shared Value is a business model in itself which even in small numbers can generate and engage a lot of locals and profit as well.
What is Godrej’s strategy to create a sustainable business model from its CSR initiatives?
You can get a dozen of examples. You can grow biomass crops and sell electricity; electricity coming from grids is anyway making up a good chunk of investment done by us. More of rice husks means more of rice yields and at the same time biomass as well. We are not the only one doing this, government and other industries have also taken certain initiatives on the lines of shared value.
Which other companies are working on a similar format?
A lot of them are. Government institutions like railways and post offices have been using this concept for a long time. Post offices’ banking services and use of ‘Kulhhar’ in railways are perfect examples of shared value. No business model can sustain without profitability and revenue generation and such formats have sustained for a longer period of time. Mahindra is working on wind business and entrepreneurs are working on electricity production from rice husk in Bihar. All of these are serving the social causes and have developed a business model as an umbrella to sustain them.
You also mentioned about power’s role into this. How is it going to be the greatest driver of CSR and other value driven businesses?
In the coming five to seven years, cost per unit of green energy is going to become cheaper than fossil led power. Petroleum and coal prices are anyways scaling up every quarter, and corporates will shift to the use of green energy and get involved in its production.
By Ankur Gaurav