Effective strategies required

Written by George Auguste | Updated: Mar 31 2008, 07:20am hrs
As the world becomes an increasingly open market, India is poised to become a leading global economic force. Increasing disposable income and rapidly changing lifestyles are driving economic growth in India. The current size and high projected growth rate of the domestic market also presents Indian manufacturers with the opportunity to become significant players on a global scale.

However, to succeed in the wider global marketplace, Indian companies will have to compete effectively at every level with todays leading multinationals. In particular, they will have to show the same commitment to sustainable development that is taken for granted in the worlds most highly developed economies.

An important factor that Indian companies need to consider is that, multinationals from the most developed regions have evolved effective strategies for addressing the complex issues of sustainable development. These strategies are the result of decades of social pressures and legal frameworks that companies in India and other developing countries have not historically been exposed to in their own domestic markets. India will undoubtedly follow the same path in terms of increasing legislation for environmental and social responsibility. But there is little doubt that Indian corporations who anticipate this trend and proactively develop their own sustainable development cultures will be better equipped to compete in todays global marketplace than those that wait for legislation to force them to react.

A good example to follow is that of the semiconductor industry. Globalisation became a significant factor for this industry long before it impacted most other industry segments, with the result that the semiconductor industrys path towards sustainable development was made under the most severe financial pressures. It is therefore no exaggeration to say that if sustainable development can work for the semiconductor industry, it can work for almost every other industry.

ST was a pioneer in this area and has accumulated more than 10 years of solid data that proves that Green is Black that is, relatively small investments in new technologies that reduce the consumption of energy, water or chemicals result in real cost savings that pay back the investment in just a few years.

STs initial efforts began in the early 1990s and in 1995, the company published its first Environmental Decalogue, a set of 10 measurable, time-defined targets created to help reduce the companys impact on the environment. Since then, ST has made significant progress with regard to environmental performance.

Examples of what can be achieved by this approach include a dramatic 47% reduction between 1994 and 2006 in the electrical energy required to process a silicon wafer. This reduction allowed ST to save close to $130 million in 2006. Similar actions on reducing consumption of water and chemicals delivered savings of $26 million and $82 million, respectively, in 2006. STs key environmental programmes that focus on making savings in energy, water and chemicals have allowed us to save more than $200 million in 2006; $700 million in the past six years; and over $1 billion since we launched our environmental programmes in 1995.

These measurable benefits are augmented by many other intangible benefits such as the increased motivation of the companys people and its ability to attract the most talented new recruits. The experience of ST suggests that Indian companies do not need to wait for future legislation to make them develop sustainable development philosophies and cultures.

The writer is corporate VP, STMicroelectronics