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    Can acting on climate change boost Indian mid-market’s growth?

    Can acting on climate change boost Indian mid-market’s growth?

    Can acting on climate change boost Indian mid-market’s growth?
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    By CNBCTV18.com Contributor  IST (Published)

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    The Indian mid-market industry has quietly undergone significant change during the past two years. Since it makes up a sizeable component of the national economy, the sector’s involvement in driving India’s sustainability agenda is extremely critical.

    The 2022 Environmental Protection Index (EPI) by the University of Yale and Columbia graded India as a laggard among a cohort of 180 countries for its performance on climate change. This is a sobering reflection given that we faced a record-breaking heatwave earlier this year.
    The report further indicated that if India doesn’t put prompt mitigation measures in place, we’re likely to face irreversible environmental changes in the form of heatwaves, droughts, and erratic rainfall. Helping India build a better, liveable future, is, therefore, now a shared responsibility of governments, investors, individuals, and cities. Indian MSMEs are no exception.
    The Indian mid-market industry has quietly undergone significant change during the past two years. Currently, it contributes over 30 percent of the gross domestic product (GDP) and supports over 100 million people across the nation. Since it makes up a sizeable component of the national economy, the sector’s involvement in driving India’s sustainability agenda is extremely critical. Often the myth that environmental sustainability can’t coexist with profitability and economic viability permeate business decisions and conversations.
    However, there is unequivocal evidence that sudden climate disruptions in weather can impact small businesses leading to interrupted operations, lost productivity, increased costs, and depleting revenues.
    A challenging yet necessary transformation:
    The dynamics of international commerce have changed in the last few years, creating new prospects for India and its mid-market segment to meet its ambitious goal of exports exceeding $400 billion. The sector has made India the next emerging manufacturing export hub and a leading candidate for global value chains (GCV) because of its promise of high-quality production.
    This means, that smaller companies will be increasingly impacted because the large corporations, which often are their clients, will scrutinise the whole supply chain, in a bid to marry profit and planetary considerations together.
    In other words, the onus of compliance therefore will sit with the entire value chain, rather than an individual entity or a segment of the value chain. And so, sustainability is no longer an option, but a constant necessity and a value-driven approach to the long-term viability and success of enterprises.
    Let us consider a retailer of appliances to illustrate the idea. This business, partners with a contract manufacturer who in turn depends on a packaging and parts supplier, who in turn depends on raw material suppliers.
    After that, the organisation sends the finished products to distribution hubs worldwide, from where they are sent to distributors, merchants, or even directly to the end users. These physical movements are supported by a network of carriers and logistical service providers, as well as a network of lenders.
    A project like this calls for shared accountability and a team effort to unlock new development and innovation. In turn, this will support the growth of economies and enterprises. All partners will ultimately contribute to success across the board by utilising their combined intelligence and using the lessons learned from the past to inform future actions.
    Start Small, Start Now:
    This raises a question: what would it take for India’s SME segment, to not only develop a competitive edge but build an intelligent, sustainable business and drive long-term success? As in any business, there’s no one right road to sustainability. The best outcome will depend on the stakes and ambitions of each company. Companies must start small, but start now:
    - Align business strategy with sustainability- If a company sells directly to consumers, they’re likely to be judged on what they do and not what they say about sustainability. Customers will expect them to be transparent about the product’s environmental footprint.
    Alternatively, if they’re a part of a business network, they must ensure that their supply chain partners are equally sustainable. SMEs need to align business strategy with long-term social and environmental sustainability efforts, future-proofing business advantage.
    - Leverage green tech to create circular economy – Businesses today employ digital technology and cutting-edge innovations to profile their clients, increase productivity, manage costs, etc.
    However, smaller businesses could accelerate sustainability, spur a behaviour change, create circular business models, product strategies, and better consumer choices by leveraging green technology to track and trace a firm's carbon footprint. Alternatively, they could embed operations, experience, and financial insights into core business processes.
    - Put sustainability at the heart of employee experience - Sustainability is not just about fixing environmental wrongs. It can also bring big opportunities and drive a positive impact when it comes to hiring and retaining the best talent. Although agility and transformation are the top business concerns. At the heart of it lies the need for skilled talent that can conceptualise, drive, and accelerate this change.
    Being environmentally conscious in business is the need of the hour and while sustainable practices will undoubtedly benefit the environment, society, and economy, our overarching goal is to protect the environment and the limited resources. Mid-size organizations thus remain a vital piece of the puzzle in cutting down on emissions, waste, and prevention of resource depletion.
    To conclude, India’s mid-market remains a critical piece of the country’s journey towards becoming a sustainable and self-reliant economy.
    The author Rajeev Singh is Vice President and Head- Midmarket at SAP Indian Subcontinent. Views expressed are personal.
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