People, Profits and Planet: Sustainability in Business

Last month, Auroville Today featured two successful commercial units that are seeking to find innovative ways to increase capital funds and thereby economic growth. But economic growth is not the only raison d’être of our economy.

What is needed is a paradigm shift in the business sector itself, where instead of being stuck on the bottom line of profit-calculation, businesses engage in meeting the ‘triple-bottom’ line of economic profit, social responsibility, and environmental responsibility. We are already decades behind in making this paradigmatic leap. The concept of a triple bottom line was introduced in 1994 by John Elkington and is based on the fact that businesses do not operate in a vacuum but are intrinsically linked, in concentric circles, to a society and to the environment. In other words, the cost-benefit analysis of doing business should also include a cost-benefit analysis to society and the environment. A key challenge with the triple bottom line, according to Elkington, is the difficulty of measuring the social and environmental bottom lines. The elements of the triple bottom line often referred to as “people, profits, and planet,” necessitates three separate accounts that are evaluated on their own merits.

Many Auroville units donate in kind or make specific contributions to projects that directly benefit “people'' or the community. A recent initiative by the Auoville unit ‘Earth&Us’ in collaboration with Auro-Cabs called Shared Taxi Service seeks to benefit both people and the planet [see below]. But, as yet, only Auroville Consulting has made that paradigmatic leap in accounting for the triple bottom line. In the financial year 2015-16, along with standard accounting practices of costs and expenses, Auroville Consulting initiated a process that they call “Geo-referencing” to spatially map their business practices. Along with this, they also sought to account for the negative externalities (i.e. CO2e emissions) of their operations. “Geo-referencing” seeks to measure the social impact of the business, while calculating CO2e emissions seeks to measure its environmental impact.

The objective of geo-referencing or mapping expenses across a geographical area allows Auroville Consulting to track how much they spend within Auroville: it is a known economic principle that circulating money locally is key to local economic growth.They have been doing this for two and half years now. In the last financial year, almost 80% (79% to be precise) of the total expenses of Auroville Consulting was spent within Auroville. Auroville Consulting was also able to analyze which sectors of Auroville were benefitting and also to identify gaps or leakages, where they had to rely on services outside of Auroville for their business operations. For the next fiscal year, Auroville Consulting aims to keep the benchmark it has established of 80%spending within Auroville. It also plans to directly intervene in the food and accommodation sector, for these sectors cannot yet meet the needs of their business.

The objective of accounting for negative externalities or measuring the carbon footprint of their business operations was to reduce their environmental impact and offset their carbon emission. Calculating carbon footprints and emissions is fraught with difficulties. For example, in comparing the carbon footprint of an electric vehicle and a fossil-fuel based vehicle, if one limits one’s calculation to vehicle-operation, then, it goes without saying that the latter will have a bigger carbon footprint. However, if one takes into account the life-cycle assessment of each vehicle and the foot-print of the energy sources is required for the operation of each vehicle, then one cannot always conclusively say that electric vehicles are better.

Nevertheless, it is a commendable initiative by Auroville Consulting to measure their carbon footprint in key areas, namely, Energy, Water, Transportation, Materials – Soft Goods, Food and Infrastructure. They have been doing this for four years now and they estimated their carbon footprint for the financial year 2015-16 to be 8,605 kg, which to be offset would require the planting and nurturing of 396 trees. Moving forward, Auroville Consulting aims at reducing its electric energy consumption through the use of efficient appliances, increasing its solar PV capacity and reducing its transport-related carbon footprint through car sharing or the use of public transport. For offsetting its carbon footprint via tree-planting, Auroville Consulting will collaborate with the Forest Group.

Many carbon-offset gurus currently scoff at idea of planting trees as an offsetting measure, for such a measure is only short-term (the carbon captured is released back to the atmosphere when the tree dies and decomposes).Also, many international programmes offset their carbon emissions by planting monocultures in African countries, which in turn results in negative externalities to both society and the environment.

In Auroville, however, the Forest Group has the ethic of planting different species of the indigenous forest type, which in turn generates positive benefits. Also to Auroville Consulting’s credit, they are currently reviewing their environmental and social matrices against international standards, namely those of the World Resources Institute and World Business Council for Sustainable Development.To comply with international standards would require refining and updating the two matrices on a periodic basis, which, in turn, means dedicating more time and resources to this exercise.

Speaking of their commitment, Martin, one of the co-founders of Auroville Consulting, says, “Behind both the matrices (geo-referencing and CO2e accounting) is an organizational pledge towards being an ecologically and socially-just operation. This requires us to experiment with additional business matrices that include environment and social dimensions. We are looking for ways to measure what we say we are or do. If our organizational values are ecological and social justice, then we need to define these terms and find ways to measure them.” Experimenting with the two matrices would also allow such matrices to be more universally applied. For instance, many Auroville commercial units train and employ local labour, but the social benefits of these are not quantified and thus cannot be objectively measured.

Auroville Consulting is open to sharing its templates with other commercial units and training their accountants to use them. Auroville Village Action Group and Auroville Earth Institute have expressed an interest in keeping such integral accounts. Martin concludes that “Geo-referencing and the CO2e accounting process, if done by all Auroville units, can be a win-win situation allowing for growth of the business while stimulating the local economy and becoming increasingly carbon-neutral.”