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  Financial Express, 27th October, 2008  
 

Interview: GV Prasad, Vice-Chairman & CEO Dr. Reddy’s
Sustainability is mandatory for business survival

Dr Reddy’s Laboratories is a leader in more ways than one. The company has a lesser-known distinction of being the first pharma company in India to publish a sustainability report. Last week the com-pany released its fifth annual report with the theme The Journey of Sustainability. GV Prasad, vice-chairman and chief executive officer, talks about the report and the company’s philosophy on sustainability in an email interview with the FE. Excerpts:

What are the highlights of your just released sustainability report?

The theme for the 2008 report is The Journey of Sustainability. This report talks about the various initiatives we have undertaken to build a sustainable organisation, especially our efforts to enhance value on four dimensions—economic, environmental, social and the employees of Dr Reddy’s. The report captures the journey till date and highlights what we intend to do going forward in building a truly sustainable organisation.

What prompted you to start publishing sustainability reports in the first place?

The primary reason for publishing sustainability report was our commitment to good governance and transparency to all our stakeholders. Sustainability reporting enables us to inform our stakeholders about our economic, environmental and social impact, improve internal management system and performance via reporting processes, improve our employees’ awareness and commitment to sustainability, and for greater accountability on our sustainability initiatives.

Should such reporting be mandatory?

In my personal opinion reporting should remain voluntary. Standards of reporting are still evolving and there is certainly a long way to go in terms of evolving a common framework and metrics. While Global Reporting Initiative gives some guidelines, each company still has the freedom to include its own issues in unique ways. However, there could be some logic for making it mandatory to report some aspects of performance such as carbon emissions, energy and water usage because these are easily quantifiable and verifiable. We require urgent focus on the environment in view of the looming climate crisis.

Does reporting help in improving sustainability initiatives?

Sustainability reporting helps in understanding the facts and the gaps that exist and thus realise the shortcomings in sustainability programmes. A reporting framework gives an idea of the elements that are missing by function and by area. The gaps in turn need ownership and have to be plugged.

How profitable is it for a company to invest in sustainability?

It is not a question of whether investing in sustainability is profitable or not.

Sustainability as a concept means being profitable consistently and for a long time. If one doesn’t function in a sustainable way, long-term survival is not possible. Investing in sustainability is a fine balance between short-term requirements and long-term growth. One has to be careful in the initial days of not committing too much. Sustainability is mandatory for the long-term survival of business organisations.

What’s your budget for sustainability?

We define sustainability in a much more broader sense and not just limited to CSR. We are moving towards integrating sustainability as a way of life into our operations. We do not separately allocate a budget for sustainability activities as they form part of our core activities now. We do have a budget for social acti-vities, which we carry out through various vehicles such as the Dr Reddy’s Foundation.

Some people use sustainability and CSR interchangeably. Where do you draw the line?

CSR often connotes community welfare and philanthropic activities, which is a small part of sustainability. Sustainability talks about long-term business survival and success and doing the necessary activities that will ensure it. It is more broadbased than CSR. We, at Dr Reddy’s, seek to have equal focus on economic, people and environmental impacts and therefore, we find sustainability as an appropriate label.

Dr Reddy’s head of CSR and sustainability reports directly to you. Does it indicate that sustainability is of utmost priority for the company or you are still laying down a road map for integrating it in business operations?

Sustainability is more of a way of doing things, which needs to be embedded into the business. The sustainability head’s role is more of a facilitating one so that the company imbibes the practices. His job is to keep an eye on best practices around, keeping abreast of the latest happenings and internalising those so that we don’t miss the bus. Ultimately it is the businesses, which can make things happen. We at Dr Reddy’s have started in the right direction and are in the process of integrating it into the organisation completely.

How have you internalised sustainability in your business operations?

In terms of community development, philanthropy and environmental protection, we have done quite a bit. It terms of products and processes we have many examples to illustrate and are in the process of putting in place a cohesive strategy.

The Dr Reddy’s Foundation has done significant contribution to the public good through commitment to critical social causes that influence the lives and livelihood of thousands of needy Indians. We have successful examples demonstrating application of green chemistry in product development. All our chemical manufacturing facilities are zero-liquid discharge operations. Our manufacturing facilities have targets to reduce energy consumption. We are currently focused on improving the effectiveness of solvent recovery and hazardous waste handling.

We are doing a lot of activity on the sustainability front. We are aiming to move from an activity-based approach to a strategic approach to sustainability with clear measurable performance.

Do your shareholders subscribe to your sustainability strategy?

Shareholders are a huge spectrum and their views will depend on where they come from. They will have varying responses to various sustainability initiatives. It is our job as a responsible corporate to educate and make them understand that sustainability is important for long-term profitability and growth. To address shareholder concerns, we need to ensure that their welfare is met and that they see significant value creation taking place in the company. At the end of the day, the objective is to ensure medium to long-term value to shareholders.