2012-06-14

Co.Exist

What India Can Teach Us About Sustainable Business

The country was full of natural, sustainable processes before it became a "developing economy." If it can find ways to combine those old ways with economic advancement, it could be a model for how to develop without destroying culture and the environment.

Don’t destroy a perfectly functional system. Build on it. Culture matters in sustainable business. Paul Hawken once said that "the first rule of sustainability is to align with natural forces, or at least not try to defy them." That was sage advice, yet the frequency of counter-cultural market entrances is still alarmingly common throughout the world. India is no stranger to such misguided efforts. Outsiders have been coming to India with a view towards cultural imposition for centuries. India endures, but no one really wins. Indian companies know better. They understand the local context, and so they can swim with the current, leveraging the cultural ecosystem to enormous mutual benefit. In nature, cooperation is more prevalent than domination, but it’s usually implicit. You have to listen for it.

Abhishek and Abhinav Sinha know how to leverage existing forces. They started EKO Financial Services in 2007 knowing that fewer than half of India’s 1.2 billion citizens had a bank account. They also knew that only 10% of India’s villages had a bank branch of any kind, but that hundreds of millions of the country’s working poor were migrants, who left their villages and their families to work, and needed to send money home regularly. For most migrant workers, sending money home via the banks was not practical. Finding and traveling to a branch, setting up an account, waiting in line, and then having someone do all of that again on the receiving end in order to accept the transfer was just too burdensome. They could use the Indian post office, which had more offices, and didn’t require a bank account, but by the time fees were paid, plus any baksheesh, the cost to transfer money through this formal channel was prohibitively expensive. Most workers ended up using cash couriers instead, who were less expensive than the post office, but riskier, and illegal.

The Sinha brothers knew the system, and how to work with it, not against it. They knew that bank accounts and branches were scarce, but mobile phones were not. There are more than 800 million mobile phone connections in India and almost anyone either owns a phone, shares a phone, or can borrow a phone. Hook up the phones to the banks, they thought, and cheap, reliable access to banking would follow. They also knew that every village or neighborhood had a local retailer. Everyone has a relationship with the local shop owner, often involving credit and micro-lending. For EKO, the answer was simple: Connect these neighborhood retailers to the country’s main banking systems, and let them act as EKO’s "branches." For the worker, all they needed was a cell phone and a piece of ID, and they could cheaply and easily send money home through one of these local retailers. In the worker’s home village, a family member could go and pick up the money from a similar local retailer close to their home. So far, the idea has been a huge success. In 2011, EKO had 150,000 customers using their service and were working with 1,500 retailers, and they are still growing; and by doing so, strengthening the local economies in which they work, while also providing India’s unbanked millions with financial services.

Husk Power is another example. Gyanesh Pandey is one of the founders of this innovative startup in Bihar, India’s poorest state. Gyanesh grew up without electricity. He understands what it is like to live without basic services, and how poverty can make an entire population of people feel "low." After attending university and starting his career in America, Gyanesh was drawn back to India to try to help solve one of the most intransigent problems, the chronic lack of electricity. Gyanesh understands the culture of Bihar intimately, but still he didn’t rush in. He and his friend Yadav spent several years experimenting with different technologies and puzzling over different approaches to the problem.

The proverbial light went on when he met up with a retailer who sold gasifiers. Gasifiers burn organic materials in an oxygen-restricted environment and produce electricity. They have been in use for a long time as a supplement to expensive diesel fuel. Still, "nobody had thought to use rice husks to run a whole power system." Rice husks are a big source of waste in Bihar, and it is estimated that 1.8 billion kilograms go into landfills each year, where they produce methane, a dangerous greenhouse gas. So Gyanesh and his partners decided to leverage this fact to solve an intransigent social problem. The result? A rice husk electrical generator that can power a village of about 500 people using about 50 kilograms of rice husks per hour. It’s still early stages, but Husk Power has identified 25,000 sites appropriate for their technology. If this approach scales successfully, it will be huge. It works beautifully within the cultural and ecological framework of India’s rice belt.

In the past, food was usually re-wrapped in discarded cardboard or newspaper, or your children’s finished homework. Water was drunk from reusable containers. Littering was not such a big deal in these simpler times. Then came foreign companies, new tastes and so-called conveniences, and finally the onslaught of paper cups, plastic water bottles, individually plastic wrapped, single-serving shampoo cachets, and their ilk. Now there is a major littering problem. Similarly, as early as 30 years ago Indians mostly used biodegradable packaging. Chai, that famously delicious sweetened double-milk tea, used to come served in clay cups. The clay, made directly from the soil of India, was said to give the tea a more earthy flavor, and the cups were biodegradable. Throwing them on the ground was of no consequence as the sun would melt the cups back into the earth within days. Then came paper and plastic cups. The clay cups are still used, but only as a niche industry in Kolkata, where local artisans enjoy a sustainable livelihood crafting the cups, and residents appreciate the added flavor, a connection to local production, and a taste of an old tradition.

What happened? Companies with significant economic clout unwittingly introduced unsustainable practices into a traditionally self-reliant culture, and the unintended consequences were culturally, ecologically, and economically destructive. Culture is an important part of sustainability, and cultural facets of an offering increasingly add value to products and services. Local cultures often have built-in systems for sustainability, and getting in touch with these is not just a way to reduce harm, but to find hidden efficiencies, local partners, and unique marketing stories.

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5 Comments

  • Ron Peck

    Their is new tec. that is being used to turn Rice husks and mushrooms into
    packaging material.
    It replaces styrofoam.
    HP computers will be shipping its computers with it.
    When done, just crumble it up and put it on your lawn or garden.

  • Shitij Jain

    Dear Andrew - thank you for the article. Interesting indeed. while the point you wish to raise is of sustainable businesses. the examples given are of "misfit economists".  We as business leaders, need to re-look at the definition of sustainability. Its not about long-haul anymore, its about being able to create tangible value in the ecosystem in the shortest possible time. A metric, that unfortunately, doesnt reflect very well in our balance-sheets. Regards, Shitij

  • Rajesh

    Dear Andrew,

    Thank you for such a brilliant article.....it is a real eye opener for an Indian like me-I think we have really got blinkers on which we should get rid off in a hurry!!

    Warm Regards

    Rajesh

  • Meena Kadri

    Speaking of foil sachets & some forms of plastic litter, contexts of scarcity tend to evolve sustainable uses for these in India. eg. http://bit.ly/spun_gold Often the innovation is found from the bottom-up, with many lessons for those thinking top-down.