CEO Perspectives

“Climate Change Is the Biggest Business Opportunity of the st 21 Century”

Anand

i FOCUSING ON THE BUSINESS OPPORTUNITIES IN CLIMATE CHANGE

Anand Mahindra is the Chairman of the , an Indian multinational group with annual revenue of more than US$19.4 billion and employing close to a quarter of a million people in areas such as aerospace, agribusiness, automobiles, industrial equipment, defense, energy, finance and real estate.

Mahindra himself is considered one of the world’s most innovative business leaders and has been an outspoken advocate of seizing the business opportunities associated with climate change. He believes a false choice has been created between profit and sustainability. “The fact is that sustainability cancreate wealth,” he told the World Economic Forum this year.

Ron O’Hanley Chairman and Chief Executive Officer, State Street Corporation

1 With trillions of dollars’ worth of climate-related business opportunities over the next two decades, Mahindra says: “We need to keep drumming the message that climate change is in fact this century’s biggest financial and business opportunity.” And Mahindra is walking the talk in his own business. He has pledged that the Group will be carbon neutral by 2040, ten years before the Paris agreement deadline, and the Group is assiduously investing in multiple areas of green innovations and sustainable development.

As part of our CEO Perspectives series, State Street Chairman and CEO Ron O’Hanley asked how he came to focus so intensively on climate change issues.

Anand Mahindra Chairman of the Mahindra Group

2 Ron: Anand, thank you for speaking We have a set of businesses that with us. Before we discuss the important enhance climate resilience such work you and the Mahindra Group as electric vehicles, green buildings, have been doing around climate change, micro-irrigation, waste to energy, let me ask you if COVID-19 has changed responsible recycling of automobiles the way you think about the issues? and so on. If COVID enhances demand for these solutions, we are ready Anand: The Mahindra Group was to deliver. I am sure many such already ambitious and aggressive in opportunities will emerge in future. responding to climate change prior to COVID -19. We committed to doubling So, the Mahindra Group is not going energy productivity in major businesses, back on its ambitious commitments adopting 100% renewable energy in and is ready to enable climate-friendly our hospitality business, implementing solutions for people willing to adopt them. Science-Based Targets in 20 companies Ron: Apart from your tireless efforts across the Group and making the entire to keep climate change issues top of Group carbon neutral by 2040. In addition, mind for the public, you take a distinctly we have committed to planting a million optimistic approach about the positive plus trees a year, making our business business opportunities related to climate locations zero waste to landfill, and being change. Tell us about the personal a water-positive enterprise. COVID-19 journey that led you to focus on climate has not made us go back on any of that. change opportunities. The COVID experience should have Anand: My approach to climate opened many eyes to the possibility change has always been positive for of creating a vibrant world within three reasons: it’s good for my country, the boundaries of nature. At least it’s good for our businesses, and we the voices I hear on webinars seem owe that kind of constructive approach to suggest that. To that extent, if there to future generations. are more hands on deck for the climate journey as a result of COVID, we are First, India’s commitment to the Paris better off today than we were before. Agreement has been steadfast. Prime Minister Modi has repeatedly said that

3 “We need to accelerate progress exponentially through the synergy of business and government working together.”

Anand Mahindra, Chairman of the Mahindra Group

India needs to address climate change, between the Tropics of Cancer and not because of pressure from the West, Capricorn. Through this initiative, India but because of the enormous threat will promote clean energy, sustainable climate change poses to us. At the public transport, and climate-adaptive highest levels of government, there is agriculture. , our a strong belief that environmental renewable energy business, was born sustainability is the only way to go. out of this initiative three years ago.

As a result, India has set extremely Lastly, in terms of our debt to future ambitious sustainability targets. generations, I became a grandfather For example, before the COVID crisis for the first time two years ago. That hit us, the government had planned to has really driven home my responsibility generate 450 gigawatts of renewable to take action. I don’t want my grandchild energy by 2030, which means that asking me in 10 years’ time why I didn’t 40 percent of the country’s energy act when it was still possible to make needs will by then be generated by a meaningful difference. non-fossil-fuel power. That will be Ron: How do you view the relationship an extraordinary achievement. between business and policymakers Secondly, addressing climate change when it comes to climate change action? for the Mahindra Group is directly Anand: Public-private partnerships are aligned with our guiding principle of the most powerful way to drive green shared value: “doing good and doing growth. Governments need to create well.” Businesses have contributed a favorable ecosystem in which innovation to climate change, so we must also can occur, and businesses must seize contribute to the solutions. But this is those opportunities. not a matter of atonement; we see the exciting new business avenues climate Business and policymakers are natural change mitigation offers. partners when it comes to climate change action: policymakers value the power of For example, Prime Minister Modi market-driven solutions, and companies established the International Solar need the support of prudent regulations. Alliance whose 121 members are Business must find innovative solutions from the “sunshine countries” that lie

4 “Apart from the investments in green businesses, our perspective on sustainability has also led us to adopt aggressive energy efficiency, water security, circular economy and bio-diversity practices for our own activities.”

Anand Mahindra, Chairman of the Mahindra Group

to mitigate greenhouse gas emissions has generated revenues of more than and government must judiciously US$600 million. We are thinking big. formulate policies and regulations to And we are thinking differently. accelerate the adoption of climate Developing new technologies and solutions. We simply don’t have time leveraging them to create new to let the usual S-curve trajectory play businesses present a huge opportunity. out when it comes to climate solutions. For example, Mahindra’s farm business Businesses can create a ripple effect has a multi-pronged approach to making that cascades change like a pebble agricultural technologies available based dropped in water; we need to accelerate on advances in artificial intelligence, progress exponentially through the big data, robotics, the internet of things, synergy of business and government drones, and autonomous machinery. working together. These technologies will go a long way But make no mistake: this is the biggest in resolving some of the challenges business opportunity of the century. plaguing Indian agriculture, such as Ron: How has Mahindra Group itself stagnating productivity, water shortages, incorporated sustainability into its deteriorating soil health, labor scarcity long-term business strategy? as well as reducing production costs.

Anand: Our definition of sustainability Other sustainability areas we’ve is grounded in opportunity: “Building invested in include , enduring businesses by rejuvenating the which launched a pilot project for the environment and enabling stakeholders large-scale adoption of clean energy- to rise.” This provides the context for driven mobility. Mahindra Accelo, our identifying where we need to take steel trading company, has undertaken strategic action. a joint venture with an Indian government enterprise formerly known as the Metal We’ve made investments in many Scrap Trading Corporation Limited to set green businesses – electric vehicles, up India’s first environmentally responsible shared mobility, renewable energy, auto-shredding facility. And Mahindra micro-irrigation, waste to energy, green Lifespaces Developers are happy to buildings and so on – a portfolio which be a part of a consortium of leading

5 “The real question businesses should be asking themselves is, how can I leverage sustainability to do better business?”

Anand Mahindra, Chairman of the Mahindra Group

developers and the International Finance Anand: The Mahindra Group operates Corporation to enable the construction of like a federation. Each business has green buildings in India. to find what is relevant and useful for itself. Our sustainability team and the Mahindra Susten, our renewable energy Group Sustainability Council work with business, has enjoyed the fastest path all of them to help them understand to profitability within the Mahindra how to leverage sustainability to do Group, becoming the second-largest better business. This is an empowering solar engineering, procurement and approach, and much more effective construction (EPC) provider in India. than excoriating businesses for the Apart from the investments in green damage they have done and then asking businesses, our perspective on for restitution. sustainability has also led us to adopt It has been a long journey, and we are aggressive energy efficiency, water where we are because we have been security, circular economy and bio- blessed with colleagues who understand diversity practices for our own activities. what is the right thing to do, and they get We now use only half the energy to it done without any hesitation. In fact, produce a vehicle as we used eight when it comes to climate and society’s years ago; we reuse more than 12 times welfare, we are not dependent only on the water we consume; and more than senior leadership to steer the course. 17 of our business sites are certified Our colleagues at all levels display as adding zero waste to landfills. Lastly, amazing initiative, and this is one of the Mahindra Hariyali program has now the most satisfying outcomes for me. planted 17 million trees in India since its start in 2007 to expand the country’s Ron: Why do you think other business green cover and mitigate the harmful leaders have been slow to respond to effects of carbon emissions. the opportunities you point to?

Ron: Mahindra Group has so many Anand: This is a genuine transition, and diversified businesses. How did you as with all transitions, we hear pushback get your leadership team to focus on along the lines of “it’s too expensive,” or uncovering the business opportunities “it’s not directly related to my business,” across such different sectors? or “it’s an additional burden.”

6 “The top 21 developing countries alone that signed the Paris Agreement will generate $23 trillion in investment opportunities by 2030.”

Anand Mahindra, Chairman of the Mahindra Group

I think the real question businesses Ron: You’ve been a great defender of should be asking themselves is, “how India’s record of staying on track with can I leverage sustainability to do its Paris commitments. Why do you think better business?” there is so much misunderstanding about the seriousness with which developing Many of the business opportunities we countries like India treat climate see are driven by the need to promote change action? what we call “alternativism,” that is, creating alternative low-carbon solutions Anand: India has taken a leadership role that people want to adopt. We know by being an early mover. It is important to from our surveys that an overwhelming look at the country’s actions holistically: majority of people in India, upwards of 80 percent, are aware of their impact • India’s cement industry has become on climate change and are willing to the most energy-efficient in the world, take climate-friendly action but cannot and is now the lowest-cost producer find feasible alternatives even when of cement they want to do the right thing. • India has helped bring down prices That is where businesses and for LED lights for the whole world by policymakers can work together to help implementing the largest conversion people adopt low-carbon alternatives to LED program with practical solutions. • India is already making significant And I do think we are seeing progress. progress in key areas of renewables, More companies are recognizing that electric vehicles, reforestation and climate change is a lever for innovation, decarbonizing heavy industry — growth and competitive advantage. ahead of its commitment to the Just think of the estimates from the Paris Agreement World Bank’s International Finance • India’s adoption of electric vehicles, Corporation, which says that the especially three wheelers, is a very commitments from the top 21 developing good case study countries alone that signed the Paris Agreement will generate $23 trillion • India’s leadership in triggering a solar in investment opportunities by 2030. energy revolution and co-founding That is an enormous business incentive! the International Solar Alliance has been exemplary

7 “As more climate-friendly solutions are available in our daily lives, alternative choices will go mainstream and we will have a fighting chance to achieve the Paris targets and more.”

Anand Mahindra, Chairman of the Mahindra Group

All of this progress is obscured by I also take hope from the young people a narrow view of India’s sources of who are speaking up and moving toward energy. Most critics don’t recognize concerted action. that India is pursuing a low emissions We also cannot lose sight of the fact path, while growing rapidly and lifting that researchers are discovering new people out of poverty all at the same low carbon solutions. The cost curve is time and at an unprecedented scale. coming down. Green buildings are no longer more expensive to build than Ron: What gives you hope about conventional construction; researchers the future? are close to making flexible and thin film Anand: We see clear signs that solar panels real; and we are getting corporations are willing to act: just as better at repurposing materials we had nearly every government has signed previously discarded as waste. This is all the Paris Agreement, more than 750 helping companies and industries reduce companies around the world, including their carbon footprint. I do believe that ours, are part of the Science-Based as more climate-friendly solutions are Targets effort to get companies to available in our daily lives, alternative become carbon neutral. choices will go mainstream and we will have a fighting chance to achieve the I am also encouraged by the fact that Paris targets and more. people are actually adopting climate- friendly approaches in their daily lives. We now see the climate challenge It is not a revolution yet, but there are infiltrating every part of our lives, including strong green shoots. I’m thinking here our artistic expressions around song, about LED adoption, reducing single-use dance, literature and film. This suggests plastics, the steady shift to renewable to me that we are on the cusp of a cultural energy and the demand for electric transformation. Not only is it time for vehicles. These are all harbingers of scientists to create new climate solutions, serious change. it is time for the poets to move us from a sense of despair to a vision of a new desirable future.

8 9 I have of course the compelling Ron: Anand, I can’t thank you enough reminder of my grandchild, but also for sharing all the good work you the goodwill and energy of my personally and the Mahindra Group colleagues at Mahindra Group and collectively are doing to battle climate my fellow countrymen, to keep change. Thank you for your leadership me focused on leveraging business in keeping the issue front and center opportunities to tackle the climate and for couching the climate challenge challenge. We need to get more in the important context of the most businesses involved to harness the compelling business opportunities of multiplier effect of market-driven the century. I look forward to continuing solutions for positive the conversation. environmental outcomes.

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