Anshul Rai, Founder, Earthwise Investors

Anshul Rai is the Founder at Earthwise Investors. He is highly regarded in the industry as a visionary and a marketplace expert with proficiency in building multifaceted environments in the field of sustainable investment. As the Founder of the company, Anshul’s mission is to bring sustainability centre-stage in sustainable investing. An alumnus of Management Development Institute, Anshul has over two decades of sustainable investment experience in Emerging & Frontier Markets spanning Asia, Africa and Middle East, in a broad range of industries including renewable energy, water, waste management, healthcare, transportation and telecoms. As part of the investment team at the International Finance Corporation (IFC).


“In transition to a more sustainable world, the winner will be those who embrace the potential for positive change, and not just avoid the risk of negative outcomes.”

Over the past few years, Sustainability has risen up the priority list of corporate leaders and boardrooms globally. During this period, a broad consensus has emerged in the corporate world that historical approach to production and consumption has put the world on an environmentally and socially unsustainable path. If left unaddressed, future economic growth and profits are likely to face risks and challenges that many, if not most, corporates are not fully equipped to handle.

Concurrently, businesses are being pushed by investors, consumers and activists to more fully embrace the notion of “stakeholder capitalism”. Adopting sustainable practices has come to be seen as essential for accessing capital and, to a certain extent, product and labour markets. There is also no doubt that an organisation’s and its leaders’ attitude to sustainability has become, in public minds, a crucial indicator of its attraction as a brand and a prospective employer.

In this backdrop, it becomes imperative for the top management of an organisation to provide the required leadership (both in thoughts and actions) as well as to articulate how sustainability is being integrated into corporate strategy.

Strategy vs. Sustainability: “It’s complicated”

Given the current fervour over “ESG”, there is a tendency by both company managements as well as other stakeholders (including investors) to see every under/over-performance of a business from this lens, howsoever tenuous the link. Sustainability (or an adherence to its principles) is being seen as a holistic corporate strategy in itself. This in my opinion is wrong.

Any business leader or investor should be careful in postulating what sustainability can or cannot do to long-term performance. It can be easily argued that sustainability has a critical role to play in every business’s strategy. But it is not a substitute for a sound strategy. Sustainability can definitely help answer the question, “how to do?”; but it cannot always and fully answer the question, “what to do”.

If your company’s product mix is less aligned with changing consumer tastes than its competitors’, or if it has lower exposure to the fast-growing consumer markets in Asia, a focus on sustainability will not be adequate to deliver the profit and share price growth that its shareholders are looking for. Failures of strategy cannot be addressed by embracing sustainability.

Potential for positive change

As the CEOs look to integrate sustainability into their corporate strategy, they should articulate a positive vision and purpose around this integration. Too many times the leaders focus on sustainability as a way of mitigating risks. Setting a sustainability agenda with a positive purpose is quite crucial and, perhaps, the CEO’s most important role. CXOs must encourage all stakeholders to embrace the potential for positive change (meaning, growth and profits) that a drive towards sustainability can deliver. New products, new markets, new technologies, new business processes – the potential can be immense.

Knowing what matters

As the leaders incorporate sustainability principles into corporate strategy, it is important for them to understand what aspects of sustainability to focus on. At a generic level, sustainability encompasses a broad range of topics and parameters. The leaders must, however, recognise that not all sustainability parameters are equally significant for all businesses. For instance, the sustainability impact of a services business with lots of employees will be much greater on the social side, as against that of a steel mill or a cement plant (where the environmental considerations will dominate).

To identify and prioritise specific sustainability aspects for its business, the company should adopt a comprehensive analytical framework based on generally accepted sustainability principles such as the UN’s Sustainable Development Goals (SDGs). Applied correctly, such frameworks should be able to inform the leadership not only the areas in which the company can reduce/minimise its negative impacts but also the opportunities to maximise business potential with positive outcomes.

Identifying what areas to focus on should also tell the CXOs what to measure, when assessing the business’s sustainability performance. Depending on the nature and scope of its business, the leaders should establish the necessary MIS for capturing, analysing and reporting the relevant sustainability data.

Communicating well

As the CEOs seek to integrate sustainability into their overall corporate strategy, a common challenge faced by them is explaining how pursuit of sustainability impacts long-term shareholder value creation. They must be clear that pursuing sustainability goals is not a substitute for (or subservient to) delivering competitive shareholder returns. Even as a “purpose-driven” entity, the company’s main purpose is to create long-term wealth for its shareholders!

This challenge is the greatest for the leaders of publicly-listed firms, who also face the greatest scrutiny of the sustainability performance. It is naïve for anyone to link quarterly changes in profits (or share prices) to a corporate’s focus (or lack thereof) on sustainability. This tendency is partly explained by the lack of sufficient understanding by such stakeholders. So, explaining the role that sustainability plays in corporate strategy (and financial performance) is a crucial responsibility of both the CEO and the CFO.


The push towards a more responsible and responsive form of capitalism would ensure that sustainability will play a crucial role in formulation of corporate strategy in the coming decades. It is important for corporate leaders to embrace the potential for positive change that the transition towards sustainable development entails, rather than approaching it as a mere risk avoidance mechanism.

Adherence to sustainability principles is not a substitute for sound corporate strategy. Adopting sustainability principles must not compromise long-term shareholder returns – if anything, it must improve them.

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