Sustainability in Global Businesses - Reliance Industries Limited - Case Study Example

Sustainability in Global Businesses Summary Sustainable development has become an integral part of global business environment. Especially, in organisations, that primarily use non-renewable resources for creating or manufacturing products, components of sustainability are needed to be incorporated and practiced. Sustainability ensures that the current requirements of a society do not compromise the basic necessities (natural resources) of future generation. In the following sections of the paper, environmental limits and thresholds, their importance and role of sustainable development in industries have been discussed. The major section of the paper focuses on Reliance Industries Limited, a multinational company of Indian origin, its sustainable practices related to product and services, business challenges related to those practices and future plans of the company while maintaining the element of sustainability. Introduction One of the critical challenges the society is presently facing is environmental footprint. Society and environment is an open interaction system where activities in the society affect the environment and in turn, environmental changes affect the society. In past few decades, three major trends have been recognises that has claimed major share of ecosystems. The first trend is increasing global population as an outcome of medical advancements, which has reduced mortality rates and increased dramatically the life expectancy rate. The second dynamic is unprecedented migration of rural population to urban areas causing eco-footprint through urbanisation. The third dynamic is increasing demand of non renewable natural resources such as fossil fuels for continuing global development (Barkley, 2001). The growing concern about maintaining balance between societal needs and environment has led to development of an interesting concept, namely, sustainability. There are several definition of sustainability in existence but according to the World Commission on Environment and Development (WCED) report by United Nations, sustainable development is any advancement that meets the requirements of present generation without sabotaging the requirements of future generations. In this context it is important to note that, society, environment and economic aspects are highly related to each other. The purpose of this project is to study the ways through which Reliance Industries Limited has incorporated components of sustainability in its business and discuss the practices that the company is following currently and will pursue in future. The following sections provide a brief idea about the company, its business and role of sustainability in it. However, prior to that the impact of environmental limitations on industry society and global market has been discussed (Haines-Young, Potschin and Cheshire, 2006). Impact of environmental limitations on industry, society and global market For attaining sustainable development in any kind of business, it is important to understand extent of environmental thresholds and limits. Natural resources and ecological systems serve mankind and the society with a variety of benefits. However, external factors such as industrial development, pollution and commercial uses can affect the natural resource system and have hazardous impact on it (Jørgensen, 2008). Environmental limit is a point beyond which the depletion of resources and/or erosion of their quality are not tolerable or acceptable. Environment limits are set to check on over-use of resources by industries and businesses. In this context, a number of authors argued that indefinite sustainability of economic expansion is not possible and a limiting relationship always exists between population growth and supply of resources. Presently, majority studies frame environmental limits while taking in consideration factors such as ecological footprint and sustainable consumption and production (Haines-Young, Potschin and Cheshire, 2006). The basic elements of environmental limit include air quality, biodiversity, habitat quality and quantity, ecological connections, noise and light, climatic change, water quality, land and soil. Industries and businesses need to ensure that their activities are not polluting or degrading any of these factors. The government needs to set environmental parameters for industries so that they do not exceed the environmental threshold. Different geographical location has dissimilar thresholds and limits which businesses and government need to take in consideration before permitting any industry to utilise the natural resources. Resources are highly vulnerable in nature; hence, caution needs to be maintained on the part of the user. Frequently, environmental limits prevent organisations from executing their activities; in this regard, companies should consider sustainable measures for their operations and production. Presently, different countries have different environmental regulations that companies and individuals need to abide by so as to reduce ecological footprint (Aras and Crowther, 2008). Reliance Industries Limited: about the company and its current businesses In 1932, Reliance Industries Limited was founded by Dhirubhai H. Ambani and presently it is a fortune 500 company and is the largest in private sector of India. The core businesses of the company include energy sector and materials value chain. According to the management of the company, backward vertical integration is the main reason behind their growth and success. The main activities and products of the company are exploration, refining, production and marketing of petroleum and natural gas, petrochemical products such as polyesters, plastics, fibre intermediates and chemicals and manufacturing and marketing of textile products. The company is also operating in retail sector, communication sector and special economic zones (Reliance Industries Limited, 2014a). Under exploration and production, Reliance has taken initiatives to minimise the country’s dependency on crude oil import. This vision has made it possible for the company to become one of the global energy major. The company has recognised the changing structure of fuel mix, declining dependency on non-fossil fuel such as coal and crude oil and increasing importance of natural gas in the global market. Consequently, company is focusing on gas production and has uncovered gas reserve in the D6 block of Krishna Godavari Basin, in partnership with Bharat Petroleum. The company has undertaken vast number of refining processes, namely, alkylation, bottom of the barrel processing, oxygenates, reforming, sweetening, Vis-breaking and others. The petroleum products of Reliance are available for export and supply in Indian market. These includes Naphtha, Gasoline, Aviation fuel, diesel and petroleum coke, that are available at different grades while meeting international specifications. In addition, Reliance is world’s largest producer of polyester fibre and yarn. In addition, it is also one of the largest producers of polymer (Reliance Industries Limited, 2014b). Incorporation of sustainability in its business by Reliance According to Reliance Industries Limited, sustainability is one of its core business strategies and foundation of its ever-growing success. The company commenced sustainability reporting in the year 2004-05 and all its yearly reports related to sustainability are framed as per the guidelines of internationally accepted Global Reporting Initiative (GRI). Since 2006-07, the company has initiated incorporating guidelines of the American Petroleum Institute/ International Petroleum Industry Environmental Conservation Association (API/IPIECA) along with that of GRI. Moreover, Reliance has aligned its sustainable development activities with the principles of United Nations Global Compact. Reliance was approved by the International Finance Corporation (World Bank group) in 2009 as one of the top 10 largest Indian companies by market capitalisation for its sustainability reporting. In addition, the company was awarded with National Golden Peacock Award in 2011for its extraordinary contribution towards corporate sustainability (Reliance Industries Limited, 2014a). The elements of sustainability strategy of Reliance include energy security, corporate governance and transparency, climatic change, health and safety, product responsibility and waste management. In its production segment, safety constraint is given highest priority According to the company’s sustainability report for 2011-12, the injury rate at manufacturing facilities was 0.099 while at energy and power location it was 0.21. For occupational safety purpose, the company trained more than 100,000 truck drivers. According to the 2011-12 sustainability report of Reliance, all the manufacturing units and upstream gas handling terminals are certified with ISO 14001:2004 Environmental Management Systems. Moreover, the manufacturing divisions follow well- planned procedures for assessing environmental risk related to projects and mitigating adverse impacts. For protecting and preserving environment and biodiversity, the company conducts risk assessment and environmental impact of various proposed projects. The sustainability report of 2011-12 illustrates that the company utilised 52,246 cubic metre of rainwater in its plants and facilities. The company has undertaken sufficient efforts towards controlling Green House Gases emission in the environment (Reliance Industries Limited, 2012). The sustainability report of 2012-13 demonstrated that Reliance planted more than 1.2 million plant saplings in its manufacturing units and hazardous waste disposal has been reduced by 19.86% at the same compared to previous year. The company also utilises renewable sources of energy (wind and biomass) in its plants to reduce environmental footprint. Furthermore, at the manufacturing divisions, the percentage of recycled water has increased from 54.52% in 2011-12 to 55.05% in 2012-13 (Reliance Industries Limited, 2013). Sustainability practices in product development in Reliance In polyester and polymer business, Reliance is a major buyer of sustainable packaging materials. These packaging materials comprise raw materials such as paper and recyclable plastic. To reduce environmental footprint, the company emphasises on 3R’s- reduce, reuse and recycle, in procurement of packaging materials. All the major initiatives taken by the company are as follows: Paper consumption has been reduced from 4550 tonnes/annum in 2006-07 to 3025 tonnes/annum in 2010-11 for corrugated products. Reusable packaging materials such as paper and wood are used by the firm but that are being replaced by another returnable plastic product, so as to reduce paper and wood consumption. Recycled waste and recycled plastics are used by the company for preparing variety of packaging materials. Reliance has the largest refinery in India that produces lead free gasoline. To maintain environmental responsibilities in its supply chain, Reliance gives preference to RC 14001 compliant suppliers. Moreover, the company follows ISPM standards approved Heat Treatment process for pallet treatment over ASCU that has arsenic content. In addition, one of Reliance’s products, Recron 3S, is used as a substitute of harmful asbestos fibre, in construction and paper industry. This product is also used in wallpaper manufacturing and filtration industry all over the world. The company has integrated local suppliers in its supply chain for availing indigenous substitutes of other hazardous raw materials. The company has created pipeline structure in its facilities for carrying hazardous materials so as to minimise scope of contamination and adversity. In addition, Reliance has set up one of the finest recycling plants in India for recycling used packaging bottles (Reliance Industries Limited, 2013). Future sustainable plans of Reliance: 40 years from present day The present incorporation of sustainability in business strategy of Reliance suggests that the company has relevant long term plans. Since its inception, the growth of the company has integrated several sustainable initiatives and it is expected that the company will continue the same path for as long as its business continues. The company has mentioned some of its long-term sustainable plans in its sustainability report of 2007-08, which states that the company would like to have embedded life-cycle and system thinking in its business operations. The company has undertaken continuous efforts towards reduction of ecological footprint and is expected to continue the same with greater involvement of green technologies and systems. The other plans of the company include reduction in carbon dependency, greater use of clean fuel and renewable sources of energy, having talent who can align their objectives with diversified objectives of the company and creation of triple-bottom line accounting system in its business (Raar, 2002; Reliance Industries Limited, 2008). Conclusion Reliance Industries Limited is the largest private sector company of India operating in field of material and energy value chain. The paper aimed at understanding and acknowledging various sustainability initiatives taken by the company in its power and energy production sector. The paper has elaborately discussed the various initiatives the company has incorporated in its core activities and its future plans. It was interesting to study that the company at one hand deals with non-renewable sources of energy and on the other hand, it is pursuing activities that can minimise environmental footprint, increase involvement of green technology and production of clean energy. Another interesting fact was noted that the company has involved various types of reusability and recyclability in its product development, processes and waste management to increase sustainable development and environmental protection. In addition, the company has future plans of integrating triple-bottom line accounting system for the purpose of sustainable accounting. Reference List Aras, G. and Crowther, D., 2008. Developing sustainable reporting standards. Journal of Applied Accounting Research, 9(1), pp. 4-16. Barkley J.R., 2001. Complex ecologic-economic dynamics and environmental policy. Ecological Economics, 37, pp. 23-37. Haines-Young, R., Potschin, M. and Cheshire D., 2006. Defining and identifying Environmental Limits for Sustainable Development. [pdf] University of Nottingham. Available at: [Accessed on 01 July 2014]. Jørgensen, T. H., 2008. Towards more sustainable management systems: through life cycle management and integration. Journal of Cleaner Production, 16(10), pp. 1071-1080. Raar, J., 2002. Environmental initiatives: towards triple-bottom line reporting. Corporate Communications: An International Journal, 7(3), 169-183. Reliance Industries Limited, 2008. Our strategy and roadmap. [pdf] Reliance Industries Limited. Available at: [Accessed on 02 July 2014]. Reliance Industries Limited, 2012. Sustainability report 2011-12. [pdf] Reliance Industries Limited. Available at: [Accessed on 02 July 2014]. Reliance Industries Limited, 2013. Sustainability report 2012-13. [pdf] Reliance Industries Limited. Available at: [Accessed on 02 July 2014]. Reliance Industries Limited, 2014a. About us. [online] Available at: [Accessed on 01 July 2014]. Reliance Industries Limited, 2014b. Growth through energy security for India. [online] Available at: [Accessed on 02 July 2014]. Read More