BUILDING SUSTAINABLE BUSINESSES FIT FOR A SUSTAINABLE WORLD 46 Strategic Stakeholder Engagement // A DIFFERENT APPROACH Our approach to materiality incorporates examining and responding to the impacts of our businesses whilst also taking into consideration the external factors that could result in risks to our business strategies. This approach goes further than conventional materiality analysis. We appreciate the need to understand the external issues that are important, present material risks or opportunities to the Group and our businesses. However, just focusing on the areas that we internally feel are significant, or that our stakeholders require us to operate against, limits our thinking. Most believe that a sustainable business is one that understands and manages its impacts in the world. At the Aditya Birla Group however, we recognise that in order for us to be truly sustainable, we must understand that there are external factors that will require us to adapt. As the world around us faces increased challenges, we will increasingly need to not just manage the areas that we impact and affect, but also to understand better the trends surrounding each of the external factors that will impact us. Building effective relationships with key stakeholder groups is a vital component of modern day business management. Our Group focus on Strategic Stakeholder Engagement goes beyond traditional interactions with the organisations that are affected by or affect our businesses now or in the short term. We want to work with our strategically selected stakeholders in a more business-critical way, benefitting from their expertise to help us identify the key issues, trends and external factors that will shape our markets and operating environment in order to shape our planning in the medium and long term. This evolved approach pushes us to move from thinking and working tactically to strategically. Particularly for businesses operating in developing markets, the implications of resource scarcity, new technology, talent management and climatic changes amongst many others are, and will become, more pronounced. We must have the foresight to work beyond the areas that are in our sphere of influence, but recognise those factors that have the potential of influencing our own sustainability and that of our value chains. We are increasingly doing this at a Group, business and site level. Creating differentiation Our approach builds risk mitigation strategies for our businesses and their operations as well as identifying business opportunities. The goal is to enable our leaders to position our businesses with a strategic advantage over our competitors. We do not believe that the sustainable business playing field is flat. Aspects such as structure, technology, geographic location and developments in legislation that are the focus of our Model for Sustainable Business are likely to lead to winners and losers. Losers being businesses that cannot stay inside the shrinking legislative funnel, and winners being businesses that are able to position themselves to take advantage of the dramatic changes heading their way and gain market share from the losers. Believing this, it is vital that our leaders understand what could disrupt their markets, business models and supply chains and be proactive in implementing our responses. This can only be done by building the right relationships with the right experts who understand the trends in key external factors and the science behind them better than we do. A good example might be climate change where some of our businesses are very small emitters of CO2 , but depend on a supply chain that might be severely affected by sea level rise or the legal requirements to prevent CO2 emissions. By leveraging our expert and strategic stakeholder relationships to understand such interdependencies, we are able to scan the horizon and find efficient and cost effective ways to improve the directions of our operations. We need this information to improve our business strategy and plans but more importantly, this approach is what sets our leadership and our businesses apart and places them firmly on the road to being viable and capable in a sustainable world.