BUILDING SUSTAINABLE BUSINESSES FIT FOR A SUSTAINABLE WORLD 48 // MITIGATION vs. ADAPTATION vs. TRANSFORMATION Without looking at the external factors in a broader and longer-term manner, our businesses are at risk of being caught off guard by a trend reaching a tipping point and thus creating a disruption that they cannot cope with compared to competitors. We must be prepared and informed enough to determine whether our operations will require mitigation (best practice is good enough), adaptation (we can adapt to the trends we see) or transformation (we need to redesign our products, operations and business models) in order to survive. Our Responsible Stewardship programme allows our companies to mitigate and manage the areas that we affect and can control but it can only go so far in helping us contribute to adaptation. Some business models will not be sustainable without a complete transformation. We need much more information to make informed decisions. By using a horizon scanning and scenario planning process, our business leaders can consider a wide range of potential worlds when developing future plans. It pushes colleagues to think about these issues in a holistic way and we have developed a series of management tools including information cards to help challenge their thinking. These include issues like climate change, human rights, supply chain resilience, energy, water, robotics and artificial intelligence, resource availability, nutrition and skills requirements. By asking a series of questions and presenting different scenarios, we are learning to identify and understand the potential disruptions that could cause the funnel in our model to shrink and constrain our businesses as well as those we depend on in our value chains. Looking beyond our operations For some of our businesses, the threats are not directly caused by them but will involve responding to the effects caused by others and a deteriorating planet nonetheless. For instance, all businesses will need to learn to operate in a world that is at least 2 degrees hotter than preindustrial temperatures, even if the efforts to meet the ambitious COP21 commitments are accelerated and successful. For Birla Capital, engagement with institutions like the International Finance Corporation (IFC) and the United Nations (UN) whose Performance Standards and Principles for Responsible Investment form the basis for international standards today, means understanding how they will evolve in the future to create a sustainable landscape for the financial services sector. Responsible Investment is currently immature in India, but the international tide for inclusion and exclusion frameworks will no doubt influence the markets of the future. Being forewarned of developments means that business leaders will be able to chart strategy accordingly and be able to lead the adaption process ahead of peers and competitors. Embracing a new way of thinking Our stakeholder relationships are evolving as our thinking and approach to building sustainable businesses has taken shape. Our Retail, Fashion and Textile businesses have carried out horizon scanning exercises to explore the trends in the external factors that will pose a risk to their business and that of their supply chain. Led by Forum for the Future, workshops were used to explore trends that the businesses had not previously considered as possible opportunities or risks to their business models. They examined broad topics under legal, societal, technological, economic, physical and geo-political frameworks. Going through a facilitated programme has helped our leaders to think about their businesses and their operations in a more holistic way. It has fundamentally challenged their perceptions of what could disrupt their strategic plans for the future and as a result, it is making our leadership think about the types of relationships and strategic stakeholder engagements that they need to develop now in order to be able to understand where adaption and possible transformation may be needed. Further, the requirement to map our supply chains to evaluate risk is a message coming from the major brands that use our products. Strategic Stakeholder Engagement