Sustainability and Business

Case Assignment - 1
PGP 25 – SECTION D

Roll Number Name

190 Anchit Jalan
197 Bharat Jain
219 Pranav Kumar Masa
238 Sujal Aggarwal
240 Shiva Sagar Surapu
246 Keerthana Velagapudi
 1. What are the sustainability-related trade-offs in the large dam/hydro projects in
general, and NT2 in particular?

Large hydro projects have various advantages, such as reduced emission levels of CO2 and SO2
as fossil fuel usage is reduced. There is also economic advancement due to the increased
availability of electricity to remote locations. However, there are also cons/demerits of large
hydro projects, such as the displacement of nearby communities and negatively impacting
ecological habitats. The sustainability-related trade-offs can be summarised as follows:

• Dams alter the ecosystem as they block the water flow and the flow of sediments, leading
to increased erosion downstream. Sediments also carry nutrients that feed the fish, so the
river often becomes dead when the sediment flow is blocked.
• Dams reduce biodiversity and cause extinction; as mobility of fishes is affected, many
migratory species die. Overfishing can also lead to diversity loss
• Dams contribute to climate change, as upstream forests are flooded, eliminating their use
as carbon sinks.
• Dams also reduce water quality by trapping the dirty water or fertilizer-filled water that flows
into them. This increases mineral concentration and can result in an algal bloom. It can
further dirty the groundwater and affect the drinking water supply.
• They often result in wastage of water

In the NT2 project, the negative impacts include:

• Contamination of river water due to the construction of a dam, thus endangering the lives
of villagers.
• Riverbank vegetable garden flooded by rising water and no compensation for the same
• Erosion occurring downstream along Xe Bang Fai River
• Loss of fish diversity and disappearance of fishes

2. Why might the NT2 dam and the International Rivers letter pose a reputation risk
for ABB?

Yes, even though NTPC is the major player in the project, earning revenue from the business makes
ABB responsible for the implications on the project.

• ABB is already has a standard to maintain when they were granted the ISO 14001
certification. This might put them under greater scrutiny of the media or NGOs.

• Although sustainability measures were included in the project, the letter outlined violations
of the concession agreement and resettlement policy outlined by the world bank. This
included the following violations :
✓ Provisions of clean water supply, i.e., breach of health and safety rule
✓ Prior compensation
✓ Provision for irrigation system

Getting associated with a project that violates norms outlined by a central organization like
the world bank will hurt its reputation.

• There exist a possibility that their previous hydel projects, such as the 'Three Gorges Project,'
will come under the radar.

• Existing and future clients/shareholders who value sustainability and environment-friendly

practices might lose their trust in ABB, eventually leading to a loss of business.

Although ABB Corporation is not directly involved with the project, the state in its sustainability
strategy evaluates the risks associated with them before selecting projects. They also state that they
are careful in selecting suppliers and customers because of the environmental issues imposed
implied obligations on ABB. ABB will be impacted if there is a problem with the environment at NTPC.
As a result, ABB Corporation's image might be jeopardized by the project and the International
Rivers letter. This may harm their reputation and, in the worst-case situation, their ability to continue
their business.
 3. To what extent and how should ABB integrate stakeholder concerns in its business
decisions?

As companies transition from shareholder to stakeholder theories, it will be necessary to consider

various stakeholder needs, which are essentially individuals and groups interested in a variety of its
operations. As social enterprises, firms must not focus just on profit maximization but also on social
welfare and long-term sustainability plans for new initiatives that various stakeholders now
recognize. ABB's most important stakeholders are customers, investors, the media, and non-
governmental organizations (NGOs).

Stakeholder issues should be factored heavily into ABB's corporate choices. They should employ the
accommodating approach, in which corporations accept responsibility and take corrective steps to
address the NT2 project's problems. Considering ABB's sustainability goals, the company should
strive for a mix of economic success, environmental oversight, and social growth that benefits all
stakeholders. The NT2 project is particularly delicate since it entails the relocation of 17
communities, which will directly impact the organization's image.

ABB has long strived to address environmental management, and in 1992 established a section
dedicated to it. ABB's operations are at the center of reducing environmental impact and increasing
sustainability and corporate ethics, which directly combines stakeholder issues like company
reputation, cost savings, and designing sustainable solutions.

4. Would you change ABB's sustainability criteria and objectives, and if so, how?

In 2008, ABB came up with new sustainability objectives, but in the NT2 project, it failed to
implement them efficiently. Following are the suggestions that they might have taken care of to
stick to its criteria and objectives without changing them:

1. ABB conducted assessments that were in sync with the World Bank. However, both failed to
apprehend the long-term impact of their project, like contaminated groundwater. While they planned
for alternative water sources for those who were being resettled, the company should also have
taken measures to divert contamination to prevent natural resources from getting spoiled. ABB's
sustainability, criteria, and objectives should also involve preserving natural resources.

2. NTPC failed in its commitment to providing clean water to the local people and the displaced
people. Moreover, there were delays in payments. A body should be in place to check on the terms
and contracts with the clients such that if the contracts are not fulfilled on due time, there could
have been the risk of penalization. Another alternative is the involvement of the local authorities to
ensure the proper fulfillment of set conditions.

3. ABB should hire a third party or have an efficient internal team to dynamically adapt to the
problems arising and settle these disputes at a micro-level. This will ensure proper implementation
of said resolutions for the displaced and help in dealing with issues like contamination of the
groundwater.