Sustainability proposes that socially responsible firms will somehow financially outperform other less responsible firms in the long run resulting from customer loyalty, better employee morale, or public policy favouring ethical conduct. Empirical results testing this hypothesis are mixed, neither suggesting that more responsible firms, on the average, have a clear financial advantage nor a large burden. A useful approach is to determine specific circumstances under which a firm may actually find the more responsible approach to be more profitable and under which circumstances responsible behaviour can be pursued without an overall significant downside. And to add to it the ethical responsibilities that a firm faces when a more responsible approach may be more costly.
The individual, the firm, the society
Different individuals vary in their ethical convictions. For example: some are willing to work for the tobacco industry while others are not. Some are willing to mislead potential customers while others will normally not do this. There are, however, also broader societal and companywide values that may influence the individual business decision maker. In cultures where the stricter interpretation applies, a firm may be unwilling to set up an interest-based financing plan for customers who cannot pay cash. The firm might, instead, charge a higher price, with no additional charge for interest. Some firms also have their own ethical stands, either implicitly or explicitly. For example, Google has the motto “Do no evil.” Other firms, on the other hand, may actively encourage lies, deception, and other reprehensible behaviour. Some firms elect to sell in less developed countries products that have been banned as unsafe in their own countries.
A common question raised these days is that what can be done to overcome the reluctance of the Indian consumer to pay a higher price for sustainable products?
Scenario in the Indian Market
Indian consumers' lifestyle emerged as the most environmentally sustainable with 62.6 per cent claiming to care about the environment. Paradoxically, that very consumer is reluctant to fork out more money for a green product
Hero Honda (before they split), Volkswagen and Toyota in automobiles, Voltas, Panasonic and LG in consumer durables, Nokia, Sony Ericsson and Philips in personal electronics and Wipro (with its non-toxic Green PCs) are examples of Indian companies
A PROBABLE SOLUTION
What can be done to overcome the inability of low income consumers to pay for the services that can enhance their incomes?
Taking the example of rural India, we see that it is ripe with opportunity, but also rife with challenges. Several firms have found success overcoming obstacles to thrive in the rural sector. The emergences of micro products have helped bring more value to consumers who are bound by their incomes.
For example: Sachets for oil, toothpaste, shampoo & even micro loans!...