SOM 620: Business and Sustainable Development End Term

Examination Spring 2021-22, SJMSOM, IIT Bombay

Date: 20 February 2022 | Total Marks: 30 | Time: 60 minutes

Instructions:
1. This question paper contains three (3) mini cases. There are five questions from each case. Each case
is of 10 marks. Answer all the questions. Read and analyse the cases to answer the questions. Do not
be verbose. Answer to the point illustrating concepts and principles.
2. Upload your answer sheet (with all your answers in a single file) in the upload link available in the
Google Form. The file format accepted is MS Word or PDF. File size should not exceed 10 MB. The
answer file name should be <Your Full Roll Number>_<Your Name>. If you are not comfortable to
write your answers using MS word. You can write your answers using the paper & pen and scan it
(using a scanner or click a picture). Make sure, the scan/picture is legible, and one can read the answers.
Insert all the scanned answers to a single word document. Save your file and upload. Click submit
button.
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Read the following mini cases and answer the questions based on the information given in the
cases.
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Case-1: Rio Tinto
Mining the Social Dimensions of Its Vast Operations
Given its business of mining over 5 million tons of rock a day, Rio Tinto has a big footprint. The mines
are expensive, take decades to fully develop and are not portable if something goes wrong. To reduce
the political and economic risk and thus ensure steady returns, Rio Tinto has sought to win the backing
of local communities, governments and the societies in which it operates.
About a decade ago, Rio Tinto came up with the concept of working within communities on outreach
and social and economic development. At the time, the company was developing a mine in Madagascar
that was a source of contention with NGOs, which were worried about threats to biodiversity and the
local community. Ninety percent of the island had already been cleared by farming, grazing and
charcoal production; the mine was situated in one of the island’s last pristine regions. The challenge
was to create an operation “respectful to the environment, respectful of our employees, that is seen to
be sustainable,” said CEO Tom Albanese. A plan was developed to protect the environment and create
economic opportunities in the communities surrounding the project, setting up standards and goals for
the company to meet. These in turn aligned with broader company policies on environmental
stewardship, social well-being, governance and economic prosperity.
Putting this strategy to work, Rio Tinto created a long list of measures, including:

• Policies to protect biodiversity and water quality around mine locations

• Employment for aboriginal peoples living near its mines
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 • Training programs to shift employees from manual labor to skilled positions
• Plans for the day when mining would be done, seeking to prevent “ghost towns”
• Goals for greenhouse gas emissions and energy use

Questions (Total Marks - 5 * 2 marks = 10 marks)

1. How does a company obtain a “social license” to operate, and nurture the local labor force that
it needs?
2. What are the possible risks would have been there for the company?
3. Do you consider their measure as CSS or CSR? Give justification for your answer?
4. How would you connect their activities into possible corporate strategies?
5. Does sustainability vision of the company direct towards the solution of social and
environmental problems

Case-2: Better Place

Charging Ahead in Favorable Regulatory Climates

Better Place saw a future in electric cars and a demand for ways to recharge them. But how soon will
electric charging stations make sense?
Shai Agassi founded Better Place in 2007 on a straightforward rationale: Oil is finite, petroleum prices
will inevitably rise and global warming has created the impetus to reduce carbon emissions. Electric
cars will be part of the emissions-reduction answer, as long as they have refilling stations.

Still, there was a big gap between that knowledge and the kind of favorable policies needed to create a
critical mass of electric cars, at least in most markets.

So Better Place decided to analyze which geographic areas had already made political and cultural
strides toward favoring electric vehicles — in essence, “outsourcing” its work on regulatory policy
change to communities in which it was already underway.

Among Better Place’s criteria for identifying hospitable locations for operation were that the public had
to be receptive to electric cars, therefore creating an underlying market, and the government had to be
creating a political climate to bring electric transportation to life. At the top of its list of nations was
Israel, which wants all new cars to be electric by 2020. Urban centers in Israel are also less than 150
kilometers apart (about 90 miles), and 90% of car owners drive less than 70 kilometers per day, perfect
for a short-haul electric vehicle. Add on gasoline taxes and a burgeoning wind industry, and Israel
appeared the perfect habitat to nurture electric vehicles — and thus electric refilling stations.

Coming in a close second was Denmark, which has a strong green consumer movement and has
committed to cutting carbon emissions by 21% by 2012. Better Place also partnered with the city of
Copenhagen for the rapid deployment of electric recharging stations. In addition to these two leading-
edge countries, the company is working in Australia, the United States (Los Angeles) and Japan to roll
out recharging stations.

Questions – 5 Questions (5 * 2 marks = 10 marks)

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 6. What is the long-term goal and major challenge of the company?
7. Do you think that Better place would be accruing a competitive advantage? If so, then identify
the crucial factors leading to competitive advantages?
8. Do you think that ‘Electric car “is an example of environmentally friendly product? If yes,
explain how it fulfils the requirement
9. What is the role of policy and regulation in this case?
10. Identify two possible strategies with regard to its portfolio of “green” products in this case.
Mention which types of cleaner production options are used by them?

Case -3: Danish Energy

Danish energy companies merged in 2006 to form DONG Energy, where Oil and Natural Gas based
power generation and distribution companies formulated an integration. The energy generation was
dominated by coal with a total of 85% contribution from fossil fuel, which contributed as the third
largest emission producing company in Denmark. There was a small share of renewable energy
business, including the world’s first offshore wind farm in 1991.

In 2007-08, the EU adopted a target of 20% renewable energy by 2020 and in 2009, which increased
stakeholder concerns about the coal power project under development by DONG Energy, the 1600 MW
Greifswald Power Station in North-east Germany. This created an opportunity for the company to
transform and to change from fossil fuel to sustainable energy. The firm changed its name to Orsted
Ltd. along with their aim, “Let’s create a world that runs entirely on green energy “. Slowly the company
started investing in wind energy with the aim to achieve a production share of 85% from green and only
15% from fossil fuel by 2040. The company has already achieved this target and is now moving towards
99% energy generation from renewable sources by 2025. On the way, the company has acquired
Brookfield Renewable with onshore wind energy investment across Ireland and UK amongst others.

Questions – 5 Questions (5 * 2 marks = 10 marks)

11. In this example, the company used which principal of substitution from Robert Solow’s stock
model?
12. What is the driving factor of change in the example above?
13. The journey from DONG Energy to Orsted Ltd. is an example of which tool of sustainability?
14. Which competitive environmental strategies are illustrated in the example of Orsted Ltd.?
Explain with examples.
15. Can we add value or lower costs while simultaneously reducing the impact of our product? Is
there any strategy used in this case to achieve this?

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