Value Octagon Framework

 Dabur India Limited and the Value Octagon Framework: A Detailed Analysis

The Value Octagon is a strategic framework designed to evaluate and create value across eight key dimensions in an organization. It helps companies assess their strategies and operations from multiple angles, ensuring they achieve long-term growth while balancing financial, social, and environmental. The framework is particularly useful for aligning a company's goals with sustainable practices, enabling it to stay competitive while fulfilling its obligations to shareholders, society, and the environment.

Dabur India Limited, a well-established company with over 140 years of legacy, uses various strategies to create value and ensure sustainability, aligning with global best practices in corporate governance and environmental, social, and governance (ESG) principles. 

Here's how Dabur has applied key strategies in the Value Octagon model to create value, especially focusing on ESG:

1. Strategy and Business Model:

Dabur’s strategy focuses on growing its business while keeping sustainability at the core. The company is committed to offering products that are both good for the environment and benefit society. Here’s how Dabur’s strategy and business model reflect this approach:

• Project Prakriti: Dabur launched Project Prakriti, a strategic program aimed at tackling global challenges like climate change, water scarcity, plastic pollution, and inequality. This program addresses 15 critical areas identified after a thorough review of Dabur’s environmental, social, and governance (ESG) impacts. For example, the company focuses on sustainable farming practices for its raw materials like herbal plants.

• Sustainable Products: Dabur has introduced products that focus on sustainability. For instance, their Dabur Amla Hair Oil is known for using natural ingredients such as Amla (Indian gooseberry) and Shikakai, which are responsibly sourced from the local environment. These ingredients support both environmental sustainability and the livelihood of local farmers.

• Eco-Friendly Packaging: Dabur is increasingly adopting eco-friendly packaging. For example, their Dabur Honey is packed in glass jars instead of plastic to reduce environmental impact. This move supports their goal of creating a positive environmental footprint.

2. Capital Allocation:

Dabur carefully allocates its resources to ensure long-term growth and support sustainable practices. Here are several examples of how the company uses its financial resources to foster sustainability:

• Solar Energy Investments: Dabur has installed solar panels across many of its factories. These solar installations help reduce dependency on non-renewable energy sources like coal and gas, aligning with their Net Zero Emissions goal by 2045. At their Pithampur plant, they installed a solar power system that provides a significant percentage of the factory’s electricity needs, lowering energy costs and reducing carbon emissions.

• Water Conservation Projects: Dabur has invested in technologies that save water across its operations. At their Pithampur facility, the company implemented water recycling systems, allowing them to reuse water instead of drawing more from external sources. They also built rainwater harvesting systems at various sites, which capture and store rainwater for use during dry periods. This significantly reduces their water consumption and supports their water conservation efforts.

• Sustainable Farming: Dabur partners with local farmers to promote organic farming and sustainable agricultural practices. For example, in areas like Kesar, farmers are taught to grow herbs like Amla, Tulsi, and Neem using eco-friendly farming techniques. This ensures the sustainability of raw materials and improves the livelihoods of local farmers.

3. Strategic Financing Decisions:

Dabur’s financing decisions are not just about making profits but also about reducing risks and supporting environmental and social goals. Some examples include:

• Waste Reduction: Dabur has invested in processes that minimize waste at their production facilities. One such initiative is the zero waste to landfill program, where they have created systems to reuse or recycle all waste materials from production. This reduces landfill contributions and helps the company meet its sustainability targets.

• Sustainable Supply Chain: Dabur has also focused on making its entire supply chain sustainable. For instance, the company is working with suppliers to use renewable energy sources and reduce their carbon emissions. They encourage suppliers to implement sustainable farming practices, ensuring that all ingredients sourced for Dabur products are grown and harvested responsibly.

• Investing in ESG Goals: Dabur has set aside funds specifically for ESG-related projects. For example, their Herbal Garden Project, which focuses on the preservation and cultivation of indigenous plants used in their products, has received significant investment. This project helps preserve biodiversity while ensuring a consistent supply of natural ingredients for Dabur’s products.

4. Organisational Architecture:

Dabur has designed its organizational structure to support long-term sustainable growth. Some key strategies in this area include:

• Employee Engagement: Dabur has invested in initiatives that promote employee wellbeing and diversity. The company was recognized by the Economic Times as one of the Best Organizations for Women for creating an inclusive workplace culture. They offer flexible working hours, promote gender diversity, and provide equal opportunities for men and women at all levels of the organization.

• Employee Training: Dabur offers its employees training programs that focus on sustainable practices. For example, employees are trained to use energy-efficient equipment, manage waste, and reduce water consumption in day-to-day operations.

• Leadership in Sustainability: Dabur’s leadership encourages sustainability at all levels. The CEO and top executives regularly discuss and review the company's ESG performance, setting clear goals and targets. This helps ensure that sustainability is a key part of the company’s long-term strategy.

5. Cost Management:

Dabur uses cost management strategies to enhance its profitability while staying committed to sustainability. Examples include:

• In-House Media Agency: Dabur’s in-house media agency saves the company money on advertising. By managing their media planning and purchasing directly, they reduced costs by 25%. This cost savings is then invested in sustainable projects like water conservation and waste management.

• Reducing Packaging Costs: Dabur has reduced the amount of plastic used in packaging, opting for recyclable materials like glass and paper. This not only reduces environmental impact but also cuts costs in the long run because the company spends less on producing plastic packaging.

6. Corporate Risk Management:

Dabur takes a proactive approach to managing risks, especially those related to environmental and social issues. Some examples include:

• Risk Management in Water Scarcity: Dabur understands the risks of water scarcity in India, so they’ve implemented water-saving technologies and conservation efforts across their factories. For example, they’ve set up rainwater harvesting systems and water treatment plants at several locations to ensure they can manage water shortages.

• Climate Change Risks: Dabur’s commitment to Net Zero Emissions by 2045 is an example of how the company manages risks related to climate change. By reducing carbon emissions and improving energy efficiency, Dabur is preparing for future regulations and challenges related to global warming.

7. Mergers, Acquisitions, and Restructuring:

Dabur has used mergers and acquisitions as a way to expand its sustainable practices and market presence:

• Acquisition of Healthy Brands: In recent years, Dabur acquired several health-focused brands like Bovonto (a health drink) and Indulekha (a herbal hair care brand). These acquisitions align with Dabur’s strategy to enhance its portfolio of sustainable, health-focused products.

• Restructuring for Efficiency: Dabur has restructured its operations to streamline processes, reduce waste, and improve efficiency. For example, they centralized some of their manufacturing operations, reducing energy consumption and improving the overall environmental footprint.

8. Corporate Governance:

Dabur’s governance practices are designed to ensure fairness, transparency, and accountability to all stakeholders, particularly in relation to environmental and social responsibility:

• Sustainable Business Practices: Dabur’s corporate governance philosophy prioritizes long-term value creation through sustainable practices. For instance, they regularly disclose their sustainability performance, including water management efforts and carbon emissions reduction. Their commitment to transparency is seen in their annual Sustainability Reports, which detail their ESG goals and progress.

• Awards and Recognition: Dabur’s corporate governance has earned it various awards, such as the Green Champion Award from the India Net Zero Alliance and recognition as one of the Top 50 Most Sustainable Companies in India by BW Business World.