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Global Emerging Markets positive impact case study: Tech Mahindra

In this case study, we demonstrate how current holding Tech Mahindra is creating positive impact aligned to the Sustainable Development Goals (SDGs).

Headquartered in India, Tech Mahindra is a multinational company specialising in the provision of software and IT solutions for clients in the telecoms, manufacturing, financial services and logistics sectors. 

Theory of Change

Tech Mahindra offers technology solutions which can be used by clients who want to save energy and reduce their GHG emissions, either by moving their data centres to the cloud or by providing their services remotely. The company also offers technology that can help clients measure their carbon footprint. Meanwhile, its product portfolio for smart cities is focused on making cities and human settlements sustainable and safe – for instance, by improving waste management.

Alignment with UN SDGs

The overall culture of the group is strongly aligned with various SDGs1 including:

  • Goal 7: Affordable and clean energy
  • Goal 9: Industry, innovation & infrastructure
  • Goal 11: Sustainable cities & communities
  • Goal 13: Climate action

Environmental focus

Tech Mahindra is a leading global enabler of digital transformation, consulting and business reengineering services and solutions. It helps clients integrate platforms, connect and make greater use of technology including the Internet of things (IoT), the cloud, artificial intelligence (AI), blockchain and 5G. During our recent call with management we discussed the significance of SDG-aligned revenue sources for the company. Tech Mahindra's Chief Sustainability Officer, Sandeep Chandna, highlighted that 12% of total sales can be linked to SDGs. These cover smart cities, solar energy, the virtualisation of services and moving clients' data centres to the cloud. The company sees these areas as opportunities for growth and wants to capitalise on its relevant expertise to expand its revenues further. It aims to act as an enabler for businesses as regulation, society and markets force them to pay more attention to sustainability issues.

To seize the opportunity Tech Mahindra is investing to expand its offering and it is walking the talk with its own commitment to the Paris accord. The Mahindra Group stands out within Emerging Markets for its pledge, inasmuch as it is one of the few Indian groups to have set science-based targets (SBTs) such as greenhouse gas reduction targets that are consistent with the two degree cap. Tech Mahindra aims to cut its Scope 1 and 2 greenhouse gas emissions2 by 22% by 2030 and 50% by 20503, mainly by increasing its use of green energy (which makes up 18% of the mix consumed today).4 For its capital allocation simulations and decisions, the company uses a fictional carbon price of US$10 per tonne to price in the cost of ESG externalities in its scenarios – in India the tax on coal is currently only around US$5 per tonne.5

In terms of its SDG-aligned offering, Tech Mahindra's products and services are focused on making cities and other human settlements sustainable and safe. Solutions like Smart Street Light, Smart Waste Management Systems and Smart Meter can be managed remotely through a smart city portal known as UMACC. Smart Building Management solutions help in reducing the consumption of resources.

Tech Mahindra’s renewable energy solutions are removing inefficiencies and enabling more reliable energy supply. Its Microgrid as a Solution enables easy access to sustainable energy for communities. Meanwhile, its IoT-based Connected Solar Plants solution can link plants globally, helping to forecast production, monitor substations, analyse real-time data, and audit and report energy production. The plug-and-play device also sends timely alerts during critical events to help manage weather issues and limit accidents.

The virtualisation of services and offering services remotely are structural trends among Tech Mahindra’s clients. As a result of the Covid-19 pandemic these trends have taken root more strongly in our societies, with remote working now a part of day-to-day life for most of us, and call centres and online services more important than ever. Tech Mahindra offers companies a range of solutions to help with going digital, delivering considerable benefits to wider society in terms of reducing road congestion and pollution.

Tech Mahindra also works with clients who want to move to an outsourced, cloud-based solution for data storage. Outsourcing data to specialists has many benefits, not least in terms of environmental impact: better capacity utilisation and more efficient cooling systems save energy, making a cloud-based approach both more environmentally friendly and better for the bottom line. 

A company with a purpose

Tech Mahindra adopts sustainability as a “way of life”. This is reflected not just in sustainable business practices but in a spirit of collaboration which leverages the power of its technology. To this end, Tech Mahindra has created some communities and platforms which connect stakeholders, in an effort to solve some of the most critical sustainability challenges the world is facing. GAiA, its ACUMOS-powered open source AI platform, democratises knowledge and make it accessible to everyone, accelerating change and encouraging the adoption of solutions which address business and environmental problems. For example, its “community of thinkers” (#AI4Action) leverages the company's AI-powered technology to facilitate knowledge sharing around tackling climate change.

These knowledge sharing initiatives are not the only action the company is taking on the social aspect of ESG. The Tech Mahindra Foundation (TMF) runs various corporate social responsibility (CSR) initiatives which aim to improve education for children and young people from marginalised sections of society.

The company is also playing a part in providing care during the Covid-19 crisis by helping the Indian Government set up tele-health services. These use the mobile app AragyaSetu to connect Indian people with essential health services in the fight against the pandemic. Tech Mahindra has also developed a digital health kiosk and deployed over 50 “Health ATMs” across India and Africa to deliver health screening, live video-consultation with doctors, instant health reports and prescriptions, medicines, and help in managing and monitoring health.

 

This case study will feature in the Global Emerging Markets: ESG Materiality, Q1 2021 newsletter which will be published in the coming weeks.

Risk profile
  • This document does not constitute a solicitation or offer to any person to buy or sell any related securities or financial instruments.
  • The value of investments and income from them may go down as well as up, and you may not get back the original amount invested.
  • Past performance is not a reliable indicator of future results and targets are not guaranteed.
  • Investments in emerging markets tend to be more volatile than those in mature markets and the value of an investment can move sharply down or up.
  1. 1For a full list, see Tech Mahindra’s Integrated Report 2019-20. For completeness, we note that a subsidiary, Tech Mahindra Americas Inc, received a lawsuit for alleged discrimination against non-South Asian employees in its hiring, promoting and terminating decisions. However, the group strongly denies the allegations and is vigorously defending the said matter and believes itself to be strongly placed to emerge successful. Currently, there is a motion to dismiss the lawsuit pending before the court and we are awaiting a ruling on that motion. Source: Email from Tech Mahindra’s investor relations team.
  2. 2Under the Greenhouse Gas Protocol, Scope 1 covers direct emissions, while Scope 2 covers indirect emissions relating to electricity purchases.
  3. 3Targets relate to the divisions over which Tech Mahindra has 100% operational control, i.e. its Indian operations, which represent more than 75% of assets. We expect targets relating to cutting Scope 3 emissions (covering all non-electricity related emissions in a company's value chain) and reaching net zero to be announced in April 2021.
  4. 4Source: https://www.techmahindra.com/en-in/sustainability/. Tech Mahindra plans to spend INR63.4m on greening its facilities and INR2.6m on water resilience (a total of approximately US$1m). Source: Tech Mahindra Integrated Report 2019-20, page 159.
  5. 5The funds fictionally spent for carbon pricing are then allocated to climate-centric initiatives such as solar plants, sewage treatment plants, purchase power agreements (PPAs), and installing LEDs and other energy-efficient devices. It should be noted that in India there is a proposed increase in the carbon tax on coal from the current level of US$ 5.47 per tonne to US$ 16.09 per tonne. Source: Tech Mahindra’s Integrated Report 2019-20, page 70.

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