By Rajitha Kariyawasan  “What we usually consider as impossible are simply engineering problems... there’s no law of physics preventing them” – Michio Kaku The merits of Environmental, Social, and Governance (ESG) standards have become an increasingly polarising topic. Some criticise ESG for not doing enough to effect meaningful change, others accuse it of diluting commercial effectiveness with ‘extraneous’ considerations. These positions stem from a common scepticism as to whether companies can behave ethically and still turn a profit. The many powerful examples of sustainable innovation emerging across the Hayleys Group prove that in fact, they can do both.   Inherent circularity    Of all the agricultural products that Sri Lanka produces, few rival the versatility of coconut. The fibre from the husk is utilised in everything from mattresses to potting material, while its contents are used for food products and ingredients, including edible oil.  Similarly, since 1973 we have been contributing to Sri Lanka’s economic development through the export of activated carbon derived from coconut shells. A niche market at the time, today global demand for activated carbon is estimated at $ 7.1 billion and forecasted to double to $ 14.5 billion in the next five years.  The world is looking at sustainable solutions. ESG-led applications are therefore a basic hygiene factor. Our global customer base demands greener products/services while many Western nations and corporates are aggressively targeting carbon neutral milestones. Haycarb has been on the frontiers of this growth opportunity, leveraging homegrown research and development, with ESG at the core of our management philosophy.  Today, the activated carbon we produce is contributing to a remarkable range of environmentally-friendly applications across five continents – from air and water purification to antidotes and medical equipment in hospitals, supercapacitors for many stationary and mobile power applications, and for new battery technologies in the electric vehicle industry.  Our environmental engineering segment designs and implements solutions for waste water treatment in Sri Lanka and regionally, using chemical, aerobic, anaerobic, or hybrid processes, ensuring water released from domestic and industrial applications to the natural environment is safe.  At every step, we have sought to enhance circularity, add value, and look after the communities we work with. Through our flagship Puritas Sath Diyawara project, we provide clean drinking water, school supplies and equipment, village infrastructure, scholarships, medical essentials and equipment, and essential food distribution especially during the pandemic and current economic crisis.  Parallel to activated carbon applications, we have developed sustainable livelihoods by creating and integrating networks of small-scale rural suppliers into our green supply chain. But our partner raw material suppliers were primarily utilising open pits to produce their charcoal, as was industry practice. Hence, even while the applications were green, the methods of production were not.        Creating sustainable opportunities at the grassroots – locally and globally   We addressed this challenge head-on within our manufacturing operations first. This culminated in the development of Haycarb’s own patented Recogen process, which created techniques for capturing and recycling these emissions using a centralised and mechanised charcoaling process by pyrolysis of coconut shells and using a boiler to combust the gases released. This in turn powers steam turbines that supply electricity to the national grid. The project was certified for carbon credits under the Kyoto Protocol. While the techniques we developed were ideal for factory conditions, they had to be adapted further to be replicated at the grassroot level, where our small-scale suppliers operate as a cottage industry.  This was the basis of Haritha Angara, a pioneering initiative to provide interest free loans and technical assistance to our supplier network, supporting conversion of their open pit charcoaling operations into environmentally friendly closed pits. By partnering with the Coconut Development Authority and enabling our suppliers to obtain a licence from the Central Environmental Authority, we were able to broaden and propagate this practice across Sri Lanka. Today, approximately 80% of suppliers in Sri Lanka have converted to the eco-friendly model, saving carbon emissions nationally. In this manner, we were able to enhance productivity of our suppliers, while radically cutting down on their emissions footprint. Haycarb now sources 51% of its raw material from 400 micro-entrepreneurs globally. Over the past year, we generated 1.5 million kWh of electricity for the national grid – a 48% Year-on-Year (YoY) increase. Most crucially, we generated export revenue for three emerging economies, $ 71.2 million in export earnings for Sri Lanka, and $ 22.6 million and $ 25.1 million for Thailand and Indonesia respectively.  The impact of Haritha Angara is not limited to Sri Lanka. Over the past years, we rolled out similar programmes in both of our overseas manufacturing operations, which ensures that the benefits of what we pioneered in Sri Lanka are now spreading across Asia.    Entering a new orbit      While Sri Lanka has faced immense challenges over the past three years, today’s issues are not purely the result of ongoing global volatility, but rather a result of systemic failure to adapt our nation’s unique strengths to meet increasingly complex global market requirements.  While companies look at running their businesses in a more sustainable way, the nation’s policy framework is critical to support this drive. Responsible, consistent, and interconnected governmental action must align ESG-led incentives, rebates, and concessions across the economy to support a low-carbon, prosperous, and inclusive future. In solving our current challenges, we believe the spirit of entrepreneurial innovation within our organisation and across the Hayleys Group will help Sri Lanka enter a new orbit. For Haycarb, our top priority is to continue purifying the globe via activated carbon, through our water and air applications and by investing in research and development to take our value-adding capabilities to new heights, resulting in powerful solutions to existing and new applications.  In particular, we are focused on how our products can help lead to a new generation of battery technologies that will power electric vehicles and renewable energy projects across the globe.  Today, increasing numbers of Sri Lankans are losing confidence in our nation and making difficult choices in order to escape our economic predicament. In this moment it is more important than ever to lead with purpose, to inspire those who chose to remain, and rebuild. Our team is part of a mission to demonstrate that we can respond to pollution with science. We can help purify the world and be rewarded financially for the solutions that we innovate. By further refining our ESG strategy, standards, and protocols, we credibly demonstrate to our stakeholders that we continue to walk the talk, and that the many innovations in the pipeline are created by an ethical organisation, considerate of its environmental and social impact and good governance framework  This is the true meaning of holistic value creation. ESG mechanisms like the Hayleys Lifecode do not run counter to our financial viability, but instead, amplify it, by formalising and systematising the mindset, values, and ethical principles on which our organisation was built in the first place.       (The writer is the Director of Haycarb Managing)