 "V Anantha Nageswaran, Nageswaran, Anantha")
Chief Economic Advisor V. Anantha Nageswaran (File Photo: PTI)
India needs to take steps towards better environment, social and governance (ESG) practices for its own sake, but there is a natural resistance when it is imposed by outsiders such as international bodies and forums, Chief Economic Advisor V Anantha Nageswaran said on Wednesday.
“When we have global leaders and heads of organisations travel in their private jets a few thousand kilometres to attend a conference on climate change or ESG, that does not pass the credibility test,” the CEA said.
Speaking at a conference by the Indian Institute of Corporate Affairs (IICA) on Escalating Environment, Social, Governance (ESG) for Viksit Bharat, the CEA said that companies should ask if ESG was a separate activity or embedded in the way they do business. Nageswaran said that businesses of online gaming, ultra-processed food, and crypto trading could be compliant in the spirit of the law, but in terms of social value addition, they are questionable at best.
Nageswaran, while stressing that responsible business in the Indian context is not the same as how it is interpreted in the West, said that India has to focus on climate adaptation rather than emission mitigation because it is not the biggest contributor to emissions.
Talking of standards being imposed on developing countries, such as labour, environment, and gender, the CEA said that the developed countries should remember that these standards came after they reached a certain threshold of income at the national and social level.
The CEA said that imposing these costs on micro, small, and medium enterprises (MSMEs) before they can stand on their own feet would be counterproductive. “Imposing these costs on MSMEs may be counterproductive if it crimps their freedom of operation and imposes costs on them before they can stand on their own legs and undermines their competition in the global context… We should draw a line on how much of it is appropriate in the national and social context.”
Citing the example of how plastic came into India from outside, the CEA warned that there was a need to be careful in importing some of these things wholesale.
On corporate social responsibility, Nageswaran said that it is not a separate activity but how a business is conducted. Referring to youngsters using smartphones and consuming ultra-processed food, he said, “In the process of earning the current top line and bottom line, if businesses end up destroying the productivity and income-earning capacity of today’s younger cohort, then down the road it rebounds on businesses in terms of much lower aggregate demand and economic growth. It becomes a lose-lose proposition down the road.”
Govt intention is to provide a framework, not regulation on ESG: Govt official
The government’s intention is not to bring regulation but to provide guiding principles for companies as far as environment, social, and governance (ESG) practices are concerned, Inderdeep Singh Dhariwal, joint secretary, corporate affairs ministry, said while speaking at the IICA event.
“We provide a framework, and then it is left for the companies to evolve it. It is a trust-based relationship,” Dhariwal said.
He also said that the guidelines may need to be sector-specific and may have to vary from a mining company to a services-oriented company. However, he added that the demand for sector-specific guidelines has to come from companies, but there has been no such issue raised yet. “We are listening to the stakeholders. The requirement has to echo from the source,” Dhariwal said.
First Published: Sep 04 2024 | 5:19 PM IS