Archaeologists invoke “Gaia Hypothesis”, – principle of Mother Earth Neolithic Goddess envisioned as living planet with interdependent systems of Biosphere, Oceans, Climate, Vegetations and Evolving Creatures living in a virtuous circle, equivalent of “Vasudhaiva Kutumbakam”; while Millennial term “spaceship earth” synthesizes material & spiritual world view, in a celebration of unitive life.

Notion of an Ancient Golden Age of ecological innocence may be apocryphal. Humans always tended to exceed rational limits of exploitation – smothering the Climate by denuding vegetation, exhausting fertile soil into dust bowls, and disfiguring Nature with geometry of human design. Though evidence is equivocal, all civilizations were concerned with efforts to extend control over Nature. Aristotle judged this as ‘rational’ advance over vegetative and sensitive faculties from an animal continuum. Chinese formula by Hsun Tzu was similar.

Pythagoras viewed Nature as kindred. Mahavir emphasized obligation of care for Whole Creation.

In the tussle between “overlordship” and “stewardship” of nature and climate, the industrial revolution’s advent gave humans the tools to exploit natural resources, both above and below the ground, and there was no stopping thereafter. A poignant realization has now emerged, perhaps due to recent recurrent extreme weather, biodiversity loss, wildfires, droughts, and floods, that, – we can no longer disregard the paramount pervasive need to establish rational limits for conservation of all natural resources, most importantly those affecting Climate. We owe the resurgence of this long abandoned dormant notion, to the dedication & tenacity of activists, mainly millennials who embellished it into a durable and popular concern.

But the seminal, almost numinous attainment of that activism, was to get the world to recognize that this problem required a massive and cooperative action even before it becomes fully evident, otherwise, it can be too late. Take global warming- rising sea levels are not perceptible to the naked eye, but by the time coastal cities are flooded it will be too late to occlude that cataclysm. Similarly, there must be sufficient acuity about the connection between rainforest devastation and global warming, to spur timely redressal.

Investors and those who manage large liquid pools of capital on behalf of investors, deserve encomiums for heeding the call of ESG activism, and effectively translating that concern into business logic readily intelligible to Entrepreneurs and Corporate Management, that – good environmental practices offer opportunities not only for risk mitigation but also for value creation. This was easier said than done. This rationale appealed alike to profit-oriented businessmen and career-minded managers focused on budgets and bottom lines. This thinking now finds relief of expression in much of the world through activists and business leaders highlighting the linkage between profitability and performance on one hand, and environmental key matrix on the other hand, i.e. How A Business Performs As A Steward Of Nature through – optimal resource use, managing greenhouse gas emissions, sustainable sourcing & Waste management etc.

The true measure of success of this commitment, is that those funds that emphasised ESG considerations have grown fivefold over recent years and their published numbers in 2021 show INR 12,000 crores and expected to grow exponentially. This could only happen because those in charge of governance clearly understood the point made by activists, and enunciated to their operations management what the business loses by ESG non-compliance and what the business gains by adherence to ESG matrices. Robust ESG benefits are now well communicated to industry, notably include (i) Access to capital markets and lower cost of funding, (ii) stakeholder’s engagement and regulatory compliance, (iii) Entry into new markets with competitive advantage, (iv) Managing risks, (v) Attracting and retaining talent, (vi) Performance and value creation.

COP26 summit, IPCC reports, and WEF findings, enhanced awareness that Environmental Risks, today tops the global list of risks in terms of impact. At COP26 summit in November 2021, India announced its goal be NET zero carbon by 2070 which places an obligation on industry.

Regulators have now mandated Reporting requirement of Business Responsibility & Sustainability Report (BRSR) for top 1000 publicly listed Cos w.e.f. 1st April 2022, to comprise: A – size, location, products, B – Management & Processes, policies & framework, governance & stakeholder engagement, C – Principle-wise performance on 9 key principles per National Guidelines on responsible business conduct.

Internationally, Investor & Activist pressure continues for compliance with – Multiple ESG Reporting Standards, like: (i) UN Sustainable Development Goals (SDGs), (ii) Global Reporting Initiative (GRI), (iii) Carbon Disclosure Project (CDP), (iv)Task force on Climate related financial Disclosures (TCFD), (v) Value Reporting Foundation (VRF), (vi) International Sustainable Standards Board (ISSB).

As also some sector specific standards, such as – (i) GOGLA guidelines for off-grid solar systems, (ii) GRESB for real estate and large infra projects, (iii) Principles for Responsible Investment for Investment Industry.

Worldwide prescriptions signal that these initiatives are neither scientific orthodoxy, nor political rhetoric, but an indispensable remedial measure.

Courtesy:Times of India – Blog.