Who other than corporations themselves can make corporate sustainability a success? The governments, isn’t it?
While it is the corporations aka the businesses that need to make it work, governments can greatly discourage or help—by way of the policies and regulations they make and the way the implementations are done.
Then there is the investment community, which has to see the value in sustainability reporting and appreciate that to. Enter the realm of bourses.
The MCX Stock Exchange (MCX-SX) became the second stock exchange in India to sign the ‘voluntary commitment to the United Nation’s Sustainable Stock Exchanges (SSE) initiative.’ Bombay Stock Exchange (BSE) had already done so earlier this year. That makes India the only country where more than one bourse is publicly committed to the SSE initiative.
(Globally, only five other exchanges are signatories to the initiative. Those are Nasdaq OMX, the Brazilian stock exchange BM & Fbovespa, Johannesburg Stock Exchange, Egyptian Exchange, and Istanbul Stock Exchange.)
In February, BSE had also launched its “Greenex” index to offer a live measure of carbon-emission performances of companies, while also taking into account their financial performance data.
As India Inc. progresses on the path of sustainability, the performance of such indices vis-à-vis the more mainstream ones like Sensex would itself be a key measure of the performance of ‘corporate sustainability’ efforts. And when one arrives to a situation where a Greenex consistently outperforms a Sensex, ‘sustainability’ would have truly arrived in India. In fact, why not make a Greenex performance a measure of India’s carbon performance as a country too?
What can the government do to make this happen quicker?
One thing would be to incentivize, if not subsidize, alternative energies like solar, wind and bio, and at least offer them a level-playing economic field against the traditional energies like coal and diesel.
Simplification of sustainability measurement criteria could greatly help. For example, it should suffice that a company is able to achieve a duly reported reduction in consumption and billing of traditional energy. Beyond that, the company should be free to source alternative energies from varied sources, and of course, have that audited and disclosed too.
For example, why should a business be dependent on an oil company for mixing a biofuel in diesel and pay a high price for that too? Of course, the oil company should be as free to buy ethanol from the open market and sell it too, but as a separate commodity.
The right to mix biofuels or not should lie with the user, who should also have the right to buy it from an oil company or an alternative source. That would offer significant incentive, from a financial bottomline perspective too, for companies that are reporting on sustainability. In turn, that could improve the performance of green indices like the Greenex.
As for traditional energy companies, their sustainability progress should be a measure of how they work to gradually reduce their dependence on traditional fuels and increase the mix of alternative energies in their portfolio. That would be akin to a tobacco company increasing the mix of non-tobacco products into its overall portfolio.
(First published in SustaiNuance)
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