Regulators must realise economy is a fully owned subsidiary of ecology
Deccan Herald: March 30, 2023
Honoured to co-author this Op-ed for the Deccan Herald with Dr. Raghunathan V. He was for many years an independent director on the Board of Securities and Exchange Board of India (SEBI). The Op-ed is an outcome of my response to “Comments on Consultation Paper on ESG Disclosures, Ratings and Investing” – invited by the SEBI.
Do we accept that the root cause of the biggest existential crisis – the Climate Emergency – lies in the way we treat Nature? Sir Partha Dasgupta of Cambridge calls nature a “blind spot” in economics. The Stern review warns “Climate change could lead to the greatest market failure ever.” Isn’t that the underlying reason for the SEBI initiative? Taking the first step towards a metrics to address this emergency has some attendant problems – apart from no reference to Nature.
One, our fragmented regulatory ecosystem – with each financial services regulator waking up to the climate challenge at their respective pace. Two, what Dr. Kim Schumacher, PhD, CEnv alludes to as ‘Competence Greenwashing’. How do we ensure that the people charged with ensuring robust disclosures, ratings and transparency – are indeed equipped for it? Just when the world is awash with shades of greenwash. Three, as Clinical Professor Alison Taylor says: “The problem with treating climate change as an auditing task is that you end up with a bunch of auditors signing off on destruction, placing mindless faith in certification schemes”. Needless to mention lack of reference to Ethics.
Can we afford to have a low touch regulatory environment knowing what is staring at us? Particularly when India is one of the most vulnerable countries to the climate crisis. Four, deficiencies in the International Sustainability Standards Board’s (ISSB) approach to double materiality that Bill Baue has been valiantly reminding us about from time to time. It is not just about impact of climate change on the balance sheets of businesses, but how businesses contribute to climate woes that needs to be disclosed.
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