“Companies with a global footprint need to have strong risk management systems in place”
Illuminem: Originally published on http://www.thediversityblog.com
February 24, 2024
https://illuminem.com/illuminemvoicesprofile/praveen-gupta
Umesh Pratapa (P Umesh) and I explore evolution of liability niche in the Indian insurance market-place. What appeared to be a glacial shift – Bhopal Gas Tragedy to Satyam Computers was just that – has suddenly assumed a lightning pace. Tata Sons, IL&FS, ICICI, BharatPe, Zee Sony, PayTM, Byju are but a few names with recent board level action. The list keeps growing.
With ongoing ‘notional’ extension of board theatre – a D&O does not stop with manifestations of management liability. Environmental, Societal & Governance (#esg), #greenwashing, #ecocide, et al nudge it into a cross class realm.
It is not just the insureds and their boards getting sued. Insurers too are getting drawn into the ring. Something that Zaneta Sedilekova and I explored here: https://lnkd.in/dqZnmSRs.
And how is a new age climate #disclosure changing business? “Businesses and financial institutions that want to attract investors in a global market must adopt international standards, regardless of whether it’s a requirement in their home country.” Something that Indian boards hungry for overseas capital need to bear in mind: “Access to international financing will increasingly hinge on adherence to global climate #reporting,” says Pietro Rocco, Head of Green Finance at The Carbon Trust.
According to David Grayson, Chair of the United Kingdom’s Institute of Business Ethics, that will involve much more than preserving the climate.
“It’s a much wider waterfront covering #humanrights, labor standards in global #supplychains, modern day #slavery, #livingwage and #accountability for the misuse of a company’s products,” he tells The CEO Magazine. No respite in sight as boards must now equip to deal with #Polycrisis.
“Climate risks are here before us and we need to address them now. Obviously the first step is to get on board people who have a good understanding of climate risks in the wider sense of the word”, advises Umesh.
Hopefully this is not falling on deaf ears!
The Diversity Blog 
At what point would all the international stiuplations for doing business overseas be too much? Would you think or could there be a breaking point where corporations get too frustrated with working with international regulations, and instead try to preserve their investments by only working domestically?
Many thanks Nick. This is really a pressing issue. Two thoughts immediately come to mind.
1. As long as globalisation stays functional – players who continue adapting – to ever evolving complexities – will keep deploying resources while there is money to be made.
2. De-globalisation, protectionism appear to be the new cycle.
More importatly, with rising: temperature, GHG emissions, pollution and bio-diversity losses – we are putting in motion tipping points for various planetary boundaries. Going forward it will be imperative to price the externalities. Europe leads in undertaking most of the desirable initiatives. The barriers for non-compliant businesses are already rising and have existential implications. Those who do not fall in line will drop out of the race.
Needless to mention, geographic diversification is crucial for any business. There will always be trade offs between it and risk aversion.